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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
PLY GEM INDUSTRIES, INC.
(NAME OF SUBJECT COMPANY)
NTK SUB, INC.
NORTEK, INC.
(BIDDERS)
------------------------
COMMON STOCK, $0.25 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
729416107
(CUSIP NUMBER OF CLASS OF SECURITIES)
RICHARD L. BREADY
NORTEK, INC.
50 KENNEDY PLAZA
PROVIDENCE, RHODE ISLAND 02903
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
------------------------
COPY TO:
DAVID C. CHAPIN, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
(617) 951-7000
JULY 29, 1997
------------------------
CALCULATION OF FILING FEE
TRANSACTION VALUATION* $394,047,615
AMOUNT OF FILING FEE $78,809
- ---------------
* Estimated for purposes of calculating the amount of the filing fee only. The
amount assumes the purchase of 20,207,570 shares of common stock, $0.25 par
value, of Ply Gem Industries, Inc. (the "Company") (collectively, the
"Shares") at a price per Share of $19.50 in cash (the "Offer Price"). Such
number of shares represents all of the Shares outstanding as of July 28, 1997
(other than the 640,000 Shares held by Nortek, Inc.) and assumes the exercise
of all outstanding options and the vesting of all unvested stock.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing.
Amount previously paid: none
Form or registration no.: n/a
Filing party: n/a
Date filed: n/a
(Exhibit Index is located on Page 5)
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TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 relates to the offer by NTK
Sub, Inc., a Delaware corporation ("Purchaser"), to purchase all outstanding
shares of common stock, par value $0.25 per share (collectively, the "Shares"),
of Ply Gem Industries, Inc., a Delaware corporation, at $19.50 per Share, net to
the seller in cash, on the terms and subject to the conditions set forth in the
Offer to Purchase dated July 29, 1997 (the "Offer to Purchase") and in the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively (which, as amended or supplemented from time to
time, together constitute the "Offer"). The item numbers and responses thereto
below are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Ply Gem Industries, Inc., a Delaware
corporation (the "Company"). The address of the Company's principal executive
offices is 777 Third Avenue, New York, New York 10017.
(b) The information set forth in the Introduction of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in Section 6 -- "Price Range of Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d), (g) This Statement is filed by Purchaser and Nortek, Inc., a
Delaware corporation ("Parent"). The information set forth in the Introduction,
in Section 8 -- "Certain Information Concerning Purchaser and Parent" and in
Schedule I to the Offer to Purchase is incorporated herein by reference.
(e)-(f) During the last five years, neither Parent nor Purchaser nor, to
their knowledge, any of the persons listed in Schedule I (Directors and
Executive Officers) to the Offer to Purchase (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) has been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a)-(b) The information set forth in Section 8 -- "Certain Information
Concerning Purchaser and Parent," in Section 10 -- "Background of the Offer;
Contacts with the Company" and in Section 11 -- "The Offer and Merger; Merger
Agreement" of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in Section 9 -- "Sources and Amounts of
Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(g) The information set forth in the Introduction, in Section
10 -- "Background of the Offer; Contacts with the Company," in Section
11 -- "The Offer and Merger; Merger Agreement," in Section 12 -- "Purpose of the
Offer and Merger; Plans for the Company" and in Section 13 -- "Effect of the
Offer on the Market for the Shares; Exchange Act Registration; Margin
Regulations" of the Offer to Purchase is incorporated herein by reference.
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ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) The information set forth in Section 8 -- "Certain Information
Concerning Purchaser and Parent," in Section 11 -- "The Offer and Merger; Merger
Agreement" and in Schedule I to the Offer to Purchase is incorporated herein by
reference.
(b) The information set forth in Section 11 -- "The Offer and Merger;
Merger Agreement" of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
The information set forth in the Introduction, in Section 8 -- "Certain
Information Concerning Purchaser and Parent," in Section 10 -- "Background of
the Offer; Contacts with the Company," in Section 11-- "The Offer and Merger;
Merger Agreement," in Section 12 -- "Purpose of the Offer and Merger; Plans for
the Company," and in Section 15 -- "Extension of Tender Period; Amendment;
Termination" of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in the Introduction, in Section 18 -- "'Fees and
Expenses" and in Section 19 -- "Miscellaneous" of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 8 -- "Certain Information Concerning
Purchaser and Parent" of the Offer to Purchase, including the financial
statements and related notes thereto incorporated by reference in Section 8, is
incorporated herein by reference. The incorporation by reference herein of the
above-referenced financial information does not constitute an admission that
such information is material to a decision by a stockholder of the Company
whether to sell, tender or hold shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in the Introduction, in Section 8 -- "Certain
Information Concerning Purchaser and Parent," in Section 10 -- "Background of
the Offer; Contacts with the Company," in Section 11 -- "The Offer and Merger;
Merger Agreement" and in Section 12 -- "Purpose of the Offer and Merger; Plans
for the Company" of the Offer to Purchase is incorporated herein by reference.
(b)-(c) The information set forth in Section 12 -- "Purpose of the Offer
and Merger; Plans for the Company" and in Section 17 -- "Certain Legal Matters;
Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 13 -- "Effect of the Offer on the
Market for the Shares; Exchange Act Registration; Margin Regulations" and in
Section 17 -- "Certain Legal Matters; Regulatory Approvals" of the Offer to
Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase, dated July 29, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
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(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Letter to Participants in the Ply Gem Industries, Inc. Dividend
Reinvestment Plan.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(8) Form of Summary Advertisement, dated July 29, 1997.
(a)(9) Text of Press Release, dated July 24, 1997.
(b) Commitment Letter from WP Bridge Finance, Inc. dated July 18, 1997
agreed to and accepted by Parent and Purchaser, as amended on July
25, 1997.
(c)(1) Agreement and Plan of Merger dated as of July 24, 1997 by and among
Parent, Purchaser and the Company.
(c)(2) Confidentiality Agreement dated as of September 27, 1995, as amended
on June 18, 1997, June 23, 1997 and July 17, 1997 between Parent and
the Company.
(c)(3) Stock Purchase Agreement dated as of July 24, 1997 between Parent
and the Company.
(c)(4) Registration Rights Agreement dated as of July 24, 1997 between
Parent and the Company.
(c)(5) Non-Compete and Termination Agreement dated as of July 24, 1997
among Parent, the Company and Jeffrey S. Silverman, as amended on
July 28, 1997.
(c)(6) Termination and Release Agreement dated as of July 24, 1997 among
Parent, the Company and Herbert P. Dooskin, as amended on July 28,
1997.
(c)(7) First Amended and Restated Stockholders Agreement dated as of July
24, 1997 among Atrium Acquisition Holdings Corp., Atrium/PG
Acquisition Corp., Jeffrey S. Silverman, Dana R. Snyder, Herbert P.
Dooskin, the Company, Parent and Purchaser.
(c)(8) Form of Option Surrender Agreement, Release and Waiver (filed as
Exhibit B to Exhibit (c)(1) hereto).
(d) None.
(e) Not applicable.
(f) None.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: July 29, 1997
NORTEK, INC.
By: /s/ RICHARD L. BREADY
------------------------------------
Name: Richard L. Bready
Title: President
NTK SUB, INC.
By: /s/ RICHARD L. BREADY
------------------------------------
Name: Richard L. Bready
Title: President
4
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
-------- --------------------------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase, dated July 29, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(6) Letter to Participants in the Ply Gem Industries, Inc. Dividend Reinvestment
Plan.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(8) Form of Summary Advertisement, dated July 29, 1997.
(a)(9) Text of Press Release, dated July 24, 1997.
(b) Commitment Letter from WP Bridge Finance, Inc. dated July 18, 1997 agreed to and
accepted by Parent and Purchaser, as amended on July 25, 1997.
(c)(1) Agreement and Plan of Merger dated as of July 24, 1997 by and among Parent,
Purchaser and the Company.
(c)(2) Confidentiality Agreement dated as of September 27, 1995, as amended on June 18,
1997, June 23, 1997 and July 17, 1997 between Parent and the Company.
(c)(3) Stock Purchase Agreement dated as of July 24, 1997 between Parent and the
Company.
(c)(4) Registration Rights Agreement dated as of July 24, 1997 between Parent and the
Company.
(c)(5) Non-Compete and Termination Agreement dated as of July 24, 1997 among Parent,
the Company and Jeffrey S. Silverman, as amended on July 28, 1997.
(c)(6) Termination and Release Agreement dated as of July 24, 1997 among Parent, the
Company and Herbert P. Dooskin, as amended on July 28, 1997.
(c)(7) First Amended and Restated Stockholders Agreement dated as of July 24, 1997
among Atrium Acquisition Holdings Corp., Atrium/PG Acquisition Corp., Jeffrey S.
Silverman, Dana R. Snyder, Herbert P. Dooskin, the Company, Parent and
Purchaser.
(c)(8) Form of Option Surrender Agreement, Release and Waiver (filed as Exhibit B to
Exhibit (c)(1) hereto).
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
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EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PLY GEM INDUSTRIES, INC.
AT
$19.50 NET PER SHARE
BY
NTK SUB, INC.
A WHOLLY OWNED SUBSIDIARY
OF
NORTEK, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, AUGUST 25, 1997, UNLESS EXTENDED.
THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER
DATED JULY 24, 1997 AMONG NTK SUB, INC. ("PURCHASER"), NORTEK, INC. ("PARENT")
AND PLY GEM INDUSTRIES, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE
COMPANY HAS, BY THE UNANIMOUS VOTE OF ALL DIRECTORS PRESENT, APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE OFFER AND MERGER ARE
FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, AND
RECOMMENDS ACCEPTANCE OF THE OFFER AND APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND THE MERGER BY THE STOCKHOLDERS OF THE COMPANY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN), A
NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY, $0.25 PAR VALUE PER SHARE
(COLLECTIVELY, THE "SHARES"), WHICH, WHEN ADDED TO THE SHARES THEN BENEFICIALLY
OWNED BY PARENT, CONSTITUTES AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES
OUTSTANDING ON A FULLY-DILUTED BASIS (THE "MINIMUM CONDITION"); (II) EXPIRATION
OR TERMINATION OF THE APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED; (III) PARENT AND PURCHASER
HAVING RECEIVED THE DEBT FINANCING FOR THE TRANSACTIONS CONTEMPLATED BY THE
MERGER AGREEMENT ON TERMS SUBSTANTIALLY AS OUTLINED IN THE FINANCING COMMITMENT
DESCRIBED IN SECTION 9 HEREOF; AND (IV) SATISFACTION OF THE OTHER CONDITIONS
SPECIFIED IN SECTION 16 HEREOF. THE MINIMUM CONDITION MAY NOT BE WAIVED BY
PURCHASER WITHOUT THE CONSENT OF THE COMPANY. SEE SECTION 16.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such holder's
Shares (as defined herein) should either (a) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, have such stockholder's signature guaranteed, if required
by Instruction 1 to the Letter of Transmittal, and mail or deliver it together
with the certificate(s) evidencing the tendered Shares and all other required
documents to the Depositary (as defined herein), or tender such Shares pursuant
to the procedure for book-entry transfer set forth in Section 3 of this Offer to
Purchase or (b) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such stockholder. A
stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if such stockholder
desires to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3 of
this Offer to Purchase.
Questions and requests for assistance and for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be directed to the Information Agent or the
Dealer Manager at their respective addresses and telephone numbers set forth on
the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and the
other tender offer materials may also be obtained from brokers, dealers,
commercial banks or trust companies.
------------------------
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
------------------------
The date of this Offer to Purchase is July 29, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION............................................................................ 3
1. Terms of the Offer................................................................. 4
2. Acceptance for Payment and Payment................................................. 6
3. Procedures for Tendering Shares.................................................... 7
4. Withdrawal Rights.................................................................. 9
5. Certain Tax Considerations......................................................... 10
6. Price Range of Shares; Dividends................................................... 11
7. Certain Information Concerning the Company......................................... 11
8. Certain Information Concerning Purchaser and Parent................................ 14
9. Sources and Amounts of Funds....................................................... 16
10. Background of the Offer; Contacts with the Company................................. 19
11. The Offer and Merger; Merger Agreement............................................. 22
12. Purpose of the Offer and Merger; Plans for the Company............................. 37
13. Effect of the Offer on the Market for the Shares; Exchange Act Registration; Margin
Regulations........................................................................ 38
14. Dividends and Distributions........................................................ 39
15. Extension of Tender Period; Amendment; Termination................................. 40
16. Conditions to the Offer............................................................ 40
17. Certain Legal Matters; Regulatory Approvals........................................ 42
18. Fees and Expenses.................................................................. 44
19. Miscellaneous...................................................................... 44
</TABLE>
Schedule I Directors and Executive Officers of Parent and Purchaser
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To the Holders of Common Stock of
Ply Gem Industries, Inc.
INTRODUCTION
NTK Sub, Inc., a Delaware corporation ("Purchaser") and a wholly-owned
subsidiary of Nortek, Inc., a Delaware corporation ("Parent"), hereby offers to
purchase all outstanding shares of common stock, $0.25 par value per share (the
"Company Common Stock" or the "Shares"), of Ply Gem Industries, Inc., a Delaware
corporation (the "Company"), at $19.50 per Share, net to the seller in cash (the
"Offer Price"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. Purchaser will pay all charges and expenses of
Wasserstein Perella & Co., Inc, which is acting as the Dealer Manager (in such
capacity, the "Dealer Manager"), Harris Trust Company of New York, which is
acting as the Depositary (in such capacity, the "Depositary"), and MacKenzie
Partners, Inc., which is acting as Information Agent (in such capacity, the
"Information Agent"), incurred in connection with the Offer in accordance with
the terms of agreements entered into between Purchaser and such persons. See
Section 18. For purposes of this Offer to Purchase, references to "Section" are
references to a section of this Offer to Purchase, unless the context otherwise
requires.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN), A
NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES THEN BENEFICIALLY OWNED BY
PARENT, CONSTITUTES AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES
OUTSTANDING ON A FULLY-DILUTED BASIS (THE "MINIMUM CONDITION"); (II) EXPIRATION
OR TERMINATION OF THE APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"); (III) PARENT AND
PURCHASER HAVING RECEIVED THE DEBT FINANCING FOR THE TRANSACTIONS CONTEMPLATED
BY THE MERGER AGREEMENT ON TERMS SUBSTANTIALLY AS OUTLINED IN THE FINANCING
COMMITMENT DESCRIBED IN SECTION 9 HEREOF; AND (IV) SATISFACTION OF THE OTHER
CONDITIONS SPECIFIED IN SECTION 16. THE MINIMUM CONDITION MAY NOT BE WAIVED BY
PURCHASER WITHOUT THE CONSENT OF THE COMPANY. SEE SECTION 16.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 24, 1997 (the "Merger Agreement"), by and among the Company, Parent
and Purchaser. The Merger Agreement provides, among other things, that as
promptly as practicable following the completion of the Offer and the
satisfaction or waiver of certain conditions, including the purchase of Shares
pursuant to the Offer (sometimes referred to herein as the "consummation" of the
Offer) and the approval and adoption of the Merger Agreement by the stockholders
of the Company, if required by applicable law, Purchaser will be merged with and
into the Company (the "Merger"), with the Company as the surviving corporation
(the "Surviving Corporation"). In the Merger, each issued and outstanding Share
(other than Dissenting Shares (as hereinafter defined)) not owned directly or
indirectly by the Company will be converted into and represent the right to
receive $19.50 in cash or any higher price that may be paid per Share in the
Offer, without interest (the "Merger Price"). See Section 11.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD" OR "BOARD OF DIRECTORS")
HAS, BY THE UNANIMOUS VOTE OF ALL DIRECTORS PRESENT, APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE OFFER AND THE MERGER
ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, AND
RECOMMENDS ACCEPTANCE OF THE OFFER AND APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND THE MERGER BY THE STOCKHOLDERS OF THE COMPANY.
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Furman Selz LLC (the "Company's Financial Advisor"), financial advisor to
the Company, has delivered to the Board a written opinion dated July 24, 1997 to
the effect that, as of such date and based upon and subject to certain matters
stated in such opinion, the cash consideration to be received by the holders of
Shares (other than Parent and its affiliates) in the Offer and the Merger is
fair to such holders from a financial point of view. A copy of such opinion is
included with the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), which is being mailed to stockholders concurrently
herewith, and should be read carefully in its entirety for a description of the
assumptions made, matters considered and limitations on the review undertaken by
the Company's Financial Advisor.
On July 21, 1997, the Company's Board of Directors declared a regular
quarterly dividend of $.03 per Share payable on September 5, 1997 to
shareholders of record on August 7, 1997. Shareholders of record on August 7,
1997 who tender their Shares (whether before or after such date), will be
entitled to such dividend whether or not such Shares are purchased in the Offer.
The Merger Agreement provides that in the event that Purchaser acquires at least
a majority of the Shares outstanding pursuant to the Offer, Parent shall be
entitled to designate for appointment or election to the Board, upon written
notice to the Company, such number of persons so that the designees of Parent
constitute the same percentage (but in no event less than a majority) of the
Board (rounded up to the next whole number) as the percentage of Shares acquired
pursuant to the Offer. Upon the consummation of the Offer, the Company will
increase the size of the Board or obtain the resignation of such number of
directors as is necessary to enable such number of Parent designees to be so
elected. In the Merger Agreement, the Company, Parent and Purchaser have agreed
to ensure that at least two of the members of the Board shall, at all times
prior to the Effective Time (as defined in Section 11 hereof) be, Continuing
Directors (as defined below). Following the election or appointment of
Purchaser's designees as set forth above and prior to the Effective Time, any
amendment of the Merger Agreement requiring action by the Board, any termination
of the Merger Agreement by the Company, any extension by the Company of the time
for the performance of any of the obligations or other acts of Parent or
Purchaser under the Merger Agreement, any waiver of compliance with any
agreements or conditions under the Merger Agreement for the benefit of the
Company, and any action to seek to enforce any obligation of Parent or Purchaser
under the Merger Agreement will require the concurrence of a majority of the
Continuing Directors and such concurrence shall be sufficient to authorize such
action. For purposes hereof, the term "Continuing Director" means (i) any member
of the Board as of the date of the Merger Agreement, or (ii) any successor of a
Continuing Director who is (A) unaffiliated with, and not a designee or nominee
of, Parent or Purchaser, and (B) recommended to succeed a Continuing Director by
a majority of the Continuing Directors then on the Board, and, in the case of
clause (ii) who is not an employee of the Company.
According to the Company, as of July 28, 1997, 14,623,679 Shares were
validly issued and outstanding (including 640,000 Shares issued to Parent) and
5,473,891 Shares (or 6,223,891 Shares after a "change in control") would be
issuable upon exercise of outstanding stock options (the "Options") or vesting
of unvested stock and no additional options, warrants, or other rights
convertible into, exchangeable for or issuable with respect to Shares are
outstanding. Based upon the foregoing information and assuming all of the
Options will be exercised for Shares and all unvested stock will vest, the
Minimum Condition would be satisfied if, in addition to the 640,000 Shares
currently held by Parent, 9,783,786 Shares were validly tendered and not
withdrawn. Pursuant to the First Amended and Restated Stockholders Agreement
dated as of July 24, 1997 among Atrium Acquisition Holdings Corp., Atrium P/G
Acquisition Corp., Jeffrey S. Silverman, Dana R. Snyder, Herbert P. Dooskin, the
Company, Parent and Purchaser, Messrs. Silverman, Snyder and Dooskin have agreed
to tender an aggregate of 1,235,261 Shares (see Section 11 -- The Offer and
Merger; Merger Agreement).
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the Conditions (as defined in Section 16) of
the Offer, Purchaser will accept for payment and pay for all Shares which are
validly tendered prior to the Expiration Date and not
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withdrawn in accordance with Section 4. The term "Expiration Date" means 12:00
midnight, New York City time, on Monday, August 25, 1997, unless and until
Purchaser shall have extended the period of time during which the Offer is open,
in which event the term "Expiration Date" shall refer to the latest time and
date at which the Offer, as so extended by Purchaser, shall expire.
Pursuant to the Merger Agreement, and subject to the terms and conditions
of the Offer, if all of the Conditions are not satisfied on the initial
Expiration Date, and the Merger Agreement has not been terminated in accordance
with its terms, Purchaser shall extend (and re-extend) the Offer (but not for
more than five business days at a time, unless the Company otherwise consents)
to provide time to satisfy such Conditions through the Final Termination Date
unless, in the reasonable judgment of Parent and Purchaser, any Condition is
incapable of being satisfied prior to the Final Termination Date. The "Final
Termination Date" shall be September 22, 1997. From and after the Final
Termination Date, if all of the Conditions have not been satisfied on any
Expiration Date of the Offer and the Merger Agreement has not been terminated in
accordance with its terms, Purchaser may but shall not be obligated to extend
and re-extend the Offer to provide time to satisfy such Conditions. See Section
15.
Subject to the terms of the Merger Agreement, Purchaser expressly reserves
the right to amend the terms and conditions of the Offer in any respect by
giving oral or written notice of such amendment to the Depositary. Without the
consent of the Company, however, no amendment may be made which (x) decreases
the price per Share or changes the form of consideration payable in the Offer,
(y) decreases the number of Shares sought, or (z) changes any of the Conditions
or imposes additional conditions to the Offer or amends any other term of the
Offer in any manner adverse to the holders of Shares. IN NO EVENT MAY THE
PURCHASER WAIVE THE MINIMUM CONDITION WITHOUT THE CONSENT OF THE COMPANY.
The Offer is subject to: (i) the satisfaction of the Minimum Condition;
(ii) expiration or termination of the applicable waiting period under the HSR
Act; (iii) Parent and Purchaser having received the debt financing for the
transactions contemplated by the Merger Agreement on terms substantially as
outlined in the Financing Commitment described in Section 9 hereof; and (iv)
satisfaction of the other conditions specified in Section 16. If any such
Condition is not satisfied prior to the expiration of the Offer, Purchaser may,
subject to the terms of the Merger Agreement, (i) terminate the Offer and return
all tendered Shares to tendering stockholders, (ii) extend the Offer and,
subject to withdrawal rights as set forth in Section 4, retain all such Shares
until the expiration of the Offer as so extended, (iii) waive such Condition
(other than the Minimum Condition which it may waive only with the consent of
the Company) and, subject to any requirement to extend the period of time during
which the Offer is open, purchase all Shares validly tendered and not withdrawn
by the Expiration Date, or (iv) delay acceptance for payment of (whether or not
the Shares have theretofore been accepted for payment), or payment for, any
Shares tendered and not withdrawn, subject to applicable law, until satisfaction
or waiver (if permitted) of the Conditions to the Offer. For a description of
Purchaser's right to extend the period of time during which the Offer is open,
and to amend, delay or terminate the Offer, see Section 15. Any extension,
amendment or termination will be followed as promptly as practicable by public
announcement thereof, the announcement in the case of an extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with Rules 14d-4(c), 14d-6(d)
and 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Without limiting the obligation of Purchaser under such rules
or the manner in which Purchaser may choose to make any public announcement,
Purchaser currently intends to make announcements by issuing a release to the
Dow Jones News Service.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is delayed in its purchase of or payment
for Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may retain tendered Shares on behalf of Purchaser, and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to withdrawal
rights as described in Section 4. However, the ability of Purchaser to delay the
payment for Shares which Purchaser has accepted for payment is limited by Rule
14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by or on behalf of
holders of securities promptly after the termination or withdrawal of the Offer.
5
<PAGE> 6
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
subject to the Merger Agreement, Purchaser will disseminate additional tender
offer materials and extend the Offer if and to the extent required by Rules
14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which
the Offer must remain open following material changes in the terms of the Offer
or information concerning the Offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the changes or information. With respect
to a change in price or a change in percentage of securities sought, a minimum
ten business day period is required to allow for adequate dissemination to
stockholders and investor response. If, prior to the Expiration Date, Purchaser
should decide to increase the price per Share being offered in the Offer, such
increase will be applicable to all stockholders whose Shares are accepted for
payment pursuant to the Offer. As used in this Offer to Purchase, "business day"
means any day other than a Saturday, Sunday or a federal holiday and consists of
the time period from 12:01 AM through 12:00 midnight, New York City time, as
computed in accordance with Rule 14d-1 under the Exchange Act.
The Company has provided Purchaser with the Company's stockholder list and
security position listing for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the terms of the Merger Agreement and the
Conditions of the Offer set forth in Section 16, Purchaser will accept for
payment and pay for all Shares validly tendered and not properly withdrawn in
accordance with Section 4 prior to the Expiration Date as soon as practicable
after the Expiration Date. For a description of Purchaser's right to terminate
the Offer and not accept for payment or pay for Shares or to delay acceptance
for payment or payment for Shares, see Section 15.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment tendered Shares if, as and when Purchaser gives oral or written notice
to the Depositary of its acceptance of the tenders of such Shares. Payment for
Shares purchased pursuant to the Offer will be made by deposit of the purchase
price with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from Purchaser and transmitting such
payments to tendering stockholders. In all cases, payment for Shares accepted
for payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates evidencing such Shares ("Stock Certificates") or
confirmation of a book-entry transfer (a "Book-Entry Confirmation" ) of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in Section 3), (ii) a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), or in the case of a
book-entry transfer, an Agent's Message (as defined in Section 3), and (iii) any
other required documents. For a description of the procedure for tendering
Shares pursuant to the Offer, see Section 3. Accordingly, payment may be made to
tendering stockholders at different times if delivery of the Shares and other
required documents occur at different times. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID BY PURCHASER ON THE CONSIDERATION PAID FOR SHARES PURSUANT TO
THE OFFER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR DELAY IN MAKING SUCH
PAYMENT.
If Purchaser increases the consideration to be paid for Shares pursuant to
the Offer, Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Stock Certificates are submitted for more Shares than are
tendered, Stock Certificates for Shares not purchased or tendered will be
returned (or, in the case of Shares tendered by book-entry transfer, such Shares
will be credited to an account
6
<PAGE> 7
maintained at one of the Book-Entry Transfer Facilities), without expense to the
tendering stockholder, as promptly as practicable after the expiration or
termination of the Offer.
3. PROCEDURES FOR TENDERING SHARES
VALID TENDER. To tender Shares pursuant to the Offer, either (a) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (in the
case of any book-entry transfer), and any other documents required by the Letter
of Transmittal must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date
and either (i) the Stock Certificates evidencing such Shares to be tendered must
be received by the Depositary along with the Letter of Transmittal or (ii) such
Shares must be delivered to the Depositary pursuant to the procedures for
book-entry transfer described below and a Book-Entry Confirmation must be
received by the Depositary including an Agent's Message, in each case prior to
the Expiration Date, or (b) the tendering stockholder must comply with the
guaranteed delivery procedures described below. The term "Agent's Message" means
a message transmitted by a Book-Entry Transfer Facility to and received by the
Depositary and forming a part of a Book-Entry Confirmation, which states that
such Book-Entry Transfer Facility has received an express acknowledgment from
the participant in such Book-Entry Transfer Facility tendering the Shares which
are the subject of such Book-Entry Confirmation that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that Purchaser may enforce such agreement against such participant.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at each of The Depository Trust Company and the Philadelphia
Depository Trust Company (collectively referred to as the "Book-Entry Transfer
Facilities") for purposes of the Offer within two business days after the date
of this Offer to Purchase, and any financial institution that is a participant
in the system of any Book-Entry Transfer Facility may make book-entry delivery
of Shares by causing a Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account at a Book-Entry Transfer Facility in accordance with
the procedures of such Book-Entry Transfer Facility. However, although delivery
of Shares may be effected through book-entry transfer, the Letter of Transmittal
(or facsimile thereof) properly completed and duly executed, together with any
required signature guarantees and any other required documents, must, in any
case, be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
guaranteed delivery procedures described below must be complied with. DELIVERY
OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Except as set forth below, signatures on all Letters
of Transmittal must be guaranteed by a recognized member of a Medallion
Signature Guarantee Program or by any other "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing, an
"Eligible Institution"). Signatures on a Letter of Transmittal need not be
guaranteed (a) if the Letter of Transmittal is signed by the registered holder
of the Shares tendered therewith and such holder has not completed the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of an Eligible Institution.
If a Stock Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Stock
Certificate not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then the Stock Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Stock
Certificate, with the signature(s) on such Stock Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Stock Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date, or the procedure for book-entry transfer
cannot be
7
<PAGE> 8
completed on a timely basis, such Shares may nevertheless be tendered if all the
following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary prior to the Expiration Date as provided below; and
(iii) the Stock Certificates for such Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees (or in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the Letter of
Transmittal, are received by the Depositary within three trading days after
the date of execution of the Notice of Guaranteed Delivery. A "trading day"
is any day on which the New York Stock Exchange (the "NYSE") is open for
business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS, INCLUDING THROUGH BOOK-ENTRY TRANSFER FACILITIES, IS AT THE
OPTION AND RISK OF THE TENDERING STOCKHOLDER AND DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
BACK-UP FEDERAL INCOME TAX WITHHOLDING. Under the federal income tax laws,
the Depositary will be required to withhold 31% of the amount of any payments
made to certain stockholders pursuant to the Offer. In order to avoid such
backup withholding, each tendering stockholder must provide the Depositary with
such stockholder's correct taxpayer identification number and certify that such
stockholder is not subject to back-up federal income tax withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal (see
Instruction 10 of the Letter of Transmittal) or by filing a Form W-9 with the
Depositary prior to any such payments. If the stockholder is a nonresident alien
or foreign entity not subject to backup withholding, the stockholder must give
the Depositary a completed Form W-8 Certificate of Foreign Status prior to
receipt of any payments.
OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
the stockholder's attorneys-in-fact and proxies, in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of the stockholder's rights with respect to the Shares tendered by the
stockholder and accepted for payment by Purchaser (and any and all other Shares
or other securities or property issued or issuable in respect of such Shares on
or after the date of the Merger Agreement). All such proxies and powers of
attorney shall be irrevocable and coupled with an interest in the tendered
Shares. Such appointment is effective only upon acceptance for payment of the
Shares by Purchaser. Upon such acceptance for payment, all prior proxies and
consents given by the stockholder with respect to such Shares and other
securities will, without further action, be revoked, and no subsequent proxies
may be given nor any subsequent written consent executed by such stockholder
(and, if given or executed, will not be deemed to be effective) with respect
thereto. The designees of Purchaser will, with respect to the Shares and other
securities, be empowered to exercise all voting and other rights of such
stockholder as they in their sole discretion may deem proper at any annual,
special or adjourned meeting of the Company's stockholders, by written consent
or otherwise. Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon Purchaser's acceptance for
payment of such Shares, Purchaser is able to exercise full voting and other
rights with respect to such Shares (including voting at any meeting of
stockholders then scheduled or acting by written consent without a meeting).
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER
8
<PAGE> 9
PRICE FOR TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's representation
and warranty that such stockholder has the full power and authority to tender
and assign the Shares tendered, as specified in the Letter of Transmittal.
Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the tendering stockholder and Purchaser
upon the terms and subject to the conditions of the Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tendered Shares will be determined by Purchaser in its sole discretion,
which determination shall be final and binding. Purchaser reserves the absolute
right to reject any or all tenders of any Shares determined by it not to be in
proper form or the acceptance for payment of, or payment for which may, in the
opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right to waive any defect or irregularity in any tender of Shares. No
tender of Shares will be deemed to have been properly made until all defects and
irregularities relating thereto have been cured or waived. Purchaser's
interpretation of the terms and conditions of the Offer in this regard
(including the Letter of Transmittal and the Instructions thereto) will be final
and binding. None of Purchaser, Parent, the Depositary, the Dealer Manager, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date only pursuant to the procedures set forth below.
Thereafter, such tenders are irrevocable, except that they may be withdrawn at
any time after September 26, 1997 if they have not previously been accepted for
payment as provided in this Offer to Purchase.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase. Any such notice of withdrawal
must specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder, if
different from that of the person who tendered such Shares. If Stock
Certificates evidencing Shares to be withdrawn have been delivered to the
Depositary, a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution), must be submitted prior to the release of such Shares. In
addition, such notice must specify, in the case of Shares tendered by delivery
of Stock Certificates, the name of the registered holder (if different from that
of the tendering stockholder) and the serial numbers shown on the particular
Stock Certificates evidencing the Shares to be withdrawn, or, in the case of
Shares tendered by book-entry transfer, the name and number of the account at
one of the Book-Entry Transfer Facilities to be credited with the withdrawn
Shares.
Withdrawals may not be rescinded, and Shares withdrawn will thereafter be
deemed not validly tendered for purposes of the Offer. However, withdrawn Shares
may be retendered by again following one of the procedures described in Section
3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Dealer Manager, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
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<PAGE> 10
5. CERTAIN TAX CONSIDERATIONS
The following summary addresses the material federal income tax
consequences to holders of Shares who sell their Shares in the Offer. The
summary does not address all aspects of federal income taxation that may be
relevant to particular holders of Shares and thus, for example, may not be
applicable to holders of Shares who are not citizens or residents of the United
States, who are employees and who acquired their Shares pursuant to the exercise
of compensatory stock options, or who are entities that are otherwise subject to
special tax treatment under the Internal Revenue Code of 1986, as amended (the
"Code") (such as insurance companies, tax-exempt entities and regulated
investment companies); nor does this summary address the effect of any
applicable foreign, state, local or other tax laws. The discussion assumes that
each holder of Shares holds such Shares as a capital asset within the meaning of
Section 1221 of the Code. The federal income tax discussion set forth below is
included for general information only and is based upon present law. The precise
tax consequences of the Offer (or the Merger) will depend on the particular
circumstances of the holder. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES TO THEM OF THE PROPOSED TRANSACTION.
The receipt of cash for Shares pursuant to the Offer will be a taxable
transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign tax laws. In general, a
stockholder who receives cash for Shares pursuant to the Offer will recognize
gain or loss for federal income tax purposes equal to the difference between the
amount of cash received in exchange for the Shares sold and such stockholder's
adjusted tax basis in such Shares. Such gain or loss will be capital gain or
loss, and will be long-term capital gain or loss if the holder has held the
Shares for more than one year at the time of sale. Gain or loss will be
calculated separately for each block of Shares tendered pursuant to the Offer.
Under current law, the maximum federal tax rate applicable to long-term
capital gains recognized by an individual is 28%, and the maximum federal tax
rate applicable to ordinary income (including dividends and short-term capital
gains recognized by individuals) is 39.6%. The maximum federal tax rate
applicable to all capital gains and ordinary income recognized by a corporation
is 35%. It is possible that legislation may be enacted that would reduce the
maximum federal tax rate applicable to long-term capital gains, possibly with
retroactive effect. It is not possible to predict whether or in what form any
such legislation may be enacted, or the effective date of such legislation if
enacted.
WITHHOLDING. Unless a stockholder complies with certain reporting and/or
certification procedures, or is an exempt recipient under applicable provisions
of the Code (and regulations promulgated thereunder), such stockholder may be
subject to a "backup" withholding tax of 31% with respect to any payments
received in the Offer, the Merger or as a result of the exercise of the holder's
dissenters' rights. Stockholders should contact their brokers to ensure
compliance with such procedures. Foreign stockholders should consult with their
tax advisors regarding U.S. withholding taxes in general.
DISSENTERS. A stockholder who does not tender Shares in the Offer or vote
in favor of the Merger and who otherwise exercises and perfects such
stockholder's rights under the Delaware General Corporation Law ("DGCL") to
demand fair value for such Shares will recognize capital gain or loss (and may
recognize an amount of interest income) attributable to any payment received
pursuant to the exercise of such rights based upon the principles described
above. See Section 17.
THE FORGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO
THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME
AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
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<PAGE> 11
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are traded under the symbol "PGI" on the NYSE. The following
table sets forth, for the fiscal quarters indicated, the high and low sales
prices per Share on the NYSE.
<TABLE>
<CAPTION>
HIGH LOW
--- ---
<S> <C> <C>
Fiscal Year Ended December 31, 1995:
Quarter ended March 31, 1995.................................. $21 1/4 $17 1/8
Quarter ended June 30, 1995................................... $18 3/4 $15
Quarter ended September 30, 1995.............................. $19 $15
Quarter ended December 31, 1995............................... $18 1/8 $15 5/8
Fiscal Year Ended December 31, 1996:
Quarter ended March 31, 1996.................................. $18 3/4 $14 5/8
Quarter ended June 30, 1996................................... $15 7/8 $12 7/8
Quarter ended September 30, 1996.............................. $13 7/8 $11 1/2
Quarter ended December 31, 1996............................... $13 1/8 $11 3/4
Fiscal Year Ended December 31, 1997:
Quarter ended March 31, 1997.................................. $15 $12 1/4
Quarter ended June 30, 1997................................... $18 1/8 $12 1/4
Quarter ended September 30, 1997 (through July 28, 1997)...... $19 1/2 $18 /16
</TABLE>
The Company has paid cash dividends on its Shares since 1976 and presently
pays quarterly dividends at the annual rate of $0.12 per Share. On July 21,
1997, the Company's Board of Directors declared a regular quarterly dividend of
$.03 per Share payable on September 5, 1997 to shareholders of record on August
7, 1997. Shareholders of record on August 7, 1997 who tender their Shares
(whether before or after such date) will be entitled to such dividend whether or
not such Shares are purchased in the Offer.
On July 14, 1997, the last full trading day prior to the announcement that
the Company had received Parent's proposal, the last reported sales price per
Share on the NYSE was $18 1/4. On July 28, 1997, the last full trading day prior
to the commencement of the Offer, the last reported sales price per Share on the
NYSE was $19 1/4. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION
FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY
The following information concerning the Company has been taken from or
based upon publicly available documents on file with the Securities and Exchange
Commission (the "SEC"), other publicly available information and information
provided by the Company. Although neither Purchaser nor Parent has any knowledge
that would indicate that such information is untrue, neither Purchaser nor
Parent takes any responsibility for, or makes any representation with respect
to, the accuracy or completeness of such information or for any failure by the
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information but which are unknown to
Purchaser or Parent.
GENERAL. The Company is a Delaware corporation with its principal offices
located at 777 Third Avenue, New York, New York 10017 and is a leading
manufacturer and distributor of a wide range of building products for use in the
remodeling and new construction of residential and light-commercial properties.
The Company believes that it is among the nation's largest manufacturers of wood
windows, vinyl windows, vinyl siding and accessories and a major supplier of
specialty wood and other related products.
The Company's subsidiaries and division are categorized into four primary
business groups: Windows, Doors and Siding; Specialty Wood Products;
Distribution; and Home Products. Set forth below are the
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<PAGE> 12
operating entities within each group and the year in which the entity was
acquired by the Company. Ply*Gem Manufacturing is a division of the Company and
constitutes the Company's original business.
<TABLE>
<S> <C>
WINDOWS, DOORS AND SIDING
Variform, Inc....................................................... 1986
Great Lakes Window, Inc............................................. 1986
SNE Enterprises, Inc................................................ 1989
Richwood Building Products, Inc..................................... 1992
SPECIALTY WOOD PRODUCTS
Ply*Gem Manufacturing
Hoover Treated Wood Products, Inc................................... 1983
Sagebrush Sales, Inc................................................ 1988
Continental Wood Preservers, Inc.................................... 1988
DISTRIBUTION
Goldenberg Group, Inc............................................... 1983
Allied Plywood Corporation.......................................... 1985
HOME PRODUCTS
Studley Products, Inc............................................... 1969
</TABLE>
CERTAIN FINANCIAL INFORMATION FOR THE COMPANY. The following table sets
forth certain summary consolidated financial information with respect to the
Company and its subsidiaries excerpted or derived from the audited financial
statements contained in the Company 10-K and the unaudited financial information
from the Company for the six months ended June 30, 1996 and 1997. More
comprehensive financial information is included in such reports and other
documents filed by the Company with the SEC, and the following summary is
qualified in its entirety by reference to such documents (which may be inspected
and obtained as described above), including the financial statements and related
notes contained therein. Neither Parent nor Purchaser assumes any responsibility
for the accuracy of the financial information set forth below.
PLY GEM INDUSTRIES, INC.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR JUNE 30
ENDED DECEMBER 31 (UNAUDITED)
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales................................... $808,874 $755,198 $774,928 $354,097 $381,728
Net Income(loss)............................ (8,531) (7,402) 10,454 1,519 1,980
Net Income(loss) per share.................. (.62) (.51) .74 .11 .14
BALANCE SHEET DATA(AT END OF PERIOD)
Total assets................................ $345,569 $324,990 $313,447 $335,767 $358,460
Long-term debt.............................. 79,501 93,135 73,166 102,447 111,495
Capital lease obligations................... 7,159 7,106 9,231 7,491 8,656
Stockholders' equity........................ 161,636 144,485 145,783 141,658 147,206
Dividends per common share.................. .12 .12 .12 .06 .06
</TABLE>
PROJECTED FINANCIAL INFORMATION. In connection with Parent's review of the
Company and in the course of the negotiations described in Section 10, the
Company and its representatives provided Parent with certain business and
financial information which Parent and Purchaser believe is not publicly
available. The combined IBIT (income before interest, corporate expense, certain
other income/expense and income taxes) forecasts
12
<PAGE> 13
for 1997 provided by the Company ranged from $63,209,000 to $73,351,000. The
detailed assumptions upon which such forecasts were based were not disclosed to
Parent's representatives, although the Company's representatives discussed and
responded to questions concerning certain of such assumptions.
In reaching its decision to acquire the Company, Parent made certain
assumptions of its own with regard to the anticipated financial results of the
Company's businesses, which assumptions are not reflected in the IBIT forecasts
by the Company.
It is the understanding of Parent and Purchaser that the forecasts prepared
by the Company (the "forecasts") were not prepared with a view to public
disclosure or compliance with the published guidelines of the SEC or the
guidelines established by the American Institute of Certified Public Accountants
regarding projections. The forecasts are included in this Offer to Purchase only
because they were provided to Parent. None of Parent, Purchaser, the Company or
any of their respective advisors or any other party who received such
information assumes any responsibility for the validity, reasonableness,
accuracy or completeness of the forecasts. The forecasts are based upon a
variety of assumptions relating to the business of the Company, industry
performance, general business and economic conditions and other matters, all of
which may not be realized and are subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company and only
certain of which were disclosed to Purchaser and Parent. There can be no
assurance that any of the forecasts would be realized, and actual results may
vary materially from those forecasts. The forecasts have not been reported on,
examined or compiled by the Company's independent public accountants. For these
reasons, as well as the bases on which such forecasts were compiled, there can
be no assurance that actual results will not differ materially from those
estimated. The inclusion of the range of IBIT forecasts herein should not be
regarded as an indication that Parent, Purchaser, the Company, any of their
respective advisors or any other party who received such information considers
it an accurate prediction of future events. Parent made its own independent
assessment of the Company's value based in part upon the foregoing forecasts and
in part upon its own assumptions. None of the Company, Parent, Purchaser or any
other party intends publicly to update or otherwise publicly revise the
forecasts set forth above even if experience or future changes make it clear
that such forecasts will not be realized.
The forecasts set forth above constitute forward-looking information. For a
discussion of factors regarding such forward-looking information see
"--Cautionary Statement Regarding Forward-Looking Information."
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION. For purposes
of the Private Securities Litigation Reform Act of 1995, Parent and Purchaser
identify the following important factors which could cause the Company's actual
results to differ materially from the IBIT forecasts set forth above.
(a) the development and expansion of the market for building products for
use in the remodeling and new construction of residential and light-commercial
properties;
(b) the Company's ability to continue and expand its business
relationships, including relationships with existing major customers;
(c) the Company's ability to finance expansion of its distribution system;
(d) the Company's ability to develop competitive products and services;
(e) competition from larger competitors with more resources;
(f) the Company's ability to attract and retain highly qualified
management, marketing and sales personnel;
(g) the Company's ability to manage growth;
(h) the Company's ability to improve its operating margins; and
(i) the effects of the Offer and Merger.
Many of the foregoing factors have been discussed in more detail in the
Company's prior filings with the SEC. The foregoing review of factors pursuant
to the Private Litigation Securities Reform Act of 1995 should not be construed
as exhaustive.
13
<PAGE> 14
AVAILABLE INFORMATION. The Company is subject to the information
requirements of the Exchange Act, and is required to file reports and other
information with the SEC relating to its business, financial condition and other
matters. Information, as of particular dates, concerning the Company's directors
and officers, their remuneration, options granted to them, the principal holders
of the Company's securities and any material interest of such persons in
transactions with the Company is required to be described in periodic statements
distributed to the Company's stockholders and filed with the SEC. These reports,
proxy statements, and other information, including the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996 (the "Company 10-K"),
the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997 and June 30, 1997 (which will be filed on or before August 14, 1997) and
the Schedule 14D-9, should be available for inspection and copying at the SEC's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the SEC located at Seven World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of this material may also be obtained by mail,
upon payment of the SEC's customary fees, from the SEC's principal office. Such
material should also be available for inspection at the offices of the NYSE, 20
Broad Street, New York, New York 10005. The information should also be available
for inspection at the NYSE, 20 Broad Street, New York, New York 10005. The SEC
also maintains an Internet site on the World Wide Web at http://www.sec.gov that
contains reports and other information.
A copy of this Offer to Purchase, and certain of the agreements referred to
herein, are attached to Purchaser's Tender Offer Statement on Schedule 14D-1,
dated July 29, 1997 (the "Schedule 14D-1"), which has been filed with the SEC.
The Schedule 14D-1 and the exhibits thereto, along with such other documents as
may be filed by Purchaser with the SEC, may be examined and copied from the
offices of the SEC in the manner set forth above.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
GENERAL. Purchaser is a newly-formed Delaware corporation and a
wholly-owned subsidiary of Parent. To date, Purchaser has not conducted any
business other than in connection with the Offer. Until immediately prior to the
time Purchaser purchases Shares pursuant to the Offer, it is not anticipated
that Purchaser will have any significant assets or liabilities or engage in
activities other than those incident to its formation and capitalization and the
transactions contemplated by the Offer. Because Purchaser is a newly-formed
corporation and has minimal assets and capitalization, no meaningful financial
information regarding Purchaser is available.
Parent is a Delaware corporation. Parent, along with its consolidated
subsidiaries, is a diversified manufacturer of residential and commercial
building products, operating within three principal product groups: the
Residential Building Products Group; the Air Conditioning and Heating Products
Group; and the Plumbing Products Group. Through these product groups, the Parent
manufactures and sells, primarily in the United States, Canada and Europe, a
wide variety of products for the residential and commercial construction,
manufactured housing, and the do-it-yourself, professional remodeling and
renovation markets.
The principal executive offices of Parent and Purchaser are located at 50
Kennedy Plaza, Providence, Rhode Island 02903. The name, citizenship, principal
occupation, business address and material positions held during the past five
years of each of the directors and executive officers of the Purchaser and
Parent is set forth on Schedule I attached hereto.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent
or, to the best of their knowledge, any of the persons listed on Schedule I or
any subsidiary of the Purchaser or Parent, beneficially owns or has a right to
acquire any Shares. Except as set forth in this Offer, none of the Purchaser,
Parent or, to the best of their knowledge, any of the persons listed on Schedule
I hereto, has any contract, arrangement, understanding or relationship with any
other persons with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or voting of any such securities, joint ventures, loan or option
arrangements, put or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies. None of the Purchaser, Parent or, to the best
of their knowledge, any of the persons listed on Schedule I hereto, has since
January 1, 1994 had any transactions with the Company or
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<PAGE> 15
any of its executive officers, directors or affiliates that would require
disclosure under the rules of the SEC. Except as set forth in this Offer to
Purchase, since January 1, 1994, there have been no contacts, negotiations or
transactions between Parent or Purchaser, or their respective subsidiaries or,
to the best knowledge of any of Parent or Purchaser, any of the persons listed
on Schedule I on the one hand, and the Company or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer of
a material amount of assets.
CERTAIN FINANCIAL INFORMATION FOR PARENT. Set forth below is a summary of
certain consolidated financial and operating data relating to Parent and its
consolidated subsidiaries excerpted or derived from the information contained in
or incorporated by reference into Parent's Annual Report on Form 10-K for the
year ended December 31, 1996 (the "Parent 10-K") filed with the SEC and with
respect to the six month data, provided by Parent. More comprehensive financial
information is included in or incorporated by reference into the Parent 10-K and
other documents filed by Parent with the SEC, and the financial information
summary set forth below is qualified in its entirety by reference to such
documents filed by Parent with the SEC and all the financial information and
related notes contained therein.
NORTEK, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS ENDED
ENDED DECEMBER 31 ---------------------
---------------------------------- JUNE 29 JUNE 28
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales........................... $737,160 $776,210 $969,798 $481,220 $469,218
Operating earnings.................. 50,017 41,084 60,052 25,767 29,944
Net earnings........................ 17,800 15,000 22,000 8,200 10,400
BALANCE SHEET DATA
(AT END OF PERIOD)
Total assets........................ $519,217 $625,479 $609,116 $626,679 $772,963
Long-term debt...................... 219,951 240,396 243,961 244,547 408,771
Stockholders' investment............ 117,790 131,291 118,795 107,739 121,097
PER SHARE DATA
Net earnings --
Primary........................... 1.40 1.19 2.07 .73 1.05
Fully Diluted..................... 1.39 1.19 2.05 .73 1.05
</TABLE>
AVAILABLE INFORMATION. Parent is subject to the informational requirements
of the Exchange Act and is required to file reports and other information with
the SEC relating to its business, financial condition and other matters.
Information, as of particular dates, concerning Parent's directors and officers,
their remuneration, options granted to them, the principal holders of Parent's
securities and any material interest of such persons in transactions with Parent
is required to be described in periodic statements distributed to Parent's
stockholders and filed with the SEC. These reports, proxy statements and other
information, including the Parent 10-K, Parent's Quarterly Reports on Form 10-Q
for the quarters ended March 29, 1997 and June 28, 1997 (which will be filed on
or before August 12, 1997) and the Schedule 14D-1 should be available for
inspection and copying at the SEC's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the SEC located at Seven
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this
material may also be obtained by mail, upon payment of the SEC's customary fees,
by writing to its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. The information should also be available for
15
<PAGE> 16
inspection at the NYSE, 20 Broad Street, New York, New York 10005. The SEC also
maintains an Internet site on the World Wide Web at http://www.sec.gov that
contains reports and other information.
9. SOURCES AND AMOUNTS OF FUNDS
The total amount of funds required by the Purchaser to purchase all
currently outstanding Shares and satisfy its obligations under the Merger
Agreement and to cancel all outstanding Options is expected to be approximately
$310 million. Purchaser will also require approximately $36.5 million to pay
fees, expenses and other costs expected to be incurred in connection with the
successful completion of the Offer and the Merger (excluding fees and expenses
that may be incurred in connection with the debt financing required to complete
the Offer and the Merger). It is also anticipated that approximately $158.0
million will be needed to repay existing indebtedness of the Company that may be
required to be repaid as a result of the Offer and the Merger. However, the
exact amounts and timing of such repayments of existing indebtedness are subject
to various factors currently under review and are not, at this time,
determinable.
Purchaser plans to obtain all funds needed for the Offer through a capital
contribution, which will be made by Parent to Purchaser at the time Shares
tendered pursuant to the Offer are accepted for payment. The funds required to
effect such a capital contribution are expected to be obtained from (i)
approximately $204.5 million of the cash of Parent currently on hand and (ii)
the proceeds of borrowings incurred by Parent and/or debt securities issued by
Parent. Parent and Purchaser have obtained the Financing Commitment (as defined
below) under which WP Bridge Finance, Inc. ("WP Bridge") and any other Bridge
Lenders (as defined below) have agreed, subject to the satisfaction of certain
conditions, to purchase an aggregate amount of $300 million of senior bridge
notes (the "Bridge Notes") issued by Parent.
No final decisions have been made by Parent concerning the sources of debt
financing required to complete the Offer and related transactions. However,
Parent currently contemplates, in lieu of issuing and selling the Bridge Notes,
(i) arranging for a bank credit facility under which Parent would borrow
approximately $50.0 million from the lenders participating in such facility and
(ii) selling $250 million of senior notes in a transaction exempt from
registration under the Securities Act of 1933, as amended, pursuant to Rule 144A
thereunder.
The sources and uses of the financing are expected to be as follows:
<TABLE>
<S> <C>
Sources of Funds:
Parent cash....................................................... $204.5
Bank loans/issuance of debt securities............................ 300.0
------
Total sources of funds.................................... $504.5
======
Use of Funds:
Payment for Shares and cancellation of Options.................... $310.0
Refinancing of existing indebtedness of Company................... 158.0
Fees, expenses and other costs.................................... 36.5
------
Total use of funds........................................ $504.5
======
</TABLE>
As no final decision has been made concerning the sources of debt
financing, the table above does not include fees and expenses that may be
incurred in connection therewith, other than the commitment fee paid to WP
Bridge for the Financing Commitment.
The Financing Condition provides that the obligation of the Parent to
accept for payment and pay for any Shares pursuant to the Offer is conditioned
on Parent and Purchaser having received the debt financing for the transactions
contemplated by the Merger Agreement on terms substantially as outlined in the
Financing Commitment.
BRIDGE FINANCING COMMITMENT. Parent has secured a commitment letter (the
"Financing Commitment") from WP Bridge Finance, an affiliate of the Dealer
Manager, to purchase or to cause one or more of its affiliates to purchase up to
an aggregate of $300,000,000 of Bridge Notes, subject to the terms and
conditions specified in the Financing Commitment. In issuing the Financing
Commitment, WP Bridge
16
<PAGE> 17
Finance relied upon certain information provided or made available to it
regarding Parent, the Company and the Offer and related transactions. WP Bridge
Finance may assign all or any portion of its obligations under the Financing
Commitment to any financial institution, bank, mutual fund or other person, in
each case experienced in acquisition financing with available capital, financial
resources or a net worth of not less than $100 million subject to Parent's prior
written consent, which consent may not be unreasonably withheld, conditioned or
delayed. The term "Bridge Lenders" as used in this Offer to Purchase means WP
Bridge Finance and one or more other persons (including, without limitation, any
assignee of WP Bridge Finance) who actually purchase or undertake the commitment
to purchase the Bridge Notes.
The Bridge Notes will rank pari passu will all senior indebtedness of
Parent and senior to all subordinated indebtedness of the Parent. Parent may
issue and sell the Bridge Notes in two takedowns -- once at the time Shares are
accepted for payment in the Offer and a second time upon completion of the
Merger. The Bridge Notes will become due and payable three months after the
first issuance of any Bridge Notes, subject to the option of Purchaser to extend
the maturities thereof for up to three additional three month periods upon the
payment of certain fees. To the extent permanent financing has not been used to
refinance in full the Bridge Notes prior to the first anniversary of their
initial issuance, the Bridge Lenders will be issued rollover notes (the
"Rollover Notes") in replacement of any Bridge Notes then held. The Rollover
Notes will have terms which are substantially similar to the Bridge Notes,
except that the Rollover Notes will bear interest at rates different than the
Bridge Notes, will mature seven years from the date of issuance and are entitled
to the benefit of certain registration rights under the Securities Act of 1933.
The Bridge Notes will bear interest at a rate of the highest of the
following, as determined as of the beginning of each three-month period: (i) the
base rate (as announced from time to time by Citibank, N.A.) plus 225 basis
points, (ii) three-month U.S. Dollar LIBOR (as determined from specified
sources) plus 500 basis points, and (iii) the highest yield on any of the 1, 3,
5 and 10-year direct obligations issued by the United States plus 400 basis
points. Interest is payable quarterly, in arrears. The Rollover Notes, if any,
will bear interest at a spread beginning at 300 basis points over the applicable
interest rate formula for the Bridge Notes (as determined in accordance with the
foregoing formula), which spread will increase by 50 basis points at the end of
each three month period during which the Rollover Notes are outstanding
(provided that in no event will (i) the interest rate on the Rollover Notes
exceed 17% or (ii) the amount of any cash interest paid exceed 15%; and provided
further that any excess will be paid in the form of additional Rollover Notes).
The Bridge Notes and the Rollover Notes will be secured by a first-priority
lien in all of Parent's right, title and interest in and to all of its
properties and assets to the extent permitted under the Indenture relating to
Parent's 9 1/4% Senior Notes due 2007 (the "Senior Notes Indenture"). Purchaser,
the Company and each subsidiary of Parent and the Company will issue a senior
guarantee of the Bridge Notes and the Rollover Notes. The foregoing guarantees
will be collateralized with a first priority lien in all of the properties and
assets of such entities to the extent permitted by the Senior Notes Indenture.
In general, the Senior Notes Indenture does not permit the existence of any lien
to placed upon the shares of capital stock of Parent's Restricted Subsidiaries
(as defined in the Senior Notes Indenture and currently including all
subsidiaries of Parent and upon consummation of the Offer including the Company
and all of its subsidiaries) or any Principal Property (as defined in the Senior
Indenture to include any manufacturing or processing plant, warehouse or other
building used by Parent or any of its Restricted Subsidiaries, other than
certain immaterial plants, warehouses or other buildings) but permits liens on
any other property and assets of Parent and its Restricted Subsidiaries,
including without limitation inventory and accounts receivable.
The Bridge Notes may be redeemed at the option of Parent at any time
(generally at par plus accrued interest). Subject to certain exceptions, the
Bridge Notes are subject to mandatory redemption (generally at par plus accrued
interest) at or prior to maturity with the net proceeds from the issuance of any
debt or equity securities or the net proceeds from any bank borrowings. Upon a
change of control of Parent, the Bridge Notes are subject to mandatory
redemption at a redemption price of 101% of par plus accrued interest. The
securities purchase agreement for the Bridge Notes will contain representations
and warranties, covenants and events of default customary for transactions of
this type.
17
<PAGE> 18
The obligations of the Bridge Lenders to purchase Bridge Notes upon each
takedown are subject to the fulfillment of certain conditions precedent,
including but not limited to the following:
(i) the Offer shall have been consummated in accordance with the
Merger Agreement;
(ii) the other transactions contemplated to be consummated
contemporaneously with the Offer shall have been consummated on terms
satisfactory to the Bridge Lenders in their reasonable judgment, including
without limitation the capital contribution by Parent to Purchaser of cash
currently available to Parent in aggregate amount of no less than
$200,000,000, and such available cash shall have been utilized to fund, in
whole or in part, the Offer;
(iii) reasonably satisfactory completion of all loan documentation and
other documentation relating to the Bridge Notes and the Rollover Notes in
form and substance satisfactory to the Bridge Lenders in their reasonable
judgment, including issuance of appropriate Parent, Company and subsidiary
guarantees, and receipt by the Bridge Lenders of satisfactory customary
opinions of counsel as to the transactions contemplated thereby (including
without limitation with respect to compliance with all applicable
securities laws);
(iv) the Bridge Lenders shall have received (a) a reasonably
satisfactory pro forma consolidated balance sheet of Parent and its
subsidiaries, as at the date of consummation of the Offer and after giving
effect to the Offer and the financings contemplated by the Financing
Commitment; (b) audited, unaudited interim and pro forma financial
statements of the Parent and its subsidiaries which are reasonably
satisfactory to the Bridge Lenders; and (c) unaudited interim consolidated
financial statements of each of Company and its subsidiaries and Parent and
its subsidiaries, for each quarterly period ended subsequent to the date of
the latest audited consolidated financial statements of Company and its
subsidiaries and of Parent and its subsidiaries as to which such financial
statements are available, and such financial statements shall not, in the
reasonable judgment of the Bridge Lenders, reflect any material adverse
change in the consolidated financial condition of Company and its
subsidiaries or Parent and its subsidiaries from that reflected in the
financial information previously furnished to the Bridge Lenders;
(v) the Bridge Lenders shall have received the results of a recent
lien, tax and judgment search in each of the jurisdictions and offices
where assets of the Parent and its subsidiaries and the Company and its
subsidiaries are located or recorded, and such search shall reveal no
material liens on any of their respective assets except for liens permitted
by the documentation relating to the Bridge Notes and the Rollover Notes;
(vi) the Bridge Lenders shall have determined that reasonably
satisfactory insurance relating to the Parent and its subsidiaries will be
in place after the Offer;
(vii) the Parent and its subsidiaries shall not be in breach in any
material respect of any of its obligations under the documentation relating
to the Offer or Merger or the financing thereof;
(viii) receipt of all material governmental, shareholder and third
party consents and approvals necessary or reasonably desirable in
connection with any aspect of the Offer or the Merger or any other
transactions contemplated by the Financing Commitment and satisfactory
expiration of all applicable waiting periods (including under the HSR Act)
without any actions to materially affect any material aspect of the Offer
or the Merger;
(ix) absence of any material adverse change in the business, condition
(financial or otherwise), operations, performance, properties or prospects
of Parent and its subsidiaries, taken as a whole, or of the Company and its
subsidiaries, taken as a whole, since December 31, 1996;
(x) no additional facts or information (including the occurrence of
any events or circumstances) shall have come to the attention of Bridge
Lenders that are inconsistent with the information disclosed to the Bridge
Lenders by or on behalf of Parent or Purchaser prior to the date of the
Financing Commitment and that, either individually or in the aggregate,
could reasonably be expected to have a material adverse effect on (a) the
condition (financial or otherwise), business, assets, liabilities
(contingent or otherwise), properties, value, operations, results of
operations or prospects of (i) Parent and its subsidiaries, taken as
18
<PAGE> 19
a whole, or (ii) the Company and its subsidiaries, taken as a whole, or (b)
any aspect of the Offer or Merger or the refinancing of the Bridge Notes;
(xi) from and after the date of the Financing Commitment, neither
Parent nor Purchaser shall have incurred any material contractual
obligations other than (a) the execution of the Merger Agreement, the
Financing Commitment and one or more other commitment letters for permanent
financing for the Offer and the Merger and the execution of the
documentation thereunder and (b) such other obligations as are acceptable
to the Bridge Lenders;
(xii) absence of any action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental instrumentality that (a) seeks to enjoin the Offer or Merger
or seeks damages as a result of the Offer or Merger and in the good faith
judgment of the Bridge Lenders such action, suit, investigation, litigation
or proceeding could reasonably be expected to prevail, (b) in the good
faith judgment of the Bridge Lenders could reasonably be expected to have a
material adverse effect on the business, condition (financial or
otherwise), operations, properties or prospects of Parent and its
subsidiaries, taken as a whole, or of the Company and its subsidiaries
taken as a whole or on the Offer or the Merger or (c) in the good faith
judgment of the Bridge Lenders could reasonably be expected to materially
adversely affect the Bridge Lenders, the Bridge Notes or the ability of
Parent or the Company to perform its obligations thereunder or to refinance
the Bridge Notes;
(xiii) absence of any disruption or change in financial, banking or
capital markets or in the regulatory environment that in the good faith
judgment of the Bridge Lenders could materially and adversely affect the
sale of the Bridge Notes or the refinancing thereof;
(xiv) absence of any material default or any material breach of any
representation or warranty set forth in the documentation for the Bridge
Notes; and
(xv) upon consummation of the Offer, (a) none of the Purchaser, the
Company or any of the Company's subsidiaries will have any outstanding debt
(other than (x) arrangements satisfactory to the Bridge Lenders relating to
refinancing outstanding debt and (y) certain industrial development bond
obligations and capital lease obligations in the aggregate amount of $20
million) in excess of $500,000 and (b) Parent and its subsidiaries other
than the Company and its subsidiaries will not have aggregate outstanding
debt (without taking into account the Bridge Notes) exceeding $446 million.
The Financing Commitment will expire upon the earliest to occur of (i) the
consummation of the Merger, (ii) the termination of the Merger Agreement and
(iii) 5:00 p.m. New York City time on October 31, 1997. Upon payment of a fee of
1.00% of the principal amount of any remaining Bridge Notes to be purchased
pursuant to the Financing Commitment, the date in clause (iii) of the preceding
sentence may be extended until December 31, 1997.
The foregoing description of the Financing Commitment is qualified in its
entirety by reference to the text thereof filed as an exhibit to the Schedule
14D-1 filed with the SEC in connection with the Offer and is incorporated herein
by reference.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
On August 12, 1995, the Company, in publicly disclosing its second quarter
results, announced that it had retained an investment bank "to explore various
strategic alternatives to accelerate the maximization of shareholder value,
including the possible sale of the Company." Thereafter, the Company's
investment bank proceeded to solicit interest in the Company. On September 27,
1995, Parent signed a confidentiality and two-year standstill agreement (the
"1995 Confidentiality Agreement") with the investment bank (on behalf of itself
and the Company) in order to gain access to nonpublic information concerning the
Company.
During the period February through April 1996, representatives of the
Company and Parent discussed the business and financial affairs of the Company,
possible strategic transactions between the Company and Parent and the impact
such transactions would have on Parent. On April 17, 1996, Richard L. Bready,
the Chief Executive Officer of Parent ("Bready") and Jeffrey S. Silverman, the
Chief Executive Officer of the
19
<PAGE> 20
Company ("Silverman") and a representative of the Company's investment bank met
to discuss a potential stock-for-stock merger between Parent and the Company. On
May 8, 1996, Bready and counsel to Parent met with Silverman and counsel to the
Company to discuss the process of proceeding with the merger and related
matters. On June 17, 1996, Bready, Silverman and a representative from the
Company's investment bank continued discussions regarding the stock-for-stock
merger between Parent and the Company. Discussions ended on July 16, 1996 when
the Company announced it had terminated the engagement of its investment bank
and had ended the sale process.
During the period December 1996 through January 1997, a representative of
Wasserstein Perella & Co., Inc. ("WP&Co."), at the request of Parent discussed
with Silverman the possibility of a transaction between the Company and Parent.
In March 1997, the WP&Co. representative renewed discussions with Bready
concerning such a possible transaction and reviewed the financial impact on
Parent of the acquisition of the Company.
On May 1, 1997 Silverman and Dana Snyder, the Chief Operating Officer of
the Company ("Snyder") met with Bready and other representatives of Parent and
with the WP&Co. representative to discuss a proposal whereby Parent would
acquire the Company in a cash and stock transaction valued at $17 per share. The
parties also discussed how to proceed with the due diligence process. In
meetings and discussions held between May 6 and May 13, 1997 between Silverman,
Snyder, Bready, representatives of Parent and the representative of WP&Co., the
parties discussed potential acquisition terms, the process for proceeding with
the acquisition, the settlement of Silverman's employment contract and the role
of Silverman and Snyder in the combined entity after the acquisition. During
those discussions, Mr. Bready expressed interest in an acquisition of the
Company at a price of $18 per share, payable in a combination of cash and Parent
common stock.
On May 20, 1997 counsel to Parent, counsel to the Company, representatives
of Parent and the WP&Co. representative again discussed the process for
proceeding with the acquisition including the due diligence investigation and
the timing of the transaction. On June 10, 1997, the Company's counsel sent to
Parent's counsel a proposed form of confidentiality and standstill agreement and
an index of the information contained in the Company's due diligence data room.
On June 17, 1997, Parent submitted a written proposal to the Company to
acquire all equity securities of the Company at a cash price of $20 per Share,
net to the seller, subject to limited due diligence review, the agreement to
settle Silverman's employment agreement on terms previously discussed by Bready
and Silverman and an agreement by Silverman to tender his shares and to grant to
Parent an option to acquire his shares of the Company at $20 per share. Parent
delivered to the Company proposed drafts of transaction documents that
contemplated a cash tender offer by Purchaser, a wholly owned subsidiary of
Parent, for all outstanding Shares of the Company, to be followed by a merger of
Purchaser with and into the Company. On June 18, 1997 Parent agreed to extend
the standstill provision of the 1995 Confidentiality Agreement for an additional
year from June 18, 1997.
On June 18, 1997, Parent was advised that the Company anticipated receiving
a bid from a leveraged buyout group and that as a result, Parent should
accelerate its review of the Company. On June 20, 1997, Parent was informed that
the Company's board of directors had deferred action on the buyout group's
proposal which would expire on June 27. Parent consequently accelerated its
diligence review.
On June 23, 1997, the Company notified Parent in writing that it was
waiving, on a limited basis, the standstill provision of the 1995
Confidentiality Agreement solely for the purpose of permitting Parent to make
one or more proposals to the Board of Directors of the Company to acquire the
entire equity interest in the Company.
Late on the night of June 23, 1997, Silverman advised Bready that on June
24, the Company would send to Parent agreements that morning that Parent would
have to negotiate and sign by midmorning or the Company's Board of Directors
would authorize a transaction involving a leveraged buyout group. The agreements
and related schedules were sent to Parent's representatives on the morning of
June 24.
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In response, on June 24, Parent sent three letters to the Company. The
first letter stated that Parent confirmed that it remained committed to
acquiring all Shares of the Company for a cash price of $20 per Share, net to
the seller, based upon the capitalization of the Company on June 17. Parent also
stated that it was committed to completing its diligence review on June 24 and
signing acquisition agreements on June 24, subject to the approval of its board
of directors.
The second letter stated Parent's proposal to acquire all of the
outstanding Shares of the Company for a cash price of $20.25 per Share, net to
the seller, based upon the capitalization of the Company on June 17, 1997,
subject to the approval of Parent's board of directors.
The third letter was in the form of a letter agreement confirming the
second letter and was also subject to the approval of Parent's board of
directors. The agreements Parent proposed to enter into with the Company were
forwarded separately to the Company late that day as an exhibit to the third
letter.
The second and third letters (and the documents accompanying the third
letter) did not reach the Company's Board of Directors on June 24 prior to their
entering into an agreement with Atrium Corporation.
The Company did not respond to any of Parent's letters and issued a press
release on the morning of June 25, 1997 announcing it had entered into an
agreement with Atrium Corporation, an affiliate of Hicks, Muse, Tate & Furst,
pursuant to which the Company would be acquired for $18.75 per Share.
From June 25, 1997 through July 9, 1997, representatives of Parent and
WP&Co. discussed possible strategies with respect to acquiring the Company. On
July 9, 1997, Parent's board of directors met to approve the terms of a proposal
to be sent to the Company's Board of Directors.
On July 14, 1997, Parent sent a proposal to the Board of Directors of the
Company stating that it proposed to purchase all outstanding Shares at a price
of $19.50 per Share, net to the seller in cash. The Company issued a press
release on July 15, 1997 stating that the Company's Board of Directors had
received and was evaluating this proposal.
Following negotiations between advisors and counsel for Parent and the
Company, on July 18, 1997, Parent tendered to the Board of Directors an
irrevocable offer to purchase all outstanding Shares, subject only to (i) the
Company sending notice of its intention to terminate the Agreement and Plan of
Merger dated as of June 24, 1997 (the "Atrium Agreement") among Atrium
Acquisition Holdings Corp., Atrium/PG Acquisition Corp., the Company and, for
limited purposes, Atrium Corporation (collectively with its two subsidiaries
"Atrium"), (ii) the Atrium Agreement terminating no later than July 24, 1997,
(iii) the Merger Agreement and the Stock Purchase Agreement between Parent and
the Company dated as of July 24, 1997 (the "Stock Purchase Agreement") being
executed by the Company before 8:00 a.m. on July 24, 1997, (iv) stock
certificates being delivered pursuant to the Stock Purchase Agreement against
delivery of the payment therefor, (v) Silverman entering into a Non-Compete and
Termination Agreement in the form tendered to the Company, (vi) Herbert Dooskin
entering into a Termination and Release Agreement in the form tendered to the
Company, and (vii) all of the conditions in the Merger Agreement being satisfied
or waived. On the same day, the Company tendered the required notice of its
intention to terminate the Atrium Agreement pursuant to the terms of such
agreement.
On July 18, 1997, the Company sent Atrium a notice of intention to
terminate the Atrium Agreement. On July 18, 1997, representatives of the Company
informed representatives of Parent that the Company intended to send to Atrium a
notice of termination of the Atrium Agreement at 12:01 a.m. on July 24, 1997,
and intended to execute the Merger Agreement and the Stock Purchase Agreement on
July 24, 1997.
On July 24, 1997, the Company terminated the Atrium Agreement and the
Company, Parent and Purchaser executed and delivered the Merger Agreement, the
Stock Purchase Agreement and the Registration Rights Agreement, and Parent
delivered the purchase price of $12 million pursuant to the Stock Purchase
Agreement which funds were used to fund the break-up fee under the Atrium
Agreement.
To the extent any of the foregoing information described events to which
neither Parent nor Purchaser or their advisors were a party, it is based on
information disclosed in publicly filed documents or information furnished by
the Company.
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11. THE OFFER AND MERGER; MERGER AGREEMENT
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is
attached to the Schedule 14D-1 as Exhibit (c)(1) and incorporated by reference
herein. All references to and summaries of the Merger Agreement herein are
qualified in their entirety by reference to the Merger Agreement. Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in the Merger Agreement.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than five business
days from the date of the Merger Agreement, subject to the Merger Agreement not
having been terminated prior thereto in accordance with its terms. The
obligation of Purchaser to accept for payment Shares tendered pursuant to the
Offer is subject to (i) the condition (the "Minimum Condition") that at least
the number of Shares which, when added to the Shares then beneficially owned by
Parent, constitutes a majority of the then outstanding Shares on a fully diluted
basis shall have been validly tendered and not withdrawn, and (ii) the
satisfaction and waiver of the other conditions described below under
"-- Conditions to the Offer," (collectively, the "Conditions"). Purchaser and
the Company have agreed that without the consent of the Company, no amendment to
the Offer may be made which (a) decreases the price per Share or changes the
form of consideration payable in the Offer, (b) reduces the maximum number of
Shares sought, (c) changes any of the Conditions or imposes Conditions in
addition to the Conditions or amends any other term of the Offer in either case
in any manner adverse to the holders of Shares, or (d) waives the Minimum
Condition. The Merger Agreement provides that the Offer may only be extended
with the prior written consent of the Company or as provided by Law; provided,
however, that Parent and Purchaser may extend the Offer without the consent of
the Company (i) if at the scheduled expiration date of the Offer any of the
Conditions shall not have been satisfied or waived, or (ii) for any period
required by any Laws applicable to the Offer; and provided, further, that if the
Conditions are not satisfied or, to the extent permitted by the Merger
Agreement, waived as of any scheduled expiration date, Parent and Purchaser
shall extend the Offer from time to time for up to five business days at a time
(or such longer period as shall be approved by the Company) until the earlier of
the consummation of the Offer or sixty (60) calendar days after the date of the
Merger Agreement, provided that such extension shall not be required if in the
reasonable judgment of Parent and Purchaser, any Condition is incapable of being
satisfied prior to the expiration of the sixty (60) calendar days. Upon the
terms of the Merger Agreement and subject to the Conditions, Purchaser will
accept for payment and purchase all Shares validly tendered and not withdrawn
prior to the expiration of the Offer.
CONDITIONS TO THE OFFER. The Merger Agreement provides that,
notwithstanding any other provision of the Offer, the Purchaser shall not be
required to pay for, or delay the acceptance for payment of or payment for, any
tendered shares, if (i) any applicable waiting period under the HSR Act shall
not have expired or been terminated, (ii) the Minimum Condition shall not have
been satisfied, (iii) Parent and Purchaser shall not have received the debt
financing for the transactions contemplated by the Merger Agreement on terms
substantially as outlined in the Financing Commitment, or (iv) on or after the
date of the Merger Agreement and at or before the time of payment for the
Shares, any of the following events shall occur and be continuing:
(a) there shall have occurred and be continuing (1) any general
suspension of trading in, or general limitation on prices for, securities
on the New York Stock Exchange, Inc. (other than suspensions of not more
than one business day), (2) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or
not mandatory), (3) the commencement of a war, armed hostilities or other
international or national calamity involving the United States and having
had or being reasonably likely to have a Material Adverse Effect or
materially adversely affecting (or materially delaying) the consummation of
the Offer, (4) any material limitation or proposed material limitation
(whether or not mandatory) by any Governmental Entity, or any other event,
that materially adversely affects generally the extension of credit by
banks or other financial institutions or (5) in the case of any of the
situations described in clauses (1) through (4) inclusive existing at the
date of the Merger Agreement, a material acceleration, escalation or
worsening thereof;
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(b) the representations and warranties of the Company set forth in the
Merger Agreement shall not have been true and correct in all respects
(provided that any representation or warranty of the Company contained in
the Merger Agreement that is subject to a materiality, Material Adverse
Effect or similar qualification shall not be so qualified for purposes of
determining the existence of any breach thereof on the part of the Company)
as of the date of the Merger Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
scheduled expiration date of the Offer as though made on and as of such
scheduled expiration date, except for such breaches that would neither,
individually or in the aggregate with any other breaches on the part of the
Company, (i) have a Material Adverse Effect on the Company nor (ii)
materially adversely affect the ability of the parties to the Agreement to
consummate the transactions contemplated by the Merger Agreement; or the
Company shall not have performed in all material respects (provided that
any obligation the performance of which is subject to a materiality,
Material Adverse Effect or similar qualification shall not be so qualified
for purposes of determining the existence of any nonperformance thereof)
all obligations required to be performed by it under the Merger Agreement;
(c) there shall be any action or proceeding commenced by any
Governmental Entity, which has a reasonable likelihood of success and
which, if decided adversely to the Company, would have a Material Adverse
Effect or would restrain, prohibit or materially delay the consummation of
the Offer, and if decided adversely to Parent, would have the effect of (i)
making the purchase of, or payment for, some or all of the Shares pursuant
to the Offer or the Merger or otherwise illegal, or resulting in a material
delay in the ability of Parent or Purchaser to accept for payment or pay
for some or all of the Shares, (ii) compelling Parent or Purchaser to
dispose of or hold separately all or any material portion of the Company's
or Parent's business or assets, (iii) making illegal, or otherwise directly
or indirectly restraining or prohibiting or imposing material financial
burdens, penalties or fines requiring the payment of material damages in
connection with the making of, the Offer, the acceptance for payment of,
payment for, or ownership, directly or indirectly, of some of or all the
Shares by Parent or Purchaser, the consummation of the Offer or the Merger,
(iv) otherwise preventing consummation of the Offer or the Merger, or (v)
imposing material limitations on the ability of Parent or Purchaser
effectively (A) to acquire, hold or operate the business of the Company and
its Subsidiaries taken as a whole or (B) to exercise full rights of
ownership of the Shares acquired by it, including, but not limited to, the
right to vote the Shares purchased by it on all matters properly presented
to the stockholders of the Company, which, in either case, would effect a
material diminution in the value of the Company or the Shares;
(d) there shall have been any Law enacted, promulgated, entered or
deemed applicable to the Offer or the Agreement or any other action shall
have been taken by any Governmental Entity on or after the date of the
Offer that would result in any of the consequences referred to in clauses
(i) through (v) of paragraph (c) above (other than with respect to clause
(i) of paragraph (c), if there shall have been a material delay in the
ability of Parent or Purchaser to accept for payment or pay for some or all
of the Shares due to a request for additional information under the HSR
Act);
(e) the Board of Directors of the Company shall have publicly
(including by amendment of this Schedule 14D-9) withdrawn or adversely
modified its recommendation of acceptance of the Offer;
(f) since the date of the Merger Agreement, there shall have occurred
any event or events that, singly or in the aggregate, have had or would
have a Material Adverse Effect; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms, or Parent or Purchaser shall have reached an agreement or
understanding in writing with the Company providing for termination or
amendment of the Offer;
which, in any such case, and regardless of the circumstances (including any
action or inaction by Parent or Purchaser other than a breach by Parent or
Purchaser of the Merger Agreement) giving rise to any such conditions, makes it
in the reasonable judgment of Parent inadvisable to proceed with the Offer
and/or with such acceptance for payment of the Shares.
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<PAGE> 24
The Merger Agreement provides that the foregoing conditions are for the
sole benefit of Parent and Purchaser and may be asserted by Parent or Purchaser
regardless of the circumstances giving rise to any such condition (other than a
breach by Parent or Purchaser of the Merger Agreement) and may be waived by
Parent or Purchaser, in whole or in part, at any time and from time to time, in
the sole discretion of Parent or Purchaser; provided, that the Minimum Condition
is also for the benefit of the Company and may not be waived without the
Company's consent. The failure by Parent or Purchaser at any time to exercise
any of the foregoing rights would not be deemed a waiver of any right and each
right will be deemed an ongoing right which may be asserted at any time and from
time to time.
THE MERGER
The Merger Agreement provides that following consummation of the Offer,
subject to the approval and adoption of the Merger Agreement and the Merger by
the affirmative vote of the holders of a majority of the outstanding shares of
Common Stock entitled to vote thereon (if then required by the Delaware General
Corporation Law), approval by certain regulatory authorities and compliance with
certain other covenants and conditions, Purchaser will be merged with and into
the Company, at which time the separate corporate existence of Purchaser will
cease and the Company will continue as the Surviving Corporation. Following
consummation of the Merger, the Company, as the Surviving Corporation, will be a
wholly-owned subsidiary of Parent.
CONVERSION OF SECURITIES. At the Effective Time, (i) each outstanding
share of Common Stock that is owned by the Company will be automatically
canceled and retired and will cease to exist, and no consideration will be
delivered or deliverable in exchange therefor, (ii) each issued and outstanding
share of Common Stock (other than shares to be canceled in accordance with the
immediately preceding clause and other than Dissenting Shares) will be converted
into the right to receive $19.50 or such higher price, if any, as is paid in the
Offer, in cash (the "Merger Consideration") from the Surviving Corporation,
without interest thereon, upon surrender of the certificates representing shares
of Common Stock, and (iii) each share of capital stock of Purchaser will be
converted into and become a number of fully paid and nonassessable shares of
common stock of the Surviving Corporation equal to the quotient realized by
dividing, immediately prior to the Effective Time, (A) the sum of (1) the
aggregate number of shares of Common Stock issued and outstanding, (2) the
aggregate number of shares of Common Stock that are owned by the Company and (3)
the aggregate number of shares of Common Stock issuable in respect of all then
outstanding Options (as defined in "-- Stock Option Plans" below), by (B) the
aggregate number of shares of capital stock of Purchaser issued and outstanding.
STOCK OPTION PLANS. At the Effective Time, each then outstanding option
(including stock purchase rights and unrestricted stock awards) to purchase or
acquire shares of Common Stock under the Company's Stock Option Plans, whether
or not then exercisable or vested (the "Options"), and each share of not yet
vested restricted stock granted under any such Stock Option Plan ("Unvested
Stock") will immediately (except under certain circumstances relating to persons
subject to Section 16(a) of the Exchange Act) be canceled and represent the
right to receive consideration in settlement thereof as described below. Holders
of Options will receive, for each share of Common Stock subject to such Option,
including any additional shares subject thereto by reason of their terms upon
consummation of the "change of control" resulting from the Merger as described
below, an amount (subject to any applicable withholding tax) in cash equal to
the difference between the per share Merger Consideration and the per share
exercise price of such Option to the extent such difference is a positive number
(the "Option Consideration"). Among the Options held by Jeffrey Silverman, the
Chairman and Chief Executive Officer and Herbert Dooskin, the Executive Vice
President, as set forth in the Proxy Statement, are Options with respect to
600,000 shares and 150,000 shares, respectively (with half of each of such
Options held by each of them having an exercise price of $10.75 and the
remainder an exercise price of $12.25) which Options provide that upon a "change
of control" the number of shares covered by such Options shall double. Holders
of Unvested Stock will receive for each share of Unvested Stock, cash equal to
the per share Merger Consideration (the "Unvested Stock Consideration"). Upon
consummation of the Offer, all Options will immediately vest and become
exercisable.
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The surrender of an Option to the Company in exchange for the Option
Consideration will be deemed a release of any and all rights the holder had or
may have had in respect of such Option. The Stock Option Plans will terminate as
of the Effective Time, and the provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any Subsidiary will be canceled. Prior to
the Closing, the Company will use its best efforts to take all action necessary
to ensure that, following the Effective Time, no participant in the Stock Option
Plans or any other plan, program or arrangement will have any right thereunder
to acquire equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof and terminate all such plans, programs and arrangements as of
the Effective Time.
Upon the later of the consummation of the Offer or the delivery of a duly
executed Option Release Agreement by a holder of Options to be canceled or
Unvested Stock, such holder shall be entitled to receive in respect thereof the
Option Consideration or the Unvested Stock Consideration, without interest
thereon.
DIRECTORS AND OFFICERS; GOVERNING DOCUMENTS. At the Effective Time, the
directors and officers of Purchaser will become the directors and officers of
Surviving Corporation until the earlier of their death, resignation or removal
or until their respective successors are duly elected or appointed and
qualified, as the case may be. The Certificate of Incorporation of the Company
shall be amended to increase the number of authorized shares of Company Common
Stock to an aggregate amount of 460,000,000 shares as of the Effective Time and,
as so amended, such Certificate of Incorporation shall be the Certificate of
Incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and the DGCL. The Bylaws of the Company will be the
bylaws of the Surviving Corporation until thereafter amended as provided
therein, by the Certificate of Incorporation or by applicable law.
STOCKHOLDERS' MEETING. Pursuant to the Merger Agreement, if required by
applicable Laws, the Company, acting through the Board, shall, in accordance
with applicable Laws and the Company's Certificate of Incorporation and Bylaws,
duly call, give notice of, and convene and hold a special meeting of its
stockholders as soon as practicable following consummation of the Offer for the
purpose of considering and taking action on the Merger Agreement (the
"Stockholders' Meeting"). Notwithstanding the foregoing sentence, if Parent and
Purchaser shall collectively own, following consummation of the Offer, at least
90% of the outstanding Shares, each of Parent, Purchaser and the Company shall
take all necessary and appropriate action to cause the Merger to become
effective, as soon as practicable after consummation of the Offer (but in no
event later than ten (10) business days thereafter) without a meeting of the
stockholders of the Company, in accordance with the "short-form" merger
provisions of Section 253 of the DGCL.
DESIGNATION OF DIRECTORS. The Merger Agreement provides that, provided
that Purchaser acquires at least a majority of the Shares outstanding pursuant
to the Offer, Parent shall be entitled to designate up to such number of
directors, rounded up to the next whole number, of the Board so that the
designees of Parent constitute the same percentage of the Board (but in no event
less than a majority) as the percentage of Shares acquired pursuant to the
Offer, and the Company shall increase the size of the Board or obtain the
resignations of incumbent directors as is necessary to enable such number of
Parent designees to be elected. The Merger Agreement also provides that, at all
times prior to the Effective Time, at least two of the members of the Board
shall be Continuing Directors (as defined below). Following the election or
appointment of Parent's designees pursuant to the foregoing and prior to the
Effective Time, such designees shall abstain from acting upon, and the approval
of a majority of the Continuing Directors shall be required to and shall be
sufficient to authorize, any resolution with respect to the termination of the
Merger Agreement by the Company, any amendment of the Merger Agreement requiring
action by the Board, any extension of time for the performance of any of the
obligations or other acts of Parent or Purchaser under the Merger Agreement, any
waiver of compliance with any of the agreements or conditions under the Merger
Agreement for the benefit of the Company and any action to seek to enforce any
obligation of Parent or Purchaser under the Merger Agreement. Under the Merger
Agreement, "Continuing Director" means (i) any member of the Board as of July
24, 1997 or (ii) any successor to a Continuing Director who is (A) unaffiliated
with, and not a designee or nominee, of Parent as Purchaser, and (B) recommended
to succeed a Continuing Director by a majority of the Continuing Directors then
on the Board, and in each case under clause (ii), who is not an employee of the
Company.
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ACCESS TO INFORMATION. The Company has agreed to (and to cause each of its
Subsidiaries to) afford, upon reasonable notice, the officers, employees,
accountants, counsel and other representatives of Parent and Purchaser,
including potential financing sources and their employees, accountants, counsel
and other representatives access, during normal business hours during the period
prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company will (and will
cause each of its Subsidiaries to) furnish promptly to Parent and Purchaser (i)
a copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to SEC requirements, and (ii) all
other information concerning its business, properties and personnel as Parent
and Purchaser may reasonably request.
NO SOLICITATION. The Company has agreed that: (i) from and after July 24,
1997, until the termination of the Merger Agreement, neither the Company nor any
of its Subsidiaries will, nor will any of their respective officers, directors,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by the Company or its
Subsidiaries) (collectively, the "Representatives"), and the Company will cause
the employees of the Company and its Subsidiaries not to, directly or indirectly
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any action to facilitate, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined below) or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or for the purpose of obtaining an Acquisition Proposal, or agree to
or endorse any Acquisition Proposal, or authorize or permit any of the
Representatives to take any such action; and (ii) it will in each case notify
Parent orally (within one business day) and in writing (as promptly as
practicable) of all the relevant details relating to, and all material aspects
of, all inquiries and proposals which it or any of its Subsidiaries or any of
their respective Representatives may receive relating to any of such matters,
including providing a copy of such inquiry or proposal if such inquiry or
proposal is in writing; provided that prior to the receipt of Company
Stockholder Approval, the Board of Directors of the Company may:
(i) following the receipt of an unsolicited written, bona fide
Acquisition Proposal, (A) furnish information to, or enter into discussions
or negotiations with, the person or entity that makes such Acquisition
Proposal; or (B)(1) withdraw, modify or not make a recommendation to
holders of Common Stock to approve the execution, delivery and performance
of the Transaction Documents and the adoption of the Merger Agreement
pursuant to the DGCL, or (2) terminate the Merger Agreement pursuant to the
provisions of the Merger Agreement (provided that, in the case of this
subclause (B), the person or entity making the Acquisition Proposal has the
necessary funds or has obtained customary commitments to provide the funds
to effect such Acquisition Proposal); if, and only to the extent that (x)
in the case of either clause (A) or (B) above, the Board of Directors,
after consultation with its independent legal counsel (who may be the
Company's regularly engaged legal counsel), determines in good faith that
such action is advisable for the Board of Directors to comply with its
fiduciary duties to stockholders under applicable law, (y) prior to taking
such action, the Company (1) in the case of either clause (A) or (B) above,
provides reasonable prior notice to Parent to the effect that it is taking
such action, which notice shall (to the extent consistent with the
fiduciary duties of the Board of Directors to stockholders under applicable
law) include the identity of the person or entity engaging in such
discussions or negotiations, requesting such information or making such
Acquisition Proposal, and the material terms and conditions of any
Acquisition Proposal, (II) in the case of clause (A) above, receives from
such person or entity an executed confidentiality agreement in reasonably
customary form on terms no less favorable to the Company than those
contained in the Confidentiality Agreement (except that such
confidentiality agreement need not require approval of the Board of
Directors of the Company prior to the making of such offer or proposal),
and (III) in the case of clause (A) above, the Company will, to the extent
consistent with the fiduciary duties of the Board of Directors of the
Company to stockholders under applicable law, promptly and continuously
advise Parent as to all of the relevant details relating to, and all
material aspects of, any such discussions or negotiations; or
(ii) take or disclose to the Stockholders of the Company a position
contemplated by Rule 14e-2 of the Exchange Act if the Board of Directors of
the Company, after consultation with its independent legal
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counsel (who may be the Company's regularly engaged independent counsel),
determines in good faith that such action is advisable for the Board of
Directors of the Company to comply with its fiduciary duties to holders of
Shares under applicable law.
Except for the confidentiality agreement referred to above and subject to
applicable termination provisions of the Merger Agreement, nothing in the Merger
Agreement will permit the Company to enter into any agreement with respect to
any Acquisition Proposal during the term of the Merger Agreement (it being
agreed that during the term of the Merger Agreement, the Company will not enter
into any agreement with any person that provides for, or in any way facilitates,
any Acquisition Proposal other than a confidentiality agreement in reasonably
customary form following receipt from a third party of an unsolicited written,
bona fide Acquisition Proposal). In the Merger Agreement, the Company agreed to
immediately cease and cause to be terminated any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any parties
conducted by the Company or any Representatives with respect to any Acquisition
Proposal existing on July 24, 1997.
"Acquisition Proposal" is defined in the Merger Agreement to mean any
proposal or offer (other than the transactions among the Company, Parent and
Purchaser contemplated by the Merger Agreement) involving the Company or any of
its Subsidiaries for, or an inquiry or indication of interest that reasonably
could be expected to lead to: (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of a
material portion of the assets of the Company and its Subsidiaries, taken as a
whole in a single transaction or series of transactions; or (iii) any tender
offer or exchange offer for all or any portion of the outstanding shares of
capital stock of the Company or any of its Subsidiaries or the filing of a
registration statement under the Securities Act in connection therewith.
INDEMNIFICATION AND INSURANCE. The Merger Agreement provides that, for a
period of six years after the Effective Time, the Surviving Corporation shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance and fiduciary liability insurance (or any
substitute policies of at least the same coverage and amounts, and containing
terms and conditions no less advantageous to the persons covered thereby, than
the coverage currently provided by the Company) with respect to matters arising
before and acts or omissions occurring or existing at or prior to the Effective
Time, provided, however, that Parent shall not be required to pay an annual
premium for any such insurance in excess of 125%, in the case of the directors'
and officers' liability insurance policy, and 200%, in the case of the fiduciary
liability insurance policy, of the last annual premium paid by the Company in
respect of such insurance prior to July 24, 1997, but in each such case shall
purchase as much coverage as possible for such amount.
The Merger Agreement provides that, from and after the Effective Time,
Parent and the Surviving Corporation will indemnify, defend and hold harmless,
to the fullest extent permitted by applicable law, each current and former
officer, director, employee or agent of the Company or any of its Subsidiaries
against all losses, claims, damages, costs, expenses (including attorneys' fees
and expenses), liabilities or judgments or amounts that are paid in settlement
of, with the approval of the indemnifying party (which approval shall not be
unreasonably withheld), or otherwise paid in connection with any threatened or
actual claim, action, suit, proceeding or investigation based in whole or in
part on or arising in whole or in part out of the fact that such person is or
was such an officer, director, employee or agent of the Company, or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, employee benefit plan, trust or
other enterprise at or prior to the Effective Time.
In addition, the Merger Agreement provides that the Company will honor
individual indemnification agreements between the Company and individual members
of the Board of Directors of the Company (whether pre-existing the Merger
Agreement or entered into thereafter on the same terms), except for the
provisions relating to the establishment of trusts, as to which the relevant
directors have waived their rights.
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FURTHER ACTION; REASONABLE EFFORTS. In the Merger Agreement, the Company,
Parent and Purchaser have agreed to use all reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations or otherwise to
consummate and make effective the transactions contemplated by the Transaction
Documents, subject, as applicable, to the Company Stockholder Approval,
including cooperating fully with the other party, including by providing
information and making all necessary filings in connection with, among other
things, approvals under the HSR Act. The Company will use all reasonable efforts
to obtain any consent from third parties necessary to allow the Company to
continue operating its business as presently conducted as a result of the
transactions contemplated by the Merger Agreement.
The Company has further agreed that it will make all reasonable efforts to
comply with all obligations imposed by the New Jersey Industrial Site Recovery
Act ("ISRA") with respect to the transactions contemplated by the Merger
Agreement. These obligations shall include, as appropriate, (i) timely
submission of notice to the New Jersey Department of Environmental Protection
and Energy (the "NJDEPE") and (ii) preparation and filing with NJDEPE of a
proposed negative declaration, a proposed remedial action workplan, appropriate
documents for a remediation agreement, a deferral of the remedial action
workplan, or an area of concern waiver; provided that the Company shall obtain
the approval and consent of Parent and Purchaser prior to entering into any
remediation agreement or other enforceable commitment with NJDEPE to satisfy the
requirements of ISRA. Parent and Purchaser have agreed to use their reasonable
best efforts to assist and cooperate with the Company and its representatives in
connection with the preparation and filing of all necessary documents under
ISRA.
The Company has agreed that, at Parent's request, it will cooperate, and
will cause its accountants to cooperate, in all reasonable respects with any
financing efforts of Parent or its affiliates, including the efforts of Parent
and Purchaser to secure the financing contemplated by the Financing Commitment
and any filings that may be made of Parent or its affiliates with the SEC, at
the sole expense of Parent. The Company (i) will furnish to its or to Parent's
independent accountants customary management representation letters as such
accountants may require as a condition to the execution of any required
accountants' consents necessary in connection with the delivery of any "comfort"
letters requested by financing sources of Parent or its affiliates, and (ii)
will furnish to Parent all financial statement and other information in the
possession of the Company or its Representatives.
CONDUCT OF BUSINESS PENDING THE MERGER. During the period from July 24,
1997, until the Effective Time, the Company has agreed as to itself and its
Subsidiaries that, except as expressly contemplated or permitted by the
Transaction Documents or as consented to in writing by Parent, the Company and
its Subsidiaries will carry on their respective businesses in the ordinary
course in substantially the same manner as conducted prior to July 24, 1997.
Except as expressly contemplated or permitted by the Merger Agreement or as
consented to in writing by Parent, the Company also has agreed that it will not,
nor shall it permit any of its Subsidiaries to: (i)(A) declare or pay any
dividends on or make any other distributions in respect of any of its capital
stock, other than (1) regular quarterly dividends not in excess of $.03 per
share with customary record and payment dates, and (2) cash dividends paid to
the Company by a wholly owned Subsidiary on or with respect to the capital stock
of a wholly owned Subsidiary, (B) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (C) repurchase or otherwise acquire, or permit any Subsidiary
to purchase or otherwise acquire, any shares of its capital stock except as
required by the terms of its securities outstanding as of July 24, 1997, or as
contemplated by the Merger Agreement or by any employee benefit plan in effect
on July 24, 1997; or (ii) except as described above under "-- Stock Option
Plans" or as contemplated by the Stock Purchase Agreement dated July 24, 1997,
between the Company and Parent, (A) grant any options, warrants or rights to
purchase shares of capital stock of the Company, (B) amend or reprice any option
or amend the terms of any of the Stock Option Plans, or (C) issue, deliver or
sell, or authorize or propose to issue, deliver or sell any shares of its
capital stock, any Company Voting Debt or any securities convertible into, or
any rights, warrants or options to acquire, any such shares, Company Voting Debt
or convertible securities, other than (1) the issuance of shares upon the
exercise of Options, Unvested Stock and
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rights outstanding on July 24, 1997, and (2) issuances of the capital stock of
the Company's Subsidiaries to the Company or to one of its wholly owned
Subsidiaries.
The Company has also agreed that it will not, and in the case of clauses
(ii), (iii), (v), (vi), (viii), (ix) and (x) below, that its Subsidiaries will
not, or that the Company will not permit any of its Subsidiaries to: (i) amend
or propose to amend its Certificate of Incorporation or Bylaws; (ii)(A) merge or
consolidate with, or acquire any entity interest in, any corporation,
partnership, association or other business organization, or enter into an
agreement with respect thereto, or (B) acquire or agree to acquire any assets of
any corporation, partnership, association or other business organization or
division thereof, except for the purchase of inventory and supplies in the
ordinary course of business or the acquisition by the Company or any Subsidiary
of equity interests in any customer or supplier of the Company in satisfaction
of outstanding claims against such party in bankruptcy proceedings consistent
with past practice; (iii) sell, lease, encumber or otherwise dispose of, or
agree to do the same with, any of its material assets, other than sales of
inventory or sales or returns of obsolete or surplus equipment in the ordinary
course of business consistent with past practice; (iv) authorize, recommend,
propose or announce an intention to adopt a plan of complete or partial
liquidation or dissolution of the Company or any of its Subsidiaries; (v)
without the prior written consent of Parent which consent shall not be
unreasonably withheld, (A) grant any increases in the compensation of any of its
directors, officers, management employees or key employees, except as may be
required pursuant to any of the existing Benefit Plans or Employee Arrangements
disclosed in the Merger Agreement, (B) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or contemplated to
be paid prior to the Effective Time by any of the existing Benefit Plans or
Employee Arrangements as in effect on July 24, 1997 to any such director,
officer, management employee or key employee, whether past or present, (C) enter
into any new, or materially amend any existing, employment or severance or
termination agreement with any such director, officer, management employee or
key employee, (D) except as may be required to comply with applicable law,
become obligated under any Benefit Plan or Employee Arrangement which was not in
existence on July 24, 1997, or amend any such plan or arrangement in existence
on July 24, 1997 if such amendment would have the effect of enhancing any
benefits thereunder, or (E) extend any loans or advances to any of its
directors, officers, management employees or key employees, except as expressly
permitted under the Transaction Documents; (vi) without the prior written
consent of Parent, which consent shall not be unreasonably withheld, (A) assume
or incur any indebtedness for borrowed money (except for drawdowns by the
Company under its revolving credit facility or its accounts receivable facility)
or guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of the Company or any of its
Subsidiaries or guarantee any debt securities of any other person except wholly
owned Subsidiaries or enter into any lease or create any mortgages, liens,
security interests or other encumbrances on the property of the Company or any
of its Subsidiaries in connection with any indebtedness thereof, or enter into
any "keep well" or other agreement or arrangement to maintain the financial
condition of another person except wholly owned Subsidiaries of the Company, or
(B) except as otherwise disclosed in the Merger Agreement (1) enter into any
contracts involving aggregate annual payments in excess of $250,000, or (2)
modify, rescind, terminate, waive, release or otherwise amend in any material
respect any of the terms or provisions of any Material Contract in any manner
that is material and adverse to the Company or the respective Subsidiary of the
Company party thereto; (vii) take any action, other than in the ordinary course
of business, consistent with past practice or as required by the SEC, by law or
by changes in GAAP, with respect to accounting policies, procedures and
practices; (viii) except as otherwise disclosed in the Merger Agreement, incur
capital expenditures in excess of $100,000; (ix) take or agree to commit to take
any action that is reasonably likely to result in any of the Company's
representations or warranties under the Merger Agreement being untrue in any
material respect or any of the conditions to the Merger not being satisfied in
all material respects (see "-- Conditions to the Merger"); (x) take any action
that would cause the transactions contemplated by the Merger Agreements to fail
to qualify for certain exceptions to taxation; or (xi) settle or compromise any
claim for appraisal rights in respect of the Merger without the prior written
consent of Parent and Purchaser.
The Company has further agreed to provide Parent (or its counsel) with
copies of all filings made by the Company with the SEC or any state or federal
governmental entity in connection with the Merger Agreement and the transactions
contemplated thereby.
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EMPLOYEE BENEFIT PLANS. In the Merger Agreement, the parties have agreed
that from and after the Effective Time, directors, officers and employees of the
Company and its Subsidiaries will be provided employee benefits, plans and
programs (including but not limited to incentive compensation, deferred
compensation, pension, life insurance, medical, profit sharing (including
401(k)), severance salary continuation and fringe benefits) which are no less
favorable in the aggregate than those generally available to similarly situated
directors, officers and employees of Parent and its significant Subsidiaries.
For purposes of eligibility to participate and vesting in all such benefits, the
directors, officers and employees of the Company and its Subsidiaries will be
credited with their years of service with the Company and its Subsidiaries and
prior employers to the extent service with the Company and its Subsidiaries and
prior employers is taken into account under plans of the Company and its
Subsidiaries. Nothing contained in the Merger Agreement creates any third party
beneficiary rights in any director, officer or employee (including any
beneficiary or dependent thereof) of the Company, any of its Subsidiaries or the
Surviving Corporation in respect of continued employment for any specified
period of any nature or kind whatsoever, and nothing contained in Merger
Agreement creates such third party rights in any such person in respect of any
benefits that may be provided, directly or indirectly, under any employee
benefit plan or arrangement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains
representations and warranties of the Company regarding: the due organization,
good standing and authority to conduct business and own, lease and operate its
properties for each of the Company and its Subsidiaries; the capitalization of
the Company and its Subsidiaries; the authority of the Company to enter into the
Merger Agreement and the other Transaction Documents and to consummate the
transactions contemplated thereby, subject to the Company Stockholder Approval,
unless the Merger may be effected pursuant to Section 253 of the DGCL; the
absence of conflict between transactions contemplated by the Transaction
Documents and other agreements, documents and permits and absence of violations
of laws applicable to the Company; consents and approvals; the adequacy of
filings with the SEC; the accuracy, truthfulness and adequacy of documents filed
with or sent to the SEC or any other regulatory authority; the absence of
violations of certain agreements, documents and permits of the Company;
compliance with applicable law regarding permits; the absence of litigation;
certain matters relating to taxes; the full disclosure by the Company of certain
management, employment, consulting or other agreements, contracts or
commitments; certain matters relating to ERISA; the conduct of business in the
ordinary course and the absence of certain material adverse changes since
March 31, 1997; the absence of undisclosed material liabilities; the Company's
receipt of the opinion of Furman Selz LLC as to the fairness, from a financial
point of view, of the cash consideration to be received by the stockholders of
the Company in the Offer and the Merger; the stockholder vote required to
approve the Merger Agreement and the Merger; certain labor matters; the
ownership or the rights to use of the Company's and its Subsidiaries' Intangible
Property; certain environmental matters; the ownership of real property in fee,
and the holding of leasehold interests, by the Company and its Subsidiaries free
and clear of all mortgages, pledges, liens, encumbrances and security interests;
the holding of good title by the Company and its Subsidiaries to tangible
property and assets; the recommendation by the Board of Directors of the Company
of the Merger Agreement, the Offer and the Merger; the disclosure of material
contracts to which the Company or any Subsidiary are parties or by which the
Company or any Subsidiary are bound; the disclosure of certain related party
transactions; the compliance of the Schedule 14D-9 in all material respects with
the Exchange Act; the engagement of brokers and financial advisors; and the
disclosure of the Atrium Agreements. "Material Adverse Effect" is defined in the
Merger Agreement to mean, with respect to any party, any events, changes or
effects which, individually or in the aggregate, would have a material adverse
effect on the business, operations, assets, condition (financial or otherwise)
or results of operations of such party and its Subsidiaries, taken as a whole.
The Merger Agreement also includes representations and warranties by Parent
and Purchaser regarding: the due organization, good standing and authority to
conduct business and own, lease and operate its properties; the authority of
Parent and Purchaser to enter into the Merger Agreement and the other
Transaction Documents to which each is a party; the absence of conflict with
other agreements and documents and the absence of violation of laws applicable
to Parent and Purchaser, respectively; consents and approvals; the accuracy,
truthfulness and adequacy of documents filed with or sent to the SEC or any
other regulatory authority; the approval of the Board of Directors of Parent of
the Transaction Documents; the receipt by
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Parent of certain financing commitments for the Merger; the compliance of the
Schedule 14D-1 in all material respects with the Exchange Act and the engagement
of brokers and financial advisors.
CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the respective
obligations of each party to the Merger Agreement to effect the Merger are
subject to the satisfaction or waiver of the following conditions prior to the
Closing Date: (i) approval and adoption of the Merger Agreement and the Merger
by the holders of a majority of the outstanding shares of Company Common Stock
entitled to vote thereon; (ii) termination or expiration of the waiting period
(and any extension thereof) applicable to the Merger under the HSR Act with no
restrictive order having been placed on the Company, Parent, Purchaser or the
Surviving Corporation in connection therewith; (iii) no temporary restraining
order, preliminary or permanent injunction or other order or decree issued by
any court of competent jurisdiction preventing the consummation of the Merger
being in effect; (iv) no statute, rule, order, decree or regulation having been
enacted or promulgated by any government or governmental agency or authority
which prohibits consummation of the Merger; and (v) Parent and Purchaser having
accepted for purchase and paid for the Shares tendered pursuant to the Offer
(provided, however, that this condition will be deemed satisfied with respect to
Parent and Purchaser or if Purchaser shall have failed to purchase Shares
pursuant to the Offer in violation of the terms of the Offer or the Merger
Agreement.)
TERMINATION. The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time (whether before or after the
approval of the Merger Agreement and the Merger by Parent or by the stockholders
of the Company) by mutual written consent of Parent and the Company or their
respective Boards of Directors, or under the following circumstances:
PARENT OR THE COMPANY. The Merger Agreement provides that either Parent or
the Company may terminate the Merger Agreement and abandon the Merger if: (i)
any permanent injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become final and
non-appealable; (ii) the Company Stockholder Approval is not obtained by reason
of the failure to obtain the required vote upon a vote held at the Stockholders'
Meeting or any adjournment thereof; (iii) the Offer shall not have been
consummated by October 31, 1997 or the Merger shall not have been consummated by
December 31, 1997, except that the right to terminate the Merger Agreement under
this clause (iii) is not available to any party whose breach of the Merger
Agreement has been the cause of or resulted in the failure of the Offer to be
consummated or the Merger to occur on or before such date, or (iv) if neither
the Company nor Parent is then in material breach of its obligations under the
Merger Agreement, if no Shares shall have been purchased in connection with the
Offer upon the expiration of the Offer.
PARENT. The Merger Agreement provides that Parent may terminate the Merger
Agreement and abandon the Merger prior to the consummation of the Offer: (i) so
long as Parent is not in material breach of its obligations under the Merger
Agreement, (A) if the Company has breached any of its representations or
warranties under the Merger Agreement, which breach has not been cured within
ten calendar days following receipt by the Company of notice of such breach and
is existing at the time of termination of the Merger Agreement, except for
breaches that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or materially adversely affect the ability of the
parties to the Merger Agreement to consummate the transactions contemplated
thereby, or (B) if (1) the Company has breached its covenants regarding the
solicitation of Acquisition Proposals (see "-- No Solicitation"), or (2) the
Company is in material breach of any other covenant or agreement set forth in
the Merger Agreement, which material breach has not been cured within ten
calendar days following receipt by the Company of notice of such breach and is
existing at the time of termination by the Merger Agreement; (ii) if the Board
of Directors of the Company fails to make or withdraws or modifies its
recommendation or approval of the Offer, the Merger or the Merger Agreement and
the transactions contemplated thereby or recommends to the Stockholders an
Acquisition Proposal, or if the Board of Directors of the Company resolves to do
any of the foregoing; or (iii) if a tender offer or exchange offer for 50% or
more of the outstanding shares of capital stock of the Company is commenced
(other than by the Company or its affiliates) and the Board of Directors of the
Company fails to timely recommend against the stockholders of the Company
tendering their shares into such tender offer or exchange offer.
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THE COMPANY. The Merger Agreement provides that the Company may terminate
the Merger Agreement and abandon the Merger prior to the consummation of the
Offer: (i) so long as the Company is not in material breach of its obligations
under the Merger Agreement, (A) if Parent or Purchaser has breached any of its
representations or warranties under the Merger Agreement, which breach has not
been cured within ten calendar days following receipt by Parent or Purchaser of
notice of such breach and is existing at the time of termination of the Merger
Agreement, except for breaches that would not, individually or in the aggregate,
have a Material Adverse Effect on Parent or Purchaser or materially adversely
affect the ability of the parties to the Merger Agreement to consummate the
transactions contemplated thereby, and (B) if Parent or Purchaser is in material
breach of any covenant or agreement set forth in the Merger Agreement, which
breach has not been cured within ten calendar days following receipt by Parent
or Purchaser of notice of such breach and is existing at the time of termination
of the Merger Agreement; or (ii) prior to the consummation of the Offer pursuant
to the right of termination described above under "-- No Solicitation," provided
that (A) Parent receives at least five days prior written notice from the
Company of its intention toeffect such termination to such section, (B) during
such five-day period, the Company will, and will cause its financial and legal
advisors to, consider any adjustment in the terms and conditions of the Merger
Agreement that Parent may propose, and (C) the Company may not effect
termination pursuant to such section unless the Company has contemporaneously
tendered to Parent or its designee the amounts described below under
"-- Termination Fees and Expenses."
TERMINATION FEES AND EXPENSES. The Merger Agreement provides that all
costs and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby will be paid by the party incurring such
expenses, except (i) as otherwise described below, and (ii) with respect to
claims for damages incurred as a result of a material breach of the Merger
Agreement.
If the Merger Agreement is terminated: (i) by either Parent or the Company
because the Stockholders of the Company did not approve the Merger Agreement by
reason of the failure to obtain the required vote upon a vote held at the
Stockholders' Meeting, or at any adjournment thereof, and if, at the time of
such termination or after July 24, 1997 and prior to the Stockholders' Meeting,
there is a public announcement of an Acquisition Proposal (other than an
Acquisition Proposal that is publicly withdrawn at least 15 days prior to the
taking of the vote at the Stockholders' Meeting); (ii) by Parent if, prior to
the consummation of the Offer, (A) the Board of Directors failed to make or
withdrew or modified its recommendation or approval of the Merger Agreement or
the Merger or the transactions contemplated thereby, or recommended to the
Stockholders an Acquisition Proposal, or the Board resolved to do any of the
foregoing, or (B) a tender offer or exchange offer for 50% or more of the
outstanding shares of capital stock of the Company was commenced (other than by
the Company or its affiliates) and the Board failed to timely recommend against
the stockholders of the Company tendering their shares into such tender offer or
exchange offer; or (iii) by the Company prior to the consummation of the Offer
because it shall have received an unsolicited written, bona fide Acquisition
Proposal in accordance with the provisions described above under "-- No
Solicitation"; then in any such case (other than in the case of clause (i)
above, in which case amounts payable hereunder shall be payable only if the
Company consummates an Acquisition Proposal within 12 months of termination of
the Merger Agreement) the Company shall pay to Parent or Parent's designee,
contemporaneously with termination of the Merger Agreement, the following
amounts in immediately available funds: (1) an amount equal to $9,500,000 and
(2) an amount, not to exceed $2,500,000, to reimburse Parent and its affiliates
for all reasonable out-of-pocket fees, costs and expenses incurred by any of
them in connection with their due diligence efforts or the transactions
contemplated in the Transaction Documents or in the Financing Commitments,
including, without limitation, (x) fees, costs and expenses of accountants,
escrow agents, counsel, financial advisors and other similar advisors, (y) fees
paid to any governmental entity, and (z) fees, costs and expenses paid or
payable to third parties under the Financing Commitments or in connection with
the transactions contemplated therein, including, without limitation, any
purchaser or underwriter's discounts relating to the sale of the subordinated
debt financing contemplated therein or (except for the principal amount payable
in connection therewith, but including all accrued interest payable in
connection therewith) the making of any repurchase offer in respect of such
subordinated debt financing.
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OTHER AGREEMENTS. Parent and Purchaser have agreed to pay the full amount
of any and all transfer, capital gains and other taxes, fees or costs incurred
or assessed by any New York City or New York State (or other state or local)
taxing authority for which Parent, Purchaser, the Company or the holders of
Common Stock of the Company are liable in connection with the sale or transfer
of real estate pursuant to the Offer or the Merger, and such amounts will not be
deducted from the consideration otherwise payable to a holder of shares of
Common Stock pursuant to the Offer or the Merger. Subject to the foregoing,
Parent and Purchaser, as applicable, will be entitled to deduct and withhold
from the consideration otherwise payable under the Merger Agreement (including
pursuant to the Offer) to holders of shares of Common Stock, Options or Unvested
Stock, such amounts as Parent and Purchaser are required to deduct and withhold
with respect to the making of such payment under the Code or any provision of
state, local or foreign tax law, and such withheld amounts will be treated as
having been paid to such holders.
Parent has agreed to deliver to the Board of Directors of the Company any
solvency letter from any third party appraisal or similar form that Parent
provides to the providers of financing under the Financing Commitment.
AMENDMENT; WAIVER. The Merger Agreement provides that it may be amended,
modified or supplemented only by written agreement of each of the Company,
Parent and Purchaser at any time prior to the Effective Time, provided that
after the Company Stockholder Approval, no such amendment or modification will
be permitted to reduce the amount or change the form of the Merger
Consideration. The Merger Agreement further provides that, at any time prior to
the Effective Time, the parties to the Merger Agreement, by action taken or
authorized by their respective Boards of Directors, subject to the provisions of
the Merger Agreement with respect to Continuing Directors may (i) extend the
time for the performance of any of the obligations or other acts of the other
parties thereto, (ii) waive any inaccuracies in the representations and
warranties contained in the Merger Agreement or in any document delivered
pursuant to the Merger Agreement, or (iii) waive compliance with any of the
conditions and agreements contained in the Merger Agreement. See "-- Designation
of Directors."
CONFIDENTIALITY AGREEMENT
The Company and Parent entered into a confidentiality agreement dated
September 27, 1995 (as amended to date, the "Confidentiality Agreement")
pursuant to which the Company provided Parent and its representatives certain
information and material concerning the Company on a confidential basis. Parent
also agreed on behalf of itself and its affiliates to certain standstill
provisions for a period of two years with respect to certain actions involving
or leading to a transaction with the Company without the prior consent of the
Company, which standstill provisions were extended in an amendment to the
Confidentiality Agreement dated June 18, 1997 for a period of one year from the
date of amendment. On June 23, 1997, the Company executed and sent to Parent a
waiver of the provisions of the Confidentiality Agreement requiring Parent to
obtain the written consent of the Company Board prior to making a proposal to
acquire the Company solely for the purpose of permitting Parent to make one or
more proposals to the Company Board to acquire the entire equity interest of the
Company. The foregoing summary of the Confidentiality Agreement is qualified in
its entirety by the text of the Confidentiality Agreement, a copy of which is
filed as Exhibit (c)(2) to the Schedule 14D-1 and is incorporated herein by
reference.
THE STOCK PURCHASE AGREEMENT
The following is a summary of certain provisions of the Stock Purchase
Agreement, dated as of July 24, 1997, between Parent and the Company (the "Stock
Purchase Agreement"). This summary is qualified in its entirety by reference to
the Stock Purchase Agreement which is incorporated herein by reference and a
copy of which has been filed with the SEC as an exhibit to the Schedule 14D-1.
The Stock Purchase Agreement contains customary provisions pursuant to which,
among other things, Parent has purchased 640,000 shares of the Company's Common
Stock for an aggregate purchase price of $12 million. The Company agreed to use
the proceeds of such sale first to satisfy its obligations to Atrium Acquisition
Holdings Corp. under the terms of the Atrium Agreement and, if there remain any
proceeds after such obligations are fully satisfied, for
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general corporate purposes. The Atrium Agreement is described in Section 10
"Background of the Offering Contacts with the Company" above.
THE REGISTRATION RIGHTS AGREEMENT
The following is a summary of certain provisions of the Registration Rights
Agreement, dated as of July 24, 1997, between Parent and the Company (the
"Registration Rights Agreement"). This summary is qualified in its entirety by
reference to the Registration Rights Agreement which is incorporated herein by
reference and a copy of which has been filed with the SEC as an exhibit to the
Schedule 14D-1. The Registration Rights Agreement contains customary provisions
pursuant to which, among other things, if, following the earlier of (i) the
consummation of a merger, consolidation, tender offer, sale of assets or other
disposition of the Company other than pursuant to the Merger Agreement, and (ii)
ninety (90) days after the termination of the Merger Agreement or the failure to
consummate the transactions contemplated thereby regardless of the reasons
therefore, Parent requests to effect the registration under the Securities Act
of Registrable Securities (the shares purchased pursuant to the Stock Purchase
Agreement), then the Company will promptly use its best efforts to effect such
registration under the Securities Act of such securities that the Company has
been so requested to register. In addition, if at any time following the date of
the Registration Rights Agreement, the Company proposes to register either
authorized but unissued shares of Common Stock, shares held in its treasury or
any other shares of its Common Stock (other than on Form S-4 or Form S-8
promulgated under the Securities Act or any successor forms thereto and other
than pursuant to a registration statement covered by Rule 462 promulgated under
the Securities Act), then Parent may include in such registration Registrable
Shares and the Company shall use its best efforts to cause all such Registrable
Shares to be included in such registration on the same terms and conditions as
the securities otherwise being sold in such registration. All of the foregoing
requests are subject to customary cutbacks and lockup provisions.
OPTION RELEASE AGREEMENTS
Prior to the Closing Date of the Merger, each director and executive
officer of the Company is expected to enter into an Option Surrender Agreement,
Release and Waiver substantially in the form of Exhibit B to the Merger
Agreement (each, an "Option Release Agreement") pursuant to which such director
or executive officer (in such context, an "Optionholder") agrees to surrender
Options held by him for cancellation. For each share of Common Stock subject to
such Option, the Optionholder will receive an amount (subject to applicable
withholding tax) in cash equal to the Option Consideration. The ability of
Messrs. Silverman, Dooskin and Synder to enter into Option Release Agreements is
subject to their obligations under the Stockholders Agreement (as described
below).
Jeffrey S. Silverman, Chairman and Chief Executive Officer and a Director
of the Company, is expected to enter into an Option Release Agreement with
respect to the 100,000 shares of Unvested Stock held by him, as well as with
respect to all Options held by him. Pursuant to certain of the outstanding
Options held by Mr. Silverman (with respect to 600,000 shares of Common Stock),
the number of shares subject to such Options doubles upon a "change of control,"
and Mr. Silverman will be entitled to receive the Option Consideration with
respect to such additional Shares. For each share of Unvested Stock, Mr.
Silverman will receive cash in the amount of the per share Unvested Stock
Consideration. The aggregate amount of Option Consideration and Unvested Stock
Consideration to be received by Mr. Silverman in connection with the Option
Release Agreement he is expected to enter into would be $22,070,875. However, by
reason of the Stockholders Agreement (as described below), $1,854,844 of such
amount will be paid to Atrium.
Pursuant to certain of the outstanding Options held by Herbert P. Dooskin,
Executive Vice President and a Director of the Company (with respect to 150,000
shares of Common Stock) the number of such shares subject to such Options
doubles upon a "change of control," and Mr. Dooskin will be entitled to receive
the Option Consideration with respect to such additional Shares. The aggregate
amount of Option Consideration to be received by Mr. Dooskin in connection with
the Option Release Agreement he is expected to enter into would be $3,982,625.
However, by reason of the Stockholders Agreement $291,563 of such amount will be
paid to Atrium.
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Mr. Synder, President and Chief Operating Officer and a Director of the
Company, is expected to enter into an Option Release Agreement with respect to
the Options held by him. The aggregate amount of Option Consideration to be
received by Mr. Synder in connection with the Option Release Agreement he is
expected to enter into would be $3,625,528. However, by reason of the
Stockholders Agreement, $515,728 of such amount will be paid to Atrium.
Messrs. Joseph M. Goldenberg, Albert Hersh, William Lilley III and Elihu H.
Modlin are Directors of the Company, and hold Options for 52,200, 26,700, 17,700
and 36,450 shares, respectively. Each of such Directors is expected to enter
into an Option Release Agreement prior to the Closing Date. The aggregate amount
of Option Consideration to be received by such Directors is $392,700 for
Mr. Goldenberg, $171,575 for Mr. Hersh, $89,450 for Mr. Lilley and $261,763 for
Mr. Modlin. In addition, Charles M. Modlin, son of Elihu Modlin and Secretary of
the Company, holds Options for 17,500 shares. He is expected to enter into an
Option Release Agreement prior to the Closing Date, pursuant to which he will
receive Option Consideration in an aggregate amount of $89,375.
Messrs. Donald Kruse and Michael Vagedes are, respectively, Chairman of
Sagebrush Sales, Inc., and President of Richwood Building Products, Inc., each
of which is a wholly owned subsidiary of the Company. Messrs. Kruse and Vagedes
hold Options for 40,000 and 9,000 shares, respectively. Each of such persons is
expected to enter into an Option Release Agreement prior to the Closing Date.
The aggregate amount of Option Consideration to be received by such persons is
$259,375 for Mr. Kruse and $61,188 for Mr. Vagedes.
SILVERMAN NON-COMPETE AND TERMINATION AGREEMENT
Concurrently with the execution and delivery of the Merger Agreement,
Jeffrey S. Silverman entered into a Non-Compete and Termination Agreement with
the Company (the "Non-Compete and Termination Agreement"). Pursuant to the
Non-Compete and Termination Agreement, as of the consummation of the Offer (as
defined in the Merger Agreement), Mr. Silverman will resign as an officer and
director of the Company and each of its subsidiaries, and his employment
agreement with the Company will be terminated in full. As liquidated damages for
the termination of Mr. Silverman's employment agreement, the Company will make a
payment to Mr. Silverman in the amount of $22,592,150, reduced by any amounts
advanced to Mr. Silverman as bonus for 1997 under the terms of his employment
agreement with the Company prior to the consummation of the Offer.
Pursuant to the Non-Compete and Termination Agreement, effective as of the
termination of Mr. Silverman's employment agreement, the Company will also
forgive certain indebtedness of Mr. Silverman to the Company of an aggregate
principal amount of $17,407,850 plus accrued interest, if any, a portion of
which shall represent liquidated damages for the termination of Mr. Silverman's
employment agreement and the remainder of which shall be in consideration of Mr.
Silverman's noncompetition agreement.
In the Non-Compete and Termination Agreement, Mr. Silverman has agreed, for
a period of two years from the consummation of the Offer, to not, among other
things, directly or indirectly compete with the Company or its subsidiaries in
the United States, engage in certain activities that may interfere with the
operations of the Company or its subsidiaries or aid competitors of the Company.
In the Non-Compete and Termination Agreement, Mr. Silverman has agreed,
effective as of the consummation of the Offer, to release and discharge the
Company and its subsidiaries from all claims and damages, including those
related to his employment with, and membership on the Boards of Directors for,
the Company and its subsidiaries and resignations therefrom, his employment
agreement, and all other acts or omissions related to any matter at any time
prior to and including the date of termination of his employment agreement;
except that such release does not include, among other things, Mr. Silverman's
entitlement to certain statutory rights to continued group medical coverage and
vested accrued benefits in certain of the Company's qualified employee benefit
plans.
In addition, in the event that the Company gives Parent notice of an
Acquisition Proposal (as defined in the Merger Agreement) that would permit the
Company to terminate the Merger Agreement as provided therein, the Company and
Mr. Silverman, pursuant to the Non-Compete and Termination Agreement, will
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extend to Parent, in connection with any adjustments in the terms and conditions
of the Merger Agreement that Parent may propose in response to such Acquisition
Proposal, an opportunity to enter into any agreements or arrangements with
respect to Mr. Silverman as may be specified in such notice on terms and
conditions no less favorable to Parent than those specified in such notice.
DOOSKIN TERMINATION AND RELEASE AGREEMENT
Contemporaneously with the execution and delivery of the Merger Agreement,
Herbert P. Dooskin entered into a Termination and Release Agreement (the
"Termination Agreement"). Pursuant to the Termination Agreement, as of the
consummation of the Offer, Mr. Dooskin will resign as an officer and director of
the Company and each of its subsidiaries, and his employment agreement with the
Company will be terminated in full. In consideration of the termination of Mr.
Dooskin's employment agreement, the Company agrees to pay Mr. Dooskin a sum in
the amount of $1,900,000. In addition, effective as of the termination of Mr.
Dooskin's employment agreement, the Surviving Company will forgive certain
indebtedness of Mr. Dooskin to the Company in a aggregate principal amount of
$49,500.
Pursuant to the Termination Agreement, effective as of the consummation of
the Offer, Mr. Dooskin will release and discharge the Company and its
subsidiaries from all claims and damages, including those related to his
employment with, and membership on the Boards of Directors for the Company and
its subsidiaries and resignations therefrom, his employment agreement, and all
other acts or omissions related to any matter at any time prior to and including
the date of termination of his employment agreement; provided, however, that
such release shall not include, among other things, Mr. Dooskin's entitlement to
certain statutory rights to continued group medical coverage and vested accrued
benefits in certain of the Company's qualified employee benefit plans.
STOCKHOLDERS AGREEMENT
Contemporaneously with the execution of the Atrium Agreement, Messrs.
Jeffrey S. Silverman, Dana R. Snyder and Herbert P. Dooskin (each, a "Relevant
Shareholder") entered into a Stockholders Agreement with Atrium. Such agreement
was amended and restated as of July 24, 1997, with Parent and Purchaser becoming
parties thereto (as amended and restated, the "Stockholders Agreement").
Pursuant to the Stockholders Agreement, each Relevant Stockholder has agreed to
tender all shares owned by him pursuant to the Offer, with 75% of the price paid
in the Offer over $18.75 per Share (the price per Share payable pursuant to the
Atrium Agreement) to be paid to Atrium and the remainder of the price paid in
the Offer to be paid to the Relevant Shareholder. Secondly, Atrium will be
entitled to 75% of the excess of the price paid in the Offer over $18.75 per
Share with respect to the Unvested Stock owned by Mr. Silverman. Upon
cancellation of the Options owned by the Relevant Shareholders (as described
above under "Option Release Agreements"), Atrium will be entitled to receive 75%
of the excess of the price paid in the Offer over $18.75 multiplied by the
number of shares of Common Stock issuable pursuant to such Options (including
the additional shares of Common Stock issuable by reason of a "change of
control"), and the Relevant Shareholder will be entitled to receive the
remainder of the Option Consideration. With respect to the Options held by
Messrs. Silverman and Dooskin with an exercise price of $19.125 per share of
Common Stock, however, Atrium shall be entitled to receive the entire amount of
the Option Consideration.
In addition, pursuant to the Stockholders Agreement, each Relevant
Shareholder granted Atrium an irrevocable option to purchase (collectively, the
"Purchase Options") all outstanding shares of Common Stock owned by him,
together with all shares of Common Stock (including any additional shares that
may be issuable as a result of a "change of control") owned by the Relevant
Shareholder as a result of his exercise of any Options held by him
(collectively, the "Option Shares") at a purchase price per Share equal to
$18.75, which may be exercised if the Offer is not consummated or under certain
other circumstances. In the event that Atrium purchases the Option Shares
pursuant to the Purchase Options and, within 180 days after the closing of such
purchase, sells, transfers or disposes of any of the Option Shares in a
transaction with an unaffiliated third party, Atrium Acquisition Corp. shall pay
to each Relevant Shareholder his respective pro rata share of 25% of the net
profit (as defined) realized by Atrium in connection with such disposition. In
the Stockholders Agreement, Parent and the Company have also agreed to release,
as of the consummation of the
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Offer, all claims they may have with respect to the $12 million payment made by
the Company in connection with the termination of the Atrium Agreement as
provided therein. THE FOREGOING SUMMARY OF THE STOCKHOLDERS AGREEMENT IS
QUALIFIED IN IT ENTIRETY BY REFERENCE TO THE TEXT OF THE STOCKHOLDERS AGREEMENT,
A COPY OF WHICH IS FILED AS EXHIBIT (C)(7) TO THIS SCHEDULE AND IS INCORPORATED
HEREIN BY REFERENCE.
12. PURPOSE OF THE OFFER AND MERGER; PLANS FOR THE COMPANY
The purpose of the Offer and the Merger is to acquire all the outstanding
Shares and thereby to obtain control of the Company. The Offer, as the first
step in the acquisition of the Company, is intended to facilitate the
acquisition of all the Shares. Consummation of the Offer will provide Purchaser
with at least a majority of the equity interest of the Company. The Merger will
allow Purchaser to acquire all Shares not tendered and purchased pursuant to the
Offer or otherwise. Pursuant to the Merger, each then outstanding Share (other
than Shares owned directly or indirectly by the Company, Shares held in the
treasury of the Company and Shares owned by stockholders who perfect appraisal
rights under the DGCL) would be converted into the right to receive an amount in
cash equal to the price per Share paid by the Purchaser pursuant to the Offer.
The acquisition of the entire equity interest in the Company has been structured
as a cash tender offer and a cash merger in order to provide a prompt and
orderly transfer of ownership of the Company from the public stockholders of the
Company to Parent. The purchase of Shares pursuant to the Offer will increase
the likelihood that the Merger will be consummated.
Except in the case of a "short-form" merger as described below, under the
DGCL, the approval of the Company's Board of Directors and the affirmative vote
of holders of a majority of the outstanding Shares (including any Shares owned
by the Purchaser) would be required to approve the Merger. Upon consummation of
the Offer, the Purchaser will have obtained voting power with respect to at
least a majority of the outstanding Shares, sufficient voting power to effect
the Merger without the vote of any other stockholder of the Company.
The DGCL also provides that if a parent company owns at least 90% of each
class of stock of a subsidiary, the parent company can effect a "short-form"
merger with that subsidiary without a stockholder vote. Accordingly, if, as a
result of the Offer or otherwise, Purchaser acquires or controls the voting
power of at least 90% of the outstanding Shares, Purchaser could, and in the
Merger Agreement has agreed to, effect the Merger without prior notice to, or
any action by, any other stockholder of the Company.
In the event the Purchaser acquires a majority of the outstanding Shares
pursuant to the Offer, and thereafter obtains control of the Company's board of
directors, it expects to cause the Company to cease paying quarterly dividends
on the remaining outstanding Shares. The Merger Agreement provides that Parent
and Purchaser intend that (i) the directors of Purchaser at the Effective Time
will be the initial directors of the Surviving Corporation, (ii) the officers of
the Purchaser at the Effective Time will be the initial officers of the
Surviving Corporation.
In connection with the Offer, Parent has reviewed, and will continue to
review, various possible business strategies that it might consider in the event
that it acquires all or substantially all of the equity interest in the Company.
Prior to making the Offer, Parent reviewed and analyzed the business of the
Company on the basis of publicly available information and information provided
by the Company. The strategies which Parent might consider could include, among
other things, consideration of the integration of certain assets or lines of
business of the Company with those of Parent and the disposition of certain
assets or lines of business of the Company. Upon the completion of the Offer,
Parent intends to conduct a detailed review of the Company and its assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel and consider what, if any, changes would be desirable
in light of the circumstances which then exist. To the extent that Parent or the
Purchaser cause the Company to dispose of any of its businesses or assets and
the proceeds of such dispositions are distributed to the Company's stockholders,
such distributions, to the extent received by Parent or the Purchaser, may be
used to reduce indebtedness incurred by them in connection with the Offer.
Except as described above or elsewhere in this Offer to Purchase, the
Purchaser does not have any present plans or proposals which relate to or would
result in an extraordinary corporate transaction, such as a
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merger, reorganization or liquidation involving the Company or any of its
subsidiaries, a sale or transfer of a material amount of the Company's assets
(or assets of its subsidiaries), any material change in the Company's present
capitalization, any other material change in the Company's business or corporate
structure, causing a class of securities of the Company to be delisted from a
national securities association, or causing a class of equity securities of the
Company to become eligible for termination of registration pursuant to the
Exchange Act.
Holders of Shares do not have appraisal rights as a result of the Offer.
However, if the Merger is consummated, holders of Shares at the effective time
of the Merger will have certain rights pursuant to the provisions of Section 262
of the DGCL ("Section 262") to dissent and demand appraisal of their Shares.
Under Section 262, dissenting stockholders who comply with the applicable
statutory procedures will be entitled to receive a judicial determination of the
fair value of their Shares (exclusive of any element of value arising from the
accomplishment or expectation of the Merger) and to receive payment of such fair
value in cash, together with a fair rate of interest, if any. Any such judicial
determination of the fair value of Shares could be based upon factors other
than, or in addition to, the price per Share to be paid in the Merger or the
market value of the Shares. The value so determined could be more or less than
the price per Share to be paid in the Merger. The foregoing summary of Section
262 does not purport to be complete and is qualified in its entirety by
reference to Section 262.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of holders
of Shares, which could adversely affect the liquidity and market value of the
remaining Shares held by stockholders other than Purchaser. Purchaser cannot
predict whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to be
greater or less than the Offer Price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing and
may, therefore, be delisted from such exchange. According to the NYSE's
published guidelines, the NYSE could consider delisting the Shares if, among
other things, the number of publicly held Shares (excluding Shares held by
officers, directors, their immediate families and other concentrated holdings of
10% or more) were less than 600,000, there were less than 1,200 holders of at
least 100 Shares or the aggregate market value of the publicly held Shares was
less than $5 million. If, as a result of the purchase of Shares pursuant to the
Offer, the Shares no longer meet the requirements of the NYSE for continued
listing and the listing of Shares on such exchanges is discontinued, the market
for the Shares could be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
trade on another securities exchange or in the over-the-counter market and that
price quotations for the Shares would be reported by such exchange or through
NASDAQ or other sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon such factors as the
number of holders and/or the aggregate market value of the publicly held Shares
at such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the SEC if the Shares are neither listed on a national securities
exchange nor held by 300 or more holders of record. Termination of registration
of the
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Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to its stockholders and to the SEC and
would make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b) of
the Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with stockholders' meetings and
the related requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act may
be impaired or eliminated. It is the current intention of Parent to deregister
the Shares after consummation of the Offer if the requirements for termination
of registration are met.
14. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of the Merger Agreement, the Company should (a)
split, combine or otherwise change the Shares or its capitalization, (b) acquire
or otherwise cause a reduction in the number of outstanding Shares or other
securities (other than as required by the terms of the Company's securities
outstanding or any employee benefit plan in effect on the date of the Merger
Agreement), or (c) issue or sell additional Shares (other than as permitted
pursuant to the Stock Purchase Agreement between the Company and Parent or upon
exercise of outstanding Options), shares of any other class of capital stock,
other voting securities or any securities convertible into or exchangeable for,
or rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, then, without prejudice to Purchaser's rights under Section 1 and 16,
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including, without
limitation, the number or type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should
declare or pay any dividend on the Shares (other than the regular quarterly
dividend in no event to exceed $.03 per share per quarter to the stockholders of
record with such record dates as are consistent with past practice) or make any
distribution (including, without limitation, cash dividends, the issuance of
additional Shares pursuant to a stock dividend or stock split, the issuance of
other securities or the issuance of rights for the purchase of any securities)
with respect to the Shares, payable or distributable to stockholders of record
on a date prior to the transfer of the Shares purchased pursuant to the Offer to
Purchase or its nominee or transferee on the Company's stock transfer records,
then, without prejudice to Purchaser's rights under Sections 1 and 16, (a) the
Offer Price may, in the sole discretion of Purchaser, be reduced by the amount
of any such cash dividend or cash distribution and (b) the whole of any such
noncash dividend, distribution or issuance to be received by the tendering
stockholders will (i) be received and held by the tendering stockholders for the
account of Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
Purchaser, accompanied by appropriate documentation of transfer, or (ii) at the
direction of Purchaser, be exercised for the benefit of Purchaser, in which case
the proceeds of such exercise will promptly be remitted to Purchaser. Pending
such remittance and subject to applicable law, Purchaser will be entitled to all
rights and privileges as owner of any such dividend, distribution or right and
may withhold the entire purchase price for Shares tendered in the Offer or
deduct from the purchase price the amount or value thereof, as determined by
Purchaser in its sole discretion.
Section 6.1 of the Merger Agreement prohibits the Company from taking any
of the foregoing actions without the prior consent of Parent.
On July 21, 1997 the Company declared a regular quarterly dividend of $.03
payable on September 5, 1997 to shareholders of record on August 7, 1997.
Shareholders of record on August 7, 1997 who tender their Shares (whether before
or after such date), will be entitled to such dividend whether or not such
Shares are tendered in the Offer.
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15. EXTENSION OF TENDER PERIOD; AMENDMENT; TERMINATION
Purchaser expressly reserves the right, in its sole discretion, at any time
or from time to time, regardless of whether or not any of the Conditions set
forth at Section 16 will have occurred or will have been determined by Purchaser
to have occurred, subject to the terms of the Merger Agreement and the
applicable rules of the SEC, to amend the terms and conditions of the Offer in
any respect by giving oral or written notice of such amendment to the Depositary
provided that without the consent of the Company, no amendment may be made which
(x) decreases the price per Share or changes the form of consideration payable
in the Offer, (y) decreases the number of Shares sought, or (z) changes any of
the Conditions or imposes additional conditions to the Offer or amends any other
term of the Offer in any manner adverse to the holders of Shares. IN NO EVENT
MAY THE PURCHASER WAIVE THE MINIMUM CONDITION WITHOUT THE CONSENT OF THE
COMPANY.
Pursuant to the Merger Agreement, and subject to the terms and conditions
of the Offer, if all of the Conditions (as defined in Section 16) are not
satisfied on the initial Expiration Date, and the Merger Agreement has not been
terminated in accordance with its terms, Purchaser shall extend (and re-extend)
the Offer to provide time to satisfy such Conditions through the Final
Termination Date unless, in the reasonable judgment of Parent and Purchaser, any
Condition is incapable of being satisfied prior to the Final Termination Date.
From and after the Final Termination Date, if all of the Conditions have not
been satisfied on any Expiration Date of the Offer and the Merger Agreement has
not been terminated in accordance with its terms, Purchaser may but shall not be
obligated to extend and re-extend the Offer to provide time to satisfy such
Conditions.
Purchaser also reserves the right, in its sole discretion, subject to the
terms of the Merger Agreement, in the event any of the Conditions specified in
Section 16 will not have been satisfied and so long as Shares have not
theretofore been accepted for payment, to delay (except as otherwise required by
applicable law) acceptance for payment of or payment for Shares or to terminate
the Offer and not accept for payment or pay for Shares.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is delayed in its purchase of or payment
for Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may retain tendered Shares on behalf of Purchaser, and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to withdrawal
rights as described in Section 4. However, the ability of Purchaser to delay the
payment for Shares which Purchaser has accepted for payment is limited by Rule
14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by or on behalf of
holders of securities promptly after the termination or withdrawal of such
bidder's offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer (including the Minimum Condition), Purchaser
will disseminate additional tender offer materials and extend the Offer to the
extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The
minimum period during which the Offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in percentage of securities sought, will
depend upon the facts and circumstances, including the relative materiality of
the terms or information. With respect to a change in price or a change in
percentage of securities sought, a minimum ten business day period is generally
required to allow for adequate dissemination to stockholders and investor
response. If prior to the Expiration Date, Purchaser should decide to increase
the price per Share being offered in the Offer, such increase will be applicable
to all stockholders whose Shares are accepted for payment pursuant to the Offer.
16. CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including without limitation, Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return Shares
promptly after termination or withdrawal of the Offer), pay for, or may delay
the acceptance for payment of or payment for,
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any tendered shares, if (i) any applicable waiting period under the HSR Act
shall not have expired or been terminated, (ii) the number of Shares validly
tendered and not withdrawn, when added to the Shares then beneficially owned by
Parent, does not constitute a majority of the Shares then outstanding on a
fully-diluted basis; (iii) Parent and Purchaser shall not have received the debt
financing for the transactions contemplated by the Merger Agreement on terms
substantially as outlined in the Financing Commitment or (iv) on or after the
date of the Merger Agreement and at or before the time of payment for the
Shares, any of the following events shall occur and be continuing:
(a) there shall have occurred and be continuing (1) any general
suspension of trading in, or limitation on prices for, securities on the
NYSE (other than suspensions for not more than one business day), (2) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (3) the
commencement of a war, armed hostilities or other international or national
calamity involving the United States and having had or being reasonably
likely to have a material adverse effect or materially adversely affecting
(or materially delaying) the consummation of the Offer, (4) any material
limitation or proposed material limitation (whether or not mandatory) by
any governmental entity, or any other event, that materially adversely
affects generally the extension of credit by banks or other financial
institutions, or (5) in the case of any of the situations described in
clauses (1) through (4) inclusive, existing at the date of the Merger
Agreement, a material acceleration, escalation or worsening thereof;
(b) the representations and warranties of the Company set forth in the
Merger Agreement shall not have been true and correct in all respects
(provided that any representation or warranty of the Company contained in
the Merger Agreement that is subject to materiality, "Material Adverse
Effect" or similar qualification shall not be so qualified for purposes of
determining the existence of any breach thereof on the part of the Company)
as of the date of the Merger Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
scheduled expiration date of the Offer as though made on and as of such
scheduled expiration date, except for such breaches that would neither
individually or in the aggregate with any other breaches on the part of the
Company, (i) have a "Material Adverse Effect" on the Company nor (ii)
materially adversely affect the ability of the parties to the Merger
Agreement to consummate the transactions contemplated by the Merger
Agreement; or the Company shall not have performed in all material respects
(provided that any obligation the performance of which is subject to
materiality, "Material Adverse Effect" or similar qualification shall not
be so qualified for purposes of determining the existence of any
nonperformance thereof) all obligations required to be performed by it
under the Merger Agreement.
(c) there shall be any action or proceeding commenced by any
Governmental Entity, which has a reasonable likelihood of success and
which, if decided adversely to the Company, would have a Material Adverse
Effect or would restrain, prohibit or materially delay the consummation of
the Offer and if decided adversely to Parent, would have the effect of (i)
making the purchase of, or payment for, some or all of the Shares pursuant
to the Offer or the Merger or otherwise illegal, or resulting in a material
delay in the ability of Parent or Purchaser to accept for payment or pay
for some or all of the Shares, (ii) compelling Parent or Purchaser to
dispose of or hold separately all or any material portion of the Company's
or Parent's business or assets, (iii) making illegal, or otherwise directly
or indirectly restraining or prohibiting or imposing material financial
burdens, penalties or, fines or requiring the payment of material damages
in connection with the making of, the Offer, the acceptance for payment of,
payment for, or ownership, directly or indirectly, of some of or all the
Shares by Parent or Purchaser, the consummation of the Offer or the Merger,
(iv) otherwise preventing consummation of the Offer or the Merger, or (v)
imposing material limitations on the ability of Parent or Purchaser
effectively (A) to acquire, hold or operate the business of the Company and
its subsidiaries taken as a whole or (B) to exercise full rights of
ownership of the Shares acquired by it, including, but not limited to, the
right to vote the Shares purchased by it on all matters properly presented
to the stockholders of the Company, which, in either case, would effect a
material diminution in the value of the Company or the Shares;
(d) there shall have been any law, rule or regulation enacted,
promulgated, entered or deemed applicable to the Offer or the Merger
Agreement or any other action shall have been taken by any
41
<PAGE> 42
Governmental Entity on or after the date of the Offer that would result in
any of the consequences referred to in clauses (i) through (v) of paragraph
(c) above (other than with respect to clause (i) of paragraph (c), if there
shall have been a material delay in the ability of Parent of Purchaser to
accept for payment or pay for some or all of the Shares due to a request
for additional information under the HSR Act);
(e) the Board of Directors of the Company shall have publicly
(including by amendment of its Schedule 14D-9) withdrawn or adversely
modified its recommendation of acceptance of the Offer;
(f) since the date of the Merger Agreement, there shall have occurred
any event or events that, singly or in the aggregate, have had or would
have a Material Adverse Effect; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms, or Parent or Purchaser shall have reached an agreement or
understanding in writing with the Company providing for termination or
amendment of the Offer;
which, in any such case, and regardless of the circumstances (including any
action or inaction by Parent or Purchaser other than a breach by Parent or
Purchaser of the Merger Agreement) giving rise to any such conditions,
makes it in the reasonable judgment of the Parent, inadvisable to proceed
with the Offer and/or with such acceptance for payment of the Shares.
The foregoing conditions (the "Conditions") are for the sole benefit of
Parent and Purchaser and may be asserted by Parent or Purchaser regardless of
the circumstances giving rise to any such Condition (other than a breach by
Parent or Purchaser of the Merger Agreement) and may be waived by Parent or
Purchaser, in whole or in part, at any time and from time to time, in the sole
discretion of Parent or Purchaser; provided, that the Minimum Condition is also
for the benefit of the Company and may not be waived without the Company's
consent. The failure by Parent or Purchaser at any time to exercise any of the
foregoing rights will not be deemed a waiver of any right and each right will be
deemed an ongoing right which may be asserted at any time and from time to time.
17. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
GENERAL. Except as described in this Section 17, based upon a review of
publicly available filings by the Company with the SEC and other publicly
available information concerning the Company, neither Parent nor Purchaser is
aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by Purchaser or Parent pursuant
to the Offer, the Merger or otherwise, except as set forth below, of any
approval or other action by any governmental, administrative or regulatory
agency or authority, domestic or foreign, that would be required prior to the
acquisition of Shares by Purchaser pursuant to the Offer, the Merger or
otherwise. Should any such approval or other action be required, Purchaser and
Parent currently contemplate that it will be sought. While Purchaser does not
currently intend to delay the acceptance for payment of Shares tendered pursuant
to the Offer pending the outcome of any such matter, there can be no assurance
that any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that adverse consequences might not
result to the Company's business or that certain parts of the business of the
Company or Parent might not have to be disposed of in the event that such
approvals were not obtained or any other actions were not taken. Purchaser's
obligation under the Offer to accept for payment and pay for Shares is subject
to certain conditions, including conditions relating to certain of the legal
matters discussed in this Section 17. See Section 16.
STATE TAKEOVER STATUTES. Section 203 of the DGCL prohibits business
combination transactions involving a Delaware corporation (such as the Company)
and an "interested stockholder" (defined generally as any person that directly
or indirectly beneficially owns 15% or more of the outstanding voting stock of
the subject corporation) for three years following the date such person became
an interested stockholder, unless special requirements are met or certain
exceptions apply, including that prior to such date the board of directors of
the subject corporation approved either the business combination or the
transaction which resulted in such person being an interested stockholder. In
the Merger Agreement, the Company has represented that
42
<PAGE> 43
the Board of Directors has duly and validly approved the transactions
contemplated by the Merger Agreement, including the Offer, the Merger and the
acquisition of Shares pursuant thereto, for purposes of Section 203, and that
such provisions of Section 203 are not applicable to such transactions.
A number of states, have adopted "takeover" statutes that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal executive
offices or principal places of business in such states. The Company conducts
business in a number of states throughout the United States, some of which have
enacted "takeover" statutes. Except as discussed herein, Purchaser does not know
whether any of these statutes will, by their terms, apply to the Offer, and has
not complied with any such statutes. To the extent that certain provisions of
these statutes purport to apply to the Offer, Purchaser believes that there may
be reasonable bases for contesting such statutes. If any person should seek to
apply any state takeover statute, Purchaser would take such action as then
appears desirable, which action may include challenging the validity or
applicability of any such statute in appropriate court proceedings. If it is
asserted that one or more takeover statutes apply to the Offer, and it is not
determined by an appropriate court that such statute or statutes do not apply or
are invalid as applied to the Offer, Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities, and
Purchaser might be unable to purchase or pay for Shares tendered pursuant to the
Offer, or be delayed in continuing or consummating the Offer. In such case,
Purchaser may not be obligated to accept for payment or pay for Shares tendered.
See Section 15.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division of the Department of Justice (the "Antitrust Division") or the Federal
Trade Commission (the "FTC") or unless early termination of the waiting period
is granted. If, within the initial 15-calendar day waiting period, either the
Antitrust Division or the FTC requests additional information or material from
Parent concerning the Offer, the waiting period will be extended and would
expire at 11:59 p.m., New York City time, on the tenth calendar day after the
date of substantial compliance by Parent with such request. Only one extension
of the waiting period pursuant to a request for additional information is
authorized by the HSR Act. Thereafter, such waiting period may be extended only
by court order or with the consent of Parent. In practice, complying with a
request for additional information or material can take a significant amount of
time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's acquisition of the Shares
pursuant to the Offer and the Merger. At any time before or after Purchaser's
acquisition of Shares, the Antitrust Division or the FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Shares pursuant to the
Offer or otherwise or seeking divestiture of Shares acquired by Purchaser or
divestiture of substantial assets of Parent or its subsidiaries. Private parties
and state attorneys general may also bring legal action under the antitrust laws
in certain circumstances. Based upon an examination of publicly available
information relating to the business in which Parent and the Company are
engaged, Parent and Purchaser believe that the acquisition of Shares by
Purchaser will not violate the antitrust laws. Nevertheless, there can be no
assurance that a challenge to the Offer or other acquisition of Shares by
Purchaser on antitrust grounds will not be made or, if such challenge is made,
of the result. See Section 15 for certain conditions to the Offer, including
conditions with respect to litigation and certain governmental actions.
RULE 13E-3; DISSENTERS' RIGHTS.
The SEC has adopted Rule 13e-3 under the Exchange Act, which is applicable
to certain "going private" transactions and which may under certain
circumstances be applicable to a business combination following the purchase of
Shares pursuant to the Offer in which Purchaser seeks to acquire the remaining
Shares not held by it. Purchaser believes, however, that if such a business
combination is consummated within one year of its purchase of Shares pursuant to
the Offer, Rule 13e-3 will not be applicable to it. Purchaser believes that if
43
<PAGE> 44
such a business combination is not consummated within one year of its purchase
of Shares pursuant to the Offer, Rule 13e-3 will be applicable to it. Rule 13e-3
requires, among other things, that certain financial information concerning the
Company and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the SEC and disclosed to stockholders prior to
consummation of the transaction.
Holders of Shares do not have appraisal rights as a result of the Offer;
however, holders of Shares will have certain rights pursuant to the provisions
of Section 262 upon consummation of the Merger including the right to dissent
and demand appraisal of their Shares. Under Section 262, dissenting stockholders
who comply with the applicable statutory procedures will be entitled to receive
a judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment of expectation of the Merger)
and to receive payment of such fair value in cash, together with a fair rate of
interest, if any. Any such judicial determination of the fair value of Shares
could be based upon factors other than, or in addition to, the price per Share
to be paid in the Merger or the market value of the Shares. The value so
determined could be more or less than the price per Share paid in the Merger.
The foregoing summary of Section 262 does not purport to be complete and is
qualified in its entirety by reference to Section 262.
FEDERAL RESERVE BOARD REGULATIONS. The margin regulations promulgated by
the Federal Reserve Board place restrictions on the amount of credit that may be
extended for the purpose of purchasing margin stock (including the Shares) if
such credit is secured directly or indirectly by margin stock. Purchaser and
Parent believe that the financing of the acquisition of the Shares as
contemplated by the Financing Commitment will be made in accordance with the
margin regulations.
18. FEES AND EXPENSES
Purchaser and Parent have retained WP&Co to act as the Dealer Manager and
to provide certain financial advisory services in connection with the proposed
acquisition of the Company. In connection with such services, Parent has agreed
to pay WP&Co. a fee of up to 1% of the "Aggregate Consideration", defined to
mean the sum of the amount paid in the Offer and the Merger for the Shares, the
amount paid to holders of options to acquire Shares and the value of the
Company's long term debt (which is deemed to equal $150 million), of which
$500,000 has been paid. Parent and Purchaser jointly and severally will also
reimburse WP&Co. for certain out-of-pocket expenses, including attorneys' fees.
Parent and Purchaser jointly and severally will also indemnify WP&Co. against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws. In the ordinary course of its
business, WP&Co. engages in securities trading, market-making and brokerage
activities and may, at any time, hold long or short positions and may trade or
otherwise effect transactions in securities of the Company. Purchaser and Parent
have retained MacKenzie Partners, Inc. to act as the Information Agent and State
Street Bank and Trust Company to serve as the Depositary in connection with the
Offer. The Information Agent and the Depositary each will receive reasonable and
customary compensation for their services, be reimbursed for certain reasonable
out-of-pocket expenses and be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities and expenses
under the federal securities laws.
Neither Purchaser nor Parent will pay any fees or commissions to any broker
or dealer or other person or entity (other than as described in the preceding
paragraph) in connection with the solicitation of tenders of Shares pursuant to
the Offer. Brokers, dealers, banks and trust companies will be reimbursed by
Purchaser upon request for customary mailing and handling expenses incurred by
them in forwarding material to their customers.
19. MISCELLANEOUS
Purchaser is not aware of any jurisdiction in which the making of the Offer
is not in compliance with applicable law. If Purchaser becomes aware of any
jurisdiction in which the making of the Offer would not be in compliance with
applicable law, Purchaser will make a good faith effort to comply with any such
law. If, after such good faith effort, Purchaser cannot comply with any such
law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in such jurisdiction. In those
44
<PAGE> 45
jurisdictions whose securities or blue sky laws require the Offer to be made by
a licensed broker or dealer, the Offer is being made on behalf of Purchaser by
one or more registered brokers or dealers which are licensed under the laws of
such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the SEC the Tender Offer Statement on
Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with
exhibits, furnishing certain additional information with respect to the Offer,
and may file amendments thereto. Such Schedule 14D-1 and any amendments thereto,
including exhibits, should be available for inspection and copies should be
obtainable in the manner set forth in Section 8 (except that such material will
not be available at the regional offices of the SEC).
NTK SUB, INC.
NORTEK, INC.
July 29, 1997
45
<PAGE> 46
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of Parent
and certain other information are set forth below. The address of each director
and officer is Nortek, Inc. (for purposes of this Schedule I, "Parent" or
"Nortek"), 50 Kennedy Plaza, Providence, Rhode Island 02903. Unless otherwise
indicated, each occupation set forth below an individual's name refers to
employment with Parent. All directors and executive officers listed below are
citizens of the United States. Unless otherwise indicated, each such person has
held his or her present occupation as set forth below, or has been an executive
officer of Parent, or the organization indicated, for the past five years.
DIRECTORS OF PARENT
RICHARD L. BREADY
Mr. Bready has been Chairman and Chief Executive Officer of the Company for more
than the past five years.
PHILLIP L. COHEN
Mr. Cohen was a partner with the professional service firm Arthur Andersen LLP
from 1965 until his retirement in June 1994 and has been a financial consultant
since that date.
RICHARD J. HARRIS
Mr. Harris has been employed by Parent as Vice President and Treasurer for more
than the past five years.
WILLIAM I. KELLY
Mr. Kelly has been Director of the Graduate School of Professional Accounting of
Northeastern University for more than the past five years.
J. PETER LYONS
Mr. Lyons, for more than the past five years, has been President of The J. Peter
Lyons Companies, an insurance and employee benefit consulting company.
EXECUTIVE OFFICERS OF PARENT
RICHARD L. BREADY (see above)
ALMON C. HALL
Vice President, Controller and Chief Accounting Officer
RICHARD J. HARRIS (see above)
KENNETH J. ORTMAN
Senior Vice President, Group Operations
SIEGFRIED MOLNAR
Senior Vice President, Group Operations
KEVIN W. DONNELLY
Vice President, General Counsel and Secretary
I-1
<PAGE> 47
DIRECTORS AND EXECUTIVE OFFICERS
OF PURCHASER
The name of each director and executive officer of Purchaser are set forth
below. The present principal occupation or employment and five-year employment
history of such persons are set forth earlier in this Schedule I. The address of
each director and officer is NTK Sub, Inc., c/o Nortek, Inc., 50 Kennedy Plaza,
Providence, Rhode Island 02903. Unless otherwise indicated, each occupation set
forth opposite an individual's name refers to employment with Purchaser. All
directors and executive officers listed below are citizens of the United States.
DIRECTOR OF PURCHASER
RICHARD J. HARRIS (see above)
EXECUTIVE OFFICERS OF PARENT
RICHARD L. BREADY (see above)
President
RICHARD J. HARRIS (see above)
Vice President and Treasurer
KEVIN W. DONNELLY (see above)
Vice President and Secretary
I-2
<PAGE> 48
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or his
broker, dealer, commercial bank or other nominee to the Depositary at one of its
addresses set forth below.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Hand By Overnight Courier By Mail
Receive Window 77 Water Street Wall Street Station
77 Water Street 4th Floor P.O. Box 1023
New York, NY 10005 New York, NY 10005 New York, NY 10268-1023
</TABLE>
Other Information
<TABLE>
<S> <C>
By Facsimile Telephone Numbers
(212) 701-7636 For information call
(212) 701-7640 (212) 701-7663
Confirm by telephone
(212) 701-7663
</TABLE>
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent at its telephone numbers and location
listed below. You may also contact your broker, dealer, commercial bank or trust
company or nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500
or
CALL TOLL FREE: (800) 322-2885
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, NY 10019
(212) 969-7949 (collect)
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
PLY GEM INDUSTRIES, INC.
AT
$19.50 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 29, 1997
BY
NTK SUB, INC.
A WHOLLY OWNED SUBSIDIARY
OF
NORTEK, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, AUGUST 25, 1997, UNLESS EXTENDED.
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or his
broker, dealer, commercial bank or other nominee to the Depositary at one of its
addresses set forth below.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Hand: By Overnight Courier: By Mail:
Receive Window 77 Water Street Wall Street Station
77 Water Street 4th Floor P.O. Box 1023
New York, NY 10005 New York, NY 10005 New York, NY 10268-1023
</TABLE>
Other information
<TABLE>
<S> <C>
By Facsimile: Telephone Numbers:
(212) 701-7636 For information call
(212) 701-7640 (212) 701-7663
Confirm by telephone
(212) 701-7663
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
<PAGE> 2
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DESCRIPTION OF SHARES TENDERED
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
SHARE CERTIFICATE(S) AND SHARE(S) TENDERED (ATTACH ADDITIONAL LIST IF NECESSARY)
------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARE OF SHARES NUMBER
CERTIFICATE REPRESENTED OF SHARES
NUMBER(S)* BY CERTIFICATES* TENDERED**
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL SHARES:
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced
by each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
- --------------------------------------------------------------------------------
<PAGE> 3
This Letter of Transmittal is to be completed by stockholders either if
certificates are to be forwarded herewith or if delivery is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
("DTC") or the Philadelphia Depository Trust Company ("PDTC") (each, a
"Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in Section 3 of the Offer to
Purchase (as defined below).
Stockholders whose certificates evidencing Shares ("Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or who cannot comply
with the book-entry transfer procedures on a timely basis must tender their
Shares according to the guaranteed delivery procedure set forth in Section 3 of
the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY
- -------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
----------------------------------------------
Check Box of Book-Entry Transfer Facility (Check one):
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
-------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY SENT TO THE DEPOSITARY PRIOR TO THE DATE HEREOF AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
---------------------------------------------
Window Ticket Number (if any):
----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------
Name of Institution that Guaranteed Delivery:
-------------------------------
Check Box of Book-Entry Transfer Facility if Delivered by Book-Entry Transfer
(check one):
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number (if delivered by Book-Entry Transfer):
-----------------------
Transaction Code Number:
----------------------------------------------------
- -------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE> 4
LADIES AND GENTLEMEN:
The undersigned hereby tenders to NTK Sub, Inc., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Nortek, Inc., a Delaware
corporation ("Parent"), the above-described shares of Common Stock, par value
$0.25 per share (collectively, the "Shares"), of Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), at $19.50 per Share, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated July 29, 1997 (the "Offer to Purchase"), receipt
of which is hereby acknowledged, and in this Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or assign,
in whole or in part from time to time to Parent or one or more direct or
indirect wholly owned subsidiaries of Parent, the right to purchase Shares
tendered pursuant to the Offer.
Subject to and effective upon acceptance for payment of the Shares tendered
herewith in accordance with the terms and subject to the conditions of the
Offer, the undersigned hereby sells, assigns and transfers to, or upon the order
of, Purchaser all right, title and interest in and to all of the Shares that are
being tendered hereby and all other Shares or other securities or property
issued or issuable in respect thereof on or after July 29, 1997 (such other
Shares, securities or property other than the Shares being referred to herein as
the "Other Securities") and irrevocably appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to such Shares
and all Other Securities with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to (a)
deliver Share Certificates evidencing such Shares and all Other Securities, or
transfer ownership of such Shares and all Other Securities on the account books
maintained by any of the Book-Entry Transfer Facilities, together, in either
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of Purchaser, upon receipt by the Depositary, as the undersigned's
agent, of the purchase price (adjusted, if appropriate, as provided in the Offer
to Purchase), (b) present such Shares and all Other Securities for transfer on
the books of the Company, and (c) receive all benefits and otherwise exercise
all rights of beneficial ownership of such Shares and all Other Securities, all
in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Parent, Purchaser, and each of
them or any other designees of Parent or Purchaser, the attorneys and proxies of
the undersigned, each with full power of substitution, to the full extent of the
undersigned's rights, including to exercise such voting and other rights as each
such attorney and proxy or his (or her) substitute shall, in his (or her) sole
discretion, deem proper, and otherwise act (including pursuant to written
consent), with respect to all of the Shares tendered hereby which have been
accepted for payment by Purchaser (and any and all Other Securities issued or
issuable in respect thereof on or after July 29, 1997), which the undersigned is
entitled to vote at any meeting of stockholders of the Company (whether annual
or special and whether or not an adjourned meeting), or written consent in lieu
of such meeting, or otherwise. This proxy and power of attorney is coupled with
an interest in the Shares tendered hereby and is irrevocable and is granted in
consideration of, and is effective upon, the acceptance for payment of such
Shares by Purchaser in accordance with the terms of the Offer. Such acceptance
for payment shall, without further action, revoke all prior proxies and consents
granted by the undersigned with respect to such Shares (and all Shares and other
securities issued in Other Securities in respect of such Shares), and no
subsequent proxy or power of attorney or written consent shall be given (and if
given or executed, shall be deemed not to be effective) with respect thereto by
the undersigned. Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon Purchaser's acceptance
for payment of such Shares, Purchaser is able to exercise full voting and other
rights with respect to such Shares (including voting at any meeting of
stockholders then scheduled or acting by written consent without a meeting).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Other Securities, and that when such Shares are accepted
for payment by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and that none of such Shares and Other Securities will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver any signature guarantees or additional documents deemed by the
Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Other Securities.
In addition, the undersigned shall promptly remit and transfer to the Depositary
for the account of Purchaser all Other Securities in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and
pending such remittance or appropriate assurance thereof Purchaser shall be
entitled to all rights and privileges as owner of such Other Securities and may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated in
the Offer to Purchase, this tender is irrevocable.
<PAGE> 5
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, Purchaser may not be required to accept for payment any of the
Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates evidencing Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates evidencing Shares not tendered or accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or return any Share
Certificates evidencing Shares not purchased (together with accompanying
documents as appropriate) in the name(s) of, and deliver said check and/or
return such Share Certificates to, the person or persons so indicated.
Stockholders tendering Shares by book-entry transfer may request that any Shares
not accepted for payment be returned by crediting such account maintained at DTC
or PDTC as such stockholder may designate by making an appropriate entry under
"Special Payment Instructions." The undersigned recognizes that Purchaser has no
obligation pursuant to the Special Payment Instructions to transfer any Shares
from the name of the registered holder(s) thereof if Purchaser does not accept
for payment any of the Shares so tendered.
<PAGE> 6
======================================================
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if the check for the
purchase price of Shares purchased or Share
Certificates evidencing Shares not tendered or
not purchased are to be issued in the name of
someone other than the undersigned.
Issue
[ ] Check and/or [ ] Certificate(s)
To:
----------------------------------------------
Name(s) (Please Print)
----------------------------------------------
----------------------------------------------
Address
----------------------------------------------
(Include Zip Code)
----------------------------------------------
(Taxpayer Identification or Social Security No.)
(See Substitute Form W-9)
======================================================
======================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if the check for the
purchase price of Shares purchased or Share
Certificates evidencing Shares not tendered or
not purchased are to be mailed to someone
other than the undersigned, or to the
undersigned at an address other than that
shown under "Description of Shares Tendered."
Mail
[ ] Check and/or [ ] Certificate(s)
To:
----------------------------------------------
Name(s) (Please Print)
----------------------------------------------
----------------------------------------------
Address
----------------------------------------------
(Include Zip Code)
======================================================
[ ] CHECK HERE IF ANY OF THE SHARE CERTIFICATES THAT YOU OWN AND WISH TO
TENDER HAVE BEEN LOST, DESTROYED OR STOLEN. (SEE INSTRUCTION 11.)
Number of Shares represented by lost, destroyed or stolen certificates:
<PAGE> 7
================================================================================
STOCKHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
(Must be signed by registered holder(s) as name(s) appear(s) on share
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by trustee, executor, administrator, guardian, attorney-in-fact,
agent, officer of a corporation or any other person acting in a fiduciary or
representative capacity, please provide the following information. See
Instruction 5.)
PLEASE PRINT OR TYPE
Dated: , 1997
---------------------------
Name(s)
------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please Print or Type)
Capacity (Full Title)
----------------------------------------------------------
Address
------------------------------------------------------------------------
(Include Zip Code)
Area Code and
Telephone Number (Home)
--------------------------------------------------------
Area Code and
Telephone Number (Business)
----------------------------------------------------
Tax Identification or
Social Security Number
---------------------------------------------------------
(Complete Substitute Form W-9 Below)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
-----------------------------------------------------------
Name
--------------------------------------------------------------------------
(PLEASE PRINT OR TYPE)
Full Title
---------------------------------------------------------------------
Name of Firm
-------------------------------------------------------------------
Address
------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ZIP CODE
Area Code and
Telephone Number
---------------------------------------------------------------
Date: , 1997
---------------------------
================================================================================
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be guaranteed by a participant in the Security Transfer Agents Medallion
Program or any other "eligible guarantor institution" as defined in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (each, an "Eligible
Institution"), unless (i) this Letter of Transmittal is signed by the registered
holder(s) of Shares (which term, for the purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears on
a security position listing as the owner of Shares) tendered hereby and such
holder(s) has (have) not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on this Letter
of Transmittal or (ii) such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders
either if Share Certificates are to be forwarded herewith or if a tender of
Shares is to be made pursuant to the procedures for delivery by book-entry
transfer set forth in Section 3 of the Offer to Purchase. Share Certificates
evidencing all physically tendered Shares, or confirmation ("Book-Entry
Confirmation") of any book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility of Shares delivered by book-entry transfer as well
as a properly completed and duly executed Letter of Transmittal, must be
received by the Depositary, at one of the addresses set forth herein prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase). If Share
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Stockholders whose Share Certificates are not immediately available,
who cannot deliver their Share Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot comply with the
book-entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing a Notice of Guaranteed Delivery pursuant
to the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase. Pursuant to such procedure, (i) such tender must be made by or through
an Eligible Institution, (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by Purchaser, must be
received by the Depositary prior to the Expiration Date and (iii) the Share
Certificates evidencing all physically tendered Shares (or Book-Entry
Confirmation with respect to such Shares), as well as a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARES AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE SENT BY
REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. All
tendering stockholders, by execution of this Letter of Transmittal (or facsimile
thereof), waive any right to receive any notice of the acceptance of their
Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares tendered should be listed on a separate signed schedule and attached
hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by
book-entry transfer.) If fewer than all the Shares evidenced by any Share
Certificate submitted are to be tendered, fill in the number of Shares which are
to be tendered in the box entitled "Number of Shares Tendered." In such case,
new Share Certificate(s) evidencing the remainder of the Shares that were
evidenced by the old Share Certificate(s) will be sent to the registered holder,
unless otherwise provided in the appropriate box on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares represented by
Share Certificates delivered to the Depositary will be deemed to have been
tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the Share Certificate(s) without alteration, enlargement
or any change whatsoever. If any of the Shares tendered hereby are held of
record by two or more persons, all such persons must sign this Letter of
Transmittal.
If any tendered Shares are registered in different names on several Share
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of such Shares.
<PAGE> 9
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares evidenced by Share Certificates listed and transmitted hereby, no
endorsements of Share Certificates or separate stock powers are required unless
payment is to be made to or Share Certificates evidencing Shares not tendered or
purchased are to be issued in the name of a person other than the registered
holder(s), in which case the Share Certificate(s) evidencing the Shares tendered
hereby must be endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name(s) of the registered holder(s) appear(s) on such
Share Certificate(s). Signatures on such certificates and stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names of
the registered holder or holders appear on the Share Certificate(s). Signatures
on such Share Certificate(s) or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificates or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or any person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price is to be made to, or if Share
Certificates evidencing Shares not tendered or purchased are to be registered in
the name of, any person other than the registered holder(s), or if Share
Certificates evidencing tendered Shares are registered in the name of any person
other than the person(s) signing this Letter of Transmittal, the amount of any
stock transfer taxes (whether imposed on the registered holder(s) or such other
person) payable on account of the transfer to such person will be deducted from
the purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent and/or any Share Certificates
are to be returned to someone other than the signer above, or to the signer
above but at an address other than that shown in the box entitled "Description
of Shares Tendered" on the first page hereof, the appropriate boxes on this
Letter of Transmittal should be completed. Stockholders tendering Shares by
book-entry transfer may request that Shares not purchased be credited to such
account maintained at any of the Book-Entry Transfer Facilities as such
stockholder may designate under "Special Delivery Instructions." If no such
instructions are given, any such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facilities designated above.
8. Request for Assistance or Additional Copies. Requests for assistance
may be directed to, or additional copies of the Offer to Purchase, this Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from, the
Information Agent or the Dealer Manager at the telephone numbers and address set
forth below. Stockholders may also contact their broker, dealer, commercial bank
or trust company.
9. Waiver of Conditions. Except as otherwise provided in the Offer to
Purchase, Purchaser reserves the right in its sole discretion to waive in whole
or in part at any time or from time to time any of the specified conditions of
the Offer or any defect or irregularity in tender with regard to any Shares
tendered.
10. Substitute Form W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"), generally
the stockholder's Social Security Number or Employer Identification Number, on
Substitute Form W-9, which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, whether he or she is subject to
backup withholding of federal income tax. If a tendering stockholder is subject
to backup withholding, he or she must cross out item (2) of the Certification
Box on Substitute Form W-9. Failure to provide the information on Substitute
Form W-9 may subject the tendering stockholder to 31% federal income tax
withholding on the payment of the purchase price. If the tendering stockholder
has not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, he or she should write "Applied For" in the space
provided for the TIN in Part I, sign and date the Substitute Form W-9 and sign
and date the Certificate of Awaiting Taxpayer Identification Number. If "Applied
For" is written in Part I and the Depositary is not provided with a TIN within
60 days, the Depositary will withhold 31% of payments for surrendered Shares
thereafter until a TIN is provided to the Depositary.
<PAGE> 10
11. Mutilated, Lost, Stolen or Destroyed Certificates. Any holder of a
Share Certificate whose certificate(s) has been mutilated, lost, stolen or
destroyed should (i) complete this Letter of Transmittal and check the
appropriate box on this Letter of Transmittal and (ii) complete and return to
the Depositary any additional documentation, including the posting of any
indemnity bond, requested by the Depositary. If required by Purchaser, the
holder will be required to post a bond in such reasonable amount as Purchaser
may direct as indemnity against any claim that may be made against Parent,
Purchaser or any of their respective affiliates with respect to such
certificate(s).
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY, TOGETHER WITH CERTIFICATES (OR BOOK-ENTRY CONFIRMATION) AND ALL OTHER
REQUIRED DOCUMENTS OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal tax law, a stockholder whose tendered Shares are accepted for
payment is required to provide the Depositary (as payor) with such stockholder's
correct TIN on Substitute Form W-9 below. If such stockholder is an individual,
the TIN is such stockholder's Social Security Number. If the Depositary is not
provided with the correct TIN or an adequate basis for exemption, the
stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such stockholder with respect to
Shares purchased pursuant to the Offer may be subject to backup withholding in
an amount equal to 31% of the gross proceeds resulting from the Offer.
Certain stockholders (including, among others, certain corporations and
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit an IRS Form W-8, signed under penalties
of perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his or her correct TIN by completing the
Substitute Form W-9 contained herein, certifying that the TIN provided on the
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and
that (1) the stockholder is exempt from backup withholding, (2) the stockholder
has not been notified by the Internal Revenue Service that he or she is subject
to backup withholding as a result of failure to report all interest or
dividends, or (3) the Internal Revenue Service has notified the stockholder that
he or she is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the Social Security
Number or Employer Identification Number of the record owner of the Shares. If
the Shares are 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.
If the tendering stockholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, he or she should
write "Applied For" in the space provided for the TIN in Part I, sign and date
the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I and the Depositary
is not provided with a TIN within 60 days, the Depositary will withhold 31% of
all payments of the purchase price until a TIN is provided to the Depositary.
<PAGE> 11
<TABLE>
- ---------------------------------------------------------------------------------------------------------
PAYOR'S NAME: HARRIS TRUST COMPANY OF NEW YORK, AS DEPOSITARY
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART I -- PLEASE PROVIDE YOUR TIN IN THE BOX AT
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. ----------------------------
DEPARTMENT OF THE TREASURY ----------------------------------------------- Social Security
INTERNAL REVENUE SERVICE NAME (PLEASE PRINT) or
----------------------------------------------- Employee Identification
PAYOR'S REQUEST FOR ADDRESS Number
TAXPAYER IDENTIFICATION ----------------------------------------------- ----------------------------
NUMBER (TIN) CITY STATE ZIP CODE (If awaiting TIN write
AND CERTIFICATION "Applied For")
-----------------------------------------------------------------------------
PART II -- For Payees NOT subject to backup withholding, see the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 and complete as instructed therein.
CERTIFICATION -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
1. The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
2. I am not subject to backup withholding because either (a) I am exempt
from backup withholding, (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding.
-----------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if
after being notified by the IRS that you were subject to backup withholding
you received another notification from the IRS that you are no longer
subject to backup withholding, do not cross out item (2). (Also see
instructions in the enclosed Guidelines.)
- ---------------------------------------------------------------------------------------------------------
Signature: Dated: , 1997
--------------------------------------------------- ------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE 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 WROTE "APPLIED FOR" IN PART I OF
SUBSTITUTE FORM W-9.
<PAGE> 12
- --------------------------------------------------------------------------------
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 (a) 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
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
--------------------------------------- ---------------------------
Signature(s): Dated:
- --------------------------------------------------------------------------------
<PAGE> 13
The Information Agent for the Offer is:
[MACKENZIE PARTNERS LOGO]
156 Fifth Avenue
New York, NY 10010
(212) 929-5500
or
CALL TOLL FREE: (800) 322-2885
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, NY 10019-6118
(212) 969-7949 (collect)
<PAGE> 1
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF SHARES OF COMMON STOCK
OF
PLY GEM INDUSTRIES, INC.
TO
NTK SUB, INC.
A WHOLLY OWNED SUBSIDIARY
OF
NORTEK, INC.
As set forth in Section 3 of the Offer to Purchase (as defined below), this
form, or a form substantially equivalent to this form, must be used to accept
the Offer (as defined below) if the certificates representing shares of common
stock, par value $0.25 per share (collectively, the "Shares"), of Ply Gem
Industries, Inc. are not immediately available or time will not permit all
required documents to reach the Depositary prior to the Expiration Date (as
defined in the Offer to Purchase) or the procedures for book-entry transfer
cannot be completed on a timely basis. Such form may be delivered by hand or
transmitted by facsimile transmission or mail to the Depositary and must include
a guarantee by an Eligible Institution (as defined in Section 3 of the Offer to
Purchase). See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Hand: By Overnight Courier: By Mail:
Receive Window 77 Water Street Wall Street Station
77 Water Street 4th Floor P.O. Box 1023
New York, NY 10005 New York, NY 10005 New York, NY 10268-1023
</TABLE>
Other Information
<TABLE>
<S> <C>
By Facsimile: Telephone Numbers:
(212) 701-7636 For information call
(212) 701-7640 (212) 701-7663
Confirm by telephone
(212) 701-7663
</TABLE>
------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER
THAN AS LISTED ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to NTK Sub, Inc., a Delaware corporation and
a wholly owned subsidiary of Nortek, Inc., a Delaware corporation, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
July 29, 1997 (the "Offer to Purchase") and the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer"), receipt of which is hereby acknowledged, the number of Shares
indicated below pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase.
- ------------------------------------------------------------
Number of Shares:
----------------------------------------
Share Certificate Numbers (if available):
---------------------------------------------------------
---------------------------------------------------------
If Shares will be delivered by book-entry transfer,
check one box:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
------------------------------------------
Dated: , 1997
---------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
Name(s) of Record Holder(s):
--------------------------------------------------
--------------------------------------------------
Please Type or Print
Address(es):
---------------------------------------------
--------------------------------------------------
Zip Code
Area Code and Telephone Number:
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
Signature(s)
Dated: , 1997
-------------------------------------------
- ------------------------------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a participant in the Security Transfer Agents Medallion
Program or any other "eligible guarantor institution" as defined in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (each, an "Eligible
Institution"), hereby guarantees that either the certificates representing the
Shares tendered hereby in proper form for transfer, or timely confirmation of a
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company or the Philadelphia Depository Trust Company (pursuant
to procedures set forth in Section 3 of the Offer to Purchase), together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase)) and any
other documents required by the Letter of Transmittal, will be received by the
Depositary at one of its addresses set forth above within three (3) New York
Stock Exchange trading days after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal,
certificates for Shares and any other required documents to the Depositary
within the time period shown herein. Failure to do so could result in a
financial loss to such Eligible Institution.
- -----------------------------------------------------------------------------
Name of Firm:
- -----------------------------------------------------------------------------
Address:
---------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
ZIP CODE
Area Code and
Telephone Number:
------------------------------------------------------------
AUTHORIZED SIGNATURE
Name:
------------------------------------------------------------------------
PLEASE TYPE OR PRINT
Title:
-----------------------------------------------------------------------
Dated: , 1997
-----------------------------------------------------------------
- -----------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES ARE TO BE DELIVERED WITH THE LETTER OF
TRANSMITTAL.
<PAGE> 1
Exhibit (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PLY GEM INDUSTRIES, INC.
BY
NTK SUB, INC.
A WHOLLY OWNED SUBSIDIARY
OF
NORTEK, INC.
AT
$19.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME,
ON MONDAY, AUGUST 25, 1997, UNLESS THE OFFER IS EXTENDED.
July 29, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by NTK Sub, Inc., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Nortek, Inc., a Delaware
corporation ("Parent"), to act as Dealer Manager in connection with its offer to
purchase all outstanding shares of common stock, par value $0.25 per share
(collectively, the "Shares"), of Ply Gem Industries, Inc., a Delaware
corporation (the "Company"), at $19.50 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated July 29, 1997 (the "Offer to Purchase") and
in the related Letter of Transmittal (which, as amended or supplemented from
time to time, together constitute the "Offer"), copies of which are enclosed
herewith.
For your information and for forwarding to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information relating
to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
the Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (as defined in the Offer to Purchase);
4. A form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
5. Solicitation/Recommendation Statement on Schedule 14D-9 issued by
the Company; and
6. A return envelope addressed to Harris Trust Company of New York,
as the Depositary.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 24, 1997 (the "Merger Agreement"), by and among Parent, Purchaser and
the Company. The Merger Agreement provides that, among other things, following
the consummation of the Offer and the satisfaction or waiver of the other
conditions set forth in the Merger Agreement, Purchaser will be merged with and
into the Company (the "Merger"). At the effective time of the Merger, each
outstanding Share (other than Shares held in the treasury of the Company, owned
directly or indirectly by the Company or any held by stockholders who perfect
their dissenters' rights under Delaware law) will be converted into the right to
receive the per Share price paid in the Offer, without interest.
The Board of Directors of the Company has, by the unanimous vote of all
directors present, approved the Merger Agreement, the Offer and the Merger, has
determined that the Offer and the Merger are fair to and in the best interests
of the stockholders of the Company and recommends that stockholders accept the
Offer and approve the Merger.
<PAGE> 2
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will be deemed to have accepted for payment, and will
pay for, all Shares validly tendered and not properly withdrawn by the
Expiration Date (as defined in the Offer to Purchase) if, as and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of the tenders of such Shares for payment pursuant to the Offer.
Payment for Shares purchased pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates evidencing such Shares or
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities (as defined in
the Offer to Purchase), (ii) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) or, in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase) and (iii) any other
documents required by the Letter of Transmittal.
In order to tender Shares pursuant to the Offer, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message (in the case of any book-entry
transfer), and any other documents required by the Letter of Transmittal, should
be sent to the Depositary, and either certificates representing the tendered
Shares should be delivered or such Shares must be delivered to the Depositary
pursuant to the procedures for book-entry transfers, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates on or prior to the Expiration Date or to
comply with the book-entry transfer procedures on a timely basis, a tender may
be effected by following the guaranteed delivery procedures specified in Section
3 of the Offer to Purchase.
Neither Parent nor Purchaser will pay any fees or commissions to any
broker, dealer or other person (other than the Dealer Manager, the Information
Agent and the Depositary as described in the Offer to Purchase) in connection
with the solicitation of tenders of Shares pursuant to the Offer. Purchaser
will, however, upon request, reimburse brokers, dealers, commercial banks and
trust companies for reasonable expenses incurred by them in forwarding materials
to their customers. Purchaser will pay all stock transfer taxes applicable to
its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, AUGUST 25, 1997, UNLESS THE OFFER IS
EXTENDED.
Any inquiries you may have with respect to the Offer may be addressed to
the Information Agent or the undersigned at the addresses and telephone numbers
set forth on the back cover page of the Offer to Purchase. Requests for
additional copies of the enclosed materials may be directed to the Information
Agent or the Dealer Manager.
Very truly yours,
Wasserstein Perella & Co., Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY PERSON THE AGENT OF PURCHASER, PARENT, THE COMPANY, ANY AFFILIATE OF THE
COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PLY GEM INDUSTRIES, INC.
AT
$19.50 NET PER SHARE
BY
NTK SUB, INC.
A WHOLLY OWNED SUBSIDIARY OF
NORTEK, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME,
ON MONDAY, AUGUST 25, 1997 UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated July 29,
1997 (the "Offer to Purchase") and the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer") and
other materials relating to the Offer by NTK Sub, Inc., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Nortek, Inc., a Delaware
corporation ("Parent"), to purchase all of the outstanding shares of common
stock, par value $0.25 per share (collectively, the "Shares"), of Ply Gem
Industries, Inc., a Delaware corporation (the "Company"), at $19.50 per Share,
net to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer. Also enclosed is the letter to stockholders
of the Company from the Chairman of the Board and Chief Executive Officer of the
Company accompanied by the Company's Solicitation/Recommendation Statement on
Schedule 14D-9. This material is being sent to you as the beneficial owner of
Shares held by us for your account but not registered in your name. A tender of
such Shares can be made only by us as the holder of record and pursuant to your
instructions. The Letter of Transmittal accompanying this letter is furnished to
you for your information only and cannot be used by you to tender Shares held by
us for your account.
We request instructions as to whether you wish to have us tender any or all
of the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $19.50 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions of the
Offer.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, August 25, 1997, unless the Offer is extended.
3. The Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of July 24, 1997 (the "Merger Agreement"), by and among
Parent, Purchaser and the Company. The Merger Agreement provides that,
among other things, following the consummation of the Offer and the
satisfaction or waiver of the other conditions set forth in the Merger
Agreement, Purchaser will be merged with and into the Company (the
"Merger"). At the effective time of the Merger, each outstanding Share
(other than Shares held in the treasury of the Company, owned directly or
indirectly by the Company or any held by stockholders who perfect their
dissenters' rights under Delaware law) will be converted into the right to
receive the per Share price paid in the Offer, without interest.
4. The Board of Directors of the Company has, by the unanimous vote of
all directors present, approved the Merger Agreement, the Offer and the
Merger, has determined that the Offer and the Merger are fair to and in the
best interests of the stockholders of the Company and recommends that
stockholders accept the Offer and approve the Merger.
<PAGE> 2
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer,
that number of Shares which, together with any Shares beneficially owned by
Parent, represent at least a majority of the Shares outstanding on a
fully-diluted basis (the "Minimum Condition"). Subject to the terms of the
Merger Agreement, the Offer is also subject to other terms and conditions,
including receipt of certain regulatory approvals, set forth in the Offer
to Purchase and receipt by Parent and Purchaser of the debt financing for
the transactions contemplated by the Merger Agreement on terms
substantially as outlined in the Financing Commitment (as defined in the
Offer to Purchase). Pursuant to the Merger Agreement, the Purchaser has
agreed to extend and reextend the Offer from time to time for up to five
business days at a time until September 22, 1997, if at the initial
Expiration Date (as defined in the Offer to Purchase), or any extension
thereof, all conditions to the Offer have not been satisfied or waived,
unless in the reasonable judgment of Parent or Purchaser, such conditions
are incapable of being satisfied before September 22, 1997. Notwithstanding
the foregoing, Parent and Purchaser may, in their judgment, extend and
reextend the Offer, from time to time, but in no event beyond October 31,
1997 if the Company elects to terminate the Merger Agreement. Any and all
conditions of the Offer, other than the Minimum Condition, may be waived by
Purchaser.
6. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
In order to tender Shares pursuant to the Offer, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or (in the case of any book-entry transfer) an Agent's
Message (as defined in the Offer to Purchase) and any other documents required
by the Letter of Transmittal, should be sent to Harris Trust Company of New
York, the Depositary, and either certificates representing the tendered Shares
should be delivered or such Shares must be delivered to the Depositary pursuant
to the procedures for book-entry transfers, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
The Offer is being made to all holders of Shares. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares in
any jurisdiction in which the making of the Offer or acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by Wasserstein Perella & Co., Inc. or one or more registered brokers
or dealers licensed under the laws of such jurisdictions.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing and returning to us the
instruction form set forth below. Please forward your instructions to us in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer. If you authorize the tender of your Shares, all such
Shares will be tendered unless otherwise specified on the instruction form set
forth below.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PLY GEM INDUSTRIES, INC.
BY
NTK SUB, INC.
A WHOLLY OWNED SUBSIDIARY
OF
NORTEK, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated July 29, 1997 and the related Letter of Transmittal, in
connection with the offer by NTK Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of Nortek, Inc., a Delaware corporation, to purchase for cash
all outstanding shares of common stock, par value $0.25 per share (collectively,
the "Shares"), of Ply Gem Industries, Inc., a Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer and the related Letter of Transmittal.
- --------------------------------------------------------------------------------
DATED: , 1997
NUMBER OF SHARES TO BE TENDERED:
SHARES*
------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S)
- --------------------------------------------------------------------------------
PLEASE PRINT NAME(S)
- --------------------------------------------------------------------------------
PLEASE PRINT ADDRESS(ES)
- --------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER(S)
- --------------------------------------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)
- ---------------
* I (We) understand that if I (we) sign this instruction form without indicating
a lesser number of Shares in the space above, all Shares held by you for my
(our) account will be tendered.
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT (a)(6)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PLY GEM INDUSTRIES, INC.
AT
$19.50 NET PER SHARE
BY
NTK SUB, INC.
A WHOLLY OWNED SUBSIDIARY OF
NORTEK, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, AUGUST 25, 1997 UNLESS THE OFFER IS EXTENDED.
July 29, 1997
To Participants in the Ply Gem Industries, Inc. Dividend Reinvestment Plan:
Enclosed for your consideration are the Offer to Purchase dated July 29,
1997 (the "Offer to Purchase") and the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer") and
other materials relating to the Offer by NTK Sub, Inc., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Nortek, Inc., a Delaware
corporation ("Parent"), to purchase all of the outstanding shares of common
stock, par value $0.25 per share (collectively, the "Shares"), of Ply Gem
Industries, Inc., a Delaware corporation (the "Company"), at $19.50 per Share,
net to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer. Also enclosed is the letter to stockholders
of the Company from the Chairman of the Board and Chief Executive Officer of the
Company accompanied by the Company's Solicitation/Recommendation Statement on
Schedule 14D-9.
WE ARE THE HOLDER OF RECORD OF COMMON SHARES HELD FOR YOUR ACCOUNT AS A
PARTICIPANT IN THE COMPANY'S DIVIDEND REINVESTMENT PLAN (THE "PLAN"). A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD IN ACCORDANCE WITH
THE TERMS OF THE PLAN, TO THE EXTENT CONSISTENT WITH APPLICABLE LAWS. THE LETTER
OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED
BY YOU TO TENDER SHARES HELD IN YOUR PLAN ACCOUNT.
We request instructions as to whether you wish to have us tender any or all
of the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $19.50 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions of the
Offer.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, August 25, 1997, unless the Offer is extended.
3. The Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of July 24, 1997 (the "Merger Agreement"), by and among
Parent, Purchaser and the Company. The Merger Agreement provides that,
among other things, following the consummation of the Offer and the
satisfaction or waiver of the other conditions set forth in the Merger
Agreement, Purchaser will be merged with and into the Company (the
"Merger"). At the effective time of the Merger, each outstanding Share
(other than Shares held in the treasury of the Company, owned directly or
indirectly by the Company or any held by stockholders who perfect their
dissenters' rights under Delaware law) will be converted into the right to
receive the per Share price paid in the Offer, without interest.
<PAGE> 2
4. The Board of Directors of the Company has, by the unanimous vote of
all directors present, approved the Merger Agreement, the Offer and the
Merger, has determined that the Offer and the Merger are fair to and in the
best interests of the stockholders of the Company and recommends that
stockholders accept the Offer and approve the Merger.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer,
that number of Shares which, together with any Shares beneficially owned by
Parent, represent at least a majority of the Shares outstanding on a
fully-diluted basis (the "Minimum Condition"). Subject to the terms of the
Merger Agreement, the Offer is also subject to other terms and conditions,
including receipt of certain regulatory approvals, set forth in the Offer
to Purchase and receipt by Parent and Purchaser of the debt financing for
the transactions contemplated by the Merger Agreement on terms
substantially as outlined in the Financing Commitment (as defined in the
Offer to Purchase). Pursuant to the Merger Agreement, the Purchaser has
agreed to extend and reextend the Offer from time to time for up to five
business days at a time until September 22, 1997, if at the initial
Expiration Date (as defined in the Offer to Purchase), or any extension
thereof, all conditions to the Offer have not been satisfied or waived,
unless in the reasonable judgment of Parent or Purchaser, such conditions
are incapable of being satisfied before September 22, 1997. Notwithstanding
the foregoing, Parent and Purchaser may, in their judgment, extend and
reextend the Offer, from time to time, but in no event beyond October 31,
1997 if the Company elects to terminate the Merger Agreement. Any and all
conditions of the Offer, other than the Minimum Condition, may be waived by
Purchaser.
6. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
7. Shares in Plan accounts as to which we have not received
instructions from Participants will not be tendered in the Offer.
If you wish to have us tender any or all of the Shares held in your Plan
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form contained in this letter. An envelope to return your
instruction to us is enclosed. If you authorize tender of your Shares, all such
Shares will be tendered unless otherwise indicated in such instruction form.
PLEASE FORWARD YOUR INSTRUCTIONS TO US SO THAT THEY ARE RECEIVED BY US IN AMPLE
TIME TO PERMIT US TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION
OF THE OFFER.
The Offer is being made to all holders of Shares. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares in
any jurisdiction in which the making of the Offer or acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by Wasserstein Perella & Co., Inc. or one or more registered brokers
or dealers licensed under the laws of such jurisdictions.
Very truly yours,
Harris Trust Company of New York
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PLY GEM INDUSTRIES, INC.
BY
NTK SUB, INC.
A WHOLLY OWNED SUBSIDIARY
OF
NORTEK, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated July 29, 1997 and the related Letter of Transmittal, in
connection with the offer by NTK Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of Nortek, Inc., a Delaware corporation, to purchase for cash
all outstanding shares of common stock, par value $0.25 per share (collectively,
the "Shares"), of Ply Gem Industries, Inc., a Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer and the related Letter of Transmittal.
- --------------------------------------------------------------------------------
DATED: , 1997
NUMBER OF SHARES TO BE TENDERED:
SHARES*
------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S)
- --------------------------------------------------------------------------------
PLEASE PRINT NAME(S)
- --------------------------------------------------------------------------------
PLEASE PRINT ADDRESS(ES)
- --------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER(S)
- --------------------------------------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)
- ---------------
* I (We) understand that if I (we) sign this instruction form without indicating
a lesser number of Shares in the space above, all Shares held by you for my
(our) account will be tendered.
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT(a)(7)
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.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------
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 of the
account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of the
account or, if joint funds,
either person(1)
4. Custodian account of a 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 guardian The ward, minor, or
or committee for a designated incompetent person(3)
ward, minor, or 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 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 not
pension trust 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 The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- ------------------------------------------------------------------
</TABLE>
(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> 2
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 S-11, Application for a Social Security Number Card, or Form
S-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 organization 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 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 is 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 with holding 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 identifications number to the payer.
- Payments of tax-exempt interest (including exempt dividends under section
852).
- Payments described in section 6049(b)(5) to nonresident 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 sections 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
(1) 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.
(2) 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.
(3) 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> 1
Exhibit (a)(8)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The offer is made solely by the Offer to Purchase dated July 29,
1997 and the related Letter of Transmittal and is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares in any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction; in those jurisdictions where
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by Wasserstein Perella & Co., Inc. or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of Ply Gem Industries, Inc.
by
NTK Sub, Inc.
a wholly owned subsidiary of Nortek,Inc.
at
$19.50 Net Per Share in Cash
NTK Sub, Inc. (the "Purchaser"), a Delaware corporation and a wholly owned
subsidiary of Nortek, Inc., a Delaware corporation ("Parent"), hereby offers to
purchase all of the outstanding shares of common stock, $0.25 par value per
share (the "Shares"), of Ply Gem Industries, Inc., a Delaware corporation (the
"Company"), at a price of $19.50 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated July 29, 1997 (the "Offer to Purchase") and in the
related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, AUGUST 25, 1997 UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of
July 24, 1997 (the "Merger Agreement"), by and among the Company, Parent and
Purchaser. The Merger Agreement provides, among other things, that as promptly
as practicable following the completion of the Offer and the satisfaction or
waiver of certain conditions, including the purchase of Shares pursuant to the
Offer and the approval and adoption of the Merger Agreement by the stockholders
of the Company, if required by applicable law, Purchaser will be merged with and
into the Company (the "Merger"), with the Company as the surviving corporation.
In the Merger, each issued and outstanding Share (other than Dissenting Shares
(as defined in the Offer to Purchase)) not owned directly or indirectly by the
Company will be converted into and represent the right to receive $19.50 in cash
or any higher price that may be paid per Share in the Offer, without interest.
The Board of Directors of the Company (by unanimous vote of all directors
present)
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<PAGE> 2
has approved the Merger Agreement, the Offer and the Merger, determined that the
Offer and the Merger are fair to and in the best interests of the stockholders
of the Company, and recommends acceptance of the Offer and approval and adoption
of the Merger Agreement and the Merger by the stockholders of the Company.
The purpose of the Offer is to acquire all the outstanding Shares and thereby to
obtain control of the Company. The Offer, as the first step in the acquisition
of the Company, is intended to facilitate the acquisition of all the Shares.
Consummation of the Offer will provide Purchaser with at least a majority of the
equity interest of the Company. The Merger will allow Purchaser to acquire all
Shares not tendered and purchased pursuant to the Offer or otherwise. Pursuant
to the Merger, each then outstanding Share (other than Shares owned directly or
indirectly by the Company, Shares held in the treasury of the Company and Shares
owned by stockholders who perfect appraisal rights under Delaware law) would be
converted into the right to receive an amount in cash equal to the price per
Share paid by the Purchaser pursuant to the Offer. The acquisition of the entire
equity interest in the Company has been structured as a cash tender offer and a
cash merger in order to provide a prompt and orderly transfer of ownership of
the Company from the public stockholders of the Company to Parent. The purchase
of Shares pursuant to the Offer will increase the likelihood that the Merger
will be consummated.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined below), a
number of Shares, which, when added to the Shares then beneficially owned by
Parent, constitutes at least a majority of the total number of Shares
outstanding on a fully-diluted basis (the "Minimum Condition"); (ii) expiration
or termination of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended; and (iii) Parent and Purchaser
having received the debt financing for the transactions contemplated by the
Merger Agreement on terms substantially as outlined in the Financing Commitment
(as defined in the Offer to Purchase). If any Condition (as defined in the Offer
to Purchase) is not satisfied prior to the expiration of the Offer, Purchaser
may, subject to the terms of the Merger Agreement, (i) terminate the Offer and
return all tendered Shares to tendering stockholders; (ii) extend the Offer and,
subject to withdrawal rights (as set forth in Section 4 of the Offer to
Purchase), retain all such Shares until the expiration of the Offer as so
extended; (iii) waive such Condition (other than the Minimum Condition) and,
subject to any requirement to extend the period of time during which the Offer
is open, purchase all Shares validly tendered and not withdrawn by the
Expiration Date; or (iv) delay acceptance for payment of (whether or not the
Shares have theretofore been accepted for payment), or payment for, any Shares
tendered and not withdrawn, subject to applicable law, until satisfaction or
waiver (if permitted) of the Conditions to the Offer.
Pursuant to the Merger Agreement, and subject to the terms and conditions of the
Offer, if all of the Conditions are not satisfied on the initial Expiration
Date, and the Merger Agreement has not been terminated in accordance with its
terms, Purchaser shall extend (and re-extend) the Offer to provide time to
satisfy such Conditions
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<PAGE> 3
through the Final Termination Date unless, in the reasonable judgment of Parent
and Purchaser, any Condition is incapable of being satisfied prior to the Final
Termination Date. The "Final Termination Date" shall initially be September 22,
1997. From and after the Final Termination Date, if all of the Conditions have
not been satisfied on any Expiration Date of the Offer and the Merger Agreement
has not been terminated in accordance with its terms, Purchaser may but shall
not be obligated to extend and re-extend the Offer to provide time to satisfy
such Conditions.
Subject to the terms of the Merger Agreement, Purchaser expressly reserves the
right to amend the terms and conditions of the Offer in any respect by giving
oral or written notice of such amendment to the Depositary (as defined in the
Offer to Purchase). Without the consent of the Company, however, no amendment
may be made which (x) decreases the price per Share or changes the form of
consideration payable in the Offer, (y) decreases the number of Shares sought,
or (z) changes any of the Conditions or imposes additional conditions to the
Offer or amends any other term of the Offer in any manner adverse to the holders
of Shares. IN NO EVENT MAY THE PURCHASER WAIVE THE MINIMUM CONDITION WITHOUT THE
CONSENT OF THE COMPANY.
The term "Expiration Date" means 12:00 midnight, New York City time, on Monday,
August 25, 1997, unless and until Purchaser shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall refer to the latest time and date at which the Offer, as so extended by
Purchaser, shall expire.
For purposes of the Offer, Purchaser will be deemed to have accepted for payment
tendered Shares if, as and when Purchaser gives oral or written notice to the
Depositary of its acceptance of the tenders of such Shares. Payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payment from Purchaser and transmitting such payments to
tendering stockholders. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates evidencing such Shares ("Stock Certificates") or
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities (as defined in the Offer to
Purchase); (ii) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), or in the case of a book-entry transfer, an Agent's Message
(as defined in Section 3 of the Offer to Purchase); and (iii) any other required
documents. Accordingly, payment may be made to tendering stockholders at
different times if delivery of the Shares and other required documents occur at
different times. Under no circumstances will interest be paid by Purchaser on
the consideration paid for Shares pursuant to the Offer, regardless of any
extension of the Offer or delay in making such payment.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date only pursuant to the following provisions. Thereafter,
such tenders are irrevocable, except that they may be withdrawn at any time
after September 26, 1997 if they have not previously been accepted for payment
as
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<PAGE> 4
provided in the Offer to Purchase. To be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If Stock Certificates evidencing the Shares to be
withdrawn have been delivered to the Depositary, a signed notice of withdrawal
with signatures guaranteed by an Eligible Institution (as defined in the Offer
to Purchase) (except in the case of Shares tendered by an Eligible Institution),
must be submitted prior to the release of such Shares. In addition, such notice
must specify, in the case of Shares tendered by delivery of Stock Certificates,
the name of the registered holder (if different from that of the tendering
stockholder) and the serial numbers shown on the particular Stock Certificates
evidencing the Shares to be withdrawn, or, in the case of Shares tendered by
book-entry transfer, the name and number of the account at one of the Book-Entry
Transfer Facilities to be credited with the withdrawn Shares. Withdrawals may
not be rescinded, and Shares withdrawn will thereafter be deemed not validly
tendered for purposes of the Offer. However, withdrawn Shares may be retendered
by again following the appropriate procedures described in the Offer to Purchase
at any time prior to the Expiration Date. All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be determined
by the Purchaser, in its sole discretion, whose determination will be final and
binding. None of the Purchaser, Parent, the Depositary, the Dealer Manager, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
The Offer to Purchase and the Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
Questions and requests for assistance, and requests for copies of the Offer to
Purchase, the Letter of Transmittal and other tender offer materials, may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below. Holders of Shares may also
contact brokers, dealers, commercial banks and trust companies for additional
copies of the Offer to
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<PAGE> 5
Purchase, the Letter of Transmittal or other tender offer materials. No fees or
commissions will be payable to brokers, dealers or other persons other than the
Information Agent, the Dealer Manager, and the Depositary for soliciting tenders
of Shares pursuant to the Offer.
The Information Agent for the Offer is:
MacKenzie Partners, Inc. Logo
156 Fifth Avenue
New York, New York 10010
(212) 929-5500
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
Wasserstein Perella & Co., Inc.
31 West 52nd Street
New York, New York 10019
(212) 969-7949 (Call Collect)
July 29, 1997
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<PAGE> 1
Exhibit (a)(9)
CONTACT: Richard J. Harris, Vice President and Treasurer
401-751-1600
RELEASE: NORTEK TO ACQUIRE PLY GEM
-------------------------
PROVIDENCE, RI, July 24, 1997--Nortek, Inc. announced today that it has entered
into an agreement with Ply Gem Industries, Inc. pursuant to which Nortek will
acquire all outstanding shares of Ply Gem common stock for $19.50 per share.
Nortek will pay approximately $310 million to purchase Ply Gem common stock and
settle Ply Gem common stock options and will assume or refinance approximately
$172 million of Ply Gem's existing debt. Nortek has in place sufficient cash and
financing commitments to fund the acquisition and related costs.
Pursuant to its agreement with Ply Gem, Nortek said it expects to commence
by Tuesday, July 29, 1997, a cash tender offer for all outstanding shares of Ply
Gem common stock. The offer will be conditioned upon tender of a majority of Ply
Gem's outstanding shares (on a fully diluted basis), funding of Nortek's
financing commitments and other customary conditions. Any Ply Gem shares not
tendered to Nortek in the offer will be acquired by a merger of Ply Gem with a
subsidiary of Nortek following consummation of the offer.
The Ply Gem Board of Directors (by unanimous vote of all directors present)
has approved the agreement with Nortek and recommends that stockholders tender
their shares.
Ply Gem has terminated its previous $18.75 per share merger agreement with
Atrium Acquisition Holdings Corp., an affiliate of Hicks, Muse, Tate & Furst
Incorporated. As a result, Atrium is being paid $9.5 million in breakup fees and
is entitled to up to $2.5 million
<PAGE> 2
for reimbursement of expenses. Nortek has provided funds for the payment of such
amounts by purchasing today 640,000 shares of Ply Gem common stock at $18.75 per
share.
Richard L. Bready, Nortek's Chairman and Chief Executive Officer, stated
that a combination of Nortek and Ply Gem will create "a leader in the building
products industry, with pro forma latest twelve-month (through June 30) sales of
approximately $1.7 billion and EBITDA in excess of $155 million." According to
Bready, "The two companies complement one another, creating significant
marketing and distribution efficiencies and synergies."
Bready pointed out that Nortek has emphasized the remodeling and renovation
markets in its residential and commercial businesses for many years. "We've also
concentrated on increasing our market share in rapidly growing markets. Ply
Gem's business mix will enable us to take a quantum step forward in
accomplishing these objectives, by substantially increasing our participation in
the rapidly growing home improvement market and broadening our product
offerings."
Noting that 85 percent of U.S. housing stock was built before 1980, Bready
said remodeling spending has and will continue to increase strongly and is
expected to rise from $75 billion in 1996 to about $108 billion by the year
2005. "We are confident that by combining Nortek and Ply Gem, Nortek's
stockholders and bondholders will benefit from the incremental growth, strong
cash flow and larger capital base."
Nortek is a leading manufacturer and distributor of high-quality,
competitively priced products and systems for residential and commercial
building and remodeling. The U.S. leader in residential ventilation products and
indoor air quality systems, Nortek's principal businesses include building
products and HVAC systems designed to add value and improve air quality for
homes and businesses. Ply Gem Industries is a major manufacturer and
<PAGE> 3
distributor of building and home improvement products used primarily in
residential remodeling and construction. Principal products include vinyl and
wood windows and doors, vinyl siding and accessories, skylights, specialty wood
products and other home decor and improvement products.
Nortek's net sales from continuing businesses rose by 25 percent in 1996,
reaching nearly $1 billion. A major portion of Nortek's gains reflected the
successful integration of three companies, acquired in 1995, which specialize in
building and home improvement products. In the first quarter of 1997, Nortek
raised $175 million in debt capital, primarily to fund growth through additional
strategic acquisitions.
Wasserstein Perella & Co., Inc. is acting as financial adviser to Nortek.
This release contains forward-looking statements relating to future
financial results. Actual results may differ as a result of factors over which
the Company has no control, including the strength of domestic and foreign
economies, slower than anticipated sales growth, price and product competition
and increases in raw material costs. Additional information which could affect
the Company's financial results is included in the Company's annual report and
on Forms 10-K and 10-Q, on file with the Securities and Exchange Commission.
<PAGE> 1
Exhibit (b)
July 18, 1997
Nortek, Inc.
50 Kennedy Plaza
Providence, RI 02903
Ladies and Gentlemen:
We understand that NTK Sub, Inc. ("Merger Sub"), a Delaware
corporation formed and wholly owned by Nortek, Inc. ("Parent"), intends to
acquire all of the outstanding common stock of Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), pursuant to a tender offer and merger
agreement (the "Acquisition Agreement") to be entered into among Parent, Merger
Sub and the Company (such tender offer transaction, the "Acquisition"). After
consummation of the Acquisition, Merger Sub would be merged with and into the
Company (the "Merger"), with the Company being the surviving corporation. (The
Acquisition and the Merger are sometimes referred to as the "Transaction".) We
understand that Parent, Merger Sub and the Company will enter into certain
arrangements in connection with the Acquisition and the Merger as follows:
(i) Parent proposes to issue and sell, if necessary, on the
date on which the Acquisition is consummated (the "Closing Date") and,
if necessary, on the date on which the Merger is consummated (the
"Merger Date") senior bridge notes (the "Bridge Notes") having
substantially the terms (including guarantees) set forth in Exhibit A
hereto (such Exhibit, together with Exhibit B hereto referred to below,
being the "Term Sheet"), such that the aggregate cash proceeds from the
issuance and sale of the Bridge Notes will be approximately
$300,000,000, less fees and expenses payable to the Purchasers (as
defined below);
(ii) Parent or the Company or both would issue and sell as
soon as practicable following the Acquisition, in one or more public
offerings or private placements, debt or equity securities, the
proceeds of which will be used to redeem the Bridge Notes purchased
hereunder. In order to finance the redemption of the Bridge Notes,
Parent, the Company, Merger Sub and their subsidiaries and affiliates
will, prior to the Acquisition and within one year following its
consummation, offer on a first and last refusal basis Wasserstein
Perella & Co., Inc., Wasserstein Perella Securities, Inc. and their
affiliates (together, "WP&Co.") the opportunity to act as (i) exclusive
agents or sole underwriters for any debt securities to be issued by
Parent, Merger Sub or the Company (excluding any facility for borrowing
commercial loans from one or
<PAGE> 2
2
more commercial banks (a "Bank Credit Facility")), (ii) co-manager with
respect to any public offerings of equity securities to be issued by
Parent, Merger Sub or the Company, and (iii) sole or lead agent, or
co-agent of any private placements of equity securities to be issued by
Parent, Merger Sub or the Company. (All debt and equity financings and
any Bank Credit Facilities contemplated by the foregoing are referred
to as "Permanent Financings".) In addition, if by the maturity date of
the Bridge Notes, the Permanent Financing shall not have been issued or
obtained, or shall not have been issued or obtained in an aggregate
amount sufficient to repay the principal of and accrued and unpaid
interest on the Bridge Notes, such unpaid interest will be paid in cash
and such unpaid principal will be satisfied by the issuance to the
holders of the Bridge Notes of debt securities of the Company having
substantially those terms set forth in Exhibit B hereto (the "Rollover
Notes"); and
(iii) (a) Parent would continue to own all of the outstanding
capital stock of Merger Sub; (b) Merger Sub will make a tender offer
for any and all outstanding common stock of the Company; (c) Merger Sub
would own at least 51% of the outstanding capital stock of the Company
after consummation of the Acquisition and (d) as soon as practicable
after consummation of the Acquisition, Merger Sub will merge with and
into the Company, with the Company surviving the Merger.
We understand that cash currently available to Parent
(approximately $200,000,000) ("Available Cash"), together with the net cash
proceeds from the issuance and sale of the Bridge Notes, will provide funds
sufficient to (i) consummate the Acquisition and the Merger, (ii) refinance
concurrently with the Acquisition or the Merger, as the case may be, outstanding
debt of the Company and the Company's accounts receivable securitization program
in an aggregate amount up to approximately $165,000,000, and (iii) pay the fees
and expenses incurred in connection with the consummation of the Transaction
(all of the foregoing, the "Transaction Costs"). We understand that the
Transaction Costs will be approximately $500,000,000 in the aggregate.
We further understand that the Transaction Costs will be
funded as follows:
FIRST, on or immediately prior to the Closing Date, Parent
will contribute the Available Cash to the capital of Merger Sub and such
Available Cash will be utilized on the Closing Date to fund all or a portion of
the purchase price of the Acquisition;
SECOND, on the Closing Date, Parent will (A) issue and sell
such amount of Bridge Notes such that the net cash proceeds thereof will be
sufficient to (i) fund the
<PAGE> 3
3
remaining portion, if any, of the purchase price of the Acquisition, (ii)
refinance concurrently with the Acquisition approximately $165,000,000 of the
outstanding debt of the Company and the Company's accounts receivable
securitization program and (iii) pay fees and expenses incurred in connection
with the consummation of the Acquisition and (B) contribute the net cash
proceeds of the Bridge Notes described in clause (A) to the capital of Merger
Sub; and
THIRD, if necessary, on the Merger Date, Parent will (x) issue
and sell such amount of Bridge Notes such that the net cash proceeds thereof
will be sufficient to fund any remaining Transaction Costs and (y) contribute
the net cash proceeds of the Bridge Notes described in clause (x) to the capital
of Merger Sub.
Based upon and subject to the foregoing and subject to the
conditions set forth below and in the Term Sheet, WP Bridge Finance, Inc. ("WP
Bridge Finance") hereby commits to purchase, or to cause one or more of its
respective affiliates, to purchase, if necessary, on the Closing Date and on the
Merger Date up to an aggregate amount equal to $300,000,000 of the Bridge Notes,
in each case on the terms and subject to the conditions set forth in the Term
Sheet. The term "Purchasers" as used in this Commitment Letter shall mean WP
Bridge Finance and one or more other persons (including, without limitation, any
assignee of WP Bridge Finance) who actually purchase or undertake the commitment
to purchase the Bridge Notes referred to herein. You agree to continue to
provide or cause to be provided to the Purchasers all of the information
received by you or on your behalf or of which you become aware that is related
to or affects Merger Sub or the Company or any of its subsidiaries or any aspect
of the Transaction or that is material regarding Parent or its subsidiaries in
the context of the Transaction or the commitment contained herein. Please note,
however, that the terms and conditions of this Commitment Letter are not limited
to those set forth herein or in the Term Sheet. Those matters that are not
covered or made clear herein or in the Term Sheet are subject to mutual
agreement of the parties. Neither the Purchasers nor you shall be liable or
responsible for any consequential damages that may be alleged as a result of any
failure to issue or purchase the Bridge Notes.
Each of Parent and Merger Sub hereby agree to pay WP Bridge
Finance, on its own behalf and on behalf of each Purchaser, the fees set forth
in the fee letter dated the date hereof between WP Bridge Finance, Parent and
Merger Sub (the "FEE LETTER").
In partial consideration for our commitment hereunder, each of
Parent and Merger Sub hereby agrees, jointly and severally, to indemnify and
hold harmless the Purchasers, each of the members or shareholders or other
investors or holders of interests in, or other transferees of the Purchasers
(collectively, "Additional Investors"), any affiliates of the Purchasers
(including without limitation WP&Co. and the Additional Investors, and each
other person, if any, controlling the Purchasers or
<PAGE> 4
4
any Additional Investors and any of their respective affiliates, and any of the
directors, officers, agents and employees of any of the foregoing (each, an
"Indemnified Person") from and against any losses, claims, damages or
liabilities related to, arising out of or in connection with the matters which
are the subject of the commitment made hereunder (including, but without
limitation, any use made or proposed to be made by Parent, Merger Sub or the
Company of the proceeds from the transactions referred to above) or in
connection with any aspect of the Transaction (collectively, the "Subject
Matter"), and will reimburse any Indemnified Person for all expenses (including
fees, charges and disbursements of counsel) as they are incurred in connection
with investigating, preparing, pursuing or defending any action, claim, suit,
investigation or proceedings related to, arising out of or in connection with
the Subject Matter, whether or not pending or threatened and whether or not such
action, claim, suit or proceedings is brought by you, your subsidiaries,
creditors, shareholders or an Indemnified Person, or any Indemnified Person is
otherwise a party thereto, and whether or not the Transaction is consummated.
Parent and Merger Sub will not, however, be responsible for any losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence of
any Indemnified Person. Parent and Merger Sub also agree that no Indemnified
Person shall have any liability (whether direct or indirect, in contract or tort
or otherwise) to Parent and Merger Sub, or any of their respective affiliates
for or in connection with the Subject Matter, except for any such liability for
losses, claim, damages or liabilities incurred by Parent or Merger Sub that are
finally judicially determined to have resulted from the bad faith or gross
negligence of such Indemnified Person.
Neither Parent nor Merger Sub will, without the prior written
consent of the Purchasers (which consent shall not be unreasonably withheld),
settle, compromise, consent to the entry of any judgment in or otherwise seek to
terminate any action, claim, suit or proceedings in respect of which
indemnification may be sought hereunder (whether or not any Indemnified Person
is a party thereto) unless such settlement, compromise, consent or termination
includes a full and unconditional release of each Indemnified Person from any
liabilities arising out of such action, claim, suit or proceedings.
If the indemnification provided for in the second preceding
paragraph of this Commitment Letter is judicially determined to be unavailable
(other than in accordance with the terms hereof) to an Indemnified Person in
respect of any losses, claims, damages or liabilities referred to herein, then,
in lieu of indemnifying such Indemnified Person hereunder, Parent and Merger Sub
agree to contribute to the amount paid or payable by such Indemnified Person as
a result of such losses, claims, damages or liabilities (and expenses relating
thereto) (i) in such proportion as is appropriate to reflect the relative
benefits to you on the one hand, and the Purchasers, on the other hand, of the
Transaction or (ii) if the allocation provided by clause (i) is not available,
in such proportion as is appropriate to reflect not only the relative
<PAGE> 5
5
benefits referred to in such clause (i) but also the relative fault of each of
you and the Purchasers, as well as any other relevant equitable considerations;
PROVIDED that in no event shall the Purchasers' aggregate contribution to the
amount paid or payable exceed the aggregate amount of fees actually received by
us under the Fee Letter.
Except as otherwise provided in the second sentence of the
third preceding paragraph, each of Parent and Merger Sub agrees to pay as
incurred all legal and other out-of-pocket expenses of the Purchasers in
connection with the matters referred to herein, including travel costs, document
production and other expenses of this type, and the fees, disbursements and
charges of outside counsel and fees and expenses of other professional advisors
retained with your consent, whether or not the Acquisition or the Merger is
consummated or any Bridge Notes are actually issued.
This commitment will expire at 6:00 p.m. New York City time on
July 18, 1997 unless accepted prior to such time and, if accepted prior to such
time, shall expire at the earliest of (i) consummation of the Merger, (ii)
termination of the Merger Agreement and (iii) 5:00 p.m. New York City time on
October 31, 1997 or, at the option of Parent and Merger Sub and subject to the
payment in full of the Additional Commitment Fee (as defined in the Fee Letter),
December 31, 1997, if the closing of the Merger shall not have occurred by such
time. No such termination shall affect your obligations under (x) the Fee Letter
and (y) each of the four immediately preceding paragraphs, which Fee Letter and
paragraphs shall remain in full force and effect regardless of any termination
or the completion of the transactions referred to herein, except your obligation
under the immediately preceding paragraph shall only apply to expenses accruing
prior to such termination. Notwithstanding the execution and acceptance of this
Commitment Letter, this Commitment Letter shall not have any legal force or
effect until the date on which it is released to Parent and WP Bridge Finance
from the escrow established pursuant to that certain Escrow Letter, dated as of
the date hereof, from you and WP Bridge Finance to the escrow agent named
therein (the "Escrow Letter") in accordance with Section 2(i) of the Escrow
Letter.
This Commitment Letter shall be governed by and construed in
accordance with the internal laws of the State of New York. Any right to trial
by jury with respect to any claim, action, suit or proceedings arising out of or
contemplated by this letter is hereby waived and the parties hereto hereby
submit to the non-exclusive jurisdiction of the federal and New York State
courts located in the city of New York in connection with any dispute related to
this Commitment Letter or any matters contemplated hereby. This Commitment
Letter is not assignable by you to any other person. WP Bridge Finance may
assign all or any portion of its obligations pursuant hereto to any financial
institution, bank, mutual fund or other person, in each case experienced in
acquisition financing with available capital, financial resources or a net worth
of not less than $100,000,000 subject to your prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed. To the
extent of
<PAGE> 6
6
any assignment made pursuant to the immediately preceding sentence, WP Bridge
Finance shall be relieved of its obligations hereunder and the assignee shall
have, to the extent of such assignment, the same obligations hereunder as it
would if it were WP Bridge Finance. In addition, WP Bridge Finance may, without
your consent, sell to one or more entities participating interests in all or any
portion of its obligations hereunder; PROVIDED, THAT, WP Bridge Finance shall
not be relieved of its obligations hereunder as a result of any such sale.
Without our prior written consent, this Commitment Letter and the Term Sheet
(and the contents thereof) may not be disclosed by you to any other person
except your accountants, attorneys and other advisors and to the Company and its
accountants, attorneys and other advisors in connection with the Acquisition and
then only on a confidential basis and in connection with the Transaction, except
as otherwise required by law or the rules and regulations of the Securities and
Exchange Commission.
This letter may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page of this letter by telecopier shall be effective as delivery
of a manually executed counterpart of this letter.
<PAGE> 7
7
Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us an executed duplicate of this
letter. Upon your acceptance hereof, this letter will constitute a binding
agreement between us, subject, however, to the terms and conditions of the
Escrow Letter.
WP BRIDGE FINANCE, INC.
By /s/ James C. Kingsbery
----------------------
Name: James C. Kingsbery
Title: Treasurer
AGREED TO AND ACCEPTED:
NORTEK, INC.
By /s/ Kevin W. Donnelly
---------------------
Name: Kevin W. Donnelly
Title: Vice President and General Counsel
NTK SUB, INC.
By /s/ Kevin W. Donnelly
---------------------
Name: Kevin W. Donnelly
Title: Secretary
<PAGE> 8
8
EXHIBIT A
---------
SENIOR BRIDGE NOTES:
SUMMARY OF TERMS AND CONDITIONS(1)
Issuer:
Agent/ Parent
Initial Purchaser: WP Bridge Finance, Inc.
Issue: Senior Bridge Notes (the "Bridge Notes") issued
pursuant to a Securities Purchase Agreement (the
"Securities Purchase Agreement").
Use of Proceeds: The proceeds of the Bridge Notes will be contributed
to the capital of Merger Sub in order for it to (i)
finance, in part, the purchase price of the
Acquisition, (ii) refinance, in part, certain
outstanding debt of the Company and the Company's
accounts receivable securitization program, and (iii)
pay costs and expenses in connection with the
Transaction.
Principal Amount: $300,000,000, to be funded in one or two issuances.
Price: 100% of the principal amount.
Interest Rate: Interest on the Bridge Notes shall be paid at the
Applicable Interest Rate (as defined below) and
payable quarterly in arrears. "Applicable Interest
Rate" means the highest of the following, as
determined as of the beginning of each three-month
period: (i) the base rate (as announced from time to
time by Citibank, N.A.) plus 325 basis points, (ii)
three-month U.S. Dollar LIBOR (as determined from
specified sources) plus 600 basis points and (iii)
the highest yield on any of the 1, 3, 5 and 10-year
direct obligations issued by the United States plus
500 basis points.
- --------
(1)Capitalized terms used but not defined herein are used as defined in the
Commitment Letter (the "Commitment Letter") to which this Summary of Terms and
Conditions is attached.
<PAGE> 9
9
Maturity: Six months from the date of first issuance of any
Bridge Notes; PROVIDED, HOWEVER, that the Company may
extend the maturity to nine months from the date of
such first issuance by the payment on or prior to the
six month maturity date of an extension fee of $2.50
per $1,000 of principal amount of Bridge Notes to be
so extended; and PROVIDED FURTHER that the maturity
may be extended to twelve months from the date of
such first issuance by the payment on or prior to the
nine month maturity date of an extension fee of $3.75
per $1,000 of principal amount of Bridge Notes to be
so extended.
Ranking: The Bridge Notes will rank (i) PARI PASSU with
Parent's 9-1/4% Senior Notes due March 15, 2007 (the
"Senior Notes"), Parent's senior credit facilities,
mortgage notes payable and with all other senior
indebtedness of Parent and (ii) senior to Parent's
9-7/8% Senior Subordinated Notes due March 1, 2004
and to all other subordinated indebtedness of the
Parent.
Security: Parent will grant Purchasers a first priority
security interest in all of Parent's right, title and
interest in and to all of its properties and assets
to the extent so permitted under Section 4.09 of the
Indenture relating to the Senior Notes ("Section
4.09").
Guarantees: Merger Sub, the Company and each subsidiary of Parent
and the Company will issue a senior guarantee of the
Bridge Notes and the Rollover Notes and the
obligations of Parent and Merger Sub under the
Securities Purchase Agreement. The foregoing
guarantees will be collateralized with a first
priority security interest in all of the properties
and assets of such entities to the extent so
permitted by Section 4.09.
<PAGE> 10
10
Mandatory Redemption: Parent will redeem the Bridge Notes at par plus
accrued interest at or prior to maturity, as such
maturity may be extended as provided herein, with,
subject to certain agreed exceptions, (i) the net
proceeds from the issuance of any debt securities,
(ii) the net proceeds from the issuance of any equity
securities, and (iii) the net proceeds from any Bank
Credit Facility; PROVIDED that the redemption price
shall be 103% of par plus accrued interest if the
Bridge Notes are redeemed with or in anticipation of
funds raised by any means other than (a) a Bank
Credit Facility, (b) a debt financing in which
WP&Co., together with such other parties, if any,
approved by WP&Co., have acted as exclusive agents or
sole underwriters, or (c) a public or private
offering of equity securities, in which WP&Co. has
acted as sole or lead agent or as co-agent or
co-manager.
Change-of-Control: Parent will redeem the Bridge Notes upon any
change-of-control (to be defined in a mutually
acceptable manner) of Parent at a redemption price of
101% of par plus accrued interest. Any redemption or
other acquisition of Bridge Notes, whether optional
(as set forth below), mandatory (as set forth above)
or upon a change of control, will be made pro rata
among the Purchasers based on the principal amount of
Bridge Notes held by each of them.
Interest Payment: Quarterly in arrears.
Optional Redemption: The Bridge Notes will be callable, in whole or in
part, upon not less than 10 days written notice, at
the option of Parent, at any time at a redemption
price at par plus accrued interest to the redemption
date; PROVIDED that the redemption price shall be
103% of par plus accrued interest if the Bridge Notes
are redeemed with or in anticipation of funds raised
by any means other than (a) a Bank Credit Facility,
(b) a debt financing in which WP&Co., together with
such other parties, if any, approved by WP&Co., have
acted as exclusive agents or sole underwriters, or
(c) a public or private offering of equity
securities, in which WP&Co. has acted as sole or lead
agent or as co-agent or co-manager.
<PAGE> 11
11
Mandatory Exchange: If the Bridge Notes have not been previously redeemed
in full for cash on or prior to maturity, as the
maturity may be extended as provided herein, the
principal of the Bridge Notes outstanding at
maturity, as so extended, may, subject to certain
conditions precedent, be satisfied at such maturity
through the issuance and delivery of the Rollover
Notes described in the attached term sheet (Exhibit
B). The Rollover Notes will be issued at the same
time as the Bridge Notes and held in escrow pending
such mandatory exchange.
Right to Resell The Purchasers shall have the absolute and
Bridge Notes: unconditional right to resell the Bridge Notes to one
or more third parties, whether by assignment or
participation.
Conditions to Funding: The execution and closing of the Securities Purchase
Agreement and the funding of the Bridge Notes will be
subject to satisfaction of conditions precedent,
including but not limited to the following:
1. The Acquisition shall have been consummated in
accordance with the Acquisition Agreement, and
the Acquisition Agreement, tender offer and
other documentation shall be satisfactory in
form and substance to the Purchasers in their
reasonable judgment, without any material (as
determined by the Purchasers in their
reasonable judgment) amendment, modification
or waiver of any of the terms or conditions
thereof without the prior written consent of
the Purchasers; PROVIDED, that, if the
definitive Acquisition Agreement is
substantially similar in all material respects
to the form of Acquisition Agreement, a copy
of which is attached to the Escrow Letter,
such definitive Acquisition Agreement will be
satisfactory to the Purchasers. The structure
of the Transaction, including the tax, federal
margin regulation, ERISA, accounting and other
consequences thereof, and corporate and legal
structure shall be satisfactory to the
Purchasers in their reasonable judgment;
PROVIDED, THAT, if the structure of the
Transaction is substantially similar in all
material respects to the structure set forth
in the Draft Acquisition Agreement, such
structure will be satisfactory to the
Purchasers.
<PAGE> 12
12
2. The other transactions contemplated to be
consummated on the Closing Date shall have
been consummated on terms satisfactory to the
Purchasers in their reasonable judgment,
including without limitation the capital
contribution by Parent to Merger Sub of the
Available Cash, which shall be in aggregate
amount of no less than $200,000,000, and such
Available Cash shall have been utilized to
fund, in whole or in part, the Acquisition.
3. Reasonably satisfactory completion of all loan
documentation and other documentation relating
to the Bridge Notes and the Rollover Notes in
form and substance satisfactory to the
Purchasers in their reasonable judgment,
including issuance of appropriate Parent,
Company and subsidiary guarantees, and receipt
by the Purchasers of satisfactory customary
opinions of counsel as to the transactions
contemplated thereby (including without
limitation with respect to compliance with all
applicable securities laws).
4. The Purchasers shall have received (i) a
reasonably satisfactory pro forma consolidated
balance sheet of Parent and its subsidiaries,
as at the Closing Date and after giving effect
to the Acquisition and the financings
contemplated hereby; (ii) audited, unaudited
interim and pro forma financial statements of
the Parent and its subsidiaries which are
reasonably satisfactory to the Purchasers;
(iii) unaudited interim consolidated financial
statements of each of Company and its
subsidiaries and Parent and its subsidiaries,
for each quarterly period ended subsequent to
the date of the latest audited consolidated
financial statements of Company and its
subsidiaries and of Parent and its
subsidiaries as to which such financial
statements are available, and such financial
statements shall not, in the reasonable
judgment of the Purchasers, reflect any
material adverse change in the consolidated
financial condition of Company and its
subsidiaries or Parent and its subsidiaries,
as reflected in the financial information
previously furnished to the Purchasers.
<PAGE> 13
13
5. The Purchasers shall have received the results
of a recent lien, tax and judgment search in
each of the jurisdictions and offices where
assets of the Parent and its subsidiaries and
the Company and its subsidiaries are located
or recorded, and such search shall reveal no
material liens on any of their respective
assets except for liens permitted by the
documentation relating to the Bridge Notes and
the Rollover Notes.
6. The Purchasers shall have determined that
reasonably satisfactory insurance relating to
the Parent and its subsidiaries will be in
place after the Acquisition.
7. The Parent and its subsidiaries shall not be
in breach in any material respect of any of
its obligations under the documentation
relating to the Transaction or the financing
thereof.
8. Receipt of all material governmental,
shareholder and third party consents and
approvals necessary or reasonably desirable in
connection with any aspect of the Transaction
or any other transactions contemplated hereby
and satisfactory expiration of all applicable
waiting periods without any actions to
materially affect any material aspect of the
Transaction.
<PAGE> 14
14
9. Absence of any material adverse change in the
business, condition (financial or otherwise),
operations, performance, properties or
prospects of Parent and its subsidiaries,
taken as a whole, or of the Company and its
subsidiaries, taken as a whole, since December
31, 1996. No additional facts or information
(including the occurrence of any events or
circumstances) shall have come to the
attention of Purchasers that are inconsistent
with the information disclosed to the
Purchasers by or on behalf of Parent or Merger
Sub prior to the date of the Commitment Letter
and that, either individually or in the
aggregate, could reasonably be expected to
have a material adverse effect on (a) the
condition (financial or otherwise), business,
assets, liabilities (contingent or otherwise),
properties, value, operations, results of
operations or prospects of (i) Parent and its
subsidiaries, taken as a whole, or (ii) the
Company and its subsidiaries, taken as a
whole, or (b) any aspect of the Transaction or
the refinancing of the Bridge Notes. From and
after the date hereof, neither Parent nor
Merger Sub shall have incurred any material
contractual obligations other than (i) the
execution of the Acquisition Agreement, the
Commitment Letter and one or more other
commitment letters for Permanent Financing
comprising part of the Transaction and the
execution of the documentation thereunder and
(ii) such other obligations as are acceptable
to the Purchasers.
<PAGE> 15
15
10. Absence of any action, suit, investigation,
litigation or proceeding pending or threatened
in any court or before any arbitrator or
governmental instrumentality that (i) seeks to
enjoin the Transaction or seeks damages as a
result of the Transaction and in the good
faith judgment of the Purchasers such action,
suit, investigation, litigation or proceeding
could reasonably be expected to prevail, (ii)
in the good faith judgment of the Purchasers
could reasonably be expected to have a
material adverse effect on the business,
condition (financial or otherwise),
operations, properties or prospects of Parent
and its subsidiaries, taken as a whole, or of
the Company and its subsidiaries taken as a
whole or on the Acquisition or the Merger or
(iii) in the good faith judgment of the
Purchasers could reasonably be expected to
materially adversely affect the Purchasers,
the Bridge Notes or the ability of Parent or
the Company to perform its obligations
thereunder or to refinance the Bridge Notes.
11. Absence of any disruption or change in
financial, banking or capital markets or in
the regulatory environment that in the good
faith judgment of the Purchasers could
materially and adversely affect the sale of
the Bridge Notes or the refinancing thereof.
12. Absence of any material default or any
material breach of any representation or
warranty set forth in the documentation for
the Bridge Notes.
13. Upon consummation of the Acquisition, (i) none
of Merger Sub, the Company or any of the
Company's subsidiaries will have any
outstanding debt (other than (x) arrangements
satisfactory to the Purchasers relating to
refinancing outstanding debt and (y) certain
industrial development bond obligations and
capital lease obligations in the aggregate
amount of $20,000,000) in excess of $500,000
and (ii) Parent and its subsidiaries other
than the Company and its subsidiaries will not
have aggregate outstanding debt (without
taking into account the Bridge Notes)
exceeding $446,000,000.
<PAGE> 16
16
Representations and The Securities Purchase Agreement will contain
Warranties: representations and warranties which are usual and
customary for transactions of this nature or which
the Purchasers reasonably determine to be appropriate
in light of the business or operations of Parent, the
Company or any of their subsidiaries (with the scope,
exceptions and qualifications, to be agreed upon),
including but not limited to the following:
1. Corporate existence.
2. Corporate and governmental authorizations;
non-contravention; binding and enforceable
agreements.
3. Financial information.
4. No material adverse change.
5. Environmental matters.
6. Compliance with laws, including ERISA and
environmental laws.
7. No material litigation.
8. Existence, incorporation, etc., of
subsidiaries.
9. Payment of taxes and other material
obligations.
10. Full disclosure.
11. After consummation of the Transaction, Parent
is in compliance with the terms of its
material debt obligations.
Covenants: The Securities Purchase Agreement will contain usual
and customary covenants for transactions of this
nature or which the Purchasers reasonably determine
to be appropriate in light of the business or
operations of the Parent, Company or any of their
subsidiaries (with the scope and exceptions to be
agreed upon), including without limitation the
following:
1. Furnishing of information (including annual
and quarterly financial and operating
reports).
2. Maintenance of property; insurance coverage.
3. Compliance with laws; conduct of business.
4. Use of proceeds.
5. Restrictions on indebtedness.
6. Negative pledge and restrictions on
sale-leasebacks.
7. Restrictions on dividends and other restricted
payments by Parent (including redemptions and
prepayment of junior or PARI PASSU
indebtedness).
8. Restrictions on asset sales.
9. Restrictions on transactions with affiliates.
10. Restrictions on mergers and consolidations.
<PAGE> 17
17
11. Use best efforts to effect refinancing of
Bridge Notes through the Permanent Financing
as soon as practicable.
12. Limitation on investments.
13. Sales of subsidiaries' stock and absence of
limitations on the ability of subsidiaries to
upstream assets to Merger Sub.
14. Limitation on capital expenditures and
acquisitions.
15. Availability of management to meet with
holders of Bridge Notes or Rollover Notes upon
request.
16. Maintenance of minimum net worth.
Events of Default: The Securities Purchase Agreement will contain usual
and customary events of default for transactions of
this nature or which the Purchasers reasonably
determine to be appropriate in light of the business
or operations of the Parent, Company or any of their
subsidiaries, including without limitation the
following:
1. Failure to pay any principal when due or any
interest or fees payable within five days of
when due.
2. Failure to meet covenants, with grace periods
where appropriate.
3. Representations or warranties false in any
material respect when made or repeated.
4. Cross default to other debt of Parent, Merger
Sub, the Company and their subsidiaries (with
minimum dollar amounts to be agreed upon).
5. Judgment defaults (with minimum dollar amounts
to be agreed upon).
6. Other usual defaults, including without
limitation, insolvency, bankruptcy and ERISA.
Indemnification: Parent and Merger Sub will indemnify the Purchasers,
their affiliates and related persons against all
losses, liabilities, claims, damages or expenses
relating to the Bridge Notes, the Securities Purchase
Agreement and the use of the Bridge Note proceeds or
the commitments, including but not limited to, fees,
charges and disbursements of counsel and settlement
costs, substantially on the terms set forth in the
Commitment Letter.
<PAGE> 18
18
Expenses: Parent and Merger Sub will pay all legal and other
out-of-pocket expenses of the Purchasers as incurred,
including travel costs, document production and other
expenses of this type, and the fees, charges and
disbursements of outside counsel and fees of other
professional advisors engaged with Parent's consent.
Governing Law: State of New York.
Amendments and Waivers: After the first issuance of the Bridge Notes,
amendments and waivers will require the consent of
persons holding in the aggregate at least 51% of
the principal amount of the Bridge Notes
outstanding, PROVIDED, that any such amendment will
require the approval of WP Bridge Finance and
PROVIDED, FURTHER, that changes to certain economic
provisions will require unanimous consent.
Miscellaneous: The provisions of the Commitment Letter and Term
Sheet will be replaced by the provisions of any
definitive documentation executed in connection with
the Bridge Notes.
Standard yield protection (including payments free
and clear of withholding taxes and interest period
breakage indemnities), eurodollar illegality and
similar provisions will apply.
<PAGE> 19
EXHIBIT B
---------
SENIOR ROLLOVER NOTES:
SUMMARY OF TERMS AND CONDITIONS
Issuer: Parent.
Issue: Senior Rollover Notes (the "Rollover Notes").
Principal Amount: Up to the outstanding principal amount of the Bridge
Notes plus an amount equal to 3% of such principal
amount, representing a funding fee payable to the
Purchasers, to be paid to the Purchasers pro rata
based on their respective shares of Bridge Notes
held.
Purpose: The Rollover Notes will be used in their entirety to
redeem 100% of the outstanding (and unredeemed)
principal amount of the Bridge Notes.(1)
Maturity: 7 years after the issuance date of the Rollover
Notes.
Interest Rate: Interest on the Rollover Notes shall be paid at the
Applicable Interest Rate (as defined below) and
payable quarterly in arrears. "Applicable Interest
Rate" means the sum of (A) 200 basis points (the
"Incremental Spread") as of the date of the issuance
of the Rollover Notes, which Incremental Spread shall
(for so long as the Rollover Notes are held by the
Purchasers) increase by an additional 50 basis points
at the end of each three-month period for so long as
the Rollover Notes are outstanding, PLUS (B) the
highest of the following, as determined as of the
beginning of each three-month period: (i) the base
rate (as announced from time to time by Citibank,
N.A.) plus 325 basis points, (ii) three months U.S.
Dollar LIBOR (as determined from specified sources)
plus 600 basis points and (iii) the highest yield on
any of the 1, 3, 5 and 10-year direct obligations
issued by the United States plus 500 basis points;
and PROVIDED, FURTHER, that (A) in no event shall the
Applicable Interest Rate exceed 17% and (B) the
amount of cash interest paid will be subject to a cap
of 15%, with the excess (if any) of the Applicable
Interest Rate over such interest rate cap to be paid
in additional Rollover Notes.
- --------
(1)Accrued interest to be paid in cash on the Bridge Notes at the time of
exchange for Rollover Notes.
<PAGE> 20
2
Optional Redemption: For so long as they are held by the Purchasers, the
Rollover Notes will be redeemable at the option of
Parent, in whole or in part, at any time at par plus
accrued and unpaid interest to the redemption date,
PROVIDED, HOWEVER, that if the Rollover Notes are
sold to third party purchasers on a fixed rate basis
no less favorable to Parent than the then applicable
rate of interest (it being understood that the
Purchasers shall have the right unilaterally to fix
the Interest Rate on the Rollover Notes in
conjunction with such third party sales and it also
being understood that no such third party sales shall
take place unless Parent has been given 10 days'
prior notice), the Rollover Notes will be
non-callable for 4 years from the date of issuance
and will be callable thereafter at par plus accrued
interest plus a premium equal to 50% of the coupon in
effect on the date of issuance of the Rollover Notes,
declining ratably on each yearly anniversary to par
one year prior to the maturity of the Rollover Notes.
Mandatory Redemption: Same as Bridge Notes, except that the redemption
price shall be at par plus accrued interest.
Change-of-Control: Parent will redeem the Rollover Notes upon any
change-of- control of Parent at a redemption price of
101% of par plus accrued interest. Any redemption or
other acquisition of Rollover Notes, whether optional
(as set forth above), mandatory (as set forth above)
or upon a change of control, will be made pro rata
among the Purchasers based on the principal amount of
Rollover Notes held by each of them.
Ranking: Same as Bridge Notes.
Guarantees: Same as Bridge Notes.
<PAGE> 21
3
Registration Rights: Parent will file, and will use its best efforts to
cause to become effective, a "shelf" registration
statement with respect to the Rollover Notes as soon
as practicable after the issuance of the Rollover
Notes. Parent will keep the registration statement
for the Rollover Notes effective until all of the
Rollover Notes shall have been redeemed or are
saleable in accordance with Rule 144(k) under the
Securities Act. If a "shelf" registration statement
for the Rollover Notes has either (i) not been filed
within 60 days from the date of issuance of the
Rollover Notes, or (ii) not been declared effective
within 120 days from the date of issuance of the
Rollover Notes, Parent will pay liquidated damages of
$.192 per week per $1,000 principal amount of
Rollover Notes until such time as such registration
statement has been filed or become effective, as the
case may be. Parent will also pay such liquidated
damages for any period of time following the
effectiveness of such registration statement that the
registration statement is not available for resales
thereunder.
Right to Resell The Purchasers shall have the absolute and
Rollover Notes: unconditional right to resell Rollover Notes in
compliance with applicable law to any third parties.
Conditions to Issuance: The right to issue the Rollover Notes will be subject
to satisfaction of the following conditions
precedent: (i) at the time of issuance, there shall
exist no material default under the Securities
Purchase Agreement, (ii) all fees and other amounts
owing to the Purchasers shall have been paid in full
and (iii) no injunction, decree, order or judgment
enjoining such issuance shall be in effect.
Representation As in the Securities Purchase Agreement
Warranties, (see Exhibit A).
Covenants, Events
of Default,
Indemnities and
Expenses:
Governing Law: State of New York.
<PAGE> 22
WP BRIDGE FINANCE, INC.
31 West 52nd Street
New York, New York 10019
July 25, 1997
Nortek, Inc.
50 Kennedy Plaza
Providence, RI 02903
Re: $300,000,000 Bridge Commitment Letter
-------------------------------------
Gentlemen:
Reference is made to the (i) Letter Agreement, dated as of July 18,
1997 (the "COMMITMENT LETTER"), between WP Bridge Finance, Inc. ("WP BRIDGE
FINANCE") and you with respect to the proposed sale of $300,000,000 of bridge
notes (the "Bridge Notes") and (ii) the Summary of Terms and Conditions attached
thereto as Exhibits A and B (such Summary of Terms and Conditions shall
hereinafter be collectively referred to as the "TERM SHEET", such Exhibit A
included therein shall hereinafter be referred to as "TERM SHEET EXHIBIT A" and
such Exhibit B included therein shall hereinafter be referred to as "TERM SHEET
EXHIBIT B"). Unless otherwise defined herein, capitalized terms which are used
herein shall have the respective meanings ascribed to them in the Commitment
Letter and the Term Sheet.
This letter shall confirm our agreement that the Term Sheet shall
hereby be amended as follows:
1. The paragraph set forth opposite the heading "Interest Rate" in Term Sheet
Exhibit A is hereby deleted in its entirety and replaced with the
following:
"Interest on the Bridge Notes shall be paid at the Applicable Interest
Rate (as defined below) and payable quarterly in arrears. "Applicable
Interest Rate" means the highest of the following, as determined as of
the beginning of each three-month period: (i) the base rate (as
announced from time to time by Citibank, N.A.) plus 225 basis points,
(ii) three-month U.S. Dollar LIBOR (as determined from specified
sources) plus 500 basis points and (iii) the highest yield on any of
the 1,
<PAGE> 23
2
3, 5 and 10-year direct obligations issued by the United States plus
400 basis points."
2. The paragraph set forth opposite the heading "Maturity" in Term Sheet
Exhibit A is hereby deleted in its entirety and replaced with the
following:
"Three months from the date of first issuance of any Bridge Notes;
PROVIDED, HOWEVER, that (i) the Company may extend the maturity to six
months from the date of such first issuance by the payment on or prior
to the three month maturity date of an extension fee of $2.50 per
$1,000 of principal amount of Bridge Notes to be so extended, (ii) the
Company may extend the maturity to nine months from the date of such
first issuance by the payment on or prior to the six month maturity
date of an extension fee of $5.00 per $1,000 of principal amount of
Bridge Notes to be so extended and (iii) the Company may extend the
maturity to twelve months from the date of such first issuance by the
payment on or prior to the nine month maturity date of an extension
fee of $6.25 per $1,000 of principal amount of Bridge Notes to be so
extended.
3. The paragraph set forth opposite the heading "Interest Rate" in Term Sheet
Exhibit B is hereby deleted in its entirety and replaced with the
following:
"Interest on the Rollover Notes shall be paid at the Applicable
Interest Rate (as defined below) and payable quarterly in arrears.
"Applicable Interest Rate" means the sum of (A) 300 basis points (the
"Incremental Spread") as of the date of the issuance of the Rollover
Notes, which Incremental Spread shall (for so long as the Rollover
Notes are held by the Purchasers) increase by an additional 50 basis
points at the end of each three-month period for so long as the
Rollover Notes are outstanding, plus (B) the highest of the following,
as determined as of the beginning of each three-month period: (i) the
base rate (as announced from time to time by Citibank, N.A.) plus 225
basis points, (ii) three-month U.S. Dollar LIBOR (as determined from
specified sources) plus 500 basis points and (iii) the highest yield
on any of the 1, 3, 5 and 10-year direct obligations issued by the
United States plus 400 basis points; and PROVIDED, FURTHER, that (A)
in no event shall the Applicable Interest Rate exceed 17% and (B) the
amount of cash interest paid will be subject to a cap of 15%, with the
excess (if any) of the Applicable Interest Rate over such interest
rate cap to be paid in additional Rollover Notes."
Except as specifically amended hereby, all of the terms and provisions
of each of the Commitment Letter, the Exhibit A Term Sheet and the Exhibit B
Term
<PAGE> 24
3
Sheet shall remain unamended and in full force and effect in accordance with the
provisions thereof, and the terms "Commitment Letter" and "Term Sheet" and words
of like import shall be deemed to refer to the Commitment Letter and the Term
Sheet as amended by this letter.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. ANY RIGHT TO TRIAL
BY JURY WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
CONTEMPLATED BY THIS LETTER IS HEREBY WAIVED AND THE PARTIES HEREBY SUBMIT TO
THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED
IN THE CITY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THIS LETTER OR
ANY MATTERS CONTEMPLATED HEREBY.
Without our prior written consent, this letter (and the contents
hereof) may not be disclosed by you to any other person except your accountants,
attorneys and other advisors and to the Company and its accountants, attorneys
and other advisors in connection with the Acquisition and then only, in each
case, on a confidential basis and in connection with the Transaction, except as
otherwise required by law or the rules and regulations of the Securities and
Exchange Commission.
This letter may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page of this letter by telecopier shall be effective at delivery
of a manually executed counterpart of this letter.
<PAGE> 25
4
Please acknowledge your agreement with the foregoing by signing where
indicated below and by returning this letter to WP Bridge Finance. Upon your
acceptance hereof, this letter will constitute a binding agreement between us.
Very truly yours,
WP BRIDGE FINANCE, INC.
By: /s/ James C. Kingsbery
------------------------------
Name: James C. Kingsbery
Title: Treasurer
Accepted and agreed to as of the
date first above written:
NORTEK, INC.
By: /s/ Kevin W. Donnelly
-------------------------------------
Name: Kevin W. Donnelly
Title: Vice President General Counsel
NTK SUB, INC.
By: /s/ Kevin W. Donnelly
-------------------------------------
Name: Kevin W. Donnelly
Title: Secretary
<PAGE> 1
Exhibit (c)(1)
================================================================================
AGREEMENT AND PLAN OF MERGER
among
NORTEK, INC.,
NTK SUB, INC.
and
PLY GEM INDUSTRIES, INC.
dated as of July 24, 1997
================================================================================
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
THE OFFER................................................................................................2
1.1. THE OFFER................................................................................2
1.2. COMPANY ACTIONS..........................................................................3
1.3. STOCKHOLDER LISTS........................................................................4
1.4. SUB STOCKHOLDER APPROVAL.................................................................5
1.5. COMPOSITION OF THE BOARD OF DIRECTORS; SECTION 14(f).....................................5
1.6. ACTION BY CONTINUING DIRECTORS...........................................................5
ARTICLE 2
THE MERGER...............................................................................................6
2.1. THE MERGER...............................................................................6
2.2. CLOSING..................................................................................6
2.3. EFFECTIVE TIME OF THE MERGER.............................................................6
2.4. EFFECTS OF THE MERGER....................................................................6
2.5. STOCKHOLDERS' MEETING....................................................................7
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF THE CERTIFICATES...............................................8
3.1. EFFECT ON CAPITAL STOCK..................................................................8
3.2. CONVERSION OF SHARES.....................................................................8
3.3. PAYMENT FOR SHARES.......................................................................9
3.4. STOCK TRANSFER BOOKS....................................................................11
3.5. STOCK OPTION PLANS......................................................................11
3.6. DISSENTING SHARES.......................................................................12
ARTICLE 4
REPRESENTATIONS AND WARRANTIES..........................................................................13
4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................13
4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........................................35
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS...............................................................38
5.1. Covenants of the Company................................................................38
ARTICLE 6
ADDITIONAL AGREEMENTS...................................................................................43
6.1. ACCESS TO INFORMATION...................................................................43
6.2. ASSISTANCE..............................................................................43
6.3. COMPLIANCE WITH NEW JERSEY ISRA.........................................................44
6.4. FEES AND EXPENSES.......................................................................44
6.5. BROKERS OR FINDERS......................................................................45
6.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.....................................46
6.7. REASONABLE EFFORTS......................................................................49
6.8. PUBLICITY...............................................................................49
6.9. WITHHOLDING RIGHTS......................................................................49
6.10. REAL ESTATE TAXES......................................................................50
6.11. HSR AND OTHER GOVERNMENTAL APPROVALS...................................................50
6.12. NOTIFICATION OF CERTAIN MATTERS........................................................51
6.13. SOLVENCY LETTER. ......................................................................51
6.14. CONTINUATION OF EMPLOYEE BENEFITS......................................................51
6.15. TRUSTEES...............................................................................52
6.16. WITHDRAWAL LIABILITY...................................................................52
ARTICLE 7
CONDITIONS PRECEDENT....................................................................................52
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER..............................52
ARTICLE 8
TERMINATION AND AMENDMENT...............................................................................53
8.1. TERMINATION.............................................................................53
8.2. EFFECT OF TERMINATION...................................................................56
8.3. AMENDMENT...............................................................................56
8.4. EXTENSION; WAIVER.......................................................................56
ARTICLE 9
GENERAL PROVISIONS......................................................................................56
9.1. NONSURVIVAL OF COVENANTS AND AGREEMENTS.................................................56
9.2. CONFIDENTIALITY AGREEMENT...............................................................56
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
9.3. NOTICES.................................................................................57
9.4. INTERPRETATION..........................................................................57
9.5. COUNTERPARTS............................................................................58
9.6. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF OWNERSHIP.....................58
9.7. GOVERNING LAW...........................................................................58
9.8. ASSIGNMENT..............................................................................58
9.9. DIRECTOR AND OFFICER LIABILITY..........................................................59
9.10. SPECIFIC PERFORMANCE....................................................................59
</TABLE>
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<PAGE> 5
Schedules
Schedule 3.5(a) -- Cancellation of Stock Options
Schedule 4.1(a) -- Subsidiaries
Schedule 4.1(b) -- Capital Structure
Schedule 4.1(c) -- Violations (Transaction Documents)
Schedule 4.1(f) -- Violations (General)
Schedule 4.1(g) -- Permits
Schedule 4.1(h) -- Litigation
Schedule 4.1(i) -- Taxes
Schedule 4.1(j) -- Employment Agreements
Schedule 4.1(k) -- Benefit Plans and Employee Arrangements
Schedule 4.1(l) -- Absence of Certain Changes or Events
Schedule 4.1(m) -- Material Liabilities
Schedule 4.1(n) -- Agreements with Financial Advisor
Schedule 4.1(p) -- Labor Matters
Schedule 4.1(r) -- Environmental Matters
Schedule 4.1(s) -- Real Property
Schedule 4.1(v) -- Material Contracts
Schedule 4.1(w) -- Related Party Transactions
Schedule 4.2(e) -- Financing Commitments
Schedule 5.1(n) -- Capital Expenditures
Schedule 6.5(a) -- Brokers or Finders
-iv-
<PAGE> 6
Schedule 9.4--Atrium Agreements
-v-
<PAGE> 7
Exhibits
Exhibit A -- Conditions to the Offer
Exhibit B -- Option Surrender Agreement, Release and Waiver
Exhibit C -- Non-Compete and Termination Agreement
Exhibit D -- Termination and Release Agreement
-vi-
<PAGE> 8
LIST OF DEFINED TERMS
A
Acquisition Proposal............................ 40
Agreement....................................... 1
Antitrust Division.............................. 50
Atrium Agreements............................... 58
B
Benefit Liabilities............................. 24
Benefit Plans................................... 22
Board........................................... 3
Board of Directors.............................. 3
Bylaws.......................................... 7
C
Capitalization Date............................. 13
CERCLA.......................................... 30
Certificate of Merger........................... 6
Certificates.................................... 10
Closing......................................... 6
Closing Date.................................... 6
Code............................................ 21
Company......................................... 1
Company Common Stock............................ 2
Company Intangible Property..................... 30
Company Litigation.............................. 19
Company Order................................... 19
Company Permits................................. 18
Company SEC Documents........................... 17
Company Stockholder Approval.................... 16
Company Voting Debt............................. 14
Conditions...................................... 2
Confidentiality Agreement....................... 43
Constituent Corporations........................ 6
Continuing Directors............................ 5
D
DGCL............................................ 4
Dissenting Shares............................... 12
E
Effective Time.................................. 6
Employee Arrangements........................... 22
Environmental Costs and
Liabilities................................... 30
Environmental Law............................... 30
ERISA Affiliate................................. 22
Exchange Act.................................... 4
F
Fairness Opinion................................ 4
Financial Advisor............................... 4
Financing Commitment............................ 37
FTC............................................. 50
G
GAAP............................................ 17
Gains and Transfer Taxes........................ 16
Governmental Entity............................. 16
H
Hazardous Material.............................. 31
HSR Act......................................... 16
I
Indemnified Liabilities......................... 46
Indemnified Parties............................. 46
Injunction...................................... 53
IRS............................................. 20
ISRA............................................ 16
-vii-
<PAGE> 9
L
Laws............................................ 16
M
Material Adverse Effect......................... 13
Material Contracts.............................. 34
Meeting Date.................................... 17
Merger.......................................... 6
Merger Consideration............................ 8
Multiemployer Plan.............................. 26
N
NJDEPE.......................................... 44
Non-Compete and Termination Agreement........... 1
O
Offer........................................... 2
Offer Documents................................. 3
Offer Price..................................... 2
Options......................................... 11
Option Consideration............................ 11
Option Release Agreement........................ 1
OSHA............................................ 30
P
Parent.......................................... 1
Paying Agent.................................... 9
Payment Fund.................................... 9
PBGC............................................ 24
Person.......................................... 3
Preferred Stock................................. 13
Proxy Statement................................. 7
R
Real Property Leases............................ 33
Release......................................... 31
Remedial Action................................. 31
Representatives................................. 39
S
Schedule 14D-1.................................. 4
Schedule 14D-9.................................. 4
SEC............................................. 3
Securities Act.................................. 17
Shares.......................................... 2
Stock Option Plans.............................. 11
Stockholders' Meeting........................... 7
Sub............................................. 1
Subsidiary...................................... 3
Surviving Corporation........................... 6
T
Tax............................................. 21
Tax Return...................................... 21
Taxes........................................... 21
Termination and Release Agreement............... 1
Transaction Documents........................... 3
U
Unvested Stock.................................. 11
Unvested Stock Consideration.................... 11
V
Violation....................................... 15
W
Withdrawal Liability............................ 52
-viii-
<PAGE> 10
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 24, 1997 (the
"Agreement"), is made and entered into by and among NORTEK, INC., a Delaware
corporation ("Parent"), NTK SUB, INC., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and PLY GEM INDUSTRIES, INC., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company deem it advisable and in the best interests of their respective
stockholders that Parent acquire the Company pursuant to the terms and subject
to the conditions set forth in this Agreement;
WHEREAS, Parent and Sub are unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless certain beneficial and
record holders of Options or Unvested Stock enter into an Option Surrender
Agreement, Release and Waiver substantially in the form of Exhibit B hereto (an
"Option Release Agreement");
WHEREAS, Parent and Sub are unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless, contemporaneously with the
execution and delivery hereof, Jeffrey S. Silverman enters into a Non-Compete
and Termination Agreement substantially in the form of Exhibit C hereto (the
"Non-Compete and Termination Agreement"), which shall establish (i) the terms
and provisions under which such individual's employment contract with the
Company shall terminate and (ii) the terms and provisions of a non-competition
agreement between the Company and such individual and, in order to induce Parent
and Sub to enter into this Agreement, the Company and such individual are
executing and delivering concurrently herewith the Non-Compete and Termination
Agreement;
WHEREAS, Parent and Sub are unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless, contemporaneously with the
execution and delivery hereof, Herbert P. Dooskin enters into a Termination and
Release Agreement substantially in the form of Exhibit D hereto (the
"Termination and Release Agreement"), which shall establish the terms and
provisions under which such individual's employment contract with the Company
shall terminate and, in order to induce Parent and Sub to enter into this
Agreement, the Company and such individual are executing and delivering
concurrently herewith the Termination and Release Agreement;
WHEREAS, the Company is unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless, contemporaneously with the
execution and delivery hereof, the Company has received true and complete copies
of the financing commitment described in Section 4.2(e); and
<PAGE> 11
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement and the transactions contemplated hereby and also to prescribe various
conditions to the consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
THE OFFER
1.1. THE OFFER.
(a) Subject to this Agreement not having theretofore been
terminated in accordance with the provisions of Section 8.1 hereof, Sub shall,
and Parent shall cause Sub to, as promptly as practicable after, but in no event
later than five business days from, the date of this Agreement, commence an
offer to purchase for cash (as it may be amended in accordance with the terms of
this Agreement, the "Offer") all shares of common stock, par value $0.25 per
share (the "Company Common Stock"), of the Company outstanding immediately prior
to the consummation of the Offer (the "Shares"), subject only to the conditions
set forth in Exhibit A hereto (the "Conditions"), at a price of $19.50 (the
"Offer Price") per Share, net to the seller in cash. Subject only to the
Conditions, Sub shall, and Parent shall cause Sub to, accept for payment and pay
for all Shares validly tendered pursuant to the Offer and not withdrawn prior to
the expiration date of the Offer as promptly as practicable following the
expiration date of the Offer. Sub expressly reserves the right to amend the
terms and conditions of the Offer, PROVIDED that without the consent of the
Company, no amendment may be made which (i) decreases the price per Share or
changes the form of consideration payable in the Offer, (ii) decreases the
number of Shares sought, or (iii) changes any of the Conditions or imposes
additional conditions to the Offer or amends any other term of the Offer in
either case in any manner adverse to the holders of Shares (it being understood
that extensions of the Offer as contemplated by this Section 1.1(a) are not
adverse to the holders of Shares); and PROVIDED, FURTHER, that the Minimum
Condition (as defined in Exhibit A hereto) is for the benefit of the Company and
may not be waived without the Company's consent. The Offer may only be extended
with the prior written consent of the Company or as required by law; PROVIDED,
HOWEVER, Parent and Sub may extend the Offer without the consent of the Company
(A) if at the scheduled expiration date of the Offer any of the Conditions shall
not have been satisfied or waived or (B) for any period required by any Laws (as
hereinafter defined) applicable to the Offer and PROVIDED, FURTHER, that if the
Conditions are not satisfied or, to the extent permitted by this Agreement,
waived as of any scheduled expiration date, Parent and Sub shall extend the
Offer from time to time for up to five (5) business days at a time (or such
longer period as shall be approved by the Company) until the earlier of the
consummation of the Offer or sixty (60) calendar days after the date hereof,
provided that such extension shall
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<PAGE> 12
not be required if in the reasonable judgment of Parent or Sub, any Condition is
incapable of being satisfied prior to the expiration of the sixty (60) calendar
days. Upon the terms hereof and subject to the Conditions, Sub will accept for
payment and purchase all Shares validly tendered and not withdrawn prior to the
expiration of the Offer.
(b) The Company will not, nor will it permit any of its
Subsidiaries (as defined below) to, tender into the Offer any Shares
beneficially owned by it. For purposes of this Agreement, "Subsidiary" means, as
to any Person (as defined below), any corporation, limited liability company,
partnership or joint venture, whether now existing or hereafter organized or
acquired: (i) in the case of a corporation, of which at least a majority of the
outstanding shares of stock having by the terms thereof ordinary voting power to
elect a majority of the board of directors of such corporation (other than stock
having such voting power solely by reason of the happening of any contingency)
is at the time directly or indirectly owned or controlled by such Person and/or
one or more of its Subsidiaries or (ii) in the case of a limited liability
company, partnership or joint venture, in which such Person or Subsidiary of
such Person is a managing member, general partner or joint venturer or of which
a majority of the partnership or other ownership interests are at the time owned
by such Person and/or one or more of its Subsidiaries. For purposes of this
Agreement, "Person" means any individual, corporation, company, voluntary
association, limited liability company, partnership, joint venture, trust,
unincorporated organization or other entity.
(c) On the date of the commencement of the Offer, Sub shall
file with the Securities and Exchange Commission (the "SEC") a Tender Offer
Statement on Schedule 14D-1 with respect to the Offer which will contain an
offer to purchase and form of the related letter of transmittal (together with
any supplements or amendments thereto, the "Offer Documents"). The Company and
its counsel shall be given a reasonable opportunity to review and comment on the
Offer Documents prior to the filing of such Offer Documents with the SEC. Sub
agrees to provide the Company and its counsel copies of any written comments Sub
and its counsel may receive from the SEC or its staff with respect to the Offer
Documents and a summary of any such comments received orally promptly after the
receipt thereof. Parent, Sub and the Company each agree promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that any such information shall have become false or misleading in any material
respect and Parent and Sub further agree to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to the stockholders of the Company, in each case as and to the
extent required by applicable securities laws.
1.2. COMPANY ACTIONS. The Company hereby consents to the Offer and
represents that (a) its Board of Directors (the "Board" or "Board of Directors")
(at a meeting duly called and held) has (i) determined that this Agreement, the
Option Release Agreement, the Non-Compete and Termination Agreement and the
Termination and Release Agreement (collectively, the "Transaction Documents")
and the transactions contemplated hereby or thereby, including the Offer and the
Merger (as defined in Section 2.1 hereof), are fair to and
-3-
<PAGE> 13
in the best interests of the stockholders of the Company, (ii) approved the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation of the transactions contemplated thereby, including the
Offer and the Merger, and such approval constitutes approval for purposes of
Section 203 of the Delaware General Corporation Law, as amended (the "DGCL"),
(iii) resolved to recommend acceptance of the Offer and approval and adoption of
this Agreement by the holders of Company Common Stock; and (b) Furman Selz LLC
(the "Financial Advisor") has delivered to the Board its opinion to the effect
that, as of the date of this Agreement and based upon and subject to the matters
set forth therein, the cash consideration to be received by the holders of
Company Common Stock in the Offer and the Merger is fair to such holders from a
financial point of view (the "Fairness Opinion"). Subject to its fiduciary
duties under applicable Laws (as defined in Section 4.1(c)(ii)) after
consultation with independent counsel, the Company hereby agrees to file with
the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") containing the recommendation referred to in clause (iii) above (and the
information required by Section 14(f) of the Securities Exchange Act of 1934, as
amended (together with all rules and regulations thereunder, the "Exchange
Act"), so long as Parent shall have furnished such information to the Company in
a timely manner) and to mail such Schedule 14D-9 to the stockholders of the
Company. The Company will use its best efforts to cause the Schedule 14D-9 to be
filed on the same date as Sub's Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") is filed and mailed together with the Offer Documents;
PROVIDED that in any event the Schedule 14D-9 shall be filed and mailed no later
than 10 business days following the commencement of the Offer. Parent and its
counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to the Company's filing of the Schedule 14D-9 with the SEC.
The Company agrees to provide Parent and its counsel copies of any written
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 and a summary of any such comments received orally
promptly after the receipt thereof. Parent, Sub and the Company each agree
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that any such information shall have become false or
misleading in any material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to the stockholders of the Company, in each case as
and to the extent required by applicable securities laws.
1.3. STOCKHOLDER LISTS. In connection with the Offer, at the request of
Parent or Sub, from time to time after the date hereof, the Company will
promptly furnish Sub with mailing labels, security position listings and any
available listing or computer file maintained for or by the Company containing
the names and addresses of the record holders of the Shares as of a recent date
and shall furnish Sub with such additional information reasonably available to
the Company and assistance as Sub or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of Shares. Subject
to the requirements of applicable Laws, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Sub and its affiliates and associates shall hold in
confidence the information contained in any such labels, listings and files,
will
-4-
<PAGE> 14
use such information only in connection with the Offer and the Merger and, if
this Agreement shall be terminated, will deliver to the Company all copies of
such information in their possession.
1.4. SUB STOCKHOLDER APPROVAL. Parent, in its capacity as the sole
stockholder of Sub, by its execution hereof, approves and adopts this Agreement
and the transactions contemplated hereby.
1.5. COMPOSITION OF THE BOARD OF DIRECTORS; SECTION 14(f). In the event
that Sub acquires at least a majority of the Shares outstanding pursuant to the
Offer, Parent shall be entitled to designate for appointment or election to the
Board, upon written notice to the Company, such number of persons so that the
designees of Parent constitute the same percentage (but in no event less than a
majority) of the Board (rounded up to the next whole number) as the percentage
of Shares acquired pursuant to the Offer. Effective upon such purchase of at
least a majority of the Shares pursuant to the Offer (sometimes referred to
herein as the "consummation" of the Offer), the Company will increase the size
of the Board or obtain the resignation of such number of directors as is
necessary to enable such number of Parent designees to be so elected. In
connection therewith, the Company will mail to the stockholders of the Company
the information required by Section 14(f) of the Exchange Act and Rule 14f-1
thereunder unless such information has previously been provided to such
stockholders in the Schedule 14D-9. Parent and Sub shall provide to the Company
in writing, and will be solely responsible for, any information with respect to
such companies and their nominees, officers, directors and affiliates required
by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. Notwithstanding
the provisions of this Section 1.5, at least two of the members of the Board
shall, at all times prior to the Effective Time (as defined in Section 2.3
hereof) be, Continuing Directors (as defined below). For purposes hereof, the
term "Continuing Director" shall mean (i) any member of the Board as of the date
hereof or (ii) any successor of a Continuing Director who is (A) unaffiliated
with, and not a designee or nominee, of Parent or Sub, and (B) recommended to
succeed a Continuing Director by a majority of the Continuing Directors then on
the Board, and in each case under clause (ii), who is not an employee of the
Company.
1.6. ACTION BY CONTINUING DIRECTORS. Following the election or
appointment of Parent's designees pursuant to Section 1.5 and prior to the
Effective Time, such designees shall abstain from acting upon, and the approval
of a majority of the Continuing Directors shall be required to authorize and
shall be sufficient to authorize, any resolution with respect to any termination
of this Agreement by the Company, any amendment of this Agreement requiring
action by the Board of Directors of the Company, any extension of time for the
performance of any of the obligations or other acts of Parent or Sub under this
Agreement, any waiver of compliance with any of the agreements or conditions
under this Agreement for the benefit of the Company, and any action to seek to
enforce any obligation of Parent or Sub under this Agreement. If at any time the
Continuing Directors reasonably deem it necessary to consult independent counsel
in connection with their duties as Continuing Directors or actions
-5-
<PAGE> 15
to be taken by Company, the Continuing Directors may retain counsel for such
purpose and Parent or Sub shall pay the reasonable fees and expenses incurred in
connection therewith.
ARTICLE 2
THE MERGER
2.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Sub shall be merged
(the "Merger") with and into the Company at the Effective Time (as defined in
Section 2.3). At the Effective Time the separate corporate existence of Sub
shall cease, and the Company shall continue as the surviving corporation and a
direct wholly owned subsidiary of Parent or its successor (Sub and the Company
are sometimes hereinafter referred to as "Constituent Corporations" and, as the
context requires, the Company is sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue under the name "Ply Gem Industries,
Inc."
2.2. CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, and subject to the satisfaction or waiver of the conditions set
forth in Article 7, the closing of the Merger (the "Closing") shall take place
at 10:00 a.m., New York time, on the second business day after satisfaction
and/or waiver of all of the conditions set forth in Section 7.1 (the "Closing
Date"), at the offices of Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza,
New York, New York 10006, unless another date, time or place is agreed to in
writing by the parties hereto.
2.3. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, as provided in the DGCL, as soon as
practicable on or after the Closing Date. The Merger shall become effective upon
such filing or at such time thereafter as is provided in the Certificate of
Merger as the Company and Sub shall agree (the "Effective Time").
2.4. EFFECTS OF THE MERGER.
(a) The Merger shall have the effects as set forth in the
applicable provisions of the DGCL.
(b) The directors and officers of Sub immediately prior to the
Effective Time shall, from and after the Effective Time, be the initial
directors and officers of the Surviving Corporation until their successors have
been duly elected or appointed and qualified, or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(c) At the Effective Time, Article IV of the Certificate of
Incorporation of the
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<PAGE> 16
Company, as in effect immediately prior to the Effective Time, shall be amended
to increase the number of authorized shares of Company Common Stock to an
aggregate amount of Four Hundred Sixty Million (460,000,000) as of the Effective
Time, by operation of this Agreement and by virtue of the Merger without any
further action by the stockholders or directors of the Surviving Corporation
and, as so amended, such Certificate of Incorporation shall be the Certificate
of Incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and the DGCL.
(d) The By-Laws of the Company shall be the bylaws (the
"Bylaws") of the Surviving Corporation until thereafter amended as provided by
applicable law, the Certificate of Incorporation or the Bylaws.
2.5. STOCKHOLDERS' MEETING.
(a) If required by applicable Laws in order to consummate the
Merger, the Company, acting through the Board shall, in accordance with
applicable Laws, its Certificate of Incorporation and its Bylaws, as soon as
practicable following the consummation of the Offer:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders as soon as practicable following
the consummation of the Offer for the purpose of considering and taking
action upon this Agreement (the "Stockholders' Meeting");
(ii) subject to its fiduciary duties under applicable
Laws after consultation with independent counsel, include in the proxy
statement or information statement prepared by the Company for
distribution to stockholders of the Company in advance of the
Stockholders' Meeting in accordance with Regulation 14A or Regulation
14C promulgated under the Exchange Act (the "Proxy Statement") the
recommendation of the Board referred to in Section 1.2 hereof; and
(iii) use its reasonable efforts to (A) obtain and
furnish the information required to be included by it in the Proxy
Statement and, after consultation with Parent, respond promptly to any
comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof and cause the Proxy Statement to be mailed
to its stockholders following the consummation of the Offer and (B)
obtain the necessary approvals of this Agreement and the Merger by its
stockholders.
Parent will provide the Company with the information concerning Parent and Sub
required to be included in the Proxy Statement and will vote, or cause to be
voted, all Shares owned by it or its Subsidiaries in favor of approval and
adoption of this Agreement and the transactions contemplated hereby.
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<PAGE> 17
(b) Notwithstanding Section 2.5(a), if Parent and Sub and
their affiliates shall collectively own, following consummation of the Offer, at
least 90 percent of the outstanding Shares, each of Parent, Sub and the Company
shall take all necessary and appropriate action to cause the Merger to become
effective, as soon as practicable after the consummation of the Offer (but in no
event later than ten (10) business days thereafter), without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF THE CERTIFICATES
3.1. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder of shares of Company
Common Stock or any holder of shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become a number of fully paid and nonassessable shares of
common stock, par value $0.25 per share, of the Surviving Corporation equal to
the quotient realized by dividing (i) the sum of (A) the aggregate number of
shares of Company Common Stock issued and outstanding immediately prior to the
Effective Time, (B) the aggregate number of shares of Company Common Stock that
are owned by and held in the treasury of the Company immediately prior to the
Effective Time and (C) the aggregate number of shares of Company Common Stock
issuable, immediately prior to the Effective Time, in respect of all then
outstanding Options, by (ii) the aggregate number of shares of capital stock of
Sub issued and outstanding immediately prior to the Effective Time.
(b) Cancellation of Treasury Stock. Each share of Company
Common Stock and all other shares of capital stock of the Company that are owned
by the Company shall be canceled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
3.2. CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of Sub, the Company or the holders of
the Company Common Stock:
(a) Subject to the other provisions of this Section 3.2, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (excluding shares owned, directly or indirectly, by the Company
and Dissenting Shares (as defined in Section 3.6) shall be converted into the
right to receive the Offer Price or such higher price, if any, as is paid in the
Offer (the "Merger Consideration"), payable to the holder thereof in
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<PAGE> 18
cash, without any interest thereon, upon surrender and exchange of the
Certificate (as defined in Section 3.3) representing such share of Company
Common Stock.
(b) All such shares of Company Common Stock, when converted as
provided in Section 3.2(a), no longer shall be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
Certificate previously evidencing such Company Common Stock shall thereafter
represent only the right to receive the Merger Consideration. The holders of
Certificates previously evidencing Company Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to the
Company Common Stock except as otherwise provided herein or by law and, upon the
surrender of Certificates in accordance with the provisions of Section 3.3,
shall only have the right to receive for their Company Common Stock, the Merger
Consideration, without any interest thereon. Notwithstanding the foregoing, if
between the date of this Agreement and the Effective Time the outstanding shares
of Company Common Stock shall have been changed into a different number of
shares or a different class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Merger Consideration shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, with the aggregate Merger Consideration payable to each
stockholder in such case being rounded to the nearest penny.
3.3. PAYMENT FOR SHARES.
(a) Paying Agent. Prior to the Effective Time, Parent shall
appoint a United States bank or trust company reasonably acceptable to the
Company to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration, and Parent shall contribute the Merger Consideration to
the Surviving Corporation and shall cause the Surviving Corporation to deposit
the Merger Consideration so contributed with the Paying Agent in a separate fund
established for the benefit of the holders of shares of Company Common Stock,
for payment in accordance with this Article 3, through the Paying Agent (the
"Payment Fund"), and such contribution by Parent and payment by the Surviving
Corporation shall be in immediately available funds in amounts necessary to make
the payments pursuant to Section 3.2 and this Section 3.3 to holders (other than
the Company or holders of Dissenting Shares). The Paying Agent shall, pursuant
to irrevocable instructions, pay the Merger Consideration out of the Payment
Fund.
If for any reason (including losses) the Payment Fund is inadequate to
pay the amounts to which holders of shares of Company Common Stock shall be
entitled under this Section 3.3, Parent shall take all steps necessary to enable
or cause the Surviving Corporation promptly to deposit in trust additional cash
with the Paying Agent sufficient to make all payments required under this
Agreement, and Parent and the Surviving Corporation shall in any event be liable
for payment thereof. The Payment Fund shall not be used for any purpose except
as expressly provided in this Agreement.
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<PAGE> 19
(b) Payment Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall instruct the Paying
Agent to mail to each holder of record (other than the Company) of a certificate
or certificates which, immediately prior to the Effective Time, evidenced
outstanding shares of Company Common Stock (the "Certificates"), (i) a form of
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Paying Agent, and shall be in such form and have such
other provisions as the Surviving Corporation reasonably may specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent together with such letter of transmittal, duly
executed, and such other customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
respect thereof cash in an amount equal to the product of (x) the number of
shares of Company Common Stock represented by such Certificate and (y) the per
share Merger Consideration, and the Certificate so surrendered shall forthwith
be canceled. No interest shall be paid or accrued on the Merger Consideration
payable upon the surrender of any Certificate. If any holder of Shares shall be
unable to surrender such holder's Certificates because such Certificates have
been lost, mutilated or destroyed, such holder may deliver in lieu thereof an
affidavit and indemnity bond in form and substance and with surety reasonably
satisfactory to the Surviving Corporation. If payment is to be made to a person
other than the person in whose name the surrendered Certificate is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of the surrendered
Certificate or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until surrendered in accordance
with the provisions of this Section 3.3(b), each Certificate (other than
Certificates representing Shares owned by the Company or holders of Dissenting
Shares) shall be deemed at any time after the Effective Time to represent for
all purposes only the right to receive the Merger Consideration.
(c) Termination of Payment Fund; Interest. Any portion of the
Payment Fund which remains undistributed to the holders of Company Common Stock
for 180 days after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article 3 and the instructions set forth in the
letter of transmittal mailed to such holder after the Effective Time shall
thereafter look only to the Surviving Corporation for payment of the Merger
Consideration to which they are entitled. All interest accrued in respect of the
Payment Fund shall inure to the benefit of and be paid to the Surviving
Corporation.
(d) No Liability. None of Parent, the Company or the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
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<PAGE> 20
3.4. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. On or after the Effective Time, any Certificates
presented to the Paying Agent or Parent for any reason, except notation thereon
that a stockholder has elected to exercise his rights to appraisal pursuant to
the DGCL, shall be converted into the Merger Consideration as provided in this
Article 3.
3.5. STOCK OPTION PLANS.
(a) Cancellation of Options and Unvested Stock. At the
Effective Time, each then outstanding option (including stock purchase rights
and unrestricted stock awards) to purchase or acquire shares of Company Common
Stock under the Company's 1989 Senior Executive Stock Option Plan, 1989 Employee
Incentive Stock Plan, Executive Incentive Stock Option Plan, 1994 Employee
Incentive Stock Plan and 1994 Incentive Compensation Plan (collectively, the
"Stock Option Plans"), or otherwise as set forth on Schedule 4.1(b), whether or
not then exercisable or vested (collectively, the "Options"), and each share of
not yet vested restricted stock granted under any such Stock Option Plan
("Unvested Stock") shall be canceled and shall represent the right to receive
the following consideration in settlement thereof as follows: (i) as to all
Options, for each share of Company Common Stock subject to such Option,
including any additional shares subject thereto by reason of their terms upon
consummation of the "change of control" resulting from the Merger, such holder
shall receive an amount (subject to any applicable withholding tax) in cash
equal to the difference between the per share Merger Consideration and the per
share exercise price of such Option to the extent such difference is a positive
number (such amount in cash being hereinafter referred to as the "Option
Consideration"), and (ii) as to the holders of Unvested Stock identified in
Schedule 3.5(a), for each share of Unvested Stock, cash in an amount equal to
the product of (x) the number of shares of Unvested Stock and (y) the per share
Merger Consideration (such amount in cash being hereinafter referred to as the
"Unvested Stock Consideration"); provided, however, that with respect to any
person subject to Section 16(a) of the Exchange Act, any such Option
Consideration or Unvested Stock Consideration shall not be payable until the
first date payment can be made without liability to such person under Section
16(b) of the Exchange Act, but shall be paid as soon as practicable thereafter.
Upon consummation of the Offer, all Options shall immediately vest and become
exercisable.
(b) Termination of Rights. The surrender of an Option to the
Company in exchange for the Option Consideration shall be deemed a release of
any and all rights the holder had or may have had in respect of such Option. The
Stock Option Plans shall terminate as of the Effective Time, and the provisions
in any other plan, program or arrangement providing for the issuance or grant of
any other interest in respect of the capital stock of the Company or any
Subsidiary thereof shall be canceled as of the Effective Time. Prior to the
Closing, the Company shall use its best efforts to take all action necessary
(including causing the Board of Directors of the Company (or any committees
thereof) to take such actions as are
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<PAGE> 21
allowed by the Stock Option Plans) to (i) ensure that, following the Effective
Time, no participant in the Stock Option Plans or any other plans, programs or
arrangements shall have any right thereunder to acquire equity securities of the
Company, the Surviving Corporation or any Subsidiary thereof and (ii) terminate
all such plans, programs and arrangements as of the Effective Time.
(c) Payment Procedures. Upon the later of the consummation of
the Offer or the delivery of a duly executed Option Release Agreement by a
holder of Options to be canceled or Unvested Stock, such holder shall be
entitled to receive in respect thereof the Option Consideration or the Unvested
Stock Consideration, as applicable. No interest shall be paid or accrued on the
cash portion of the Option Consideration or the Unvested Stock Consideration,
as applicable. Until settled in accordance with the provisions of this Section
3.5(c), each Option or share of Unvested Stock shall be deemed at any time
after the Effective Time to represent for all purposes only the right to
receive the Option Consideration or the Unvested Stock Consideration, as
applicable.
(d) The Company shall use its best efforts to obtain, within
30 days from the date of this Agreement, from each beneficial and record holder
of Options as identified by Parent to the Company, an Option Release Agreement
duly executed and delivered by each such holder.
3.6. DISSENTING SHARES. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who properly shall have demanded appraisal for such
shares in accordance with Section 262 of the DGCL (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
Merger Consideration. Such stockholders instead shall be entitled to receive
payment of the appraised value of such shares of Company Common Stock held by
them in accordance with the provisions of such Section 262 of the DGCL, except
that all Dissenting Shares held by stockholders who shall have failed to perfect
or who effectively shall have withdrawn or otherwise lost their rights to
appraisal of such shares of Company Common Stock under such Section 262 of the
DGCL shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender in the manner provided
in Section 3.3 of the Certificate or Certificates that, immediately prior to the
Effective Time, evidenced such shares of Company Common Stock.
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<PAGE> 22
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Power. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified to do
business as a foreign corporation and in good standing to conduct business in
each jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification necessary,
other than in such jurisdictions where the failure so to qualify would not (i)
have a Material Adverse Effect (as defined below) with respect to the Company or
(ii) materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement. The Company has heretofore made available to
Parent complete and correct copies of its Certificate of Incorporation and
Bylaws and its Subsidiaries' respective certificates of incorporation (or
comparable charter or organizational documents) and bylaws. All Subsidiaries of
the Company, their respective jurisdictions of incorporation or organization,
and their respective jurisdictions of qualification to do business are
identified on Schedule 4.1(a). As used in this Agreement, a "Material Adverse
Effect" shall mean, with respect to any party, any events, changes or effects
which, individually or in the aggregate, would have a material adverse effect on
the business, operations, assets, condition (financial or otherwise) or results
of operations of such party and its Subsidiaries, taken as a whole.
(b) Capital Structure. As of the date hereof, the authorized
capital stock of the Company consists of 60,000,000 shares of common stock, par
value $0.25 per share, and 5,000,000 shares of preferred stock, par value $0.01
per share (the "Preferred Stock"). As of June 23, 1997 (the "Capitalization
Date"), (i) 13,983,679 Shares were issued and outstanding, (ii) no shares of
Preferred Stock were issued and outstanding, (iii) no Shares were issuable in
respect of outstanding Unvested Stock, (iv) no Shares were issuable in respect
of outstanding securities convertible into, or exchangeable or exercisable for
Shares of Company Common Stock, other than Options or Unvested Stock issued
pursuant to a Stock Option Plan and Company Common Stock issuable pursuant to
the Stock Purchase Agreement dated the date hereof between the Company and
Parent and (v) 5,513,695 Shares (or 6,263,695 Shares after a "change of
control") were issuable in respect of outstanding Options, of which (A)
1,136,415 Shares were issuable pursuant to Options outstanding under the 1989
Senior Executive Stock Option Plan, (B) 1,625,276 Shares (or 2,000,276 Shares
after a "change of control") were issuable pursuant to Options outstanding under
the 1989 Employee Incentive Stock Plan, (C) 511,842 Shares (or 886,842 after a
"change in control") were issuable
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<PAGE> 23
pursuant to Options outstanding under the Executive Incentive Stock Option Plan,
(D) 2,240,162 Shares were issuable pursuant to Options outstanding under the
1994 Employee Incentive Stock Plan, (E) 100,000 Shares of Unvested Stock were
outstanding under the 1989 Employee Incentive Stock Plan, (F) no Shares of
Unvested Stock were outstanding under the 1994 Employee Incentive Stock Plan and
(G) no Shares were issuable in respect of outstanding rights under the 1994
Incentive Compensation Plan. Except for the issuance of Company Common Stock
pursuant to the exercise of outstanding Options and except as provided in
Schedule 4.1(b), there are no employment, executive termination or similar
agreements providing for the issuance of Company Common Stock. As of the date
hereof, 3,764,278 shares of Company Common Stock are held by the Company and no
Shares are held by Subsidiaries of the Company. Since the Capitalization Date,
no shares of preferred stock have been issued and no shares of Company Common
Stock have been issued, except Shares issued pursuant to the exercise of options
outstanding on such date as set forth in clauses (iii), (iv) and (v) above. No
bonds, debentures, notes or other instruments or evidence of indebtedness having
the right to vote (or convertible into, or exercisable or exchangeable for,
securities having the right to vote) on any matters on which the Company
stockholders may vote ("Company Voting Debt") are issued or outstanding. All
outstanding Shares are validly issued, fully paid and nonassessable and are not
subject to preemptive or other similar rights. Except as set forth on Schedule
4.1(b), all outstanding shares of capital stock of the Subsidiaries of the
Company are owned by the Company or a direct or indirect Subsidiary of the
Company, free and clear of all liens, charges, encumbrances, claims and options
of any nature. Except as set forth in this Section 4.1(b), there are
outstanding: (A) no shares of capital stock, Company Voting Debt or other voting
securities of the Company; (B) no securities of the Company or any Subsidiary of
the Company convertible into, or exchangeable or exercisable for, shares of
capital stock, Company Voting Debt or other voting securities of the Company or
any Subsidiary of the Company; and (C) no options, warrants, calls, rights
(including preemptive rights), commitments or agreements to which the Company or
any Subsidiary of the Company is a party or by which it is bound, in any case
obligating the Company or any Subsidiary of the Company to issue, deliver, sell,
purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased,
redeemed or acquired, additional shares of capital stock or any Company Voting
Debt or other voting securities of the Company or of any Subsidiary of the
Company, or obligating the Company or any Subsidiary of the Company to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement. Except as set forth on Schedule 4.1(b), since December 31, 1996, the
Company has not (1) granted any options, warrants or rights to purchase shares
of Company Common Stock or (2) amended or repriced any Option or any of the
Stock Option Plans. Set forth on Schedule 4.1(b) is a list of all outstanding
options, warrants and rights to purchase shares of Company Common Stock and the
exercise prices relating thereto. Except as set forth on Schedule 4.1(b) and in
the Transaction Documents, there are not as of the date hereof and there will
not be at the Effective Time any stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or by which it is
bound relating to the voting of any shares of the capital stock of the Company
which will limit in any way the solicitation of proxies by or on behalf of the
Company from, or the casting of votes by, the stockholders
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<PAGE> 24
of the Company with respect to the Merger. Except as set forth on Schedule
4.1(b), there are no restrictions on the Company to vote the stock of any of its
Subsidiaries.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and
authority to enter into the Transaction Documents and, subject to the
Company Stockholder Approval (as defined in Section 4.1(c)(iii)), to
consummate the transactions contemplated in the Transaction Documents.
The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of the
Company, subject, if required with respect to the consummation of the
Merger, to the Company Stockholder Approval, unless the Merger may be
effected pursuant to Section 253 of the DGCL. The Transaction Documents
have been duly executed and delivered by the Company and, subject, with
respect to the consummation of the Merger, to the Company Stockholder
Approval unless the Merger may be effected pursuant to Section 253 of
the DGCL, and assuming that each of the Transaction Documents to which
Parent or Sub is a party constitutes the valid and binding agreement of
Parent or Sub, constitute valid and binding obligations of the Company
enforceable in accordance with their respective terms and conditions
except that the enforcement thereof may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity).
(ii) Except as set forth on Schedule 4.1(c), the
execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby by the Company
will not (A) conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration (including
pursuant to any put right) of any obligation or the loss of a material
benefit under, or the creation of a lien, pledge, security interest or
other encumbrance on assets or property, or right of first refusal with
respect to any asset or property (any such conflict, violation,
default, right of termination, cancellation or acceleration, loss,
creation or right of first refusal, a "Violation"), pursuant to any
provision of the Certificate of Incorporation or By-Laws of the Company
or any comparable charter or organizational documents of its
Subsidiaries or (B) except as to which requisite waivers or consents
have been obtained and assuming the consents, approvals, authorizations
or permits and filings or notifications referred to in paragraph (iii)
of this Section 4.1(c) are duly and timely obtained or made and, if
required, the Company Stockholder Approval has been obtained, result in
any Violation of (1) any loan or credit agreement, note, mortgage, deed
of trust, indenture, lease, Benefit Plan (as defined in Section
4.1(k)), Company
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Permit (as defined in Section 4.1(g)), or any other agreement,
obligation, instrument, concession, franchise or license or (2) any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or their
respective properties or assets (collectively, "Laws"), except in the
case of clauses (1) and (2) for any Violations that, individually or in
the aggregate, would not have a Material Adverse Effect on the Company,
materially impair the ability of the Company to perform its obligations
under any of the Transaction Documents or prevent the consummation of
any of the transactions contemplated thereby. The Board of Directors of
the Company has taken all actions necessary under the DGCL, including
approving the transactions contemplated by the Transaction Documents,
to ensure that Section 203 of the DGCL does not, and will not, apply to
the transactions contemplated thereby.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, notice to, or permit
from any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and
delivery of any of the Transaction Documents by the Company or the
consummation by the Company of the transactions contemplated thereby,
except for (A) the filing of a pre-merger notification and report form
by the Company under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), and the expiration or termination
of the applicable waiting period thereunder; (B) the filing with the
SEC of (1) the Proxy Statement in definitive form relating to the
Stockholders' Meeting, (2) the Schedule 14D-9 and (3) such reports
under and such other compliance with the Exchange Act and the rules and
regulations thereunder as may be required in connection with this
Agreement and the transactions contemplated hereby; (C) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of
other states in which the Company does business; (D) such filings and
approvals as may be required by any applicable state securities, "blue
sky" or takeover laws; (E) such filings in connection with any state or
local tax which is attributable to the beneficial ownership of the
Company's or its Subsidiaries' real property, if any (collectively, the
"Gains and Transfer Taxes"); (F) such other filings and consents as may
be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval
necessitated by the Merger or the transactions contemplated by this
Agreement; (G) the approval of this Agreement by the holders of a
majority of the outstanding Shares ("Company Stockholder Approval");
(H) such filings, consents, approvals and authorizations under the New
Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq. ("ISRA")
and (I) such other consents, approvals, orders, authorizations,
registrations, declarations, filings, notices or permits the failure of
which to be obtained or made would not have a Material Adverse Effect
on the Company, materially impair the ability of the Company to perform
its obligations under any of the Transaction Documents or prevent the
consummation of any of the transactions contemplated thereby.
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<PAGE> 26
(d) SEC Documents. The Company has made available to Parent a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by the Company with the SEC since January 1,
1995 and prior to the date of this Agreement (the "Company SEC Documents"),
which are all the documents (other than preliminary material) that the Company
was required to file with the SEC since such date. As of their respective dates,
the Company SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Documents, and none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state 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. The financial statements of the Company included in the
Company SEC Documents complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
Rule 10-01 of Regulation S-X of the SEC) and fairly present in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to year-end audit adjustments, as permitted by Rule 10-01, and any
other adjustments described therein) the consolidated financial position of the
Company and its consolidated Subsidiaries as of their respective dates and the
consolidated results of operations and the consolidated cash flows of the
Company and its consolidated Subsidiaries for the periods presented therein.
(e) Information Supplied. None of the information supplied or
to be supplied by the Company specifically for inclusion or incorporation by
reference in the Proxy Statement will, on the date it is first mailed to the
holders of the Company Common Stock or at the date of the related stockholder
meeting (the "Meeting Date"), contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If, at any time prior to the Meeting Date, any
event with respect to the Company or any of its Subsidiaries, or with respect to
other information supplied by the Company specifically for inclusion in the
Proxy Statement, shall occur which is required to be described in an amendment
of, or a supplement to, the Proxy Statement, such event shall be so described,
and such amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. All documents
that the Company is responsible for filing with the SEC in connection with the
transactions contemplated herein, including the Schedule 14D-9 or the Proxy
Statement, insofar as it relates to the Company or its Subsidiaries or other
information supplied by the Company specifically for inclusion therein, will
comply as to form, in all material respects, with the provisions of the
Securities Act, the Exchange Act or the rules and regulations thereunder, and
each such document required to be filed with any Governmental Entity other than
the SEC will comply
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<PAGE> 27
in all material respects with the provisions of applicable law as to the
information required to be contained therein. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to the information
supplied or to be supplied by Parent or Sub for inclusion in the Proxy
Statement.
(f) No Default. Except as may result from the execution and
delivery of the Transaction Documents and the consummation of the transactions
contemplated thereby (which is subject to Section 4.1(c)(ii)) and except as set
forth on Schedule 4.1(f), no Violation exists (and no event has occurred which,
with notice or the lapse of time or both, would constitute a Violation) of any
term, condition or provision of (i) the Certificate of Incorporation or By-Laws
of the Company or the comparable charter or organizational documents of any of
its Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license to which the Company or any of its Subsidiaries is now a party or by
which the Company or any of its Subsidiaries or any of their respective
properties or assets is bound or (iii) any law, order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its
Subsidiaries, except in the case of (ii) and (iii) for Violations which, in the
aggregate, would not have a Material Adverse Effect on the Company, materially
impair the ability of the Company to perform its obligations under any of the
Transaction Documents or prevent the consummation of any of the transactions
contemplated thereby.
(g) Compliance with Applicable Laws. Except as set forth on
Schedule 4.1(g), the Company and its Subsidiaries hold all permits, licenses,
variances, exemptions, orders, franchises and approvals of all Governmental
Entities necessary for the lawful conduct of their respective businesses (the
"Company Permits"), except where the failure to hold any such Company Permits
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company, materially impair the ability of the Company to perform its
obligations under any of the Transaction Documents or prevent the consummation
of any of the transactions contemplated thereby. Except as set forth on Schedule
4.1(g), the Company and its Subsidiaries are in compliance with the terms of the
Company Permits, except where the failure to be in compliance would not,
individually or in the aggregate, have a Material Adverse Effect on the Company,
materially impair the ability of the Company to perform its obligations under
any of the Transaction Documents or prevent the consummation of any of the
transactions contemplated thereby. As of the date of this Agreement, except as
set forth on Schedule 4.1(g), no investigation or review by any Governmental
Entity with respect to the Company or any of its Subsidiaries is pending or, to
the knowledge of the Company, has been threatened which would have a Material
Adverse Effect on the Company, materially impair the ability of the Company to
perform its obligations under any of the Transaction Documents or prevent the
consummation of any of the transactions contemplated thereby.
(h) Litigation. Except as set forth on Schedule 4.1(h) or
disclosed in the Company SEC Documents, there is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary of the Company
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<PAGE> 28
("Company Litigation") the loss of which would have a Material Adverse Effect on
the Company, nor is there any material judgment, decree, unfunded settlement,
conciliation agreement, letter of deficiency, award, temporary restraining
order, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any Subsidiary of the Company ("Company
Order") that would have a Material Adverse Effect on the Company. In addition,
except as expressly set forth on Schedule 4.1(h) as having such effect, none of
the claims and judgments pending or, to the knowledge of the Company, threatened
pursuant to all Company Litigation and Company Orders, would, individually or in
the aggregate, have a Material Adverse Effect on the Company, materially impair
the ability of the Company to perform its obligations under any of the
Transaction Documents or prevent the consummation of any of the transactions
contemplated thereby.
(i) Taxes. Except as set forth on Schedule 4.1(i) hereto:
(i) All material Tax Returns required to be filed by
or with respect to the Company, each of its Subsidiaries, and any
affiliated, consolidated, combined, unitary or similar group of which
the Company or any of its Subsidiaries is or was a member, have been
duly and timely filed (taking into account all valid extensions of
filing dates), and all such Tax Returns are true, correct and complete
in all material respects. The Company, each of its Subsidiaries, and
any affiliated, consolidated, combined, unitary or similar group of
which the Company or any of its Subsidiaries is or was a member, has
duly and timely paid (or there has been paid on its behalf) all
material Taxes that are due, except for Taxes being contested in good
faith by appropriate proceedings and for which adequate reserves have
been established in the Company's unaudited financial statements for
the quarter ended March 31, 1997 in accordance with GAAP. With respect
to any period for which Taxes are not yet due with respect to the
Company, any Subsidiary, and any affiliated, consolidated, combined,
unitary or similar group of which the Company or any of its
Subsidiaries is or was a member, the Company and each of its
Subsidiaries has made due and sufficient current accruals for such
Taxes in accordance with GAAP in the most recent financial statements
contained in the Company SEC Documents. The Company and each of its
Subsidiaries has withheld and paid all material Taxes required by all
applicable laws to be withheld or paid in connection with any amounts
paid or owing to any employee, creditor, independent contractor,
stockholder or other third party.
(ii) There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitation applicable to
any claim for, or the period for the collection assessment of, material
Taxes due from or with respect to or the Company, any of its
Subsidiaries, or any affiliated, consolidated, combined, unitary or
similar group of which the Company or any of its Subsidiaries is or was
a member, for any taxable period. No audit or other proceeding by any
court, governmental or regulatory authority, or similar person is
pending in regard to any material Taxes due from or with respect to the
Company or any of its Subsidiaries or any material Tax
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<PAGE> 29
Return filed by or with respect to the Company, any Subsidiary, or any
affiliated, consolidated, combined, unitary or similar group of which
the Company or any of its Subsidiaries is or was a member, other than
normal and routine audits by nonfederal governmental authorities. All
material deficiencies of Taxes assessed by any applicable taxing
authority have been paid, fully settled or adequately provided for in
the financial statements contained in the Company SEC Documents.
Neither the Company nor any Subsidiary of the Company has received
written notice that any assessment of material Taxes is proposed
against the Company or any of its Subsidiaries or any of their assets.
(iii) No consent to the application of Section
341(f)(2) of the Code (or any predecessor provision) has been made or
filed by or with respect to the Company or any of its Subsidiaries or
any of their assets. None of the Company or any of its Subsidiaries has
agreed to make any material adjustment pursuant to Section 481(a) of
the Code (or any predecessor provision) by reason of any change in any
accounting method, and there is no application pending with any taxing
authority requesting permission for any changes in any accounting
method of the Company or any of its Subsidiaries which, in each
respective case, will or would reasonably cause the Company or any of
its Subsidiaries to include any material adjustment in taxable income
for any taxable period (or portion thereof) ending after the Closing
Date.
(iv) Except as set forth in the Company SEC
Documents, neither the Company nor any of its Subsidiaries is a party
to, is bound by, or has any obligation under, any Tax sharing
agreement, Tax allocation agreement or similar contract, agreement or
arrangement.
(v) Neither the Company nor any of its Subsidiaries
has executed or entered into with the Internal Revenue Service ("IRS"),
or any taxing authority, a closing agreement pursuant to Section 7121
of the Code or any similar provision of state, local, foreign or other
income tax law, which will require any increase in taxable income or
alternative minimum taxable income, or any reduction in tax credits
for, the Company or any of its Subsidiaries for any taxable period
ending after the Closing Date.
(vi) There are no requests for rulings from any
taxing authority for information with respect to Taxes of the Company
or any of its Subsidiaries and, to the knowledge of the Company, no
material reassessments (for property or ad valorem Tax purposes) of any
assets or any property owned or leased by the Company or any of its
Subsidiaries have been proposed in written form.
(vii) None of the property of the Company or any
Subsidiary is subject to a safe-harbor lease (pursuant to Section
168(f)(8) of the Internal Revenue Code of 1954 as in effect after the
Economic Recovery Tax Act of 1981 and before the Tax Reform Act of
1986) or is "tax-exempt use property" (within the meaning of Section
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<PAGE> 30
168(h) of the Code) or "tax-exempt bond financed property" (within the
meaning of Section 168(g)(5) of the Code).
(viii) The term "Code" shall mean the Internal
Revenue Code of 1986, as amended. The term "Tax" (and, with correlative
meaning, "Taxes") shall mean (i) any net income, alternative or add-on
minimum, gross income, gross receipts, sales, use, ad valorem, value
added, transfer, franchise, profits, license, withholding on amounts
paid by the Company or any of its Subsidiaries, payroll, employment,
excise, production, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest and/or any penalty, addition to
tax or additional amount imposed by any taxing authority, (ii) any
liability of the Company or any of its Subsidiaries for the payment of
any amounts of the type described in (i) as a result of being a member
of an affiliated or consolidated group or arrangement whereby liability
of the Company or any of its Subsidiaries for the payment of such
amounts was determined or taken into account with reference to the
liability of any other person for any period and (iii) liability of the
Company or any of its Subsidiaries with respect to the payment of any
amounts of the type described in (i) or (ii) as a result of any express
or implied obligation to indemnify any other Person. The term "Tax
Return" shall mean all returns, declarations, reports, estimates,
information returns and statements required to be filed by or with
respect to the Company or any of its Subsidiaries in respect of any
Taxes, including, without limitation, (i) any consolidated federal
income Tax return in which the Company or any of its Subsidiaries is
included and (ii) any state, local or foreign income Tax returns filed
on a consolidated, combined or unitary basis (for purposes of
determining tax liability) in which the Company or any of its
Subsidiaries is included.
(j) Employment Agreements. Schedule 4.1(j) contains a complete
list of each management, employment, consulting or other agreement, contract or
commitment, in each case, in writing, between the Company or any of its
Subsidiaries and any employee, officer or director thereof (A) providing for the
employment of any person or providing for retention of management, executive or
consulting services and providing for an obligation to pay or accrue
compensation of $50,000 or more per annum, or (B) except for severance
agreements or arrangements with an employee or officer of only a Subsidiary of
the Company and which do not provide for any severance agreement or arrangement
in excess of $75,000, providing for the payment or accrual of any compensation
or severance upon (i) a change in control of the Company or any of its
Subsidiaries or (ii) any termination of such management, employment, consulting
or other relationship.
(k) Pension and Benefit Plans; ERISA.
(i) Schedule 4.1(k) sets forth a complete and
correct list of:
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<PAGE> 31
(A) all "employee benefit plans," as defined
in Section 3(3) of ERISA, maintained by the Company
or any trade or business (whether or not
incorporated) which is under common control, or which
is treated as a single employer, with the Company
under Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate"), or to which the Company or any
of its ERISA Affiliates has any obligation or
liability, contingent or otherwise, other than any
multiemployer plan as defined in either Section 3(37)
or Section 4001(a)(3) of ERISA ("Benefit Plans"); and
(B) all stock award, stock option or stock
purchase benefit policies or arrangements and all
material bonus or other incentive compensation,
deferred compensation, salary continuation,
disability, or other material employee benefit
policies or arrangements which the Company or any of
its ERISA Affiliates maintains or to which the
Company or any of its ERISA Affiliates has any
material obligation or liability (contingent or
otherwise) (together with the agreements disclosed on
Schedule 4.1(j), the "Employee Arrangements").
(ii) With respect to each Benefit Plan for which a
Form 5500 is required to be filed, the Company or one of its
Subsidiaries has timely filed such form with the Department of Labor
for the last three years, and except as otherwise noted in Schedule
4.1(k), with respect to each Benefit Plan and Employee Arrangement, a
complete and correct copy of each of the following documents (if
applicable) has been made available to Sub: (A) the most recent plan
and related trust documents, and all amendments thereto; (B) the most
recent summary plan description, and all related summaries of material
modifications thereto; (C) Form 5500 (including schedules and
attachments) for the last three years; (D) the most recent IRS
determination letter; and (E) actuarial reports for the last three
years.
(iii) Except as disclosed on Schedule 4.1(k), the
Benefit Plans and their related trusts intended to qualify under
Sections 401(a) and 501(a) of the Code, respectively, have received
favorable determination letters from the IRS regarding the Tax Reform
Act of 1986 with respect to such qualified status and nothing, to the
best knowledge of the Company or any of its Subsidiaries, has occurred
that could reasonably be expected to cause any such qualified status to
change, which change would be material.
(iv) All material contributions or other material
payments required to have been made by the Company or any of its ERISA
Affiliates to or under any Benefit Plan or Employee Arrangement by
applicable law or the terms of such Benefit Plan or Employee
Arrangement (or any agreement relating thereto) have been timely and
properly made or are properly accrued on the Company's unaudited
financial statements in accordance with generally accepted accounting
principles.
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<PAGE> 32
(v) The Benefit Plans and Employee Arrangements have
been maintained and administered in all material respects in accordance
with their terms and applicable laws, and all filings of applicable
reports, documents and notices, the non-filing of which would have a
Material Adverse Effect, have been timely made with the appropriate
governmental agencies and plan participants and beneficiaries.
(vi) Except as disclosed on Schedule 4.1(k), there
are no pending or, to the best knowledge of the Company or any of its
Subsidiaries, threatened actions, claims or proceedings against or
relating to any Benefit Plan or Employee Arrangement (other than
routine benefit claims by persons entitled to benefits thereunder) that
would have a Material Adverse Effect.
(vii) Except for the Employee Arrangements and as
disclosed on Schedule 4.1(k), the Company and its ERISA Affiliates do
not maintain or have an obligation to contribute to retiree life or
retiree health plans which provide for continuing benefits or coverage,
for 18 months or more, for current or former officers, directors,
nonemployees or employees of the Company or any of its ERISA Affiliates
except (A) as may be required under Part 6 of Title I of ERISA and at
the sole expense of the participant or the participant's beneficiary or
(B) a medical expense reimbursement account plan pursuant to Section
125 of the Code.
(viii) Except as disclosed on Schedule 4.1(k) or
specifically provided for herein, neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated
hereby will (A) result in any material payment becoming due to any
employee or group of employees of the Company or any of its
Subsidiaries; (B) increase materially any benefits otherwise payable
under any Benefit Plan or Employee Arrangement; or (C) result in the
acceleration of the time of payment or vesting of any such material
benefits.
(ix) Except as disclosed on Schedule 4.1(k), no stock
or other security issued by the Company or any ERISA Affiliate forms a
part of the assets of any Benefit Plan.
(x) The Company and its Subsidiaries have maintained
workers' compensation coverage as required by applicable state law
through purchase of insurance and not by self-insurance or otherwise,
except as disclosed on Schedule 4.1(k).
(xi) As to each Benefit Plan subject to Title IV of
ERISA, since January 1, 1990, to the best knowledge of the Company and
each of its Subsidiaries, no notice of intent to terminate has been
given under Section 4041 of ERISA and no proceeding has been instituted
under Section 4042 of ERISA to terminate, such that
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<PAGE> 33
would result in a material liability to the Company or any ERISA
Affiliates; no material unsatisfied liability to the Pension Benefit
Guaranty Corporation ("PBGC") has been incurred; no material
unsatisfied accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the Code
has been incurred; and the most recent financial statements and
actuarial valuations including information regarding the assets and
liabilities of each such Benefit Plan have been supplied to Parent.
(xii) The provisions of this Section 4.1(k)(xii)
shall only apply to Benefit Plans subject to Title IV of ERISA and
Benefit Plans subject to Section 412 of the Code; concerning each
Benefit Plan that is or has been subject to the funding requirements of
Title I, Subtitle B, Part 3 of ERISA, the funding method used in
connection with such plan is, and at all times has been, acceptable
under ERISA, the actuarial assumptions employed in connection with
determining the funding of each such plan are, and at all times have
been, reasonable and satisfy the requirements of Section 412(c)(3) of
the Code and Section 302(c)(3) of ERISA; Schedule 4.1(k) sets forth as
of December 31, 1996, any premiums due to the PBGC for the most
recently completed year; Schedule 4.1(k) sets forth a reasonable good
faith estimate of material changes between December 31, 1996 and the
date hereof in the actuarially determined present value of all benefit
liabilities within the meaning of Section 4001(a)(16) of ERISA
(determined on the basis of the assumptions used for funding purposes
in the most recent actuarial reports for such Benefit Plans) ("Benefit
Liabilities") or plan assets with respect to such Benefit Plans; the
sum of the amount of unfunded Benefit Liabilities under all Benefit
Plans (excluding each such plan with an amount of unfunded Benefit
Liabilities of zero or less) is not more than $1,300,000, with respect
to any such Benefit Plan, no such plan has been terminated or subject
to a "spin-off" or "spin-off termination" or partial termination and no
assets of any such plan have been used or employed in a manner so as to
subject them to a material excise tax imposed under Section 4980 of the
Code; each such Benefit Plan permits termination thereof, and any
assets in excess of those required to pay Benefit Liabilities may be
distributed to or for the benefit of the Company or its ERISA
Affiliates, and Section 4044(d) of ERISA would not prevent such
reversion; with respect to any such Benefit Plan, any significant
reduction in the rate of future benefit accrual was preceded by an
adequate and appropriate notice to the parties described in and as
required by Section 204(h) of ERISA.
(xiii) Neither the Company nor any of its ERISA
Affiliates has, or will have, incurred by reason of the transactions
contemplated by this Agreement any material liability under Section
4062(e) of ERISA. Except as disclosed on Schedule 4.1(k), neither the
Company nor any of its ERISA Affiliates is a participant in any plan to
which Sections 4063 or 4064 of ERISA apply.
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<PAGE> 34
(xiv) Neither the Company nor any of its ERISA
Affiliates has engaged in any transaction described under Section 4069
of ERISA nor has any lien been imposed with respect to a material
amount on any of the Company, any ERISA Affiliate or any of their
respective assets under Section 4068 of ERISA.
(xv) The Company and its ERISA Affiliates have
complied in all material respects with all requirements for premium
payments, including any interest and penalty charges for late payment,
due the PBGC with respect to each Benefit Plan and each separate plan
year for which any premiums are required. Except as set forth in
Schedule 4.1(k), and except for transactions required by this
Agreement, since January 1, 1990, there has been no "reportable event"
(within the meaning of Section 4043(b) or (c) of ERISA and regulations
promulgated by the PBGC thereunder) with respect to any Benefit Plan
subject to Title IV of ERISA for which notice to the PBGC has not, by
rule or regulations, been waived which would have a Material Adverse
Effect. Concerning both the Company and any ERISA Affiliate (A) since
January 1, 1990, there has been no cessation of operations at a
facility so as to become subject to the provisions of Section 4062(e)
of ERISA which would have a Material Adverse Effect, (B) since January
1, 1990, there has been no withdrawal of a substantial employer from
any Benefit Plan so as to become subject to the provisions of Section
4063 of ERISA which would have a Material Adverse Effect, (C) since
January 1, 1990, there has been no cessation of contributions to any
Benefit Plan subject to Section 4064(a) of ERISA which would have a
Material Adverse Effect, (D) there is not now any material liability
under Section 4064 of ERISA to any of Parent, Sub or any affiliates of
Parent or Sub or the Company by reason of the termination of any
Benefit Plan, (E) since January 1, 1990, there has been no amendment to
any Benefit Plan that would require the furnishing of security under
Section 401(a)(29) of the Code, and (F) there has been no event or
circumstance, and, to the best knowledge of the Company or any of its
Subsidiaries, there exists no event or circumstance which could
reasonably be expected to result in any material liability being
asserted by any Benefit Plan, the PBGC or any other person or entity
under Title IV of ERISA against the Company or any ERISA Affiliate.
With respect to any Benefit Plan, no lien has been imposed under
Section 412(n) of the Code or Section 302(f) of ERISA with respect to a
material amount nor is there any material liability for excise taxes
imposed under Section 4971 of the Code; any notices to the PBGC
delivered since January 1, 1990, under Section 412(n) of the Code or
Section 302(f) of ERISA have heretofore been delivered to Parent; and
copies of any notices required to be given to participants since
January 1, 1990, under either Section 101(d) or Section 4011 of ERISA
have previously been delivered to Parent. Except as described in
Schedule 4.1(k), the PBGC has not communicated with the Company, its
ERISA Affiliates or any of its agents or representatives concerning the
transactions contemplated by the Agreement, nor any other transactions
implemented by the Company or any of its ERISA Affiliates within the
preceding five calendar years.
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<PAGE> 35
(xvi) Since January 1, 1990, neither the Company nor
any of its Subsidiaries has taken any action to vest participants in
any overfunding in any Benefit Plans subject to Title IV of ERISA.
(xvii) No act, omission or transaction has occurred
which would result in imposition on the Company or an ERISA Affiliate
of (A) material liability under Section 409 of ERISA for breach of
fiduciary duty , (B) a material civil penalty assessed pursuant to
subsections (c), (i) or (l) of Section 502 of ERISA or (C) a material
tax imposed pursuant to Chapter 43 of Subtitle D of the Code.
(xviii) (A) Except as disclosed on Schedule 4.1(k),
neither the Company nor any ERISA Affiliate contributes to, or has an
obligation to contribute to, and has not within the preceding five
years contributed to, or had an obligation to contribute to, a
multiemployer plan subject to Title IV of ERISA as defined in Section
4001(a)(3) of ERISA (each such disclosed plan, a "Multiemployer Plan"),
(B) all material contributions or other material payments required to
have been made by the Company or any of its ERISA Affiliates to or
under any Multiemployer Plan by applicable law or the terms of such
Multiemployer Plan (or any agreement relating thereto) have been timely
and properly made or are properly accrued on the Company's unaudited
financial statements in accordance with GAAP, (C) there has been no
complete or partial withdrawal from a Multiemployer Plan by the Company
or any ERISA Affiliate so as to incur any material withdrawal liability
as defined in Section 4201 of ERISA (without regard to any subsequent
reduction or waiver of such liability under Section 4207 or 4208 of
ERISA), (D) if prior to the Effective Time any Multiemployer Plan were
in "reorganization" (as defined in Section 4241 of ERISA) or
"insolvent" as defined in Section 4245 of ERISA, the estimated present
value of the aggregate increase in contributions to such Multiemployer
Plan by the Company and its ERISA Affiliates over the estimated present
value of contributions to such Multiemployer Plan by the Company and
its ERISA Affiliates without regard to such reorganization or
insolvency would not exceed $6,000,000 and would not have a Material
Adverse Effect, (E) Schedule 4.1(k) sets forth the dollar amount of
contributions made by the Company and its ERISA Affiliates with respect
to each Multiemployer Plan for the current year and preceding five
years, and (F) the aggregate dollar amount of withdrawal liability as
defined in Section 4201 of ERISA (without regard to any subsequent
reduction or waiver of such liability under Section 4207 or 4208 of
ERISA) which would be owed by the Company and its ERISA Affiliates to
all Multiemployer Plans if the Company and its ERISA Affiliates ceased
contributing to all such Multiemployer Plans immediately before the
consummation of the transactions contemplated by this Agreement would
not exceed $6,000,000, with respect to each multiemployer plan as
defined in Section 3(37) of ERISA that is not a "Multiemployer Plan",
as defined above, all material contributions or other material
payments, required to have been made by the Company or any of the ERISA
Affiliates to or under any such multiemployer plan by applicable law or
the terms of such
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<PAGE> 36
multiemployer plan (or any agreement relating thereto) have been, to
the best knowledge of the Company of any of its Subsidiaries, timely
and properly made or are properly accrued on the Company's unaudited
financial statements in accordance with GAAP.
(l) Absence of Certain Changes or Events. Since March 31,
1997, except as disclosed in Schedule 4.1(l), the Company and the Subsidiaries
have conducted their business, in all material respects, only in the ordinary
course and in a manner consistent with past practice (except in connection with
the negotiation and execution and delivery of this Agreement and the other
Transaction Documents and the Atrium Agreements (as hereinafter defined) in
connection with discussions with other parties regarding possible Acquisition
Proposals) and since March 31, 1997, except as disclosed in Schedule 4.1(l),
there has not been (i) any event or events (whether or not covered by
insurance), individually or in the aggregate, having a Material Adverse Effect
on the Company, (ii) any material change by the Company in its accounting
methods, principles or practices, (iii) any entry by the Company or any
Subsidiary into any commitment or transaction material to the Company, except in
the ordinary course of business and consistent with past practice or except in
connection with the negotiation and execution and delivery of this Agreement and
the other Transaction Documents and the Atrium Agreements (as hereinafter
defined), (iv) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any redemption,
purchase or other acquisition of any of the Company's or its Subsidiaries'
securities (except for cash dividends paid to the Company by its wholly owned
Subsidiaries with regard to its capital stock, and the declaration and payment
to the holders of Shares regular quarterly dividends to stockholders of record
with such record dates and payment dates as are consistent with past practice),
(v) other than pursuant to the Benefit Plans and the Employee Arrangements or as
required by law, any increase in, amendment to, or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option, stock purchase or other employee benefit plan, (vi)
granted any general increase in compensation, bonus or other benefits payable to
the employees of the Company or its Subsidiaries, except for increases occurring
in the ordinary course of business in accordance with its customary practice,
(vii) paid any bonus to the employees of the Company or its Subsidiaries except
for bonuses accrued on the Company's unaudited balance sheet for the quarter
ending March 31, 1997, (viii) any incurrence of indebtedness for borrowed money
or assumption or guarantee of indebtedness for borrowed money by the Company or
any of its Subsidiaries (other than loans from the Company to any wholly owned
Subsidiary or from any wholly owned Subsidiary to the Company or any other
wholly owned Subsidiary), or the grant of any lien on the material assets of the
Company or its Subsidiaries to secure indebtedness for borrowed money except, in
any such case, any drawdowns by the Company under its revolving credit facility
or its accounts receivable facility, (ix) any sale or transfer of any material
assets of the Company or its Subsidiaries other than in the ordinary course of
business and consistent with past practice, or (x) any loan, advance or capital
contribution to or investment in any person in an aggregate amount in excess of
$100,000 by the Company or any Subsidiary (excluding any loan, advance or
capital contribution to, or
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<PAGE> 37
investment in, the Company or any wholly owned Subsidiary and except for
drawdowns by the Company under its revolving credit facility or its accounts
receivable facility).
(m) No Undisclosed Material Liabilities. Except as set forth
on Schedule 4.1(m), there are no liabilities of the Company or any Subsidiary of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, that are material to the Company and its Subsidiaries
considered as a whole and that are required to be disclosed in an audited
balance sheet (or in the notes thereto) prepared in accordance with GAAP, other
than (i) liabilities reflected on the Company's unaudited financial statements
(together with the related notes thereto) filed with the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997 (as filed with the
SEC), (ii) liabilities under this Agreement, (iii) any liabilities that have
occurred in the ordinary course of business since March 31, 1997, (iv)
liabilities, individually or in the aggregate, not having a Material Adverse
Effect on the Company and (v) liabilities for professional fees and expenses in
connection with the transactions contemplated hereby and by the Atrium
Agreements.
(n) Opinion of Financial Advisor. The Company has received the
opinion of the Financial Advisor to the effect that, as of the date thereof, the
cash consideration to be received by the holders of Company Common Stock in the
Offer and the Merger is fair from a financial point of view to such holders. The
Company has been authorized by the Financial Advisor to include the Fairness
Opinion in the Offer Documents and the Proxy Statement and such opinion has not
been withdrawn or modified. True and complete copies of all agreements and
understandings between the Company or any of its affiliates and the Financial
Advisor relating to the transactions contemplated by this Agreement are attached
hereto as Schedule 4.1(n).
(o) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary
(under applicable law or otherwise) to approve the Merger and this Agreement and
the transactions contemplated hereby.
(p) Labor Matters. Except to the extent as such would not have
a Material Adverse Effect on the Company or as set forth on Schedule 4.1(p) or
in the Company SEC Documents:
(i) Neither the Company nor any of its Subsidiaries
is a party to any labor or collective bargaining agreement, and no
employees of the Company or any of its Subsidiaries are represented by
any labor organization. Within the preceding three years, there have
been no representation or certification proceedings, or petitions
seeking a representation proceeding, pending or, to the knowledge of
the Company, threatened to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority.
Within the preceding three years, to the best knowledge of the Company,
there have been no organizing activities involving the
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Company or any of its Subsidiaries with respect to any group of
employees of the Company or any of its Subsidiaries.
(ii) There are no strikes, work stoppages, slowdowns,
lockouts, material arbitrations or material grievances or other
material labor disputes pending or, to the knowledge of the Company,
threatened against or involving the Company or any of its Subsidiaries.
There are no unfair labor practice charges or complaints pending or, to
the best knowledge of the Company, threatened by or on behalf of any
employee or group of employees of the Company or any of its
Subsidiaries.
(iii) There are no complaints, charges or claims
against the Company or any of its Subsidiaries pending or, to the best
knowledge of the Company, threatened to be brought or filed, with any
Governmental Entity or arbitrator(s) based on, arising out of, in
connection with, or otherwise relating to the employment or termination
of employment of any individual by the Company or any of its
Subsidiaries.
(iv) To the best knowledge of the Company, each of
the Company and its Subsidiaries is in compliance in all material
respects with all laws, regulations and orders relating to employment
and labor, including but not limited to all such laws, regulations and
orders relating to wages and hours, collective bargaining, equal
employment opportunity, affirmative action, discrimination, civil
rights, employee benefits, plant closing and mass layoff, immigration,
medical and family leave, safety and health, workers' compensation and
the collection and payment of withholding and/or social security taxes
and any similar tax.
(v) As of the date hereof, there is no proceeding,
claim, suit, action or governmental investigation pending or, to the
best knowledge of the Company or any of its Subsidiaries, threatened,
with respect to which any current or former director, officer, employee
or agent of the Company or any of its Subsidiaries is entitled, or has
asserted he is entitled, to claim indemnification from the Company or
any of its Subsidiaries pursuant to the Certificate of Incorporation or
By-Laws of the Company or any provision of the comparable charter or
organizational documents of any of its Subsidiaries, as provided in any
indemnification agreement to which the Company or any Subsidiary of the
Company is a party or pursuant to applicable law, that has a Material
Adverse Effect on the Company, materially impairs the ability of the
Company to perform its obligations under any of the Transaction
Documents or prevents the consummation of any of the transactions
contemplated thereby.
(q) Intangible Property. Each of the Company and its
Subsidiaries owns or has a right to use each trademark, trade name, patent,
service mark, brand mark, brand name, computer program, database, industrial
design and copyright required, owned or used in connection with the operation of
its businesses, including any registrations thereof and pending
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applications therefor, and each license or other contract relating thereto that
is material to the conduct of its business (collectively, the "Company
Intangible Property"), free and clear of any and all liens, claims or
encumbrances, except where the failure to own or have a right to use such
property or such lien, claim or encumbrance would not have a Material Adverse
Effect on the Company. Except to the extent that such would not have a Material
Adverse Effect on the Company, the use of the Company Intangible Property by the
Company or its Subsidiaries does not conflict with, infringe upon, violate or
interfere with or constitute an appropriation of any right, title, interest or
goodwill, including, without limitation, any intellectual property right,
trademark, trade name, patent, service mark, brand mark, brand name, computer
program, database, industrial design, copyright or any pending application
therefor of any other person.
(r) Environmental Matters.
(i) For purposes of this Agreement:
(A) "Environmental Costs and Liabilities"
means any and all losses, liabilities, obligations,
damages, fines, penalties, judgments, actions,
claims, costs and expenses (including, without
limitation, fees, disbursements and expenses of legal
counsel, experts, engineers and consultants and the
reasonable costs of investigation and feasibility
studies and the reasonable costs to clean up, remove,
treat, or in any other way address any Hazardous
Materials) arising with respect to any violation of
or liability arising pursuant to or under any
Environmental Law or as the result of any exposure or
alleged exposure of any person or property to any
Hazardous Material.
(B) "Environmental Law" means any applicable
law regulating or prohibiting Releases of Hazardous
Materials into any part of the natural environment,
or pertaining to the protection of natural resources,
the environment and public and employee health and
safety from Hazardous Materials including, without
limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") (42 U.S.C.
ss. 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss.
6901 et seq.), the Clean Water Act (33 U.S.C. ss.
1251 et seq.), the Clean Air Act (33 U.S.C. ss. 7401
et seq.), the Toxic Substances Control Act (15 U.S.C.
ss. 7401 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 et
seq.), and the Occupational Safety and Health Act (29
U.S.C. ss. 651 et seq.) ("OSHA") and the regulations
promulgated pursuant thereto, and any such applicable
state or local statutes, including, without
limitation, ISRA, and the regulations promulgated
pursuant
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thereto, as such laws have been and may be amended or
supplemented through the Closing Date;
(C) "Hazardous Material" means any
substance, material or waste which is regulated with
respect to its toxic or otherwise hazardous character
or the potential deleterious effects arising from its
improper management by any public or governmental
authority in the jurisdictions in which the
applicable party or its Subsidiaries conducts
business, or the United States, including, without
limitation, any material or substance which is
defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or
"restricted hazardous waste," "contaminant," "solid
waste," "toxic waste" or "toxic substance" under any
provision of Environmental Law and shall also
include, without limitation, petroleum, petroleum
products, asbestos, polychlorinated biphenyls and
radioactive materials;
(D) "Release" means any release, spill,
effluent, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching, or
migration into the environment; and
(E) "Remedial Action" means all actions,
including, without limitation, any capital
expenditures, required by a governmental entity or
required under any Environmental Law, or voluntarily
undertaken to (1) clean up, remove, treat, or in any
other way ameliorate or address any Hazardous
Materials or other substance in the environment; (2)
prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it
does not endanger or threaten to endanger the public
health or welfare or the environment; (3) perform
pre-remedial studies and investigations or
post-remedial monitoring and care pertaining or
relating to a Release; or (4) bring the applicable
party into compliance with any Environmental Law.
(ii) Except as set forth on Schedule 4.1(r) hereto:
(A) The operations of the Company and its
Subsidiaries have been and, as of the Closing Date,
will be, in compliance in all respects with all
Environmental Laws except for any such noncompliance
which would not result in a Material Adverse Effect
on the Company;
(B) The Company and its Subsidiaries have
obtained and will, as of the Closing Date, maintain
all permits required under applicable Environmental
Laws for the continued operations of their respective
businesses, except such permits the lack of which
would not materially
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impair the ability of the Company and its
Subsidiaries to continue operations;
(C) The Company and its Subsidiaries are not
subject to any outstanding written orders from, or
written agreements with, any Governmental Entity
respecting (A) violations or liability pursuant to
Environmental Laws, (B) Remedial Action or (C) any
Release or threatened Release of a Hazardous
Material;
(D) The Company and its Subsidiaries have
not received any written communication alleging, with
respect to any such party, the violation of or
liability under any Environmental Law, which
violation or liability is outstanding, except for any
such violation or liability which would not result in
a Material Adverse Effect on the Company;
(E) Neither the Company nor any of its
Subsidiaries has any contingent liability in
connection with the Release of any Hazardous Material
into the environment (whether on-site or off-site)
which would result in the Company and its
Subsidiaries incurring Environmental Costs and
Liabilities which would result in a Material Adverse
Effect on the Company;
(F) The Company or its Subsidiaries do not
engage in the transportation, treatment, storage or
disposal of hazardous waste, as defined and regulated
under permit requirements set forth in 40 C.F.R.
Parts 260-270 (in effect as of the date of this
Agreement) or any state equivalent;
(G) Except as would not have a Material
Adverse Effect on the Company, here is not now nor
has there been in the past, on or in any property of
the Company or its Subsidiaries any of the following:
(A) any underground storage tanks or surface
impoundments containing Hazardous Materials, (B) any
asbestos-containing materials, or (C) any
polychlorinated biphenyls in regulated quantities;
and
(H) No judicial or administrative
proceedings or governmental investigations are
pending or, to the knowledge of the Company,
threatened against the Company or any of its
Subsidiaries alleging the violation of or seeking to
impose liability pursuant to any Environmental Law or
as the result of the Release or alleged Release of a
Hazardous Material, except for any such proceedings
or investigations that would not result in a Material
Adverse Effect on the Company.
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(iii) This Section 4.1(r) sets forth the sole and
exclusive representations and warranties of the Company relating to
Environmental Matters, including, without limitation, any matters
arising under Environmental Laws.
(s) Real Property.
(i) Schedule 4.1(s) sets forth all of the real
property owned in fee by the Company and its Subsidiaries that are
material to the conduct of the businesses of the Company and its
Subsidiaries, taken as a whole. Each of the Company and its
Subsidiaries has good and marketable title to each parcel of real
property owned by it free and clear of all mortgages, pledges, liens,
encumbrances and security interests, except (1) those described in the
Company SEC Documents or listed on Schedule 4.1(s), (2) those reflected
or reserved against in the unaudited balance sheet of the Company dated
as of March 31, 1997, and (3) mortgages, pledges, liens, encumbrances
and security interests that would not have a Material Adverse Effect on
the Company.
(ii) Schedule 4.1(s) sets forth each lease, sublease
or other agreement (collectively, the "Real Property Leases") under
which the Company or any of its Subsidiaries uses or occupies or has
the right to use or occupy, now or in the future, any real property
material to the conduct of the businesses of the Company and its
Subsidiaries, taken as a whole. Except to the extent that it would not
have a Material Adverse Effect on the Company, each Real Property Lease
is valid, binding and in full force and effect, all rent and other sums
and charges payable by the Company and its Subsidiaries as tenants
thereunder are current, no termination event or condition or uncured
default on the part of the Company or any Subsidiary of the Company
exists under any Real Property Lease. Each of the Company and its
Subsidiaries has a good and valid leasehold interest in each parcel of
real property leased by it free and clear of all mortgages, pledges,
liens, encumbrances and security interests, except (A) those disclosed
in the Company SEC Documents, (B) those reflected or reserved against
in the unaudited balance sheet of the Company dated as of March 31,
1997, (C) taxes and general and special assessments not in default and
payable without penalty and interest and (D) those which would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
(t) Tangible Property. With respect to the tangible properties
and assets of the Company and its Subsidiaries (excluding real property) that
are material to the conduct of the businesses of the Company and its
Subsidiaries, the Company and its Subsidiaries have good title to, or hold
pursuant to valid and enforceable leases, all such properties and assets, with
only such exceptions as, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. All of the assets of the Company and its
Subsidiaries have been maintained and repaired for their continued operation and
are in good operating condition, reasonable wear and tear excepted, and usable
in the ordinary course of business, except
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where the failure to be in such repair or condition or so usable would not
individually or in the aggregate have a Material Adverse Effect on the Company.
(u) Board Recommendation. As of the date hereof, the Board of
Directors of the Company, at a meeting duly called and held, has by the vote of
those directors present (i) determined that the Transaction Documents and the
transactions contemplated thereby, including the Offer and the Merger, taken
together, are fair to and in the best interests of the stockholders of the
Company and has approved the same and (ii) resolved to recommend that the
holders of the shares of Company Common Stock accept the Offer and approve this
Agreement and the transactions contemplated herein, including the Merger.
(v) Material Contracts. The Company has made available to
Parent (i) true and complete copies of all written contracts, agreements,
commitments, arrangements, leases (including with respect to personal property),
policies and other instruments to which it or any of its Subsidiaries is a party
or by which it or any such Subsidiary is bound which (A) require payments to be
made in excess of $250,000 per year for goods and/or services, (B) require
payments to be made in excess of $100,000 with respect to any licenses granted
to the Company or any of its Subsidiaries, or (C) require payments to be made in
excess of $100,000 per year for goods and/or services and do not by their terms
expire and are not subject to termination within 60 days from the date of the
execution and delivery thereof (collectively, "Material Contracts"), and (ii) a
written description of each Material Contract of which the Company is aware that
has not been reduced to writing; provided, however, that blanket purchase orders
or similar arrangements shall not be considered Material Contracts for purposes
of this Agreement. Each of the Material Contracts is listed on Schedule 4.1(v).
Neither the Company nor any of its Subsidiaries is, or has received any written
notice that any other party is, in default in any respect under any such
Material Contract, except as listed on Schedule 4.1(v) and except for those
defaults which would not, either individually or in the aggregate, have a
Material Adverse Effect with respect to the Company; and, to the Company's
knowledge, there has not occurred any event or events that with the lapse of
time or the giving of notice or both would constitute such a material default,
except as listed on Schedule 4.1(v) and except for those defaults which would
not, either individually or in the aggregate, have a Material Adverse Effect
with respect to the Company.
(w) Related Party Transactions. Except as set forth on
Schedule 4.1(w) and except for the Transaction Documents, the Employee
Arrangements or the Benefit Plans or as otherwise disclosed hereunder, no
director, officer, "affiliate" or "associate" (as such terms are defined in Rule
12b-2 under the Exchange Act) of the Company or any of its Subsidiaries (i) has
borrowed any monies from or has outstanding any indebtedness or other similar
obligations to the Company or any of its Subsidiaries or (ii) is otherwise a
party to any contract, arrangement or understanding with the Company or any of
its Subsidiaries.
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(x) Schedule 14D-9, Offer Documents and Schedule 14D-1. The
Schedule 14D-9 and any amendments and supplements thereto will, when filed with
the SEC and when published, sent or given to holders of Company Common Stock,
comply as to form in all material respects with the Exchange Act and will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or Sub in writing for inclusion therein. None of
the information supplied by the Company for inclusion in the Offer Documents or
the Schedule 14D-1, and any amendments thereof, or supplements thereto, will,
when such materials are filed with the SEC and when published, sent or given to
holders of Company Common Stock, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Parent and Sub
represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and Sub
is a corporation duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. All of the issued and outstanding capital stock
of Sub is owned directly by Parent free and clear of any lien, mortgage, pledge,
charge or encumbrance of any kind. Parent and Sub have heretofore made available
to the Company complete and correct copies of their respective Certificates of
Incorporation and Bylaws.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite
corporate power and authority to enter into each of the Transaction
Documents to which it is a party and to consummate the transactions
contemplated thereby. The execution and delivery of each of the
Transaction Documents to which Parent or Sub is a party and the
consummation of the transactions contemplated thereby have been
respectively duly authorized by all necessary corporate action on the
part of Parent and Sub. Each of the Transaction Documents to which
Parent or Sub is a party have been respectively duly executed and
delivered by each of Parent and Sub and, assuming that such constitute
the valid and binding agreements of the other parties thereto
respectively constitute valid and binding obligations of Parent and Sub
enforceable in accordance with their terms and conditions except that
the enforcement hereof or thereof may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b)
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general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(ii) The execution and delivery of each of the
Transaction Documents to which the Parent or Sub is a party and the
consummation of the transactions contemplated thereby by each of Parent
and Sub will not (A) result in any Violation pursuant to any provision
of the respective Certificates of Incorporation or Bylaws of Parent or
Sub or (B) except as to which requisite waivers or consents have been
obtained and assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in paragraph (iii) of
this Section 4.2(b) are duly and timely obtained or made and, if
required, the Company Stockholder Approval has been obtained, result in
any Violation of (1) any loan or credit agreement, note, mortgage,
indenture, lease, or other agreement, obligation, instrument,
concession, franchise or license or (2) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or Sub
or their respective properties or assets, except in the case of clauses
(1) and (2), for any Violations that, individually or in the aggregate,
would not have a Material Adverse Effect on Parent, materially impair
the ability of either Parent or Sub to perform its obligations
hereunder or under any of the Transaction Documents or prevent the
consummation of any of the transactions contemplated hereby or thereby.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, notice to, or permit
from any Governmental Entity is required by or with respect to Parent
or Sub in connection with their respective execution and delivery of
each of the Transaction Documents to which it is a party or the
consummation by each of Parent and Sub of the transactions contemplated
thereby, except for: (A) filings under the HSR Act; (B) the filing with
the SEC of such reports under and such other compliance with the
Exchange Act and the rules and regulations thereunder as may be
required in connection with this Agreement and the transactions
contemplated hereby, including the Schedule 14D-1; (C) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware; (D) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws; (E) such
filings in connection with any Gains and Transfer Taxes; (F) such
filings and consents as may be required under any environmental, health
or safety law or regulation pertaining to any notification, disclosure
or required approval necessitated by the Merger or the transactions
contemplated by this Agreement; and (G) filings, consents, approvals
and authorizations under ISRA.
(c) Information Supplied for Proxy Statement. None of the
information supplied or to be supplied by Parent or Sub specifically for
inclusion or incorporation by reference in the Proxy Statement will, on the date
it is first mailed to the holders of Company Common Stock or at the Meeting
Date, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
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statements therein, in light of the circumstances under which they are made, not
misleading. If, at any time prior to the Meeting Date, any event with respect to
Parent or Sub, or with respect to information supplied by Parent or Sub
specifically for inclusion in the Proxy Statement, shall occur which is required
to be described in an amendment of, or a supplement to, such document, such
event shall be so described to the Company. All documents that Parent or Sub is
responsible for filing with the SEC in connection with the transactions
contemplated herein will comply as to form, in all material respects, with the
provisions of the Securities Act, the Exchange Act or the rules and regulations
thereunder, and each such document required to be filed with any Governmental
Entity other than the SEC will comply in all material respects with the
provisions of applicable law as to the information required to be contained
therein. Notwithstanding the foregoing, Parent and Sub make no representation or
warranty with respect to the information supplied or to be supplied by the
Company for inclusion in the Proxy Statement.
(d) Board Recommendation. As of the date hereof, the Board of
Directors of Parent has determined that each of the Transaction Documents to
which it is a party and the transactions contemplated thereby, including the
Offer and the Merger, taken together, are fair to and in the best interests of
Parent and has approved the same.
(e) Financing. Parent and Sub have delivered to the Company a
true and complete copy of a letter of commitment obtained by Parent from
Wasserstein Perella & Co., Inc. with respect to the debt financing for the
transactions contemplated hereby (the "Financing Commitment"). An executed copy
of the Financing Commitment is attached hereto as Schedule 4.2(e). Assuming that
the financing contemplated by the Financing Commitment is consummated in
accordance with the terms thereof, the funds to be borrowed and/or provided
thereunder, together with Parent's available cash, will provide sufficient funds
to pay the Offer Price upon consummation of the Offer, the Merger Consideration,
the refinancing of all indebtedness for borrowed money of the Company which is
required to be refinanced pursuant to the terms of such indebtedness in
connection with the Offer or the Merger, and all related fees and expenses. As
of the date of this Agreement, Parent is not aware of any facts or circumstances
that create a reasonable basis for Parent to believe that Parent will not be
able to obtain financing in accordance with the terms of the Financing
Commitment. Parent agrees to promptly notify the Company if the statements in
the immediately preceding sentence are no longer true and correct.
(f) Schedule 14D-1, Offer Documents and Schedule 14D-9. The
Offer Documents and the Schedule 14D-1 and all amendments and supplements
thereto, will, when filed with the SEC and when published, sent or given to
holders of Company Common Stock, comply as to form in all material respects with
the Exchange Act and will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or Sub with respect to information supplied by or on behalf of the Company for
inclusion
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therein. None of the information supplied by Parent or Sub for inclusion in the
Schedule 14D-9 and any amendments thereof or supplements thereto will, when such
materials are filed with the SEC and when published, sent or given to holders of
Company Common Stock contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to the
Company and its Subsidiaries that (except as expressly contemplated or permitted
by the Transaction Documents, or to the extent that Parent shall otherwise
consent in writing):
(a) Ordinary Course. Subject to the other terms and provisions
of this Agreement, each of the Company and its Subsidiaries shall carry on its
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and shall use all reasonable efforts to preserve
intact its present business organization, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it, in each case in all
material respects.
(b) Dividends; Changes in Stock. The Company shall not, nor
shall it permit any of its Subsidiaries to (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock (except for
cash dividends paid to the Company by its wholly-owned Subsidiaries with regard
to its capital stock); provided, however, that the Company may declare and pay
to holders of Shares regular quarterly dividends to stockholders of record with
such record dates as are consistent with past practice, which payments in no
event shall exceed $0.03 per share per quarter; (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; or (iii) repurchase or otherwise acquire, or
permit any Subsidiary to purchase or otherwise acquire, any shares of its
capital stock, except (A) as contemplated by Section 3.5 of this Agreement and
(B) as required by the terms of its securities outstanding or any employee
benefit plan in effect on the date hereof.
(c) Issuance of Securities. Except as contemplated by Section
3.5 of this Agreement and except for Shares issuable pursuant to outstanding
Options, Unvested Stock and rights as described in Section 4.1(b) and except as
contemplated by the Stock Purchase Agreement dated the date hereof between the
Company and Parent, the Company shall not, nor shall it permit any of its
Subsidiaries to, (i) grant any options, warrants or rights, to purchase shares
of capital stock of the Company, (ii) amend the terms of or reprice any Option
or amend the terms of any of the Stock Option Plans, or (iii) issue, deliver or
sell, or authorize
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or propose to issue, deliver or sell, any shares of its capital stock of any
class or series (except for issuances of capital stock of the Company's
Subsidiaries to the Company or to a wholly-owned Subsidiary of the Company), any
Company Voting Debt or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, Company Voting Debt or convertible
securities, other than the issuance of Shares upon the exercise of Options that
are outstanding on the date hereof.
(d) Governing Documents. The Company shall not amend or
propose to amend its Certificate of Incorporation or By-Laws.
(e) No Solicitation. From and after the date hereof until the
termination of this Agreement, neither the Company nor any of its Subsidiaries,
nor any of their respective officers, directors, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its Subsidiaries) (such officers,
directors, employees, representatives, agents, affiliates, investment bankers,
attorneys and accountants being referred to herein, collectively, as
"Representatives") will, and the Company will cause the employees of the Company
and its Subsidiaries not to, directly or indirectly, initiate, solicit or
encourage (including by way of furnishing information or assistance), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
(as defined below), or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or for the
purpose of obtaining an Acquisition Proposal, or agree to or endorse any
Acquisition Proposal, and neither the Company nor any of its Subsidiaries will
authorize or permit any of its Representatives to take any such action, and the
Company shall (except with respect to any inquiry or proposal covered by the
proviso to this sentence) notify Parent orally (within one business day) and in
writing (as promptly as practicable) of all of the relevant details relating to,
and all material aspects of, all inquiries and proposals which it or any of its
Subsidiaries or any of their respective Representatives may receive relating to
any of such matters and, if such inquiry or proposal is in writing, the Company
shall deliver to Parent a copy of such inquiry or proposal as promptly as
practicable; provided, however, that, prior to the receipt of the Company
Stockholder Approval, nothing contained in this Section 5.1(e) shall prohibit
the Board of Directors of the Company from:
(i) following the receipt of an unsolicited written,
bona fide Acquisition Proposal from any person or entity, (x)
furnishing information to, or entering into discussions or negotiations
with, the person or entity that makes such Acquisition Proposal, or (y)
withdrawing, modifying or not making its recommendations referred to in
Section 1.2 or terminating this Agreement pursuant to Section 8.1(i)
(provided that, in the case of clause (y) above, such person or entity
has the necessary funds or shall have obtained customary commitments to
provide the funds to effect such Acquisition Proposal) if, and only to
the extent that, (A) in the case of either clause (x) or (y) above, the
Board of Directors of the Company, after consultation with its
independent legal counsel (who may be the Company's regularly engaged
independent
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legal counsel), determines in good faith that such action is advisable
for the Board of Directors of the Company to comply with its fiduciary
duties to stockholders under applicable law, (B) prior to taking such
action, the Company (1) in the case of either clause (x) or (y) above,
provides reasonable prior notice to Parent to the effect that it is
taking such action, which notice shall (to the extent consistent with
the fiduciary duties of the Board of Directors to stockholders under
applicable law) include the identity of the person or entity engaging
in such discussions or negotiations, requesting such information or
making such Acquisition Proposal, and the material terms and conditions
of any Acquisition Proposal and (2) in the case of clause (x) above,
receives from such person or entity an executed confidentiality
agreement in reasonably customary form on terms no less favorable to
the Company than those contained in the Confidentiality Agreement (as
defined in Section 6.1) (except that such confidentiality agreement
need not require approval of the Board of Directors of the Company
prior to the making of an offer or a proposal to such Board of
Directors), and (C) in the case of clause (x) above, the Company shall,
to the extent consistent with the fiduciary duties of the Board of
Directors to stockholders under applicable law, promptly and
continuously advise Parent as to all of the relevant details relating
to, and all material aspects, of any such discussions or negotiations;
or
(ii) taking and disclosing to the stockholders of the
Company a position contemplated by Rule 14e-2 under the Exchange Act
if, after the receipt of an unsolicited written, bona fide Acquisition
Proposal, the Board of Directors of the Company, after consultation
with its independent legal counsel (who may be the Company's regularly
engaged independent counsel), determines in good faith that such action
is advisable for the Board of Directors of the Company to comply with
its fiduciary duties to holders of Shares under applicable law.
Except for the confidentiality agreement referred to
in clause (i) above and subject to Section 8.1(i), nothing in this
Section 5.1(e) shall permit the Company to enter into any agreement
with respect to any Acquisition Proposal during the term of this
Agreement (it being agreed that during the term of this Agreement, the
Company shall not enter into any agreement with any person that
provides for, or in any way facilitates, any Acquisition Proposal other
than a confidentiality agreement in reasonably customary form following
receipt from a third party of an unsolicited written, bona fide
Acquisition Proposal). The Company shall immediately cease and cause to
be terminated any existing solicitation, initiation, encouragement,
activity, discussion or negotiation with any parties conducted
heretofore by the Company or any Representatives with respect to any
Acquisition Proposal existing on the date hereof.
For purposes of this Agreement, "Acquisition
Proposal" shall mean any proposal or offer (other than the transactions
among the Company, Parent and Sub contemplated hereunder) involving the
Company or any of its Subsidiaries for, or an inquiry or indication of
interest that reasonably could be expected to lead to: (A) any
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merger, consolidation, share exchange, recapitalization, business
combination, or other similar transaction; (B) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of a material
portion of the assets of the Company and its Subsidiaries, taken as a
whole, in a single transaction or series of transactions; or (C) any
tender offer or exchange offer for all or any portion of the
outstanding shares of capital stock of the Company or any of its
Subsidiaries or the filing of a registration statement under the
Securities Act in connection therewith.
(f) No Acquisitions. The Company shall not, nor shall it
permit any of its Subsidiaries to, (i) merge or consolidate with, or acquire any
equity interest in, any corporation, partnership, association or other business
organization, or enter into an agreement with respect thereto or (ii) acquire or
agree to acquire any assets of any corporation, partnership, association or
other business organization or division thereof, except for the purchase of
inventory and supplies in the ordinary course of business or the acquisition by
the Company or any Subsidiary of equity interests in any customer or supplier of
the Company in satisfaction of outstanding claims against such party in
bankruptcy proceedings consistent with past practice.
(g) No Dispositions. Other than sales of inventory or sales or
returns of obsolete or surplus equipment in the ordinary course of business
consistent with past practice, the Company shall not, nor shall it permit any of
its Subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to
sell, lease (whether such lease is an operating or capital lease), encumber or
otherwise dispose of, any of its material assets (including, without limitation,
any capital stock or other ownership interest of any Subsidiary of the Company).
(h) Governmental Filings. The Company shall promptly provide
Parent (or its counsel) with copies of all filings made by the Company with the
SEC or any other state or federal Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
(i) Termination of Affiliate Agreements. Effective as of the
Closing, the Company shall cause each of the agreements described on Schedule
4.1(w) (and that are indicated thereon as being subject to this Section 5.1(i))
to be terminated without any liability to the Company or any of its
Subsidiaries.
(j) No Dissolution, Etc. The Company shall not authorize,
recommend, propose or announce an intention to adopt a plan of complete or
partial liquidation or dissolution of the Company or any of its Subsidiaries.
(k) Certain Employee Matters. The Company and its Subsidiaries
shall not (without the prior written consent of Parent, which consent will not
be unreasonably withheld) (i) grant any increases in the compensation of any of
its directors, officers, management employees or key employees, except as may be
required pursuant to any of the existing Benefit
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Plans or Employee Arrangements as disclosed in a Schedule hereto; (ii) pay or
agree to pay any pension, retirement allowance or other employee benefit not
required or contemplated to be paid prior to the Effective Time by any of the
existing Benefit Plans or Employee Arrangements as in effect on the date hereof
to any such director, officer, management employee or key employee, whether past
or present; (iii) enter into any new, or materially amend any existing,
employment or severance or termination agreement with any such director,
officer, management employee or key employee; (iv) except as may be required to
comply with applicable law, become obligated under any new Benefit Plan or
Employee Arrangement, which was not in existence on the date hereof, or amend
any such plan or arrangement in existence on the date hereof if such amendment
would have the effect of materially enhancing any benefits thereunder; or (v)
extend any loans or advances to any of its directors, officers, management
employees or key employees, except as expressly permitted under the Transaction
Documents.
(l) Indebtedness; Agreements.
(i) The Company shall not, nor shall the Company
permit any of its Subsidiaries to, without the prior written consent of
Parent (which shall not be unreasonably withheld), assume or incur any
indebtedness for borrowed money (except for drawdowns by the Company
under its revolving credit facility or its accounts receivable
facility) or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of the
Company or any of its Subsidiaries or guarantee any debt securities of
any other person except wholly-owned Subsidiaries of the Company or
enter into any lease (whether such lease is an operating or capital
lease) or create any mortgages, liens, security interests or other
encumbrances on the property of the Company or any of its Subsidiaries
in connection with any indebtedness thereof, or enter into any "keep
well" or other agreement or arrangement to maintain the financial
condition of any other person except wholly-owned Subsidiaries of the
Company.
(ii) Except as set forth in Schedule 5.1(n), without
the prior written consent of Parent (which shall not be unreasonably
withheld), the Company shall not, nor shall the Company permit any of
its Subsidiaries to, (A) enter into any contracts involving aggregate
annual payments in excess of $250,000 or (B) modify, rescind,
terminate, waive, release or otherwise amend in any material respect
any of the terms or provisions of any Material Contract in any manner
that is material and adverse to the Company or the respective
Subsidiary of the Company party thereto.
(m) Accounting. The Company shall not take any action, other
than in the ordinary course of business, consistent with past practice or as
required by the SEC, by law or by changes in GAAP, with respect to accounting
policies, procedures and practices.
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(n) Capital Expenditures. Except for the capital expenditures
set forth on Schedule 5.1(n), the Company and its Subsidiaries shall not incur
any capital expenditures in excess of $100,000.
(o) Other Actions. Except as expressly permitted by the terms
of this Agreement, the Company will not knowingly or intentionally take or agree
or commit to take, nor will it permit any of its Subsidiaries to take or agree
or commit to take, any action that is reasonably likely to result in any of the
Company's representations or warranties hereunder being untrue in any material
respect or any of the conditions to the Merger not being satisfied in all
material respects.
(p) Tax Matters. Neither the Company nor any of its
Subsidiaries will take any action that would cause the transactions contemplated
by this Agreement to fail to qualify for the exceptions described in former
Treas. Regs. ss. 1.1502-13(f)(2)(i), Treas. Regs. ss. 1. 1502- 13(f)(5), former
Treas. Regs. ss. 1.1502-19(g)(1) and Treas. Regs. ss. 1.1502-19(c)(3).
(q) Appraisal Rights. The Company shall not settle or
compromise any claim for appraisal rights in respect of the Merger without the
prior written consent of Parent or Sub.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1. ACCESS TO INFORMATION. Upon reasonable notice, the Company shall
(and shall cause each of its Subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of Parent and Sub (including
potential financing sources and their employees, accountants, counsel and other
representatives), access, during normal business hours during the period prior
to the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, the Company shall (and shall cause each of its
Subsidiaries to) furnish promptly to Parent and Sub, (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to SEC requirements and (b) all other information
concerning its business, properties and personnel as Parent and Sub may
reasonably request. Subject to Section 9.2, the Confidentiality Agreement, dated
as of September 27, 1995, as amended to date, between Parent and the Company
(the "Confidentiality Agreement") shall apply with respect to information
furnished thereunder or hereunder and any other activities contemplated thereby
or hereby.
6.2. ASSISTANCE. If Parent requests, the Company will cooperate, and
will cause its accountants to cooperate, in all reasonable respects with any
financing efforts of Parent or its affiliates (including providing assistance in
the preparation of one or more registration statements or other offering
documents relating to debt and/or equity financing) and any other
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filings that may be made by Parent or its affiliates with the SEC, all at the
sole expense of Parent. The Company (a) shall furnish to its independent
accountants (or, if requested by Parent to Parent's independent public
accountants), such customary management representation letters as its
accountants may require of the Company as a condition to its execution of any
required accountants' consents necessary in connection with the delivery of any
"comfort" letters requested by financing sources of Parent or its affiliates and
(b) shall furnish to Parent all financial statements (audited and unaudited) and
other information in the possession of the Company or its representatives or
agents as Parent shall reasonably determine is necessary or appropriate in
connection with such financing. Without limiting the generality of the
foregoing, the Company agrees to cooperate with Parent's and Sub's efforts to
secure the financing contemplated by the Financing Commitment, such cooperation
to include providing such information to Parent's and Sub's financing sources as
Parent or Sub may reasonably request and making available to such financing
sources senior officers and such other employees of the Company as Parent and
Sub may reasonably request to assist in the preparation of one or more offering
documents and other appropriate marketing materials and to otherwise participate
in such marketing and sales efforts relating to the Financing Commitment as
Parent and Sub may reasonably request upon reasonable notice and consistent with
such officers' and employees' other business responsibilities to the Company.
6.3. COMPLIANCE WITH NEW JERSEY ISRA.
(a) The Company shall make all reasonable efforts to comply
with all obligations imposed by ISRA with respect to the transactions
contemplated by this Agreement. The Company's obligations shall include, as
appropriate: (i) timely submission of notice to the New Jersey Department of
Environmental Protection and Energy (the "NJDEPE") and (ii) preparation and
filing with NJDEPE of a proposed negative declaration, a proposed remedial
action workplan, appropriate documents for a remediation agreement, a deferral
of the remedial action workplan, or an area of concern waiver; provided that the
Company shall obtain the approval and consent of Parent and Sub, which approval
and consent shall not be unreasonably withheld, prior to entering into any
remediation agreement with, or making any other enforceable commitment to,
NJDEPE to satisfy the requirements of ISRA.
(b) Parent and the Sub shall use their reasonable efforts to
assist and cooperate with the Company and its representatives, in a prompt and
timely manner, in connection with the preparation and filing of all necessary
documents under ISRA.
6.4. FEES AND EXPENSES.
(a) Except as otherwise provided in this Section 6.4 and
except with respect to claims for damages incurred as a result of the material
breach of this Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense.
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(b) In the event of the termination of this Agreement under
(i) Section 8.1(b)(ii) (with respect to the Company's stockholder vote) if, at
the time of such termination or after the date hereof and prior to the
Stockholders' Meeting, there shall have been any public announcement of an
Acquisition Proposal (other than an Acquisition Proposal that shall have been
publicly withdrawn at least 15 days prior to the taking of the vote at the
Stockholders' Meeting), (ii) Section 8.1(h) or (iii) Section 8.1(i), then,
except as provided in Section 6.4(c), the Company shall pay to Parent or
Parent's designee, contemporaneously with the termination of this Agreement, the
following amounts in immediately available funds:
(x) a fee in the amount of $9,500,000, and
(y) such amount, not to exceed $2,500,000, as may be
required to reimburse Parent and its affiliates for all
reasonable out-of-pocket fees, costs and expenses incurred by
any of them in connection with their due diligence efforts or
the transactions contemplated in the Transaction Documents or
in the Financing Commitment, including, without limitation,
(A) fees, costs and expenses of accountants, escrow agents,
counsel, financial advisors and other similar advisors, (B)
fees paid to any Governmental Entity, (C) fees, costs and
expenses paid or payable to third parties under the Financing
Commitment or in connection with the transactions contemplated
therein, including, without limitation, any purchaser or
underwriter's discounts relating to the sale of the
subordinated debt financing contemplated therein or (except
for the principal amount payable in connection therewith, but
including all accrued interest payable in connection
therewith) the making of any repurchase offer in respect of
such subordinated debt financing.
(c) Any amounts that may be due and payable under this Section
6.4 as a result of the event described in Section 6.4(b)(i) shall be due and
payable only if, within 12 months after such termination, the Company
consummates an Acquisition Proposal and in such case such amounts shall be due
and payable at the closing or other consummation of such Acquisition Proposal.
(d) Any amounts due under this Section 6.4 that are not paid
when due shall bear interest at the prime rate of interest as announced from
time to time by The Chase Manhattan Bank plus 1% from the date due through and
including the date paid.
6.5. BROKERS OR FINDERS.
(a) The Company represents, as to itself, its Subsidiaries and
its affiliates, that, except as set forth in Schedule 6.5(a), no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finders fee or any other commission or similar fee
in connection with any of the transactions contemplated by this
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Agreement, except the Financial Advisor, whose fees and expenses will be paid by
the Company in accordance with the Company's agreements with such firm (copies
of which have been delivered by the Company to Parent prior to the date of this
Agreement).
(b) Parent represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor or other
firm or person is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except for Wasserstein Perella & Co., Inc.,
whose fees and expenses will be paid by Parent in accordance with the Parent's
agreements with such firm.
6.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) The Company shall, and from and after the Effective Time,
the Surviving Corporation and Parent shall, indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, an officer, director, employee or agent of
the Company or any of its Subsidiaries (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses (including attorneys' fees and
expenses), liabilities or judgments or amounts that are paid in settlement with
the approval of the indemnifying party (which approval shall not be unreasonably
withheld) of or in connection with any threatened or actual claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer, employee
or agent of the Company or any of its Subsidiaries or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise or by reason of anything done or not done by such person in any such
capacity whether pertaining to any matter existing or occurring at or prior to
the Effective Time or any acts or omissions occurring or existing at or prior to
the Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities"), including all Indemnified
Liabilities based in whole or in part on, or arising in whole or in part out of,
or pertaining to this Agreement or the transactions contemplated hereby, in each
case to the full extent permitted by applicable law (and the Company, the
Surviving Corporation, and Parent, as the case may be, shall pay expenses in
advance of the final disposition of any such action or proceeding to each
Indemnified Party to the full extent permitted by law). In determining whether
an Indemnified Party is entitled to indemnification under this Section 6.6, if
requested by such Indemnified Party, such determination shall be made by
special, independent counsel selected by the Surviving Corporation and Parent
and approved by the Indemnified Party (which approval shall not be unreasonably
withheld), and who has not otherwise performed services for the Surviving
Corporation, Parent or their respective affiliates within the last three years
(other than in connection with such matters). Without limiting the foregoing, in
the event any such claim, action, suit, proceeding or investigation is brought
against any Indemnified Parties (whether arising before or after the Effective
Time), (i) the Indemnified Parties may retain the Company's regularly engaged
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independent legal counsel or counsel satisfactory to them and reasonably
satisfactory to the Company (or satisfactory to them and reasonably satisfactory
to the Surviving Corporation and Parent after the Effective Time), and the
Company (or after the Effective Time, the Surviving Corporation and Parent)
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Parties as promptly as statements therefor are received; and (ii) the Company
(or after the Effective Time, the Surviving Corporation and Parent) will use all
reasonable best efforts to assist in the vigorous defense of any such matter,
provided that none of the Company, the Surviving Corporation or Parent shall be
liable for any settlement effected without its prior written consent which
consent shall not unreasonably be withheld. Any Indemnified Party wishing to
claim indemnification under this Section 6.6, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Company (or after
the Effective Time, the Surviving Corporation and Parent) (but the failure so to
notify shall not relieve a party from any liability which it may have under this
Section 6.6 except to the extent such failure materially prejudices such party's
position with respect to such claims) and shall deliver to the Company (or after
the Effective Time, the Surviving Corporation and Parent) the undertaking
contemplated by Section 145(e) of the DGCL, but without any requirement for the
posting of a bond. The Indemnified Parties as a group may retain only one law
firm (plus one local counsel, if necessary) to represent them with respect to
each such matter unless the use of counsel chosen to represent the Indemnified
Parties would present such counsel with a conflict of interest, or the
representation of all of the Indemnified Parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, in
which case such additional counsel as may be required (as shall be reasonably
determined by the Indemnified Parties and the Company, the Surviving Corporation
or Parent, as the case may be) may be retained by the Indemnified Parties at the
cost and expense of the Company, Surviving Corporation or Parent, as the case
may be. The Company and Sub agree that the foregoing rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action or suit, existing in favor of the Indemnified Parties with respect to
matters occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided, however, that all rights to indemnification
(including rights relating to advances of expenses) in respect of any
Indemnified Liabilities asserted or made within such period shall continue until
the disposition of such Indemnified Liabilities. Furthermore, the provisions
with respect to indemnification set forth in the Certificate of Incorporation or
Bylaws of the Surviving Corporation shall not be amended for a period of six
years following the Effective Time if such amendment would adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors, officers, employees or agents of the Company in respect of
actions or omissions occurring at or prior to the Effective Time.
(b) The Company (or after the Effective Time, the Surviving
Corporation and Parent) shall indemnify any Indemnified Party against all
reasonable costs and expenses (including attorney's fees and expenses), such
amounts to be payable in advance upon request as provided in Section 6.6(a),
relating to the enforcement of such Indemnified Party's rights
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under this Section 6.6 or under the documents referred to in this Section 6.6
regardless of whether or not such Indemnified Party is ultimately determined to
be entitled to indemnification hereunder or thereunder. Any amounts due pursuant
to the preceding sentence shall be payable upon request by the Indemnified Party
and shall bear interest from the date that such were originally due and payable
at a rate equal to the prime rate of interest as announced by The Chase
Manhattan Bank plus 1% as in effect on the date of such initial request.
(c) For a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company and its Subsidiaries (provided that Parent may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous to the Indemnified Parties) with
respect to matters arising before and acts or omissions occurring or existing at
or prior to the Effective Time including the transactions contemplated by this
Agreement, provided that Parent shall not be required to pay an annual premium
for such insurance in excess of 125% of the last annual premium paid by the
Company prior to the date hereof, but in such case shall purchase as much
coverage as possible for such amount. The last annual premium paid by the
Company was $523,720.
(d) For a period of 6 years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of fiduciary liability insurance maintained by the Company and its
Subsidiaries (provided that Parent may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions which are no less
advantageous to the Indemnified Parties who are covered thereby) with respect to
matters arising before and acts or omissions occurring or existing at or prior
to the Effective Time, provided that Parent shall not be required to pay an
annual premium for such insurance in excess of 200% of the last annual premium
paid by the Company prior to the date hereof, but in such case shall purchase as
much coverage as possible for such amount. The last annual premium paid by the
Company was $13,500. Furthermore, the provisions with respect to indemnification
provided for under any Benefit Plan or Employee Arrangement shall not be amended
for a period of six years following the Effective Time if such amendment would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors, officers, employees or agents of the Company
in respect of actions or omissions occurring at or prior to the Effective Time.
(e) The provisions of this Section 6.6 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his heirs
and his personal representatives and shall be binding on all successors and
assigns of Sub, the Company and the Surviving Corporation.
(f) The Company will honor the indemnification agreements
identified in Schedule 4.1(w), except for the provisions relating to the
establishment of trusts. The
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Company may enter into substantially similar indemnification agreements with
other directors of the Company, provided that such agreements shall not contain
any provisions for the establishment of trusts.
(g) Nothing in this Section 6.6 shall be interpreted as
obligating the Company (or from and after the Effective Time, the Surviving
Corporation), Parent, Sub or any of their respective successors or assigns, to
pay, make reimbursement for or otherwise assume responsibility for any Taxes or
penalties imposed on any officer, director, employee or agent or for any other
amount relating to any of such Person's Tax obligations or liabilities.
6.7. REASONABLE EFFORTS. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable, under applicable laws and regulations or
otherwise, to consummate and make effective the transactions contemplated by the
Transaction Documents, subject, as applicable, to the Company Stockholder
Approval, including cooperating fully with the other party, including by
provision of information and making of all necessary filings in connection with,
among other things, approvals under the HSR Act. The Company will use all
reasonable efforts to obtain any consent from third parties necessary to allow
the Company to continue operating its business as presently conducted as a
result of the consummation of the transactions contemplated hereby. In case at
any time after the Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals, immunities and
franchises of either of the Constituent Corporations, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
6.8. PUBLICITY. The parties will consult with each other and will
mutually agree upon any press release or public announcement pertaining to the
Merger and shall not issue any such press release or make any such public
announcement prior to such consultation and agreement, except as may be required
by applicable law (or stock exchange rules), in which case the party proposing
to issue such press release or make such public announcement shall use
reasonable efforts to consult in good faith with the other party before issuing
any such press release or making any such public announcement.
6.9. WITHHOLDING RIGHTS. Subject to Section 6.10, Parent and Sub, as
applicable, shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement (including pursuant to the Offer)
to any holder of shares of Company Common Stock, Options or Unvested Stock such
amounts as Parent or Sub, as applicable, is required to deduct and withhold with
respect to the making of such payment under the Code or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by Parent
or Sub, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock, Options or Unvested Stock in respect of which such deduction and
withholding was made by Parent or Sub.
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6.10. REAL ESTATE TAXES. Parent and Sub shall pay the full amount (on
behalf of themselves, the Company and the shareholders of the Company) of any
and all transfer, capital gains and other taxes, fees or costs incurred or
assessed by any New York City or New York State (or other state or local) taxing
authority for which Parent, Sub, the Company or the shareholders of the Company
are liable in connection with the sale or transfer of real estate pursuant to
the Offer or the Merger. Parent and Sub shall not be entitled to and shall not
deduct from the consideration otherwise payable to a holder of Shares pursuant
to the Offer or the Merger any amounts required to be paid by Parent and Sub
pursuant to the immediately preceding sentence.
6.11. HSR AND OTHER GOVERNMENTAL APPROVALS.
(a) HSR Act. Each party hereto shall file or cause to be filed
with the Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") any notification required to be
filed by their respective "ultimate parent" companies under the HSR Act and the
rules and regulations promulgated thereunder with respect to the transactions
contemplated hereby. Such parties will use all reasonable efforts to make such
filings promptly and to respond on a timely basis to any requests for additional
information made by either of such agencies. Each of the parties hereto agrees
to furnish the other with copies of all correspondence, filings and
communications (and memoranda setting forth the substance thereof) between it
and its affiliates and their respective representatives, on the one hand, and
the FTC, the Antitrust Division or any other Governmental Entity or members or
their respective staffs, on the other hand, with respect to this Agreement and
the transactions contemplated hereby, other than personal financial information
filed therewith. Each party hereto agrees to furnish the others with such
necessary information and reasonable assistance as such other parties and their
respective affiliates may reasonably request in connection with their
preparation of necessary filings, registrations or submissions of information to
any Governmental Entities, including without limitation any filings necessary
under the provisions of the HSR Act.
(b) Other Regulatory Approvals. Each party hereto shall
cooperate and use its reasonable best efforts to promptly prepare and file all
necessary documentation to effect all necessary applications, notices,
petitions, filings and other documents, and use all reasonable efforts to obtain
(and will cooperate with each other in obtaining) any consent, acquiescence,
authorization, order or approval of, or any exemption or nonopposition by, any
Governmental Entity required to be obtained or made by Parent or the Company or
any of their respective Subsidiaries in connection with the Offer and the Merger
or the taking of any other action contemplated by this Agreement.
6.12. NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
written notice to the other of (a) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to cause
any representation or warranty of such party
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contained in this Agreement to be untrue or inaccurate (in any material respect
for any representation or warranty not already qualified for materiality) at any
time from the date hereof to the Closing Date, (b) the failure of such party to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder and (c) in the case
of the Company, the occurrence of any threat by any executive officer or senior
management employee of the Company or any of its Subsidiaries to resign or
otherwise terminate their employment relationship with the Company or any of its
Subsidiaries.
6.13. SOLVENCY LETTER. Parent shall deliver to the Board of Directors
of the Company any solvency letter from any third party appraisal or similar
firm that Parent provides to the providers of the financing under the Financing
Commitment.
6.14. CONTINUATION OF EMPLOYEE BENEFITS.
(a) On and after the Effective Time, directors, officers and
employees of the Company and its Subsidiaries shall be provided employee
benefits, plans and programs (including but not limited to incentive
compensation, deferred compensation, pension, life insurance, medical (which
eligibility shall not be subject to any exclusions for any pre-existing
conditions if such individual has met the participation requirements of such
benefits, plans or programs of the Company or its Subsidiaries), profit sharing
(including 401(k)), severance salary continuation and fringe benefits) which are
no less favorable in the aggregate than those generally available to similarly
situated directors, officers and employees of Parent and its significant
Subsidiaries. For purposes of eligibility to participate and vesting in all
benefits provided to directors, officers and employees, the directors, officers
and employees of the Company and its Subsidiaries will be credited with their
years of service with the Company and its Subsidiaries and prior employers to
the extent service with the Company and its Subsidiaries and prior employers is
taken into account under plans of the Company and its Subsidiaries. Upon
termination of any medical plan of the Company or any of its Subsidiaries,
individuals who were directors, officers or employees of the Company or its
Subsidiaries at the Effective Time shall become eligible to participate in the
medical plan of Parent. Amounts paid before the Effective Time by directors,
officers and employees of the Company and its Subsidiaries under any medical
plans of the Company shall after the Effective Time be taken into account in
applying deductible and out-of-pocket limits applicable under the medical plan
of Parent provided as of the Effective Time to the same extent as if such
amounts had been paid under such medical plan of Parent.
(b) This Section 6.14, which shall survive the Effective Time
and shall continue without limit, is intended to benefit and bind the Company
and the Surviving Corporation, each of whom may enforce the provisions of this
Section 6.14. Nothing contained in this Section 6.14 shall create any third
party beneficiary rights in any director, officer or employee or former
director, officer or employee (including any beneficiary or dependent thereof)
of the Company, any of its Subsidiaries or the Surviving Corporation in
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respect of continued employment for any specified period of any nature or kind
whatsoever, and nothing contained in this Section 6.14 shall create such third
party rights in any such person in respect of any benefits that may be provided,
directly or indirectly, under any employee benefit plan or arrangement.
6.15. TRUSTEES. The Company will use its reasonable efforts to obtain
from each officer or director of the Company or any of its Subsidiaries who is
serving as a trustee of any Benefit Plan a duly executed resignation letter
resigning from such position effective as of the Effective Time. On or prior to
the Effective Time, the Company and its Subsidiaries may appoint a fiduciary or
advisor independent of the Company to vote, or advise on the vote of, as the
case may be, the Shares held by Benefit Plans, other than those required under
the Code to pass through voting rights to participants, in connection with the
solicitation of approval by the stockholders of this Agreement and the
transactions contemplated hereby.
6.16. WITHDRAWAL LIABILITY. The Company will cooperate with Parent and
use its best efforts to obtain from each Multiemployer Plan as soon as possible
following the execution of this Agreement (i) a copy of each Multiemployer Plan
and all amendments thereto and (ii) an estimate of the withdrawal liability as
defined in Section 4201 of ERISA (without regard to any subsequent reduction or
waiver of such liability under Section 4207 or 4208 of ERISA) which would be
owed by the Company or its ERISA Affiliates to such Multiemployer Plan if the
Company or its ERISA Affiliates ceased contributing to such Multiemployer Plan
immediately before the consummation of the transactions contemplated by this
Agreement (the "Withdrawal Liability"); the Company will cooperate with Parent
and use reasonable efforts to obtain (and provide to Parent) from each
Multiemployer Plan as soon as possible following the execution of this Agreement
all information necessary for the Company to compute the Withdrawal Liability;
the Company will provide all such documents, information and estimates requested
in this Section 6.16 to Parent upon receipt.
ARTICLE 7
CONDITIONS PRECEDENT
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote
thereon if such vote is required by applicable law.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired, and no restrictive
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order or other requirements shall have been placed on the Company, Parent, Sub
or the Surviving Corporation in connection therewith.
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect; provided, however,
that prior to invoking this condition, each party shall use all commercially
reasonable efforts to have any such decree, ruling, injunction or order vacated.
(d) Statutes. No statute, rule, order, decree or regulation
shall have been enacted or promulgated by any government or governmental agency
or authority which prohibits the consummation of the Merger.
(e) Consummation of the Tender Offer. Parent and Sub shall
have accepted for purchase and paid for Shares tendered pursuant to the Offer
(PROVIDED, HOWEVER, that this condition will be deemed satisfied with respect to
Parent and Sub if Sub shall have failed to purchase Shares pursuant to the Offer
in violation of the terms of the Offer or this Agreement).
ARTICLE 8
TERMINATION AND AMENDMENT
8.1. TERMINATION. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or by Parent:
(a) by mutual written consent of the Company and Parent, or by
mutual action of their respective Boards of Directors;
(b) by either the Company or Parent (i) if any permanent
injunction or other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and non-appealable or (ii) if
the Company Stockholder Approval shall not have been obtained by reason of the
failure to obtain the required vote upon a vote held at the Stockholders'
Meeting, or at any adjournment thereof;
(c) by either the Company or Parent if the Offer shall not
have been consummated by October 31, 1997 or the Merger has not been consummated
by December 31, 1997; provided, however, that the right to terminate this
Agreement under this Section 8.1(c) shall not be available to any party whose
breach of any representation or warranty or failure to
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fulfill any covenant or agreement under this Agreement has been the cause of or
resulted in the failure of the Offer to be consummated or the Merger to occur on
or before such date;
(d) by Parent prior to the consummation of the Offer, so long
as Parent is not then in material breach of its obligations hereunder, if there
has been a breach of any representation or warranty (when made on or at the time
of termination as if made on such date of termination, except to the extent it
relates to a particular date) on the part of the Company (provided that any
representation or warranty of the Company contained herein that is subject to a
"materiality," "Material Adverse Effect" or similar qualification shall not be
so qualified for purposes of determining the existence of any breach thereof on
the part of the Company), and which breach has not been cured within ten
calendar days following receipt by the Company of notice of such breach and is
existing at the time of the termination of this Agreement, except for such
breaches that would not, individually or in the aggregate with any other
breaches on the part of the Company, (A) have a Material Adverse Effect on the
Company or (B) materially adversely affect the ability of the parties hereto to
consummate the transactions contemplated hereby;
(e) by Parent prior to the consummation of the Offer, so long
as Parent is not then in material breach of its obligations hereunder, if there
has been a breach of Section 5.1(e) or a material breach of any other covenant
or agreement on the part of the Company set forth in this Agreement (provided
that any covenant or agreement of the Company contained herein the performance
of which is subject to a "materiality," "Material Adverse Effect" or similar
qualification shall not be so qualified for purposes of determining the
existence of any nonperformance thereof on the part of the Company), and which
breach (other than a breach of any covenant or agreement set forth in Section
5.1(e)) has not been cured within ten calendar days following receipt by the
Company of notice of such breach and is existing at the time of the termination
of this Agreement;
(f) by the Company prior to the consummation of the Offer, so
long as the Company is not then in material breach of its obligations hereunder,
if there has been a breach of any representation or warranty (when made on or at
the time of termination as if made on such date of termination, except to the
extent it relates to a particular date) on the part of Parent or Sub (provided
that any representation or warranty of Parent or Sub contained herein that is
subject to a "materiality," "Material Adverse Effect" or similar qualification
shall not be so qualified for purposes of determining the existence of any
breach thereof on the part of Parent or Sub), and which breach has not been
cured within ten calendar days following receipt by Parent or Sub of notice of
such breach and is existing at the time of the termination of this Agreement,
except for such breaches that would not, individually or in the aggregate with
any other breaches on the part of Parent or Sub, (A) have a Material Adverse
Effect on Parent or Sub or (B) materially adversely affect the ability of the
parties hereto to consummate the transactions contemplated hereby;
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(g) by the Company prior to the consummation of the Offer, so
long as the Company is not then in material breach of its obligations hereunder,
if there has been a material breach of any covenant or agreement on the part of
Parent or Sub set forth in this Agreement (provided that any covenant or
agreement of Parent or Sub contained herein the performance of which is subject
to a "materiality," "Material Adverse Effect" or similar qualification shall not
be so qualified for purposes of determining the existence of any nonperformance
thereof on the part of Parent or Sub), and which breach has not been cured
within ten calendar days following receipt by Parent or Sub of notice of such
breach and is existing at the time of the termination of this Agreement;
(h) by Parent prior to the consummation of the Offer if (i)
the Board of Directors of the Company (whether or not under circumstances
permitted by this Agreement) shall have failed to make the recommendation
contemplated by Section 1.2 in the Schedule 14D-9 or shall have withdrawn or
modified, in any manner which is adverse to Parent, its recommendation or
approval of the Offer, the Merger or this Agreement and the transactions
contemplated hereby, or shall have resolved to do so, (ii) the Board of
Directors of the Company shall have recommended to the stockholders of the
Company any Acquisition Proposal, or shall have resolved to do so, or (iii) a
tender offer or exchange offer for 50% or more of the outstanding shares of
capital stock of the Company is commenced (other than by the Company or its
affiliates) and the Board of Directors of the Company fails to timely recommend
against the stockholders of the Company tendering their shares into such tender
offer or exchange offer; or
(i) by the Company prior to the consummation of the Offer,
pursuant to the termination right permitted by clause (y) of Section 5.1(e)(i)
of this Agreement; provided that the Company may not effect such termination
pursuant to this Section 8.1(i) unless and until (i) Parent receives at least
five days prior written notice (which notice shall include the identity of the
person or entity making the relevant Acquisition Proposal, the material terms
and conditions of such Acquisition Proposal and the material terms and
conditions of any agreements or arrangements to be entered into in connection
with such Acquisition Proposal with Jeffrey S. Silverman with respect to his
then existing agreements and arrangements with the Company) from the Company of
its intention to effect such termination pursuant to this Section 8.1(i), and
(ii) during such five-day period, the Company shall, and shall cause its
respective financial and legal advisors to, consider any adjustment in the terms
and conditions of this Agreement that Parent may propose; provided further that
the Company may not effect such termination pursuant to this Section 8.1(i)
unless the Company has contemporaneously with such termination tendered payment
to Parent or Parent's designee of the amounts that are due Parent or Parent's
designee under Section 6.4; or
(j) by either the Company or Parent if such party is not then
in material breach of its obligations hereunder, if upon the expiration of the
Offer, no Shares shall have been purchased in connection with the Offer.
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8.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
affiliates, officers, directors or shareholders except (a) with respect to this
Section 8.2, the second sentence of Section 6.1, and Sections 6.4 and 9.2 and
(b) that no such termination shall relieve any party from liability for a breach
hereof.
8.3. AMENDMENT. Subject to applicable law and the provisions of Section
1.6 hereof, this Agreement may be amended, modified or supplemented only by
written agreement of Parent, Sub and the Company at any time prior to the
Effective Time with respect to any of the terms contained herein; provided,
however, that, after the Company Stockholder Approval, no term or condition
contained in this Agreement shall be amended or modified in any manner that
would reduce the amount of or change the form of the Merger Consideration.
8.4. EXTENSION; WAIVER. Subject to the provisions of Section 1.6
hereof, at any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
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 on behalf of such party. The failure of any party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
ARTICLE 9
GENERAL PROVISIONS
9.1. NONSURVIVAL OF COVENANTS AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the covenants and agreements contained in Article 3 and
Sections 6.4, 6.6, 6.10 and 6.14 hereof and any other covenant or agreement that
contemplates performance after the Effective Time.
9.2. CONFIDENTIALITY AGREEMENT. The Confidentiality Agreement shall
survive the execution and delivery of this Agreement or any termination of this
Agreement, and the provisions of the Confidentiality Agreement shall apply to
all information and material delivered by any party hereunder; provided,
however, that the terms and provisions of the Confidentiality Agreement are
hereby waived, amended or modified to the extent necessary to permit the
consummation of the transactions contemplated by this Agreement. Upon the
Closing, the terms and provisions of the Confidentiality Agreement shall
terminate in full.
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9.3. NOTICES. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after the date of
mailing to the following address or telecopy number, or to such other address or
addresses as such person may subsequently designate by notice given hereunder:
(a) if to Parent or Sub, to:
Nortek, Inc. and
NTK Sub, Inc.
50 Kennedy Plaza
Providence, RI 02903
Attn: Richard L. Bready
Telecopy: (401) 751-4610
with copies to:
Ropes & Gray
One International Place
Boston, MA 02110
Attn: David C. Chapin, Esq.
Telecopy: (617) 951-7050
(b) if to the Company, to:
Ply Gem Industries, Inc.
777 Third Avenue
New York, New York 10017
Attn: Jeffrey S. Silverman
Telecopy: (212) 888-0472
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attn: Victor I. Lewkow, Esq.
Telecopy: (212) 225-3999
9.4. INTERPRETATION. When a reference is made in this Agreement to
Articles or Sections, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The table of contents, list of defined
terms and headings contained in this
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Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the word "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
inclusion by the Company of any information or matter on a Schedule hereto is
not an admission on the part of the Company that such information or matter is
either required by the terms of this Agreement to be listed on such Schedule or
is otherwise material. Schedule 9.4 sets forth a list of all agreements or
understandings under which the Company or any of its subsidiaries has an
obligation pursuant to or in connection with the Agreement and Plan of Merger,
dated as of June 24, 1997 by and among Atrium Acquisition Holdings Corp.,
Atrium/PG Acquisition Corp. and the Company and the agreements and transactions
contemplated thereby (collectively, the "Atrium Agreements"). All obligations of
the Company or its subsidiaries contained in any document set forth on Schedule
9.4 shall be deemed disclosed for purposes of Schedules 4.1(a)-(x).
9.5. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.6. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF
OWNERSHIP. This Agreement (together with the Confidentiality Agreement (as
amended by Section 9.2), the other Transaction Documents, the schedules and
exhibits thereto, and any other 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 and, except as provided in Section 6.6, is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
9.7. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
9.8. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder (a) to
any newly-formed direct wholly-owned Subsidiary of Parent or Sub or (b) in the
form of a collateral assignment to any institutional lender who provides funds
to Sub for the consummation of the transactions contemplated hereby. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
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9.9. DIRECTOR AND OFFICER LIABILITY. The directors, officers, and
stockholders of each of the parties and their affiliates acting in such capacity
shall not in such capacity have any personal liability or obligation arising
under this Agreement (including any claims that the other parties may assert)
other than as an assignee of this Agreement.
9.10. SPECIFIC PERFORMANCE. The parties recognize that in the event the
Company should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Parent and Sub shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement. In
the event of any action to enforce this Agreement specifically, the Company
hereby waives the defense that there is an adequate remedy at law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
PARENT:
NORTEK, INC.
By: /s/ Kevin W. Donnelly
----------------------------------------
Name: Kevin W. Donnelly
Title: Vice President and General Counsel
SUB:
NTK SUB, INC.
By: /s/ Kevin W. Donnelly
----------------------------------------
Name: Kevin W. Donnelly
Title: Vice President
COMPANY:
PLY GEM INDUSTRIES, INC.
By: /s/ Jeffrey S. Silverman
----------------------------------------
Name: Jeffrey S. Silverman
Title: Chairman
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Exhibit A
CONDITIONS OF THE OFFER
Reference is made to the Agreement and Plan of Merger, dated as of July
24, 1997 (the "Agreement"), by and among Nortek, Inc., a Delaware corporation
("Parent"), NTK Sub, Inc., a Delaware corporation and a wholly owned subsidiary
of Parent ("Sub"), and Ply Gem Industries, Inc., a Delaware corporation (the
"Company"). Capitalized terms defined in the Agreement and not otherwise defined
herein are used herein with the meanings so defined.
Notwithstanding any other provision of the Offer, Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including without limitation, Rule 14e-1(c) under the
Exchange Act (relating to Sub's obligation to pay for or return Shares promptly
after termination or withdrawal of the Offer), pay for, or may delay the
acceptance for payment of or payment for, any tendered shares, if (i) any
applicable waiting period under the HSR Act shall not have expired or been
terminated, (ii) the number of Shares validly tendered and not withdrawn, when
added to the Shares then beneficially owned by Parent, does not constitute a
majority of the shares of Company Common Stock then outstanding on a fully
diluted basis (the "Minimum Condition"), (iii) Parent and Sub shall not have
received the debt financing for the transactions contemplated by the Agreement
on terms substantially as outlined in the Financing Commitment, or (iv) on or
after the date of the Agreement and at or before the time of payment for the
Shares, any of the following events shall occur and be continuing:
(a) there shall have occurred and be continuing (1) any general
suspension of trading in, or general limitation on prices for, securities on the
New York Stock Exchange, Inc. (other than suspensions of not more than one
business day), (2) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(3) the commencement of a war, armed hostilities or other international or
national calamity involving the United States and having had or being reasonably
likely to have a Material Adverse Effect or materially adversely affecting (or
materially delaying) the consummation of the Offer, (4) any material limitation
or proposed material limitation (whether or not mandatory) by any Governmental
Entity, or any other event, that materially adversely affects generally the
extension of credit by banks or other financial institutions or (5) in the case
of any of the situations described in clauses (1) through (4) inclusive,
existing at the date of the Agreement, a material acceleration, escalation or
worsening thereof;
(b) the representations and warranties of the Company set forth in the
Agreement shall not have been true and correct in all respects (provided that
any representation or warranty of the Company contained in the Agreement that is
subject to a materiality, Material Adverse Effect or similar qualification shall
not be so qualified for purposes of determining the existence of any breach
thereof on the part of the Company) as of the date of the Agreement
<PAGE> 71
and (except to the extent such representations and warranties speak as of an
earlier date) as of the scheduled expiration date of the Offer as though made on
and as of such scheduled expiration date, except for such breaches that would
neither, individually or in the aggregate with any other breaches on the part of
the Company, (i) have a Material Adverse Effect on the Company nor (ii)
materially adversely affect the ability of the parties to the Agreement to
consummate the transactions contemplated by the Agreement; or the Company shall
not have performed in all material respects (provided that any obligation the
performance of which is subject to a materiality, Material Adverse Effect or
similar qualification shall not be so qualified for purposes of determining the
existence of any nonperformance thereof) all obligations required to be
performed by it under the Agreement;
(c) there shall be any action or proceeding commenced by any
Governmental Entity, which has a reasonable likelihood of success and which, if
decided adversely to the Company, would have a Material Adverse Effect or would
restrain, prohibit or materially delay the consummation of the Offer, and if
decided adversely to Parent, would have the effect of (i) making the purchase
of, or payment for, some or all of the Shares pursuant to the Offer or the
Merger or otherwise illegal, or resulting in a material delay in the ability of
Parent or Sub to accept for payment or pay for some or all of the Shares, (ii)
compelling Parent or Sub to dispose of or hold separately all or any material
portion of the Company's or Parent's business or assets, (iii) making illegal,
or otherwise directly or indirectly restraining or prohibiting or imposing
material financial burdens, penalties or, fines or requiring the payment of
material damages in connection with the making of, the Offer, the acceptance for
payment of, payment for, or ownership, directly or indirectly, of some of or all
the Shares by Parent or Sub, the consummation of the Offer or the Merger, (iv)
otherwise preventing consummation of the Offer or the Merger, or (v) imposing
material limitations on the ability of Parent or Sub effectively (A) to acquire,
hold or operate the business of the Company and its Subsidiaries taken as a
whole or (B) to exercise full rights of ownership of the Shares acquired by it,
including, but not limited to, the right to vote the Shares purchased by it on
all matters properly presented to the stockholders of the Company, which, in
either case, would effect a material diminution in the value of the Company or
the Shares;
(d) there shall have been any Law enacted, promulgated, entered or
deemed applicable to the Offer or the Agreement or any other action shall have
been taken by any Governmental Entity on or after the date of the Offer that
would result in any of the consequences referred to in clauses (i) through (v)
of paragraph (c) above (other than with respect to clause (i) of paragraph (c),
if there shall have been a material delay in the ability of Parent or Sub to
accept for payment or pay for some or all of the Shares due to a request for
additional information under the HSR Act);
(e) the Board of Directors of the Company shall have publicly
(including by amendment of its Schedule 14D-9) withdrawn or adversely modified
its recommendation of acceptance of the Offer;
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(f) since the date of the Agreement, there shall have occurred any
event or events that, singly or in the aggregate, have had or would have a
Material Adverse Effect; or
(g) the Agreement shall have been terminated in accordance with its
terms, or Parent or Sub shall have reached an agreement or understanding in
writing with the Company providing for termination or amendment of the Offer;
which, in any such case, and regardless of the circumstances (including any
action or inaction by Parent or Sub other than a breach by Parent or Sub of the
Agreement) giving rise to any such conditions, makes it in the reasonable
judgment of Parent inadvisable to proceed with the Offer and/or with such
acceptance for payment of the Shares.
The foregoing conditions are for the sole benefit of Parent and Sub and
may be asserted by Parent or Sub regardless of the circumstances giving rise to
any such condition (other than a breach by Parent or Sub of the Agreement) and
may be waived by Parent or Sub, in whole or in part, at any time and from time
to time, in the sole discretion of Parent or Sub; provided, that the Minimum
Condition is also for the benefit of the Company and may not be waived without
the Company's consent. The failure by Parent or Sub at any time to exercise any
of the foregoing rights will not be deemed a waiver of any right and each right
will be deemed an ongoing right which may be asserted at any time and from time
to time.
-3-
<PAGE> 73
Exhibit B
OPTION SURRENDER AGREEMENT,
RELEASE AND WAIVER
NOTE: SIGNATURE MUST BE PROVIDED BELOW AND ON
THE SCHEDULE OF OWNERSHIP.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
To Ply Gem Industries, Inc., a Delaware corporation (the "Company"):
The undersigned acknowledges that pursuant to Section 3.5(a)(i) of the
Agreement and Plan of Merger among Nortek, Inc., NTK Sub, Inc. ("NTK Sub") and
the Company, dated as of July 24, 1997 (the "Merger Agreement"), the Company
will be canceling Options (as defined below) in return for cash consideration
effective at the time the proposed merger of NTK Sub with and into the Company
(the "Merger") becomes effective (the "Effective Time"). Receipt of such
consideration by the undersigned will be subject to the receipt by the Company
of this Option Surrender Agreement, Release and Waiver (the "Surrender
Agreement") surrendering Options for such cancellation.
Subject to, and effective upon, acceptance of the surrender of the Options
surrendered herewith, the undersigned hereby surrenders for cancellation to the
Company all of his rights, title and interest in and to all options (whether
vested or unvested) to purchase shares of common stock, $.25 par value per share
(the "Shares"), of the Company pursuant to the Company's Executive Incentive
Stock Option Plan, 1989 Employee Incentive Stock Plan, 1989 Senior Executive
Stock Option Plan and 1994 Employee Incentive Stock Plan (such options, the
"Options" and such plans, the "Option Plans"), listed on the attached Schedule
of Ownership (the "Ownership Schedule"), for a per Share amount equal to the
Merger Consideration (as defined in the Merger Agreement), minus the exercise
price per Share, multiplied by the number of Shares subject to such Options,
upon the terms and subject to the conditions set forth in this Surrender
Agreement.
The undersigned hereby represents and warrants that the undersigned holds
the Options surrendered hereby free and clear of all claims, liens,
restrictions, charges, encumbrances, security interests, voting agreements and
commitments of any kind and has full power and authority to surrender for
cancellation such Options, subject to other agreements involving the Merger
being executed simultaneously herewith.
This surrender is irrevocable by the undersigned but will not be effective
if the Merger is not consummated on or before December 31, 1997.
The undersigned, on behalf of himself or herself, and on behalf of all
spouses, heirs, predecessors, successors, assigns, representatives or agents of
the undersigned (including
<PAGE> 74
without limitation any trust of which the undersigned is the trustee or which is
for the benefit of the undersigned or a member of his or her family), to the
greatest extent permitted by law, hereby acknowledges that the payments made
pursuant to the Surrender Agreement are in full satisfaction of any and all
rights the undersigned may have under the Option Plans with respect to Options
being surrendered hereby.
The undersigned hereby acknowledges that the Ownership Schedule enclosed
herewith correctly and completely sets forth the Options held by the undersigned
being surrendered hereunder, and that except as set forth therein the
undersigned does not have the right to acquire any stock in the Company or any
options, warrants or other rights to acquire shares of capital stock of or
equity interests in the Company, or similar securities or contractual
obligations the value of which is derived from the value of an equity interest
in the Company, or securities convertible into or exchangeable for capital stock
of or equity interests in, or similar securities or contractual obligations of,
the Company.
The undersigned also acknowledges that all payments to be made pursuant to
the Surrender Agreement are expected to be paid by check at the Effective Time.
The undersigned also acknowledges that the Company is not required to make any
payments to the undersigned pursuant to the Surrender Agreement unless his or
her Options are outstanding at the Effective Time.
The undersigned also acknowledges that all payments to be made pursuant to
the Surrender Agreement may be subject to applicable withholding taxes and other
similar charges.
The undersigned, upon request, will execute and deliver any additional
documents deemed by the Company to be reasonably necessary or desirable to
complete the surrender of the Options surrendered hereby.
The undersigned recognizes that the Merger is subject to various conditions
and the Company may not be required to accept the surrender of any of the
Options surrendered hereby.
INSTRUCTIONS
1. EXECUTION OF THE SURRENDER AGREEMENT AND THE OWNERSHIP SCHEDULE. This
Surrender Agreement is to be completed by the optionholder. In order to validly
surrender such Options, an optionholder must complete and sign this Surrender
Agreement and the Ownership Schedule in accordance with the instructions herein
and mail or deliver them in the enclosed envelope to the Company prior to [ ].
THE OWNERSHIP SCHEDULE MUST BE SIGNED BY THE OPTIONHOLDER AS EVIDENCE OF
SUCH ACKNOWLEDGMENT AND RETURNED TOGETHER WITH
2
<PAGE> 75
THIS SURRENDER AGREEMENT. A second copy of the Ownership Schedule for the
optionholder's records has also been included herewith.
2. DELIVERY. This Surrender Agreement and the enclosed Ownership Schedule,
when executed, should be mailed or delivered to: [ ].
THE METHOD OF DELIVERY OF THE SURRENDER AGREEMENT AND THE OWNERSHIP
SCHEDULE IS AT THE OPTION AND RISK OF THE SURRENDERING OPTIONHOLDER. DELIVERY BY
EXPEDITED MAIL, COURIER OR OTHER SIMILAR SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. OPTIONHOLDERS ARE
ALSO ADVISED TO RETAIN A COPY OF ALL DOCUMENTS DELIVERED.
3. SIGNATURE ON THE SURRENDER AGREEMENT. The signature on this Surrender
Agreement must correspond exactly with the optionholder's name in the records of
the Company.
4. REQUESTS FOR ASSISTANCE. If you have questions or need assistance please
call [ ].
3
<PAGE> 76
IMPORTANT:
OPTIONHOLDER: (1) SIGN HERE; AND (2) CONFIRM AND SIGN THE ENCLOSED
OWNERSHIP SCHEDULE.
- --------------------------------------------------------------------------------
(Signature of Optionholder)
Dated:
--------------------------
Name:
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Type or Print)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
-----------------------------------------------
(Home)
-----------------------------------------------
(Business)
Taxpayer Identification or Social Security No.:
--------------------------------
- --------------------------------------------------------------------------------
, 1997
- ---------------------------
4
<PAGE> 1
Exhibit (c)(2)
BEAR STEARNS
September 27, 1995
Nortek, Inc.
50 Kennedy Plaza
Providence, RI 02903
Attn: Mr. Hiley
- ----
Confidentiality Agreement (the "Agreement")
-------------------------------------------
Mr. Hiley:
In connection with your consideration of a possible transaction (the
"Transaction") with Ply Gem Industries, Inc. (the "Company"), you have requested
the right to review certain non-public information regarding the Company. In
consideration of, and as a condition to, furnishing you with such information
and any other information (whether communicated in writing or communicated
orally) delivered to you by us or our affiliates, directors, officers,
employees, advisors, agents or "controlling persons" (within the meaning of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) (such affiliates
and other persons being herein referred to collectively as our
"Representatives") in connection with your consideration of a Transaction (such
information being herein referred to as "Evaluation Material"), the Company and
you hereby agree as follows:
1. The Evaluation Material will be used solely for the purpose of
evaluating a possible Transaction with the Company involving you or your
affiliates, and unless and until you have completed such Transaction pursuant to
a definitive agreement between you or any such affiliate and the Company, such
Evaluation Material will be kept strictly confidential by you and your
affiliates, directors, officers, employees, advisors, agents or controlling
persons (such affiliates and other persons being herein referred to collectively
as "your Representatives"), except that the Evaluation Material or portions
thereof may be disclosed to those of your Representatives who need to know such
information for the purpose of evaluating a possible Transaction with the
Company (it being understood that prior to such disclosure your Representatives
will be informed of the confidential nature of the Evaluation Material and shall
agree to be bound by this Agreement). You agree to be responsible for any breach
of this Agreement by your Representatives.
<PAGE> 2
2. The term "Evaluation Material" does not include any information which
(i) at the time of disclosure or thereafter is generally known by the public
(other than as a result of its disclosure by you or your Representatives) or
(ii) was or becomes available to you on a nonconfidential basis from a person
not otherwise bound by a confidentiality agreement with the Company or its
Representatives or is not otherwise prohibited from transmitting the information
to you. As used in this Agreement, the term "person" shall be broadly
interpreted to include, without limitation, any corporation, company, joint
venture, partnership or individual.
3. In the event that you or any of your Representatives receive a request
to disclose all or any part of the information contained in the Evaluation
Material under the terms of a valid and effective subpoena or order issued by a
court of competent jurisdiction, you or such Representative, as the case may be,
agree to (i) immediately notify the Company of the existence, terms and
circumstances surrounding such a request, (ii) consult with the Company on the
advisability of taking legally available steps to resist or narrow such request,
and (iii) if disclosure of such information is required, furnish only that
portion of the Evaluation Material, which in the written opinion of counsel, you
or such Representative are legally compelled to disclose and exercise best
efforts to obtain an order or other reliable assurance that confidential
treatment will be accorded to such information.
4. Unless otherwise required by law in the opinion of your counsel, neither
you nor your Representatives will, without our prior written consent, disclose
to any person either the fact that discussions or negotiations are taking place
concerning a possible Transaction between the Company and you or your
affiliates, or any of the terms, conditions or other facts with respect to any
such possible Transaction, including the status thereof and the fact that the
Evaluation Material has been made available to you.
5. Until the earliest of (i) the consummation by you of a Transaction (ii)
two years from the date of this Agreement, you agree not to initiate or maintain
contact (except for those contacts made in this ordinary course of business)
with any officer, director or employee of the Company regarding the business,
operations, prospects or finances of the Company or the employment of any such
officer, director or employee, except with the express written permission of the
Company. Unless otherwise agreed to by the Company in writing, all (i)
communications regarding any possible Transaction, (ii) requests for additional
information, (iii) requests for facility tours or management meetings, and (iv)
discussions or questions regarding procedures, will be submitted or directed to
Bear, Stearns & Co. Inc. ("Bear Stearns").
6. For a period of two years from the date of this Agreement, you and your
Representatives shall not, directly or indirectly, and you shall cause any
person or entity controlled by you not to, without the prior written consent of
the Board of Directors of the Company, (i) in any manner acquire, agree to
acquire or make any proposal to acquire, directly or indirectly, any securities
or property of the Company or any of its affiliates, (ii) propose to enter into,
directly or indirectly, any merger, consolidation, recapitalization, business
combination or other similar transaction involving the Company of any of its
<PAGE> 3
affiliates, (iii) make, or in any way participate in any "solicitation" of
"proxies" (as such terms are used in the proxy roles of the Securities and
Exchange Commission) to vote, or seek to advise or influence any person with
respect to the voting of any voting securities of the Company or any of its
affiliates, (iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the 1934 Act with respect to any voting
securities of the Company or any of its affiliates, (v) otherwise act, alone or
in concert with others, to seek to control or influence the management, Board of
Directors or policies of the Company, (vi) disclose any intention, plan or
arrangement inconsistent with the foregoing, or (vii) advise, assist or
encourage any other persons in connection with any of the foregoing. You also
agree during such period not to (x) request the Company (or its
Representatives), directly or indirectly, to amend or waive any provision of
this paragraph (including this sentence), (y) take any action which might
require the Company or any of its affiliates to make a public announcement
regarding this Agreement or the possibility of a merger, consolidation, business
combination or other similar transaction, including without limitation, the
Transaction, or (z) communicate with the Company's shareholders regarding the
subject matter of this Agreement.
7. In addition, you hereby acknowledge that you are aware, and that you
will advise your Representatives who receive the Evaluation Material, that the
United States securities laws prohibit any person who has material, non-public
information concerning the matters which are the subject of this Agreement from
purchasing or selling securities of the Company (and options, warrants and
rights relating thereto) from communicating such information to any other person
under circumstances in which it is reasonably foreseeable that such person,
including, without limitation any of your Representatives) is likely to purchase
or sell such securities.
8. You understand and acknowledge that neither the Company nor Bear Stearns
is making any representation or warranty, expressed or implied, as to the
accuracy or completeness of the Evaluation Material or any other information
provided to you by the Company or Bear Stearns. Neither the Company nor Bear
Stearns nor our respective affiliates or Representatives, nor any of our
respective officers, directors, employees, agents or controlling persons (within
the meaning of the 1934 Act) shall have any liability to you or any other person
(including, without limitation, any of your Representatives) resulting from your
use of the Evaluation Material.
9. You agree that unless and until a definitive agreement between the
Company and you with respect to any Transaction has been executed and delivered,
the Company will not be under any legal obligation of any kind whatsoever with
respect to such a Transaction by virtue of (i) this Agreement or (ii) any
written or oral expression with respect to such a Transaction by any of the
Company's directors, officers, employees, agents, advisers or representatives
except, in the case of this letter, for the matters specifically agreed to
herein.
10. You agree that the Company has not granted you any license, copyright,
or similar right with respect to any of the Evaluation Material or any other
information provided to you by the Company or Bear Stearns.
<PAGE> 4
11. If you determine that you do not wish to proceed with a Transaction,
you will promptly advise the Company and Bear Stearns in writing of that
decision. In this case, or in the event that (i) a Transaction is not
consummated by you or (ii) at any time, the Company requests, you will promptly
destroy or deliver to us all of the Evaluation Material, including all copies,
reproductions, summaries, analyses, or extracts thereof or based thereon in your
possession or in the possession of any of your Representatives.
12. You hereby agree to indemnify and hold harmless the Company from any
damage, loss, cost or liability (including legal fees and the cost of enforcing
this indemnity) arising out of or resulting from any unauthorized use or
disclosure by you or your Representatives of the Evaluation Material. You also
acknowledge that money damages would be both incalculable and an insufficient
remedy for any breach of this Agreement by you or your Representatives and that
any such breach would cause the Company irreparable harm. Accordingly, without
prejudice to the rights and remedies otherwise available to the Company, the
Company shall be entitled to equitable relief by way of injunction if you or any
of your Representatives breach or threaten to breach any of the provisions of
this Agreement. You agree to waive, and to cause your Representatives to waive,
any requirement for the securing or posting of any bond in connection with such
remedy.
13. The validity and interpretation of this Agreement shall be governed by,
and construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be fully performed therein (excluding the
conflicts of laws rules). You irrevocably submit to the jurisdiction of any
court of the State of New York or the United States District Court for the
Southern District of the State of New York for the purpose of any suit, action,
or other proceeding arising out of this Agreement, or any of the agreements or
transactions contemplated hereby, which is brought by or against you and (i)
hereby irrevocably agree that all claims in respect of any such suit, action or
proceeding may be heard and determined in any such court, (ii) to the extent
that you have acquired, or hereafter may acquire, any immunity from jurisdiction
of any such court or from any legal process therein, you hereby waive, to the
fullest extent permitted by law, such immunity and (iii) agree not to commence
any action, suit or proceeding relating to this Agreement or any Transaction
except in such court. You hereby waive, and agree not to assert in any such
suit, action or proceeding, in each case, to the fullest extent permitted by
applicable law, any claim that (a) you are not personally subject to the
jurisdiction of any such court, (b) you are immune from any legal process
(whether through service or notice, attachment prior to judgment attachment in
aid of execution, execution or otherwise) with respect to you or your property
or (c) any such suit, action or proceeding is brought in an inconvenient forum.
14. The benefits of this Agreement shall inure to the respective successors
and assigns of the parties hereto and of the indemnified parties hereunder and
their successors and assigns and representatives, and the obligations and
liabilities assumed in this Agreement by the parties hereto shall be binding
upon the parties and their respective successors and assigns and
representatives.
<PAGE> 5
15. If it is found in a final judgment by a court of competent jurisdiction
(not subject to further appeal) that any term or provision hereof is invalid or
unenforceable, (i) the remaining terms and provision hereof shall be unimpaired
and shall remain in full force and effect and (ii) the invalid or unenforceable
provision or term shall be replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of such invalid
or unenforceable term or provision.
16. This Agreement embodies the entire agreement and understanding of the
parties hereto and supersedes any and all prior agreements, arrangements and
understandings relating to the matters provided for herein. No alteration,
waiver, amendment, change or supplement hereto shall be binding or effective
unless the same is set forth in writing signed by a duly authorized
representative of each party and may be modified or waived only by a separate
letter executed by the Company and you expressly so modifying or waiving such
Agreement.
17. For the convenience of the parties, any number of counterparts of this
Agreement may be executed by the parties hereto. Each such counterpart shall be,
and shall be deemed to be, an original instrument, but all such counterparts
taken together shall constitute one and the same Agreement.
This Agreement is being delivered to you in duplicate. Kindly execute and
return one copy of this letter which will constitute our Agreement with respect
to the subject matter of this letter.
Very truly yours,
BEARS, STEARNS & CO. INC.
for itself and on behalf of
Ply Gem Industries, Inc.
By: /s/ Robert J. Bicknese
----------------------------------
Managing Director
Confirmed and Agreed to
this 27th day of September 1995
Nortek Inc.
/s/ Kevin W. Donnelly
By: ________________________
An authorized officer
Name: Kevin W. Dennessy
Title: Vice President
Date: 9/27/95
<PAGE> 6
June 18, 1997
Nortek, Inc.
50 Kennedy Plaza
Providence, RI 02903
Attention: Mr. Richard L. Bready
- ---------
Dear Sirs:
We are in receipt of your proposal letter and draft Merger Agreement
dated June 17, 1997 with respect to a possible acquisition of Ply Gem
Industries, Inc. (the "Company") by Nortek, Inc. ("Nortek"). In connection with
these documents, we draw your attention to paragraph 6 of the Confidentiality
Agreement (the "Agreement") entered into by Nortek, the Company and Bear
Stearns & Co. Inc. dated September 27, 1995 which states in reference to Nortek
that, "For a period of two years from the date of this Agreement, you and your
Representatives shall not...without the written consent of the Board of
Directors of the Company...make any proposal to acquire...any securities or
property of the Company or any of its affiliates..." Pursuant to the foregoing
provision, your current proposal, which has not been approved by the Board of
Directors (the "Board") of the Company, is in violation of the Agreement. You
have advised us that you had not been able to locate the Agreement and believed
that the relevant provision had expired and therefore that you were not aware
of its violation in making your proposal.
Please countersign a copy of this letter to confirm your agreement
that(a) paragraph 6 of the Agreement shall remain in effect for a period of one
year from the date hereof, (b) the Company's execution of this letter agreement
so extending such period, as well as any decision by the Board to review your
proposal letter or any discussions by the Company or its representatives with
respect thereto, shall not constitute a waiver of any of the rights of the
Company under the Agreement, and (c) any further proposal by you, including any
amendment to the current proposal, will not be made except with the written
consent of the Board in compliance with the provisions of the Agreement.
Sincerely,
PLY GEM INDUSTRIES, INC.
By: /s/ Jeffrey S. Silverman
---------------------------------
Jeffrey S. Silverman
Accepted and Agreed:
NORTEK, INC.
By: /s/ Kevin W. Donnelly
------------------------
Vice President
<PAGE> 7
June 23, 1997
Via Facsimile
- -------------
Nortek, Inc.
50 Kennedy Plaza
Providence, RI 02903
Attention: Mr. Richard L. Bready
- ---------
Dear Sirs:
We are returning to you for your records a copy of the letter dated June
18, 1997 from Ply Gem Industries, Inc. (the "Company") to Nortek, Inc.
("Nortek"), signed by the Company, relating to, and extending certain provisions
of, the Confidentiality Agreement (the "Agreement") entered into by Nortek, the
Company and Bear Stearns & Co. Inc. dated September 27, 1995.
We are also writing to inform you that the Board of Directors of the
Company has authorized the Company to enter into a limited waiver, and the
Company hereby waives, pursuant to paragraph 16 of the Agreement, the provisions
of paragraph 6 of the Agreement solely during the effective period of this
waiver and solely for the purpose and to the extent of permitting Nortek,
notwithstanding the provisions of paragraph 6, to make one or more proposals to
the Board of Directors of the Company to acquire the entire equity interest in
the Company pursuant to a merger, consolidation or other business combination or
similar transaction involving the Company.
This waiver shall be effective from the date hereof until such time as the
Company shall notify Nortek in writing that it has terminated this waiver,
whereupon the provisions of paragraph 6 of the Agreement shall once again be in
full force and effect.
Sincerely,
PLY GEM INDUSTRIES, INC.
By: /s/ Jeffrey S. Silverman
------------------------
Jeffrey S. Silverman
cc: David Chapin, Esq.
<PAGE> 8
PLY GEM INDUSTRIES, INC.
July 17, 1997
Nortek, Inc.
50 Kennedy Plaza
Providence, RI 02903
Dear Sirs:
Reference is made to the confidentiality agreement between you and Bear
Stearns & Co., Inc. for itself and on our behalf, as heretofore amended and
modified (the "Confidentiality Agreement"). This is to confirm that the
Confidentiality Agreement is hereby amended to provide that the term
"Representatives" as used therein shall include "bona fide potential financing
sources." In all other respects the Confidentiality Agreement shall remain in
full force and effect.
Please execute and return a copy of this letter to confirm your agreement
to the foregoing.
PLY GEM INDUSTRIES, INC.
/s/ Jeffrey S. Silverman
By: _____________________________
Title: Chairman
Accepted and Agreed as of
the date first above written:
NORTEK, INC.
/s/ Kevin W. Donnelly
By: ________________________
Title: Vice President
<PAGE> 1
Exhibit (c)(3)
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
dated as of July 24, 1997
among
PLY GEM INDUSTRIES, INC.
(the "Company"),
and
NORTEK, INC.
(the "Investor")
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINED TERMS; RULES OF CONSTRUCTION.................................1
1.1. DEFINED TERMS...............................................1
1.2. RULES OF CONSTRUCTION.......................................3
ARTICLE II
PURCHASE AND SALE OF SHARES..........................................3
2.1. CLOSING.....................................................3
2.2. USE OF PROCEEDS.............................................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.......................4
4.1. INVESTMENT REPRESENTATIONS..................................4
4.2. OTHER REPRESENTATIONS AND WARRANTIES........................5
ARTICLE V
COMPANY DELIVERIES AT THE CLOSING....................................5
5.1. SUPPORTING DOCUMENTS........................................5
5.2. REGISTRATION RIGHTS AGREEMENT...............................6
ARTICLE VI
MISCELLANEOUS........................................................6
6.1. FEES........................................................6
6.2. FURTHER ASSURANCES..........................................7
6.3. SUCCESSORS AND ASSIGNS......................................7
6.4. ENTIRE AGREEMENT............................................7
6.5. NOTICES.....................................................7
6.6. AMENDMENTS, MODIFICATIONS AND WAIVERS.......................8
6.7. GOVERNING LAW...............................................8
6.8. COUNTERPARTS; FACSIMILE SIGNATURES..........................9
<PAGE> 3
STOCK PURCHASE AGREEMENT dated as of July 24, 1997, among PLY GEM
INDUSTRIES, INC., a Delaware corporation (the "COMPANY") and NORTEK, INC., a
Delaware corporation (the "INVESTOR").
The Company desires to obtain equity financing, and the Investor is
willing to purchase certain shares of the Company's common stock in connection
therewith, all on the terms and subject to the conditions set forth herein.
ACCORDINGLY, in consideration of the foregoing and the covenants,
agreements, representations and warranties contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, the parties hereto hereby agree as follows:
ARTICLE I
DEFINED TERMS; RULES OF CONSTRUCTION
1.1. DEFINED TERMS.
Capitalized terms used and not otherwise defined in this Agreement have
the meanings ascribed to them below or in the other locations of this Agreement
specified below:
"ATRIUM AGREEMENT" means the Agreement and Plan of Merger dated as of
June 24, 1997 among Atrium Acquisition Holding Corp., Atrium/PG Acquisition
Corp. and the Company, and, solely for the purposes of Section 4.3 and Articles
9 and 10, Atrium Corporation, a Delaware corporation and the sole stockholder of
Atrium Acquisition Holding Corp.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, legal
holiday or other day on which banks are required to be closed in New York, New
York.
"BY-LAWS" means the by-laws of the Company, as amended and in effect at
the time in question.
"CERTIFICATE OF INCORPORATION" means the certificate of incorporation
of the Company as amended and restated and in effect at the time in question.
"CLOSING" has the meaning given to it in Section 2.1(b).
"CLOSING Date" has the meaning given to it in Section 2.1(b).
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMMON STOCK" means the common stock, $0.25 par value, of the Company.
<PAGE> 4
"COMPANY" has the meaning given to it in the preamble to this
Agreement.
"DOCUMENTS" means this Agreement and the Registration Rights Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar Federal Statute then in force, and the rules and regulations
promulgated thereunder, all as the same may from time to time be in effect.
"INVESTOR" has the meaning given to it in the preamble to this
Agreement.
"MERGER AGREEMENT" means the Agreement and Plan of Merger dated the
date hereof by and among the Investor, NTK and the Company.
"NON-COMPETE AND TERMINATION AGREEMENT" means the Non-Compete and
Termination Agreement among the Investor, the Company and Jeffrey S. Silverman
substantially in the form of Exhibit C to the Merger Agreement.
"NTK" means NTK Sub, Inc., a Delaware corporation and a wholly owned
subsidiary of the Investor.
"OPTION SURRENDER AGREEMENT, RELEASE AND WAIVER" means the Option
Surrender Agreement, Release and Waiver between the Company and certain
beneficial and record holders of options or unvested stock substantially in the
form of Exhibit B to the Merger Agreement.
"PERSON" shall be construed as broadly as possible and shall include an
individual or natural person, a partnership (including a limited liability
partnership), a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a governmental authority.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
to be entered into among the Company and the Investor substantially in the form
attached hereto as Exhibit A.
"SECURITIES" means, with respect to any Person, such Person's
"securities" as defined in Section 2(1) of the Securities Act of 1933, as
amended, and includes such Person's capital stock or other equity interests or
any options, warrants or other securities or rights that are directly or
indirectly convertible into, or exercisable or exchangeable for, such Person's
capital stock or other equity interests.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same may from time to time be in effect.
"SHARES" has the meaning given to it in Section 2.1(a).
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<PAGE> 5
"TERMINATION AND RELEASE AGREEMENT" means the Termination and Release
Agreement among the Investor, Herbert P. Dooskin and the Company substantially
in the form of Exhibit D to the Merger Agreement.
1.2. Rules of Construction.
---------------------
The term "this Agreement" means this agreement together with all
schedules and exhibits attached hereto, as the same may from time to time be
amended, modified, supplemented or restated in accordance with the terms hereof.
The use in this Agreement of the term "including" means "including, without
limitation." The words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole, including the schedules and
exhibits, as the same may from time to time be amended, modified, supplemented
or restated, and not to any particular section, subsection, paragraph,
subparagraph or clause contained in this Agreement. All references to sections,
schedules and exhibits mean the sections of this Agreement and the schedules and
exhibits attached to this Agreement, except where otherwise stated. The title of
and the section and paragraph headings in this Agreement are for convenience of
reference only and shall not govern or affect the interpretation of any of the
terms or provisions of this Agreement. The use herein of the masculine, feminine
or neuter forms shall also denote the other forms, as in each case the context
may require or permit. Where specific language is used to clarify by example a
general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement has been
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1. Closing.
-------
(a) At the Closing (as defined below), subject to the satisfaction or
waiver of the conditions in Articles V, (i) the Company shall issue and sell to
the Investor, and the Investor shall purchase from the Company, 640,000 shares
of Common Stock at a per share purchase price equal to $18.75 (or the aggregate
purchase price of $12,000,000 for all 640,000 shares (collectively, the
"SHARES") to be sold to the Investor at the Closing).
(b) The closing (the "CLOSING") hereunder with respect to the issuance
and sale of the Shares and the consummation of the related transactions
contemplated hereby shall take place on the date hereof (such date being called
the "CLOSING DATE" herein) at the offices of Cleary, Gottlieb, Steen & Hamilton,
New York, New York, or such other location agreed upon by the Company and the
Investor. At the Closing, the Company shall deliver to the Investor one or more
certificates representing the Shares being purchased by the Investor at the
Closing, registered in the name of the Investor, against receipt by the Company
of the aggregate purchase
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<PAGE> 6
price therefor, payable in its entirety by wire transfer of immediately
available funds to an account specified in writing by the Company at least one
Business Day prior to the Closing Date.
2.2. Use of Proceeds.
---------------
The proceeds received by the Company from the sale of the Shares shall
be used first by the Company to satisfy its obligations to Atrium Acquisition
Holding Corp. under Section 6.4(b) of the Atrium Agreement and, if there remain
any proceeds after such obligations are fully satisfied, for general corporate
purposes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The representations and warranties of the Company contained in the
Merger Agreement are incorporated into this Agreement by reference. The Company
represents and warrants to the Investor that each of the representations and
warranties of the Company contained in the Merger Agreement are true, correct
and complete on and as of the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
4.1. Investment Representations.
--------------------------
(a) The Investor is acquiring the Shares to be purchased by the
Investor hereunder for its own account, for investment and not with a view to
the distribution thereof in violation of the Securities Act or applicable state
securities laws.
(b) The Investor understands that (i) the Shares have not been
registered under the Securities Act or applicable state securities laws by
reason of their issuance by the Company in a transaction exempt from the
registration requirements of the Securities Act and applicable state securities
laws and (ii) the Shares must be held by the Investor indefinitely unless a
subsequent disposition thereof is registered under the Securities Act and
applicable state securities laws or is exempt from registration.
(c) The Investor further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to the
Investor) promulgated under the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 may only afford the basis
for sales of Securities acquired hereunder only in limited amounts.
(d) The Investor is an "accredited investor" (as defined in Rule 501(a)
of Regulation D promulgated under the Securities Act). The Company has made
available to the Investor or its representatives all agreements, documents,
records and books that the Investor has requested relating to an investment in
the Securities which may be acquired by the Investor hereunder. The
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<PAGE> 7
Investor has had an opportunity to ask questions of, and receive answers from, a
person or persons acting on behalf of the Company, concerning the terms and
conditions of this investment, and answers have been provided to all of such
questions to the full satisfaction of the Investor. The Investor has such
knowledge and experience in financial and business matters that it is capable of
evaluating the risks and merits of this investment.
4.2. Other Representations and Warranties.
------------------------------------
The representations and warranties of the Investor and NTK contained in
the Merger Agreement are incorporated into this Agreement by reference. The
Investor and NTK represent and warrant to the Company that each of the
representations and warranties of the Investor and NTK contained in the Merger
Agreement are true, correct and complete on and as of the Closing Date.
ARTICLE V
COMPANY DELIVERIES AT THE CLOSING
The Investor's obligation to purchase the Shares is subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions, unless expressly waived by the Investor at or prior to Closing:
5.1. Supporting Documents.
--------------------
The Investor shall have received copies of the following supporting
documents (in form and substance satisfactory to the Investor):
(a) certificates of the Secretary of State of the State of
Delaware, dated as of a recent date as to the due incorporation or formation and
good standing of the Company and listing all documents of the Company on file
with said Secretary;
(b) a telegram, telex or other acceptable method of confirmation
from said Secretary as of the close of business on the next Business Day
preceding the Closing Date as to the continued good standing of the Company;
(c) a certificate of the Secretary or an Assistant Secretary of
the Company, dated as of the Closing Date and certifying:
(i) that attached thereto is a true, correct and complete copy
of the Certificate of Incorporation of the Company as in effect on and
as of the Closing Date (which shall be in form and substance
satisfactory to the Investor) and that no action has been taken or is
proposed to be taken by or on the part of the Company to amend or
modify the same in any respect or to liquidate, dissolve or wind up the
affairs of the Company;
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<PAGE> 8
(ii) that attached thereto is a true, correct and complete
copy of the By-laws of the Company as in effect on and as of the
Closing Date (which shall be in form and substance satisfactory to the
Investor) and that no action has been taken or is proposed to be taken
by or on the part of the Company to amend or modify the same in any
respect;
(iii) that attached thereto are true, correct and complete
copies of all resolutions adopted by the Board of Directors (and any
committees thereof) and the stockholders of the Company authorizing the
execution, delivery and performance of the Documents to which the
Company is or will be a party and the issuance, sale, and delivery of
the Shares (which resolutions shall be in form and substance
satisfactory to the Investor), and that all such resolutions are still
in full force and effect and that no action has been taken or is
proposed to be taken by or on the part of the Company to amend, modify
or rescind the same in any respect; and
(iv) the incumbency and specimen signature of all officers
of the Company executing the Documents, the stock certificates
representing the Shares and any certificate or instrument furnished
pursuant hereto, and a certification by another officer of the Company
as to the incumbency and signature of the officer signing the
certificate referred to in this clause (iv); and
(d) such additional supporting documents as the Investor may
reasonably request.
5.2. Registration Rights Agreement.
-----------------------------
The Company shall have executed and delivered the Registration Rights
Agreement in substantially the form of Exhibit A hereto.
ARTICLE VI
MISCELLANEOUS
6.1. Fees.
----
(a) Each party hereto shall bear all fees, costs and expenses
incurred by it in connection with the preparation, execution and performance of
the Documents, except as otherwise expressly provided herein.
(b) The Company agrees that it will pay, and will save the
Investor harmless from, any and all liability with respect to any stamp or
similar taxes which may be determined to be payable in connection with the
execution and delivery and performance of the Documents or any modification,
amendment or alteration of the terms or provisions of the Documents, and that it
will similarly pay and hold the Investor harmless from all issue taxes in
respect of the issuance of the Shares to the Investor.
-6-
<PAGE> 9
6.2. Further Assurances.
------------------
The Company shall duly execute and deliver, or cause to be duly
executed and delivered, at its own cost and expense, such further instruments
and documents and to take all such action, in each case as may be necessary or
proper in the reasonable judgment of the Investor to carry out the provisions
and purposes of the Agreement and the other Documents.
6.3. Successors and Assigns.
----------------------
This Agreement shall bind and inure to the benefit of the Company and
the Investor and their respective successors, assigns, heirs and personal
representatives.
6.4. Entire Agreement.
----------------
This Agreement and the other writings referred to herein or delivered
pursuant hereto which form a part hereof contain the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous arrangements or understandings with respect thereto.
6.5. Notices.
-------
All notices and other communications delivered hereunder (whether or
not required to be delivered hereunder) shall be deemed to be sufficient and
duly given if contained in a written instrument (a) personally delivered, (b)
sent by telecopier, (c) sent by nationally-recognized overnight courier
guaranteeing next Business Day delivery or (d) sent by first class registered or
certified mail, postage prepaid, return receipt requested, in each case
addressed as follows:
(i) if to the Company, to:
Ply Gem Industries, Inc.
777 Third Avenue
New York, NY 10017
Telephone: (212) 832-1550
Telecopier: (212) 888-0472
Attention: Jeffrey S. Silverman
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Telephone: (212) 225-2000
Telecopier: (212) 225-3999
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<PAGE> 10
Attention: Victor I. Lewkow, Esq.
(ii) if to the Investor, to:
Nortek, Inc.
50 Kennedy Plaza
Providence, RI 02903
Telephone: (401) 751-1600
Telecopier: (401) 751-4610
Attention: Richard L. Bready
with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Telephone: (617) 951-7000
Telecopier: (617) 951-7050
Attention: David C. Chapin, Esq.
or to such other address as the party to whom such notice or other communication
is to be given may have furnished to each other party in writing in accordance
herewith. Any such notice or communication shall be deemed to have been received
(i) when delivered, if personally delivered, (ii) when sent, if sent by telecopy
on a Business Day (or, if not sent on a Business Day, on the next Business Day
after the date sent by telecopy), (iii) on the next Business Day after dispatch,
if sent by nationally recognized, overnight courier guaranteeing next Business
Day delivery, and (iv) on the fifth Business Day following the date on which the
piece of mail containing such communication is posted, if sent by mail.
6.6. Amendments, Modifications and Waivers.
-------------------------------------
The terms and provisions of this Agreement may not be modified or
amended, nor may any of the provisions hereof be waived, temporarily or
permanently, except pursuant to a written instrument executed by the Company and
the Investor.
6.7. Governing Law.
-------------
All questions concerning the construction, interpretation and validity
of this Agreement shall be governed by and construed and enforced in accordance
with the domestic laws of the State of Delaware, without giving effect to any
choice or conflict of law provision or rule (whether in the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware. In furtherance of the foregoing,
the internal law of the State of Delaware will control the interpretation and
construction of this
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<PAGE> 11
Agreement, even if under such jurisdiction's choice of law or conflict of law
analysis, the substantive law of some other jurisdiction would ordinarily or
necessarily apply.
6.8. Counterparts; Facsimile Signatures.
----------------------------------
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable an binding.
* * * *
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Purchase Agreement in one or more counterparts as of the date first above
written.
PLY GEM INDUSTRIES, INC.
By: /s/ Jeffrey S. Silverman
-----------------------------------------
Name: Jeffrey S. Silverman
Title: Chairman
NORTEK, INC.
By: /s/ Kevin W. Donnelly
-----------------------------------------
Name: Kevin W. Donnelly
Title: Vice President and General Counsel
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<PAGE> 1
Exhibit (c)(4)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of July 24, 1997, between PLY
GEM INDUSTRIES, INC., a Delaware corporation (the "Company"), and NORTEK, INC.,
a Delaware corporation (the "Investor").
The Investor owns 640,000 shares of common stock, $0.25 par value per
share (the "Common Stock"), of the Company pursuant to the Stock Purchase
Agreement dated July 24, 1997 between the Company and the Investor. The Company
and the Investor deem it to be in their respective best interests to set forth
the rights of the Investor in connection with public offerings and sales of the
capital stock of the Company.
ACCORDINGLY, in consideration of the premises and mutual
covenants and obligations hereinafter set forth, the Company and the Investor
hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:
"COMMISSION" shall mean the Securities and Exchange Commission
or any other governmental authority at the time administering the Securities
Act.
"COMMON STOCK" shall have the meaning given to it in the
preamble to this agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934
or any successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
"INFORMATION" shall have the meaning given to it in
Section 5(i).
"INSPECTORS" shall have the meaning given to it in
Section 5(i).
"INVESTOR" shall have the meaning given to it in the preamble
to this agreement, and includes any successor to, or assignee or transferee of
the Investor who or which agrees in writing to be treated as an Investor
hereunder and to be bound by and comply with all of the applicable terms and
provisions hereof.
"MATERIAL TRANSACTION" means any material transaction in which
the Company or any of its subsidiaries proposes to engage or is engaged,
including a purchase or sale of assets or securities, financing, merger,
consolidation, tender offer or any other transactions that would
<PAGE> 2
require disclosure pursuant to the Exchange Act, and with respect to which the
Board of Directors of the Company reasonably has determined in good faith that
compliance with this Agreement may reasonably be expected to either materially
interfere with the Company's or such subsidiary's ability to consummate such
transaction in a timely fashion or require the Company to disclose material,
non-public information prior to such time as it would otherwise be required to
be disclosed.
"MERGER AGREEMENT" means the Agreement and Plan of Merger
dated the date hereof among the Investor, NTK Sub, Inc., a Delaware corporation
and a wholly owned subsidiary of the Investor, and the Company.
"NASD" shall have the meaning given to it in Section 5(n).
"OTHER SHARES" shall mean at any time those shares of Common
Stock which do not constitute Primary Shares or Registrable Shares.
"PERSON" shall be construed as broadly as possible and shall
include an individual or natural person, a partnership (including a limited
liability partnership), a corporation, an association, a joint stock company, a
limited liability company, a trust, a joint venture, an unincorporated
organization and a governmental authority.
"PRIMARY SHARES" shall mean at any time the authorized but
unissued shares of Common Stock or shares of Common Stock held by the Company in
its treasury.
"RECORDS" shall have the meaning given to it in Section 5(i).
"REGISTRABLE SHARES" shall mean, at any time, with respect to
the Investor, the shares of Common Stock held by the Investor which constitute
Restricted Shares. As to any particular Registrable Shares, once issued, such
Registrable Shares shall cease to be Registrable Shares when (A) they have been
registered under the Securities Act, the Registration Statement in connection
therewith has been declared effective and they have been disposed of pursuant to
and in the manner described in such effective Registration Statement, (B) they
(1) are sold or distributed pursuant to Rule 144 or (2) may be sold or
distributed by the holder thereof under Rule 144(k), (C) they have been
otherwise transferred and new certificates or other evidences of ownership for
them not bearing a restrictive legend and not subject to any stop transfer order
or other restriction on transfer shall have been delivered by the Corporation or
the issuer of other securities issued in exchange for the Registrable Shares, or
(D) they have ceased to be outstanding.
"RESTRICTED SECURITIES" shall mean, at any time and with
respect to the Investor, the Restricted Shares and any securities received on or
with respect to any Restricted Shares, which are held by the Investor and which
theretofore have not been sold to the public pursuant to a registration
statement under the Securities Act or pursuant to Rule 144.
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<PAGE> 3
"RESTRICTED SHARES" shall mean, at any time and with respect
to the Investor, the shares of Common Stock and any other securities which by
their terms are exercisable or exchangeable for or convertible into Common
Stock, and any securities received on or with respect to any such Common Stock,
acquired by the Investor pursuant to this Agreement and which theretofore have
not been sold to the public pursuant to a registration statement under the
Securities Act or pursuant to Rule 144 or may be sold under Rule 144(k).
"RULE 144" shall mean Rule 144 promulgated under the
Securities Act or any successor rule thereto or any complementary rule thereto
(such as Rule 144A).
"SECURITIES ACT" shall mean the Securities Act of 1933 or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"SELLING INVESTOR'S COUNSEL" shall have the meaning given to
it in Section 5(b).
SECTION 2. DEMAND REGISTRATION.
(a) If, following the earlier of (i) the
consummation of a merger, consolidation, tender offer, sale of assets
or other disposition of the Company other than pursuant to the Merger
Agreement, and (ii) ninety (90) days after the termination of the
Merger Agreement or the failure to consummate the transactions
contemplated thereby regardless of the reasons therefore, the Company
shall be requested by the Investor to effect the registration under the
Securities Act of Registrable Shares, then, upon the written request,
delivered to the Company (which request shall specify the number of
Registrable Shares proposed to be included in such registration), the
Company shall, subject to Section 2(c) below, promptly use its best
efforts to effect such registration under the Securities Act of the
Registrable Shares which the Company has been so requested to register.
(b) Anything contained in Section 2(a) to the
contrary notwithstanding, the Company shall not be obligated to effect
pursuant to Section 2(a) any registration under the Securities Act
except in accordance with the following provisions:
(i) the Company shall not be obligated to
use its best efforts to file and cause to become effective (A)
more than two registration statements initiated pursuant to
Section 2(a), or (B) any registration statement during any
period in which any other registration statement (other than
on Form S-4 or Form S-8 promulgated under the Securities Act
or any successor forms thereto) pursuant to which Primary
Shares are to be or were sold has been filed and not withdrawn
or has been declared effective within the prior 90 days;
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<PAGE> 4
(ii) the Company may delay the filing or
effectiveness of any registration statement for a period of up
to 90 days after the date of a request for registration
pursuant to Section 2(a) if at the time of such request (A)
the Company is engaged, or has bona fide plans to file within
60 days of the time of such request, a registration statement
in respect of a firm commitment underwritten public offering
of Primary Shares in which the holders of Restricted Shares
may include Registrable Shares pursuant to Section 3 or (B) a
Material Transaction exists at such time, provided that the
company may only so delay the filing or effectiveness of a
particular Registration Statement once pursuant to clause (A)
above and once pursuant to this clause (B) in any 18-month
period; and
(iii) with respect to any registration
pursuant to Section 2(a), the Company may include in such
registration any Primary Shares or Other Shares; PROVIDED,
HOWEVER, that if the managing underwriter advises the Company
that the inclusion of all Registrable Shares, Primary Shares
and Other Shares proposed to be included in such registration
would interfere with the successful marketing (including
pricing) of all such securities, then the number of
Registrable Shares, Primary Shares and Other Shares proposed
to be included in such registration shall be included in the
following order:
(A) first, the Registrable Shares
held by the Investor requesting that its Registrable
Shares be included in such registration pursuant to
Section 2(a);
(B) second, the Primary Shares; and
(C) third, the Other Shares.
A requested registration under this Section 2 may be rescinded prior to such
registration being declared effective by the Commission by written notice to the
Company from the Investor; PROVIDED, HOWEVER, that such rescinded registration
shall not count as a registration statement initiated pursuant to this Section 2
for purposes of clause (i) above if the Company shall have been reimbursed for
all out-of-pocket expenses incurred by the Company in connection with such
rescinded registration and provided further that no request to register
Registrable Securities may be made pursuant to this Section 2(a) for a period of
180 days from the date of such recession.
SECTION 3. PIGGYBACK REGISTRATION. If at any time following
the date hereof, the Company at any time proposes for any reason to register
Primary Shares or Other Shares under the Securities Act (other than on Form S-4
or Form S-8 promulgated under the Securities Act or any successor forms thereto
and other than pursuant to a registration statement covered by Rule 462
promulgated under the Securities Act), it shall promptly give written notice to
the
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<PAGE> 5
Investor of its intention so to register the Primary Shares or Other Shares and,
upon the written request, given within 20 days after delivery of any such notice
by the Company, of the Investor to include in such registration Registrable
Shares (which request shall specify the number of Registrable Shares proposed to
be included in such registration), the Company shall use its best efforts to
cause all such Registrable Shares to be included in such registration on the
same terms and conditions as the securities otherwise being sold in such
registration; PROVIDED, HOWEVER, that if the managing underwriter advises the
Company that the inclusion of all Registrable Shares or Other Shares proposed to
be included in such registration would interfere with the successful marketing
(including pricing) of Primary Shares proposed to be registered by the Company,
then the number of Primary Shares, Registrable Shares and Other Shares proposed
to be included in such registration shall be included in the following order:
(a) first, the Primary Shares;
(b) second, the Registrable Shares held by the
Investor; and
(c) third, the Other Shares.
SECTION 4. HOLDBACK AGREEMENT. If the Company at any time
shall register shares of Common Stock under the Securities Act (including any
registration pursuant to Section 2) for sale to the public, the Investor shall
not sell, make any short sale of, grant any option for the purchase of, seek
registration under the Securities Act of, or otherwise dispose of any Restricted
Shares (other than those shares of Common Stock included in such registration
pursuant to Section 2 or 3) without the prior written consent of the Company for
a period designated by the Company in writing to the Investor, which period
cannot begin more than 10 days prior to the effectiveness of the registration
statement pursuant to which such public offering shall be made and cannot last
more than 180 days after the effective date of such registration statement and,
in any subsequent public offering, more than 120 days after the effective date
of such registration statement.
SECTION 5. PREPARATION AND FILING. If and whenever the Company
is under an obligation pursuant to the provisions of this Agreement to use its
best efforts to effect the registration of any Registrable Shares, the Company
shall, as expeditiously as practicable:
(a) use its best efforts to cause a registration
statement that registers such Registrable Shares to become and remain
effective for a period of 90 days or until all of such Registrable
Shares have been disposed of (if earlier);
(b) furnish, at least five business days before
filing a registration statement that registers such Registrable Shares,
a prospectus relating thereto or any amendments or supplements relating
to such a registration statement or prospectus, to one counsel selected
by the Investor (the "Selling Investor's Counsel"), copies of all such
documents proposed to be filed (it being understood that such
five-business-day period
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<PAGE> 6
need not apply to successive drafts of the same document proposed to be
filed so long as such successive drafts are supplied to such counsel in
advance of the proposed filing by a period of time that is customary
and reasonable under the circumstances);
(c) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective for at least a period of 90 days
or until all of such Registrable Shares have been disposed of (if
earlier) and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of such Registrable Shares,
provided that the Company may delay (and such period of delay shall
extend such 90-day period by the same duration) for up to 45 days the
effectiveness or filing of such registration statement, or elect not to
amend such registration statement or supplement the Prospectus used in
connection therewith so that sales may not be made thereon for up to 45
days (and such period of delay shall extend such 90-day period by the
same duration), if the making of disclosures required by such
registration statement would have a material adverse affect upon the
Company or its securities and such disclosures are not otherwise
required to be made;
(d) notify in writing the Selling Investor's Counsel
promptly (i) of any comments by the Commission with respect to such
registration statement or prospectus, or any request by the Commission
for the amending or supplementing thereof or for additional information
with respect thereto, (ii) of the issuance by the Commission of any
stop order suspending the effectiveness of such registration statement
or prospectus or any amendment or supplement thereto or the initiation
of any proceedings for that purpose and (iii) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of such Registrable Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purposes;
(e) use its best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
jurisdictions as any seller of Registrable Shares reasonably requests
and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller of Registrable Shares to
consummate the disposition in such jurisdictions of the Registrable
Shares owned by such seller; PROVIDED, HOWEVER, that the Company will
not be required to qualify generally to do business, subject itself to
general taxation or consent to general service of process in any
jurisdiction where it would not otherwise be required so to do but for
this paragraph (e);
(f) furnish to each seller of such Registrable Shares
such number of copies of a summary prospectus or other prospectus,
including a preliminary prospectus, in conformity with the requirements
of the Securities Act, and such other documents as such seller of
Registrable Shares may reasonably request in order to facilitate the
public sale or other disposition of such Registrable Shares;
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<PAGE> 7
(g) use its best efforts to cause such Registrable
Shares to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business
and operations of the Company to enable the seller or sellers thereof
to consummate the disposition of such Registrable Shares;
(h) notify on a timely basis each seller of such
Registrable Shares at any time when a prospectus relating to such
Registrable Shares is required to be delivered under the Securities Act
within the appropriate period mentioned in subparagraph (a) of this
Section 5, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing and, at the request of such seller, prepare and furnish to
such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the offerees of such shares, such prospectus shall not
include 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 not misleading in light of the circumstances then
existing;
(i) make available for inspection by any seller of
such Registrable Shares, any underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such seller or underwriter
(collectively, the "Inspectors"), all pertinent financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause
the Company's officers, directors and employees to supply all
information (together with the Records, the "Information") reasonably
requested by any such Inspector in connection with such registration
statement (and any of the Information which the Company determines in
good faith to be confidential, and of which determination the
Inspectors are so notified, shall not be disclosed by the Inspectors
unless (i) the disclosure of such Information is necessary to avoid or
correct a misstatement or omission in the registration statement, (ii)
the release of such Information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction or (iii) such
Information has been made generally available to the public, and (iv)
the seller of Registrable Shares agrees that it will, upon learning
that disclosure of such Information is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent
disclosure of the Information deemed confidential);
(j) use its best efforts to obtain, from its
independent certified public accountants, a "cold comfort" letter in
customary form and covering such matters of the type customarily
covered by cold comfort letters;
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<PAGE> 8
(k) use its best efforts to obtain, from its counsel,
an opinion or opinions in customary form;
(l) provide a transfer agent and registrar (which may
be the same entity and which may be the Company) for such Registrable
Shares;
(m) issue to any underwriter to which any seller of
Registrable Shares may sell shares in such offering, certificates
evidencing such Registrable Shares;
(n) list such Registrable Shares on any national
securities exchange on which any shares of the Common Stock are listed
or, if the Common Stock is not listed on a national securities
exchange, use its best efforts to qualify such Registrable Shares for
inclusion on the automated quotation system of the National Association
of Securities Dealers, Inc. (the "NASD") or such other national
securities exchange as the holders of a majority of such Registrable
Shares shall request;
(o) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its securityholders, as soon as reasonably practicable, earnings
statements which need not be audited covering a period of 12 months
beginning within three months after the effective date of the
registration statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act; and
(p) use its best efforts to take all other steps
necessary to effect the registration of such Registrable Shares
contemplated hereby.
Each holder of the Registrable Shares, upon receipt of any
notice from the Company of any event of the kind described in Section 5(h)
hereof, shall forthwith discontinue disposition of the Registrable Shares
pursuant to the registration statement covering such Registrable Shares until
such holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(h) hereof, and, if so directed by the Corporation,
such holder shall deliver to the Corporation all copies, other than permanent
file copies then in such holder's possession, of the most recent Prospectus
covering such Registrable Shares at the time of receipt of such notice.
SECTION 6. EXPENSES. All expenses incurred by the Company in
complying with Section 5, including, without limitation, all registration and
filing fees (including all expenses incident to filing with the NASD), fees and
expenses of complying with securities and blue sky laws, printing expenses, fees
and expenses of the Company's counsel and accountants and fees and expenses of
the Selling Investor's Counsel, shall be paid by the Company; PROVIDED, HOWEVER,
that all underwriting discounts and selling commissions applicable to the
Registrable
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<PAGE> 9
Shares shall not be borne by the Company but shall be borne by the seller or
sellers thereof, in proportion to the number of Registrable Shares sold by such
seller or sellers.
SECTION 7. INDEMNIFICATION.
(a) In connection with any registration of any
Registrable Shares under the Securities Act pursuant to this Agreement,
the Company shall indemnify and hold harmless the seller of such
Registrable Shares, each underwriter, broker or any other Person acting
on behalf of such seller and each other Person, if any, who controls
any of the foregoing Persons within the meaning of the Securities Act
against any losses, claims, damages or liabilities, joint or several,
to which any of the foregoing Persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the registration statement under which such Registrable
Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, any amendment or
supplement thereto or any document incident to registration or
qualification of any Registrable Shares, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any prospectus, necessary to
make the statements therein in light of the circumstances under which
they were made not misleading, or any violation by the Company of the
Securities Act or state securities or blue sky laws applicable to the
Company and relating to action or inaction required of the Company in
connection with such registration or qualification under such state
securities or blue sky laws; and shall reimburse such seller, such
underwriter, such broker or such other Person acting on behalf of such
seller and each such controlling Person for any legal or other expenses
reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in said registration statement,
preliminary prospectus, amendment, supplement or document incident to
registration or qualification of any Registrable Shares in reliance
upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller or
underwriter, or a Person duly acting on their behalf, specifically for
use in the preparation thereof.
(b) In connection with any registration of
Registrable Shares under the Securities Act pursuant to this Agreement,
each seller of Registrable Shares shall indemnify and hold harmless (in
the same manner and to the same extent as set forth in the preceding
paragraph of this Section 7) the Company, each director of the Company,
each officer of the Company, each underwriter, broker or other Person
acting on behalf of such seller, each Person who controls any of the
foregoing Persons within the meaning of
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<PAGE> 10
the Securities Act and each other seller of Registrable Shares under
such registration statement with respect to any statement or omission
from such registration statement, any preliminary prospectus or final
prospectus contained therein, any amendment or supplement thereto or
any document incident to registration or qualification of any
Registrable Shares, if such statement or omission was made in reliance
upon and in conformity with written information furnished to the
Company or such underwriter through an instrument duly executed by such
seller or a Person duly acting on their behalf specifically for use in
connection with the preparation of such registration statement,
preliminary prospectus, final prospectus, amendment or supplement;
provided, however, that the maximum amount of liability in respect of
such indemnification shall be, limited, in the case of each seller of
Registrable Shares, to an amount equal to the net proceeds actually
received by such seller from the sale of Registrable Shares effected
pursuant to such registration unless the Seller had actual knowledge
that the information furnished was materially inaccurate.
(c) Promptly after receipt by an indemnified party of
notice of the commencement of any action involving a claim referred to
in the preceding paragraphs of this Section 7, such indemnified party
will, if a claim in respect thereof is made against an indemnifying
party, give written notice to the latter of the commencement of such
action. In case any such action is brought against an indemnified
party, the indemnifying party will be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall not be
responsible for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof; provided,
however, that if any indemnified party shall have reasonably concluded
that there may be one or more legal or equitable defenses available to
such indemnified party which are additional to or conflict with those
available to the indemnifying party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the
indemnity agreement provided in this Section 7, the indemnifying party
shall not have the right to assume the defense of such action on behalf
of such indemnified party and such indemnifying party shall reimburse
such indemnified party and, any Person controlling such indemnified
party for that portion of the fees and expenses of any one counsel
retained by the indemnified party which are reasonably related to the
matters covered by the indemnity agreement provided in this Section 7.
(d) If the indemnification provided for in this
Section 8 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, claim,
damage or liability referred to herein, then the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall contribute
to the amounts paid or payable by such indemnified party as a result of
such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
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<PAGE> 11
the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim,
damage or liability as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
SECTION 8. UNDERWRITING AGREEMENT. Notwithstanding the
provisions of Sections 4, 5, 6 and 7, to the extent that the Investor selling
Registrable Shares in a proposed registration shall enter into an underwriting
or similar agreement, which agreement contains provisions covering one or more
issues addressed in such Sections, the provisions contained in such Sections
addressing such issue or issues shall be of no force or effect with respect to
such registration, but this provision shall not apply to the Company if the
Company is not a party to the underwriting or similar agreement.
SECTION 9. INFORMATION BY HOLDER. Each holder of Registrable
Shares to be included in any registration shall furnish to the Company and the
managing underwriter such written information regarding such holder and the
distribution proposed by such holder as the Company or the managing underwriter
may reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance referred to in
this Agreement.
SECTION 10. EXCHANGE ACT COMPLIANCE. The Company shall use its
reasonable efforts to comply with all of the reporting requirements of the
Exchange Act (whether or not it shall be required to do so) and shall use its
reasonable efforts to comply with all other public information reporting
requirements of the Commission which are conditions to the availability of Rule
144 for the sale of the Common Stock. The Company shall cooperate with the
Investor in supplying such information as may be necessary for the Investor to
complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of Rule 144.
SECTION 11. NO CONFLICT OF RIGHTS. The Company represents and
warrants to the Investor that the registration rights granted to the Investor
hereby do not conflict with any other registration rights granted by the
Company. The Company shall not, after the date hereof, grant any registration
rights which conflict with or impair, or have any priority over, the
registration rights granted hereby. In any Public Offering, the managing
underwriter shall be a nationally recognized investment banking firm selected by
the Company and reasonably acceptable to the Investor for so long as it holds
Registrable Shares.
SECTION 12. TERMINATION. This Agreement shall terminate and be
of no further force or effect when there shall not be any Restricted Shares;
PROVIDED, HOWEVER, that the
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<PAGE> 12
Investor's rights under Sections 2 and 3 hereof shall cease to be in effect at
any time when (i) the Registrable Shares held by the Investor may be sold by the
Investor under Rule 144 and such Registrable Shares constitute less than 1% of
the class of the Company's Securities to which the Registrable Shares are a part
or (ii) all of the Registrable Shares held by the Investor may be sold under
Rule 144(k).
SECTION 13. SUCCESSORS AND ASSIGNS. This Agreement shall bind
and inure to the benefit of the Company and the Investor and, subject to Section
14, their respective successors and assigns.
SECTION 14. ASSIGNMENT. The Investor may assign its rights
hereunder to any purchaser from the Investor of Restricted Shares; PROVIDED,
HOWEVER, that such purchaser shall, as a condition to the effectiveness of such
assignment, be required to execute a counterpart to this Agreement agreeing to
be treated as the Investor whereupon such purchaser shall have the benefits of,
and shall be subject to the restrictions contained in, this Agreement.
SECTION 15. ENTIRE AGREEMENT. This Agreement contains the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior arrangements or understandings with respect hereto.
SECTION 16. NOTICES. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument and shall be deemed to have been duly given
when delivered in Person, by telex, telegram or telecopy, by overnight courier,
or by first class registered or certified mail, postage prepaid, addressed to
such party at the address set forth below or such other address as may hereafter
be designated in writing by the addressee to the sender:
(i) if to the Company, to:
Ply Gem Industries, Inc.
777 Third Avenue
New York, NY 10017
Telephone: (212) 832-1550
Telecopier: (212) 888-0472
Attention: Jeffrey S. Silverman
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<PAGE> 13
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Telephone: (212) 225-2000
Telecopier: (212) 225-3999
Attention: Victor I. Lewkow, Esq.
(ii) if to the Investor, to:
Nortek, Inc.
50 Kennedy Plaza
Providence, RI 02903
Telephone: (401) 751-1600
Telecopier: (401) 751-4610
Attention: Richard L. Bready
with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110-2824
Telephone: (617)951-7000
Telecopier: (617) 951-7050
Attention: David C. Chapin, Esq.
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery, telex, telegram or
telecopy, on the date of such delivery, (b) in the, case of overnight courier,
on the next business day, and (c) in the case of mailing, on the third business
day following such mailing.
SECTION 17. MODIFICATIONS; AMENDMENTS; WAIVERS. The terms and
provisions of this Agreement may not be modified or amended, nor may any
provision applicable to the Investor be waived, except pursuant to a writing
signed by (i) the Company and (ii) the Investor.
SECTION 18. HEADINGS. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement.
SECTION 19. SEVERABILITY. It is the desire and intent of the
parties that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and
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<PAGE> 14
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any provision of this Agreement would be held in any
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 20. GOVERNING LAW. All questions concerning the
construction, interpretation and validity of this Agreement shall be governed by
and construed and enforced in accordance with the domestic laws of the State of
Delaware, without giving effect to any choice or conflict of law provision or
rule (whether in the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Delaware. In furtherance of the foregoing, the internal law of the State of
Delaware will control the interpretation and construction of this Agreement,
even if under such jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.
SECTION 21. LEGEND ON CERTIFICATES. Any certificate
representing securities subject to this Agreement shall bear a legend in
substantially the following form:
"The securities represented by this certificate are
subject to a Registration Rights Agreement dated as
of July 24, 1997, as amended from time to time. A
copy thereof is available for inspection from the
Company."
SECTION 22. COUNTERPARTS; VALIDITY. This Agreement may be
executed in any number of counterparts, and each such counterpart hereof shall
be deemed to be an original instrument, but all such counterparts together shall
constitute but one agreement and telecopied signatures are effective.
SECTION 23. ENTIRE AGREEMENT. This Agreement and the other
documents, certificates, instruments, writings and agreements referred to herein
or delivered pursuant hereto contain the entire understanding of the parties
with respect to the subject matter hereof and supersede in their entirety any
and all prior agreements and understandings between any of the parties hereto
all of which are hereby terminated in their entirety and of no further force or
effect.
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement on the date first written above.
PLY GEM INDUSTRIES, INC.
By: /s/ Jeffrey S. Silverman
-------------------------------------------
Name: Jeffrey S. Silverman
Title: Chairman
NORTEK, INC.
By: /s/ Kevin W. Donnelly
-------------------------------------------
Name: Kevin W. Donnelly
Title: Vice President and General Counsel
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<PAGE> 1
Exhibit (c)(5)
NON-COMPETE AND TERMINATION AGREEMENT
THIS NON-COMPETE AND TERMINATION AGREEMENT (this "Agreement"), dated as of
July 24, 1997, is made and entered into by Nortek, Inc., a Delaware corporation
("Parent"), Ply Gem Industries, Inc., a Delaware corporation (the "Company") and
Jeffrey S. Silverman (the "Executive").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, NTK Sub, Inc. ("Sub") and the
Company are entering into an Agreement and Plan of Merger (as such agreement may
hereafter be amended from time to time, the "Merger Agreement"; capitalized
terms used and not defined herein have the respective meanings ascribed to them
in the Merger Agreement), pursuant to which Sub will be merged with and into the
Company (the "Merger");
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that Executive agree, and Executive has agreed,
to enter into this Agreement;
WHEREAS, but for his obligations under this Agreement, subsequent to the
closing of the Merger, Executive would not otherwise be bound by any contractual
obligations restricting his ability to compete with the Company;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT AGREEMENT. Executive hereby represents and warrants that his
employment relationship with the Company is pursuant to and governed by the
Employment Agreement dated July 17, 1986, between Executive and the Company, as
amended on October 15, 1987; June 2, 1990; February 19, 1991; November 3, 1992;
December 23, 1992; December 31, 1994; June 10, 1995; August 1, 1995; April 30,
1996; December 27, 1996; and April 11, 1997, a true and correct copy of which
has been furnished to Parent (the "Employment Agreement").
2. TERMINATION OF EMPLOYMENT AGREEMENT. Effective as of the Effective Time
(a) Executive hereby tenders his resignation as an officer and director of the
Company and each of its Subsidiaries, and (b) the Employment Agreement shall be
terminated in full without any further action on the part of the Company or
Executive. Except as expressly provided in this Agreement (including the
exceptions set forth in Section 4(a)), from and after the date of termination of
the Employment Agreement, Executive shall not be entitled to receive any further
wages, compensation or benefits arising pursuant to the Employment Agreement or
his
<PAGE> 2
employment relationship with the Company or any of its Subsidiaries (including,
without limitation, compensation previously deferred by the Executive under the
terms of the Employment Agreement or otherwise and which become due on or after
the date hereof) and Executive shall not be entitled to any post termination
wages, compensation or benefits (including, without limitation, severance pay,
deferred compensation payments, nonqualified supplemental executive retirement
plan payments, vacation pay or sick pay). As liquidated damages for the
termination of the Employment Agreement, the Company hereby agrees to pay
Executive immediately after the Effective Time, by means of wire transfer of
immediately available funds, a sum in the amount of $22,592,150; PROVIDED,
HOWEVER, that the amount of $22,592,150 shall be reduced by any amounts advanced
(except for the amounts on Annex II) to the Executive as bonus for 1997 under
the terms of his Employment Agreement prior to the Effective Time. Except as
provided in paragraph 5 hereof and as described in Annex II, the Executive
hereby waives any and all rights to recover amounts of salary or bonus deferred
by him in accordance with the April 11, 1997 amendment to the Employment
Agreement.
3. FORGIVENESS OF INDEBTEDNESS. Effective as of the termination of the
Employment Agreement, the Company hereby forgives in its entirety and hereby
releases all of its rights in respect of the indebtedness described on Annex II
attached hereto including, without limitation all principal and interest that
may be due and owing or that may become due and owing thereunder. An amount
equal to $11,407,850 of the indebtedness forgiven hereunder shall be in
consideration of the termination of the Employment Agreement as provided in
Section 2. The remainder of the indebtedness forgiven hereunder shall be in
consideration of the noncompetition agreement provided in Section 7.
Notwithstanding the foregoing, any indebtedness owed to the Company or any of
its Subsidiaries by Executive and which is not described on Annex II shall not
be released pursuant to this Section 3 and shall remain in full force and effect
notwithstanding the terms of any other agreement or arrangement between the
Company or any of its Subsidiaries and Executive to the contrary. Except with
respect to interest that may hereafter accrue on the indebtedness described on
Annex II, from and after the date of this Agreement, if Executive should after
the date of this Agreement borrow any additional funds from, or incur any
additional indebtedness to, the Company or any of its Subsidiaries, then the
cash payment to be paid to Executive pursuant to Section 1 shall be reduced on a
dollar for dollar basis by the amount of such additional borrowing or
indebtedness; PROVIDED that, in no event shall Executive incur such additional
borrowing or indebtedness in excess of $1,000,000.
4. RELEASE OF CLAIMS.
(a) RELEASE BY EXECUTIVE. Effective as of the Effective Time, Executive
hereby releases and discharges the Released Parties from all Claims and Damages,
including those related to, arising from, or attributed to (i) his employment
with, and membership on the Boards of Directors for, the Company and its
Subsidiaries and resignations therefrom, (ii) the Employment Agreement, and
(iii) all other acts or omissions related to any matter at any time prior to and
including the date of termination of the Employment Agreement; except that this
2
<PAGE> 3
release shall not include Executive's (A) entitlement to continued group medical
coverage in accordance with the Consolidated Omnibus Budget Reconciliation Act
of 1985 ("COBRA"), (B) vested accrued Benefits in the Company's qualified
employee benefit plans described in Annex III attached hereto, (C) rights
arising under the Merger Agreement, (D) rights of Executive arising under this
Agreement, and (E) his right to be reimbursed for reasonable out-of-pocket costs
and expenses incurred after the date of this Agreement and prior to the
Effective Time in connection with services rendered by Executive to, or on
behalf of, the Company. Executive understands and expressly agrees that, unless
specifically excluded from this release, this release extends to all Claims and
Damages of every nature and kind, known or unknown, suspected or unsuspected,
past or present, whether or not these Claims and Damages were set forth in any
writing, and that all such Claims and Damages are hereby expressly settled or
waived.
(b) LIMITATION. Nothing herein shall be interpreted as obligating the
Company, Purchaser or Parent to pay, make reimbursement for or otherwise assume
responsibility for any Taxes imposed on Executive or for any other amount
relating to any of Executive's Tax obligations or liabilities.
(c) DEFINITIONS. As used in this Section 4, the following terms shall have
meanings set forth below:
(i) "Claims" means all theories of recovery of whatever nature,
whether known or unknown, and now recognized by the law or equity of any
jurisdiction, based on acts, omissions or other matters occurring on or
before the date the parties sign this Agreement. This term includes,
without limitation, lawsuits, petitions, complaints, causes of action,
charges, indebtedness, losses, claims, liabilities, and demands, whether
arising in equity or under the common law or under any contract (including,
without limitation, the Employment Agreement), statute, regulation or
ordinance. This term also includes, without limitation, any Claim of
discrimination (based on age or any other factor) under any statute or law
(including, without limitation, the Age Discrimination in Employment Act,
29 U.S.C. ss. 621, et seq.; Title VII of the Civil Rights Act of 1964, 42
U.S.C. ss. 2000e, et seq.; and the Americans with Disabilities Act, 42
U.S.C. ss. 12101, et seq.), and all Claims asserted by Executive, in
writing or otherwise, or which could be asserted, by Executive.
(ii) "Damages" means all elements of relief or recovery of whatever
nature, whether known or unknown, which are recognized by the law or equity
of any jurisdiction. This term includes, without limitation, actual,
incidental, indirect, consequential, compensatory, liquidated, exemplary,
and punitive damages; rescission, attorneys' fees; interest; costs;
equitable relief; and expenses.
(iii) "Released Parties" means and includes the Company and its
Subsidiaries, and all of the foregoing entities' past, present and future
shareholders,
3
<PAGE> 4
directors, officers, employees, agents, insurance carriers, employee
benefit plans (and such plans' fiduciaries, trustees, administrators and
representatives), predecessors, successors, assigns, executors,
administrators, attorneys and representatives, in both their corporate and
individual capacities.
5. SALARY. Executive shall be paid his regular salary of $228,598 per
month, less lawful taxes and withholdings, to and through the date of
termination of the Employment Agreement in accordance with the Company's
customary payroll practices.
6. CONFIDENTIALITY.
(a) PROTECTION OF CONFIDENTIAL INFORMATION AND TRADE SECRETS.
Executive acknowledges that the business of the Company and its Subsidiaries is
highly competitive and that certain confidential contracts, books, records, and
documents, confidential technical information concerning their services, pricing
techniques, and computer system and software, and other confidential information
(such as credit and financial data) concerning their customers and business
affiliates, all comprise confidential business information and trade secrets
which are valuable, special, and unique assets which the Company and its
Subsidiaries use in their business to obtain a competitive advantage over their
competitors. (All such information belonging to the Company and its Subsidiaries
and not publicly available is jointly referred to herein as "Confidential
Information and Trade Secrets.") Effective as of the Effective Time, Executive
agrees that all Confidential Information and Trade Secrets are the exclusive,
confidential, and proprietary information and property of the Company and,
except as necessary to perform the consulting services to be provided hereunder,
will not be used by Executive for any other purpose or in any other manner.
Executive further acknowledges that protection of such Confidential Information
and Trade Secrets against unauthorized disclosure and use is of critical
importance to the Company and its Subsidiaries in maintaining their competitive
position. Executive hereby agrees that he will not make any unauthorized
disclosure of any such Confidential Information and Trade Secrets, or make any
unauthorized use thereof. In the event that Executive is requested pursuant to,
or required by, applicable law or regulation or by legal process to disclose any
Confidential Information and Trade Secrets, Executive agrees to use his
reasonable efforts to provide the Company with prompt notice of such request(s)
to enable the Company to seek an appropriate protective order; provided,
however, that Executive shall not be prohibited from complying with any such
request unless an appropriate protective order is in place.
(b) Scope of Prohibited Activities; Remedies. Executive acknowledges
that the scope of prohibited activities, and time of duration of the provisions
of this Section 6 are reasonable and are no broader than are necessary to
protect the goodwill and legitimate business interests of the Company and its
Subsidiaries. Executive also acknowledges that the provisions of this Section 6
do not and will not impose any unreasonable burden on Executive. Executive
further acknowledges that a violation of this Section 6 will cause irreparable
damage to the Company and its Subsidiaries, entitling them to an injunction and
other equitable relief
4
<PAGE> 5
in a court of competent jurisdiction against Executive. In addition, the Company
and its Subsidiaries shall be entitled to whatever other remedies they may have
at law, including, without limitation, reasonable attorneys fees and costs
incurred by the Company and its Subsidiaries in enforcing the terms of this
Section 6.
7. NON-COMPETITION AGREEMENT.
(a) NON-COMPETITION. Except as expressly permitted herein, effective
as of the Effective Time Executive agrees that he shall not, until 11:59 p.m. on
the second anniversary of the Effective time:
(i) directly or indirectly own, engage in, manage, operate, join,
control, or participate in the ownership, management, operation, or control
of, or be connected as a stockholder, director, officer, employee, agent,
partner, joint venturer, member, beneficiary, or otherwise with, any
corporation, limited liability company, partnership, sole proprietorship,
association, business, trust, or other organization, entity or individual
which in any way competes with the Company or any of its Subsidiaries in
the business of manufacturing, marketing or distributing wood or vinyl
windows or doors or vinyl siding or in any other material business activity
that the Company or any of its Subsidiaries is conducting as of the date of
this Agreement (a "Competing Business") in the United States; PROVIDED,
HOWEVER, that the Executive may own, directly or indirectly, securities of
any entity traded on any national securities exchange or listed on the
National Association of Securities Dealers Automated Quotation System that
is a Competing Business if Executive does not, directly or indirectly, own
10% or more of any class of equity securities, or securities convertible
into or exercisable or exchangeable for 10% or more of any class of equity
securities, of such entity;
(ii) during the term of non-competition, use Executive's access
to, knowledge of, or application of Confidential Information and Trade
Secrets to perform any material duty for any Competing Business; it being
understood and agreed to that this clause (ii) shall be in addition to and
not be construed as a limitation upon the covenants in clause (i) hereof;
(iii) directly or indirectly aid, abet, or otherwise assist in a
material way any individual, business, or other organization or entity that
is a Competing Business in the United States;
(iv) directly or indirectly request or advise any present or
future customers or suppliers of the Company or any of its Subsidiaries to
cancel any contracts with the Company or any of its Subsidiaries or curtail
their dealings with the Company or any of its Subsidiaries;
5
<PAGE> 6
(v) directly or indirectly request or advise any present or
future service provider or financial resource of the Company or any of its
Subsidiaries to withdraw, curtail, or cancel the furnishing of such service
or resource to the Company or any of its Subsidiaries; or
(vi) directly or indirectly hire, attempt to hire, or contact or
solicit with respect to hiring any then significant employee of the Company
or any of its Subsidiaries, or otherwise induce or attempt to influence any
employee of the Company to terminate his or her employment.
(b) NON-COMPETITION FEE. In consideration of the non-competition
agreement described in this Section 7, the Company hereby agrees to forgive the
portion of the indebtedness (as reduced by the amount thereof allocated to the
termination of Executive's Employment Agreement as described in Section 2) owed
to the Company by Executive as described in Section 3.
(c) SCOPE OF PROHIBITED ACTIVITIES; REMEDIES. Executive acknowledges
that the geographic boundaries, scope of prohibited activities, and time
duration of this Section 7 are reasonable in nature and are no broader than are
necessary to maintain the confidentiality and the goodwill of the Company's
proprietary information, plans and services and to protect the other legitimate
business interests of the Company. Executive also acknowledges that the
provisions of this Section 7 do not and will not impose any unreasonable burden
on Executive. Executive further acknowledges that violation of this Section 7
will cause irreparable damage to the Company and its Subsidiaries, entitling
them to an injunction and other equitable relief in a court of competent
jurisdiction against Executive. In addition, the Company and its Subsidiaries
shall be entitled to whatever other remedies they may have at law, including,
without limitation, reasonable attorneys fees and costs incurred by the Company
and its Subsidiaries in enforcing the terms of this Section 7.
8. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Executive agrees that this Agreement and he
obligations hereunder shall be binding upon his heirs, guardians, administrators
or successors.
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party.
(c) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
6
<PAGE> 7
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Executive: At the addresses set forth on signature pages hereto
copy to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Attn: Joel I. Papernik
Telecopy: (212) 697-6686
If to Parent: Nortek, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903
Attn: Richard L. Bready
Telecopy: (401) 751-4724
copy to: Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attn: Douglass N. Ellis, Jr., Esq.
Telecopy: (617) 951-7050
If to the Company: Ply Gem Industries, Inc.
777 Third Avenue
New York, New York 10017
Attn: Jeffrey S. Silverman
Telecopy: (212) 888-0472
copy to: Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attn: Victor Lewkow
Telecopy: (212) 225-3999
or to such other address as the person to whom notice is given may have
previously furnished
7
<PAGE> 8
to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto; PROVIDED that in the event of Executive's death
then, the benefits to be received by Executive hereunder shall inure to his
successors and heirs.
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) JURISDICTION. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Court of Chancery in the State of Delaware in any
action, suit or proceeding arising in connection with this Agreement, and agrees
that any such action, suit or proceeding
8
<PAGE> 9
shall be brought only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein); PROVIDED, HOWEVER, that
such consent to jurisdiction is solely for the purpose referred to in this
paragraph (l) and shall not be deemed to be a general submission to the
jurisdiction of said Court or in the State of Delaware other than for such
purposes. Each party hereto hereby waives any right to a trial by jury in
connection with any such action, suit or proceeding.
(m) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
(o) TAX REPORTING. As may be appropriate, the Company shall report
the payments made hereunder by filing the appropriate 1099 or other appropriate
forms for these amounts.
9. TERMINATION. This Agreement shall terminate upon the termination of
the Merger Agreement without any further action on the part of any party hereto.
10. NEW AGREEMENTS. In the event the Company gives Parent the notice
contemplated by Section 8.1(i) of the Merger Agreement, then the Company and
Executive shall, within the time period specified in clause (ii) of such Section
8.1(i), extend to Parent, in connection with any adjustments in the terms and
conditions of the Merger Agreement that Parent may propose pursuant to clause
(ii) of such Section 8.1(i), an opportunity to enter into such agreements or
arrangements (with respect to Executive and his then existing agreements and
arrangements with the Company) as specified in such notice on terms and
conditions no less favorable to Parent as those specified in such notice.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
/s/ Jeffrey S. Silverman
-----------------------------------------
Jeffrey S. Silverman
Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
9
<PAGE> 10
Nortek, Inc.
/s/ Kevin W. Donnelly
By: ______________________________________
Kevin W. Donnelly
Name: ____________________________________
Vice President, General Counsel
Title: ___________________________________
Ply Gem Industries, Inc.
/s/ Herbert P. Dooskin
By: ______________________________________
Herbert P. Dooskin
Name: ____________________________________
Executive Vice President
Title: ___________________________________
<PAGE> 11
NORTEK
July 28, 1997
By Facsimile
- ------------
Mr. Jeffrey S. Silverman
Ply Gem Industries, Inc.
777 Third Avenue
New York, NY 10017
Dear Mr. Silverman:
Reference is hereby made to the Non-Compete and Termination Agreement
dated as of July 24, 1997 (the "Silverman Agreement") among you, Nortek, Inc., a
Delaware corporation ("Nortek"), and Ply Gem Industries, Inc., a Delaware
corporation ("Ply Gem").
In the Silverman Agreement, paragraph (i) 2 included three references, (ii)
4(a) included two references, (iii) 6(a) included one reference, and (iv) 7(a)
included two references to the term "Effective Time". We hereby confirm the term
"Effective Time" in such eight places shall be deemed deleted and replaced with
the term "consummation of the Offer." All other terms and conditions of the
Silverman Agreement are hereby confirmed.
Very truly yours,
NORTEK, INC.
By:/s/ Kevin W. Donnelly
-----------------------------
Kevin W. Donnelly
Vice President/General Counsel
[NORTEK LETTERHEAD]
<PAGE> 12
Agreed to and Accepted by:
PLY GEM INDUSTRIES, INC.
BY:/s/ Jeffrey S. Silverman
----------------------------
Jeffrey S. Silverman
Chairman
/s/ Jeffrey S. Silverman
----------------------------
Jeffrey S. Silverman
<PAGE> 1
Exhibit (c)(6)
TERMINATION AND RELEASE AGREEMENT
THIS TERMINATION AND RELEASE AGREEMENT (this "Agreement"), dated as of July
24, 1997, is made and entered into by Nortek, Inc., a Delaware corporation
("Parent"), Ply Gem Industries, Inc., a Delaware corporation (the "Company") and
Herbert P. Dooskin (the "Executive").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, NTK Sub, Inc. ("Sub") and the
Company are entering into an Agreement and Plan of Merger (as such agreement may
hereafter be amended from time to time, the "Merger Agreement"; capitalized
terms used and not defined herein have the respective meanings ascribed to them
in the Merger Agreement), pursuant to which Sub will be merged with and into the
Company (the "Merger");
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that Executive agree, and Executive has agreed,
to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT AGREEMENT. Executive hereby represents and warrants that
his employment relationship with the Company is pursuant to and governed by the
Employment Agreement dated March 7, 1986 between Executive and the Company, as
amended on May 4, 1987, March 1, 1988, and January 26, 1989, a true and correct
copy of which has been furnished to Parent (the "Employment Agreement").
2. TERMINATION OF EMPLOYMENT AGREEMENT. Effective as of the Effective
Time (a) Executive hereby tenders his resignation as an officer and director of
the Company and each of its Subsidiaries, and (b) the Employment Agreement shall
be terminated in full without any further action on the part of the Company or
Executive. Except as expressly provided in this Agreement (including the
exceptions set forth in Section 4(a)), from and after the date of termination of
the Employment Agreement, Executive shall not be entitled to receive any further
wages, compensation or benefits arising pursuant to the Employment Agreement or
his employment relationship with the Company or any of its Subsidiaries, and
Executive shall not be entitled to any post termination wages, compensation or
benefits (including, without limitation, severance pay, nonqualified
supplemental executive retirement plan payments, vacation pay or sick pay).
3. FORGIVENESS OF INDEBTEDNESS. Effective as of the termination of the
Employment
<PAGE> 2
Agreement, the Company hereby forgives in its entirety and hereby releases all
of its rights in respect of the indebtedness described on Annex II attached
hereto including, without limitation, all principal and interest that may be due
and owing or that may become due and owing thereunder. Notwithstanding the
foregoing, any indebtedness owed to the Company or any of its Subsidiaries by
Executive and which is not described on Annex II shall not be released pursuant
to this Section 3 and shall remain in full force and effect notwithstanding the
terms of any other agreement or arrangement between the Company or any of its
Subsidiaries and Executive to the contrary. Except with respect to interest that
may hereafter accrue on the indebtedness described on Annex II, from and after
the date of this Agreement, Executive shall not borrow any additional
indebtedness from the Company or any of its Subsidiaries.
4. RELEASE OF CLAIMS.
(a RELEASE BY EXECUTIVE. Effective as of the Effective Time,
Executive hereby releases and discharges the Released Parties from all Claims
and Damages, including those related to, arising from, or attributed to (i) his
employment with, and membership on the Boards of Directors for, the Company and
its Subsidiaries and resignations therefrom, (ii) the Employment Agreement, and
(iii) all other acts or omissions related to any matter at any time prior to and
including the date of termination of the Employment Agreement; except that this
release shall not include Executive's (A) entitlement to continued group medical
coverage in accordance with the Consolidated Omnibus Budget Reconciliation Act
of 1985 ("COBRA"), (B) vested accrued benefits in the Company's qualified
employee benefit plans described in Annex III attached hereto, (C) rights
arising under the Merger Agreement, (D) rights of Executive arising under this
Agreement, (E) his right to be reimbursed for reasonable out-of-pocket costs and
expenses incurred after the date of this Agreement and prior to the Effective
Time in connection with services rendered by Executive to, or on behalf of, the
Company and (F) his rights under that certain Agreement, dated January 2, 1991,
pertaining to certain life insurance policies. Executive understands and
expressly agrees that, unless specifically excluded from this release, this
release extends to all Claims and Damages of every nature and kind, known or
unknown, suspected or unsuspected, past or present, whether or not these Claims
and Damages were set forth in any writing, and that all such Claims and Damages
are hereby expressly settled or waived.
(b) LIMITATION. Nothing herein shall be interpreted as obligating the
Company, Purchaser or Parent to pay, make reimbursement for or otherwise assume
responsibility for any Taxes imposed on Executive or for any other amount
relating to any of Executive's Tax obligations or liabilities.
(c) DEFINITIONS. As used in this Section 4, the following terms shall
have meanings set forth below:
(i) "Claims" means all theories of recovery of whatever nature,
whether known or unknown, and now recognized by the law or equity of any
2
<PAGE> 3
jurisdiction, based on acts, omissions or other matters occurring on or
before the date the parties sign this Agreement. This term includes,
without limitation, lawsuits, petitions, complaints, causes of action,
charges, indebtedness, losses, claims, liabilities, and demands, whether
arising in equity or under the common law or under any contract (including,
without limitation, the Employment Agreement), statute, regulation or
ordinance. This term also includes, without limitation, any Claim of
discrimination (based on age or any other factor) under any statute or law
(including, without limitation, the Age Discrimination in Employment Act,
29 U.S.C. ss. 621, et seq.; Title VII of the Civil Rights Act of 1964, 42
U.S.C. ss. 2000e, et seq.; and the Americans with Disabilities Act, 42
U.S.C. ss. 12101, et seq.), and all Claims asserted by Executive, in
writing or otherwise, or which could be asserted, by Executive.
(ii) "Damages" means all elements of relief or recovery of
whatever nature, whether known or unknown, which are recognized by the law
or equity of any jurisdiction. This term includes, without limitation,
actual, incidental, indirect, consequential, compensatory, liquidated,
exemplary, and punitive damages; rescission, attorneys' fees; interest;
costs; equitable relief; and expenses.
(iii) "Released Parties" means and includes the Company and its
Subsidiaries, and all of the foregoing entities' past, present and future
shareholders, directors, officers, employees, agents, insurance carriers,
employee benefit plans (and such plans' fiduciaries, trustees,
administrators and representatives), predecessors, successors, assigns,
executors, administrators, attorneys and representatives, in both their
corporate and individual capacities.
5. SETTLEMENT AMOUNT. In consideration of the termination of Executive's
Employment Agreement and Executive's release and discharge of the Released
Parties from all Claims and Damages, the Company shall tender and pay to
Executive immediately after the Effective Time, by means of wire transfer of
immediately available funds, an amount equal to $1,900,000, and shall forgive
and release all of its rights in respect of the indebtedness owed the Company by
Executive. Executive shall be paid his regular salary of $47,103 per month, less
lawful taxes and withholdings, to and through the date of termination of the
Employment Agreement in accordance with the Company's customary payroll
practices.
6. CONFIDENTIALITY.
(a) PROTECTION OF CONFIDENTIAL INFORMATION AND TRADE SECRETS.
Executive acknowledges that the business of the Company and its Subsidiaries is
highly competitive and that certain confidential contracts, books, records, and
documents, confidential technical information concerning their services, pricing
techniques, and computer system and software, and other confidential information
(such as credit and financial data) concerning their customers and business
affiliates, all comprise confidential business information and trade secrets
which are valuable, special, and unique assets which the Company and its
Subsidiaries
3
<PAGE> 4
use in their business to obtain a competitive advantage over their competitors.
(All such information belonging to the Company and its Subsidiaries and not
publicly available is jointly referred to herein as "Confidential Information
and Trade Secrets.") Effective as of the Effective Time, Executive agrees that
all Confidential Information and Trade Secrets are the exclusive, confidential,
and proprietary information and property of the Company and, except as necessary
to perform the consulting services to be provided hereunder, will not be used by
Executive for any other purpose or in any other manner. Executive further
acknowledges that protection of such Confidential Information and Trade Secrets
against unauthorized disclosure and use is of critical importance to the Company
and its Subsidiaries in maintaining their competitive position. Executive hereby
agrees that he will not make any unauthorized disclosure of any such
Confidential Information and Trade Secrets, or make any unauthorized use
thereof. In the event that Executive is requested pursuant to, or required by,
applicable law or regulation or by legal process to disclose any Confidential
Information and Trade Secrets, Executive agrees to use his reasonable efforts to
provide the Company with prompt notice of such request(s) to enable the Company
to seek an appropriate protective order; provided, however, that Executive shall
not be prohibited from complying with any such request unless an appropriate
protective order is in place.
(b) SCOPE OF PROHIBITED ACTIVITIES; REMEDIES. Executive acknowledges
that the scope of prohibited activities, and time of duration of the provisions
of this Section 6 are reasonable and are no broader than are necessary to
protect the goodwill and legitimate business interests of the Company and its
Subsidiaries. Executive also acknowledges that the provisions of this Section 6
do not and will not impose any unreasonable burden on Executive. Executive
further acknowledges that a violation of this Section 6 will cause irreparable
damage to the Company and its Subsidiaries, entitling them to an injunction and
other equitable relief in a court of competent jurisdiction against Executive.
In addition, the Company and its Subsidiaries shall be entitled to whatever
other remedies they may have at law, including, without limitation, reasonable
attorneys' fees and costs incurred by the Company and its Subsidiaries in
enforcing the terms of this Section 6.
7. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Executive agrees that this Agreement and the
obligations hereunder shall be binding upon his heirs, guardians, administrators
or successors.
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party.
4
<PAGE> 5
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Executive: At the addresses set forth on signature pages hereto
copy to: Squadron, Ellenoff, Plesent & Sheinfeld, L.L.P.
551 Fifth Avenue
New York, New York 10176
Attn: Joel I. Papernik
Telecopy: (212) 697-6686
If to Parent: Nortek, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903
Attn: Richard L. Bready
Telecopy: (401) 751-4724
copy to: Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attn: Douglass N. Ellis, Jr., Esq.
Telecopy: (617) 951-7050
If to the Company: Ply Gem Industries, Inc.
777 Third Avenue
New York, New York 10017
Attn: Jeffrey S. Silverman
Telecopy: (212) 888-0472
copy to: Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attn: Victor Lewkow
Telecopy: (212) 225-3999
5
<PAGE> 6
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto; PROVIDED that, in the event of Executive's
death, the benefits to be received by Executive hereunder shall inure to his
successors and heirs.
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) JURISDICTION. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Court of Chancery in the State of Delaware in any
action, suit or proceeding
6
<PAGE> 7
arising in connection with this Agreement, and agrees that any such action, suit
or proceeding shall be brought only in such court (and waives any objection
based on forum non conveniens or any other objection to venue therein);
PROVIDED, HOWEVER, that such consent to jurisdiction is solely for the purpose
referred to in this paragraph (l) and shall not be deemed to be a general
submission to the jurisdiction of said Court or in the State of Delaware other
than for such purposes. Each party hereto hereby waives any right to a trial by
jury in connection with any such action, suit or proceeding.
(m) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
(o) TAX REPORTING. As may be appropriate, the Company shall report
the payments made hereunder by filing the appropriate 1099 or other appropriate
forms for these amounts.
8. TERMINATION. This Agreement shall terminate upon the termination of
the Merger Agreement without any further action on the part of any party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Herbert P. Dooskin
/s/ Herbert P. Dooskin
---------------------------------------
Address:
26 Maywood Court
---------------------------------------
N. Caldwell NJ 07006
---------------------------------------
---------------------------------------
---------------------------------------
7
<PAGE> 8
Nortek, Inc.
/s/ Kevin W. Donnelly
By: ___________________________________
Kevin W. Donnelly
Name: _________________________________
Vice President, General Counsel
Title: ________________________________
Ply Gem Industries, Inc.
/s/ Jeffrey S. Silverman
By: ___________________________________
Jeffrey S. Silverman
Name: _________________________________
Chairman & CEO
Title: ________________________________
<PAGE> 9
NORTEK
July 28, 1997
By Facsimile
- ------------
Mr. Herbert P. Dooskin
Ply Gem Industries, Inc.
777 Third Avenue
New York, NY 10017
Dear Mr. Dooskin:
Reference is hereby made to the Termination and Release Agreement
dated as of July 24, 1997 (the "Dooskin Agreement") among you, Nortek, Inc., a
Delaware corporation ("Nortek"), and Ply Gem Industries, Inc., a Delaware
corporation ("Ply Gem").
In the Dooskin Agreement, paragraph (i) 2 included one reference, (ii)
4(a) included two references, (iii) 5 included one reference, and (iv) 6(a)
included one reference, to the term "Effective Time." We hereby confirm the
term "Effective Time" in such five places shall be deemed deleted and replaced
with the term "consummation of the Offer." All other terms and conditions of
the Dooskin Agreement are hereby confirmed.
Very truly yours,
NORTEK, INC.
BY /s/ Kevin W. Donnelly
-------------------------
Kevin W. Donnelly
Vice President/General Counsel
[NORTEK LETTERHEAD]
<PAGE> 10
Agreed to and Accepted by:
PLY GEM INDUSTRIES, INC.
BY /s/ Jeffrey S. Silverman
-------------------------
Jeffrey S. Silverman
Chairman
/s/ Herbert P. Dooskin
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Herbert P. Dooskin
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Exhibit (c)(7)
FIRST AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
THIS FIRST AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of July
24, 1997 (the "Agreement"), is made and entered into by Atrium Acquisition
Holdings Corp., a Delaware corporation ("Parent"), Atrium/PG Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Parent ("Sub"), Jeffrey
S. Silverman, Dana R. Snyder and Herbert P. Dooskin (collectively, the
"Stockholders" and individually a "Stockholder"), Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), Nortek, Inc., a Delaware corporation
("Nortek") and NTK Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of Nortek ("NTK").
WITNESSETH:
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WHEREAS, prior to the date hereof Parent, Sub, the Company and, for limited
purposes, Atrium Corporation, entered into that certain Agreement and Plan of
Merger dated as of June 24, 1997 (the "Merger Agreement");
WHEREAS, on July 24, 1997 the Merger Agreement was terminated in accordance
with its terms;
WHEREAS, on July 24, 1997 Nortek, NTK and the Company entered into an
Agreement and Plan of Merger (as such agreement may hereafter be amended,
restated or renewed from time to time, the "Nortek Agreement"), pursuant to
which NTK will commence a tender offer for Shares (as defined below) of the
Company and NTK will be merged with and into the Company;
WHEREAS, as a result of the termination of the Merger Agreement and Nortek,
NTK and the Company entering into the Nortek Agreement, the parties desire to
amend and restate that certain Stockholders Agreement between certain of the
parties hereto dated as of June 24, 1997 in accordance with the terms and
provisions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Acquisition Proposal" shall mean any proposal or offer (other
than the transactions among the Company, Parent and Sub previously contemplated
in the Merger Agreement) involving the Company or any of its subsidiaries for,
or an inquiry or indication of interest that reasonably could be expected to
lead to: (i) any merger, consolidation, share exchange, recapitalization,
business combination, or other similar transaction, (ii) any sale, lease,
exchange,
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mortgage, pledge, transfer or other disposition of a material portion of the
assets of the Company and its subsidiaries, taken as a whole, in a single
transaction or series of transactions, or (iii) any tender offer or exchange
offer for all or any portion of the outstanding shares of capital stock of the
Company or any of its subsidiaries or the filing of a registration statement
under the Securities Act of 1933 in connection therewith. The term "Acquisition
Proposal" shall include the Offer and the Merger.
(b) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" within the meanings of Section 13(d)(3) of
the Exchange Act.
(c) "Merger" shall mean the merger contemplated by the Nortek
Agreement.
(d) "Offer" shall mean the cash tender offer contemplated by the
Nortek Agreement for all of the outstanding Shares.
(e) "Offer Price" shall mean the greater of $19.50 or the highest per
share price paid in the Offer.
(f) "Options" shall mean all outstanding options or warrants
(including stock purchase rights and stock awards) to purchase or acquire Shares
and shall include the right under the Options to acquire additional Shares upon
a "change of control" with respect to the Company.
(g) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
(h) "Purchase Price" shall mean a per share purchase price equal to
$18.75.
(i) "Shares" shall mean shares of common stock, par value $0.25 per
share, of the Company. The term "Shares" shall include, without limitation,
shares of Unvested Stock and any restricted Shares.
(j) "Termination Event" shall mean the first to occur of (i) the
termination of the Nortek Agreement by any party thereto, (ii) the termination,
withdrawal, abandonment or expiration of the Offer without the Shares of each
Stockholder as set forth on Schedule I hereto being accepted for purchase
thereunder (collectively an "Offer Termination Event") or (iii) the material
breach on the part of any party of any of their respective obligations under
Section 2.
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In addition to the terms otherwise defined herein, the following terms
shall have the meaning set forth in Nortek Agreement:
"Company Stockholder Approval";
"Offer Documents";
"Proxy Statement";
"SEC"; and
"Unvested Stock".
2. THE NORTEK OFFER.
(a) Each Stockholder hereby severally and not jointly and severally,
agrees to validly tender (and not to withdraw) pursuant to and in accordance
with the terms of the Offer, not later than one business day prior to the
expiration date of the Offer pursuant to the Nortek Agreement and Rule 14d-2
under the Exchange Act, the number of Shares set forth opposite such
Stockholder's name on Schedule I hereto. Each party hereto acknowledges and
agrees that NTK's obligation to accept for payment Shares purchased pursuant to
the Offer, including the Shares tendered pursuant to the Agreement by the
Stockholders, is subject to the terms and conditions of the Offer. The
obligations of the Stockholders under this Section 2(a) shall terminate upon a
Termination Event (except a Termination Event resulting from a breach by a
Stockholder).
(b) Each Stockholder hereby agrees to permit Nortek and NTK to publish
and disclose in the Offer Documents and, if Company Stockholder Approval is
required under applicable law, the Proxy Statement (including all documents and
schedules filed with the SEC) such Stockholder's identity and ownership of
Shares and the nature of such Stockholder's commitments, arrangements and
understandings under this Agreement.
(c) Immediately after the acceptance of any Shares for payment
pursuant to the Offer, Nortek and NTK shall take such actions as may be
necessary (including, without limitation, the giving to the "Depositary " such
instructions as may be necessary) to cause payment of the aggregate Offer Price
due in respect of the Shares properly tendered hereunder by each Stockholder to
be paid, no later than on the first business day following the date that any
Shares have been accepted for purchase pursuant to the Offer (the "Purchase
Date"), as follows:
(i) The Sub, or its permitted assign, in respect of the Shares
that have been so tendered by each Stockholder and not withdrawn,
shall receive an amount equal to 75% of the excess of (A) the
aggregate Offer Price payable in respect of such Stockholder's Shares
so tendered over (B) the product of (1) the number of Shares so
tendered, multiplied by (2) the Purchase Price; and
(ii) Each Stockholder (or his designee), in respect of the
Shares that have been so tendered by such Stockholder, shall receive
the amount of the aggregate Offer Price payable in respect of the
Shares so tendered after deducting therefrom the amount payable
pursuant to clause (i) above.
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(d) On the Purchase Date, the Company, Nortek, NTK and each of the
Stockholders, severally and not jointly severally, shall take such actions as
may be necessary for each of the Options set forth next to each Stockholder's
name on Schedule II hereto to be cancelled in consideration of an amount in cash
(subject to any applicable withholding tax), in respect of each of the Shares
subject to each of such Options (including any additional Shares subject thereto
by the reason of the occurrence of a "change of control" in the Company, and
Unvested Stock to the extent not tendered in the Offer) equal to the difference
between the per share Offer Price and the per Share exercise price of each such
Option to the extent such difference is a positive number (such amount as to the
Options of each Stockholder being collectively referred to herein as the "Option
Consideration"). On the Purchase Date, Nortek, NTK and the Company shall pay or
shall cause to be paid the Option Consideration due in respect of each
Stockholder's Options as follows:
(i) The Sub, or its permitted assign, in respect of the Options
of each Stockholder, shall receive from the Option Consideration (A) in
respect of Options having a per Share exercise price equal to or less than
the Purchase Price, an amount equal to 75% of the excess of (x) the product
of (1) the Offer Price, multiplied by (2) the number of Shares subject to
such Options, including any "change of control" Shares, over (y) the
product of (1) the number of Shares subject to such Options, including any
"change of control" Shares, multiplied by (2) the Purchase Price and (B) in
respect of Options having a per Share exercise price greater than the
Purchase Price (as set forth on Schedule II hereto) an amount equal to 100%
of the excess of (x) the product of (1) the Offer Price, multiplied by (2)
the number of Shares subject to such Options, including any "change of
control" Shares, over (y) the product of (1) the number of Shares subject
to such Options, including any "change of control" Shares multiplied by (2)
the applicable per Share exercise price of such Options; and
(ii) Each Stockholder (or his designee), in respect of the
Options of such Stockholder, shall receive the amount of the Option
Consideration payable in respect of the Options of such Stockholder after
deducting therefrom the amount payable pursuant to clause (i) above,
provided, that as to any Stockholder (excluding Mr. Snyder) subject to
Section 16(a) of the Exchange Act, payment to such Stockholder of any
portion of the Option Consideration payable under this clause (ii) will be
deferred (if necessary to avoid Section 16(b) liability) until the first
date such payment can be made without liability to such Stockholder under
Section 16(b) of the Exchange Act, but shall be paid as soon as practicable
thereafter.
The Company, Nortek and NTK hereby agree to extend to each holder of
Options who is not a party to this Agreement the opportunity to cash out such
Options on the Purchase Date in the manner contemplated in this Section 2(d).
3. OPTIONS.
(a) Each of the Stockholders hereby grants to Sub an irrevocable
option (each, a "Purchase Option" and collectively, the "Purchase Options") to
purchase the number of Shares set forth opposite such Stockholder's name on
Schedule I hereto together with all of the Shares (including any additional
Shares that may be issuable as a result of a "change of control") Beneficially
Owned by such Stockholder as a result of the Stockholder's exercise of the
Options set forth opposite such Stockholder's name on Schedule II hereto
(collectively, with the Shares described on Schedule I, the "Option Shares") at
a purchase price per share equal to the Purchase Price. Subject to the last
sentence of this Section 3(a), each Purchase Option is currently exercisable in
whole but not in part, and shall remain exercisable in whole but not in part
until 5:00 p.m. (Dallas, Texas time) on the date which is 120 days after a
Termination Event (the "Option Period"), so long as: (i) all waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), required for the purchase by Sub of the Option Shares upon such
exercise shall have expired or been waived, and (ii) there shall not be in
effect any preliminary or final injunction or other order issued by any court
or governmental, administrative or regulatory agency or authority prohibiting
the exercise of the
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Purchase Options pursuant to this Agreement. The Option Period shall be extended
for the time period that any such preliminary injunction or order shall be in
effect that otherwise prohibits the exercise of a Purchase Option. To exercise
the Purchase Options, Sub shall send a written notice (the "Notice") to the
Stockholders identifying the place and date (not less than one nor more than 20
business days from the date of the Notice) for the closing of such purchase. The
Sub shall not exercise the Purchase Options prior to the occurrence of a
Termination Event.
(b) Upon receipt of the Notice to the extent not previously exercised,
contemporaneously with the closing of the purchase of the Option Shares, each
Stockholder shall exercise in full the Options set forth opposite such
Stockholder's name on Schedule II hereto. Subject to Section 2(d), for
convenience purposes, in connection with such exercise of the Options, each
Stockholder hereby gives the Company irrevocable notice of the exercise of his
Options effective contemporaneously with the closing of the purchase of the
Option Shares pursuant to the Purchase Option and the Company hereby
acknowledges the effectiveness of such exercise. Each Stockholder also hereby
irrevocably instructs the Company to issue (and the Company hereby agrees to
issue) the Shares issuable upon such exercise in the name of Sub or its
permitted assignee (and Sub or its permitted assignee shall be deemed the record
owner thereof as of the date of such exercise so long as Sub or its permitted
assignee timely tenders payment of the Purchase Price as provided herein) and
Sub hereby agrees, on behalf of each Stockholder, to pay directly to the Company
(by means of wire transfer or official bank check) such amount as may be
necessary to fund the payment of the exercise price (without regard to any
applicable withholding taxes) due and payable to the Company as a result of such
exercise (with the aggregate amount of the Purchase Price due and payable to
each Stockholder (or his designee) being reduced by the amount of any such
payment made by Sub on behalf of such Stockholder and with the remaining amount
of the Purchase Price otherwise due and payable to each Stockholder being paid
directly to such Stockholder, as may be requested by the Company, net of any
applicable withholding taxes required to be paid to the Company, by means of
wire transfer or official bank check). Such payments to the Company (including
such requested withholding taxes) and the Stockholders shall be made
contemporaneously with the exercise of the Purchase Options and the delivery of
the Option Shares thereunder, provided, that as to any Stockholder subject to
Section 16(a) of the Exchange Act, payment to such Stockholder of any portion of
the Purchase Price will be deferred (if necessary to avoid Section 16(b)
liability) until the first date such payment can be made without liability to
such Stockholder under Section 16(b) of the Exchange Act, but shall be paid as
soon as practicable thereafter.
(c) In the event that Sub has purchased the Option Shares pursuant to
the Purchase Options, and, within one year after the date of such purchase, the
Sub or any affiliate thereof sells, transfers, exchanges or disposes of any of
the Option Shares in a transaction with a non-affiliate of Sub (a
"Disposition") then, within two business days after the closing of such
Disposition, Sub shall tender and pay to each Stockholder, in immediately
available funds, their respective pro-rata share (calculated based on the
respective amount of the Option Shares purchased from each Stockholder pursuant
to the Purchase Options) of 25% of the Net Profit realized by Sub in connection
with such Disposition. As used in this Section 3(c), Net Profit shall mean an
amount equal to (i) the excess, if any, of the gross amount realized by Sub
from a Disposition over (ii) the aggregate Purchase Price paid with respect to
the Option Shares subject to such Disposition, with such excess being reduced
by the sum of (A) all reasonable out-of-pocket fees, costs and expenses
incurred by Sub and its affiliates in connection
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with such Disposition, (including, without limitation, all fees, costs and
expenses of counsel) which in no event shall exceed 1% of such Net Profit, and
(B) all customary brokerage fees and commissions, if any, incurred in connection
with such Disposition.
(d) In the event that within the Option Period a Stockholder sells,
transfers, exchanges, cancels or disposes of any of his Option Shares or Options
in connection with or as a result of an Acquisition Proposal (an "Alternative
Disposition") other than pursuant to Section 2 then, within two business days
after the closing of such Alternative Disposition, such Stockholder shall tender
and pay to Sub, in immediately available funds, its pro-rata share of 75% of the
Net Profit realized by such Stockholder in connection with such Alternative
Disposition. As used in this Section 3(d), Net Profit shall mean (i) in the case
of outstanding Option Shares, an amount equal to the excess, if any, of (A) the
gross amount realized by such Stockholder from an Alternative Disposition of
outstanding Option Shares, over (B) the product of (x) the number of such Option
Shares subject to such Alternative Disposition, multiplied by (y) the Purchase
Price and (ii) in the case of Options, an amount equal to the excess, if any, of
(A) the product of (x) the gross underlying per Share price otherwise paid in
the Alternative Disposition and used in calculating the amount so realized by
such Stockholder with respect to such Options in connection with such
Alternative Disposition, multiplied by (y) the number of Option Shares subject
to such Options, over (B) the product of (x) the number of Option Shares subject
to such Options, multiplied by (y) the Purchase Price, with the aggregate of
such excesses being reduced by the sum of (1) all reasonable out-of-pocket fees,
costs and expenses incurred by such Stockholder in connection with such
Alternative Disposition, (including, without limitation, all fees, costs and
expenses of counsel, but excluding any withholding taxes) which in no event
shall exceed 1% of such Net Profit, and (2) all customary brokerage fees and
commissions, if any, incurred in connection with such Alternative Disposition.
(e) As may be requested by Sub subsequent to a Termination Event but
prior to the expiration of the Option Period each Stockholder shall tender his
Shares as set forth on Schedule I hereto pursuant to any tender offer being made
(at a per Share price greater than the Purchase Price) in connection with an
Acquisition Proposal.
(f) The Purchase Options shall terminate in full upon the consummation
of the transactions (including, the tendering of all payments to be made
thereunder) contemplated by Section 2.
4. COVENANTS, REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER.
(a) Each Stockholder hereby, severally and not jointly and severally,
represents and warrants to the other parties hereto as follows:
(i) OWNERSHIP BY SHARES. Such Stockholder is either (A) the
record and Beneficial Owner of, or (B) the Beneficial Owner but not
the record holder of, the number of Shares and Options respectively
set forth opposite the Stockholder's name on Schedule I and II hereto.
As of June 24, 1997, the Shares and Options respectively set forth
opposite such Stockholder's name on Schedules I and II hereto
constitute all of the Shares and Options owned of record or
Beneficially Owned by such Stockholder. Such Stockholder has sole
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power to issue instructions with respect to the matters set forth in
Sections 2 and 3 hereof, sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case
with respect to all of the Shares set forth opposite such
Stockholder's name on Schedule I hereto and all of the Options set
forth opposite such Stockholder's name on Schedule II hereto, with no
material limitations, qualifications or restrictions on such rights,
subject to applicable securities laws and the terms of this Agreement.
(ii) POWER; BINDING AGREEMENT. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. This Agreement has
been duly and validly executed and delivered by such Stockholder and
constitutes a valid and binding agreement of such Stockholder,
enforceable against such Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or
other interest of any trust of which such Stockholder is trustee whose
consent is required for the execution and delivery of this Agreement
or the consummation by such Stockholder of the transactions
contemplated hereby. If such Stockholder is married and such
Stockholder's Shares or Options constitute community property, this
Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, such Stockholder's
spouse, enforceable against such person in accordance with its terms.
(iii) NO CONFLICTS. Except for filings under the Exchange Act or
if applicable the HSR Act (as to which, to the extent necessary, each
Stockholder shall promptly make all such filings and use all
reasonable efforts to respond to any requests for additional
information) (A) no filing with, and no permit, authorization, consent
or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by such Stockholder and
the consummation by such Stockholder of the transactions contemplated
hereby, except where the failure to obtain such consent, permit,
authorization, approval or filing would not interfere with such
Stockholder's ability to perform its obligations hereunder, and (B)
none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the
provisions hereof shall (1) conflict with or result in any breach of
any applicable organizational documents applicable to such
Stockholder, (2) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which such Stockholder is a party or by
which such Stockholder or any of such Stockholder's properties or
assets may be bound, or (3) violate any order, writ, injunction,
decree, judgment, order, statute, rule or regulation applicable to
such Stockholder or any of such Stockholder's properties or assets, in
each such case except to the extent that any conflict, breach, default
or violation would not interfere with the ability of such Stockholder
to perform its obligations hereunder.
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(iv) NO ENCUMBRANCES. Except as required by Sections 2 and 3 and
liens or security interests that will be released at the closing, if
any, of a purchase under the Purchase Options or a closing under
Section 2 as may be applicable, such Stockholder's Shares and the
certificates representing such Shares are now, and at all times
during the term hereof will be, held by such Stockholder, or by a
nominee or custodian for the benefit of such Stockholder, free and
clear of all liens, claims, security interests, proxies, voting
trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever.
(v) NO FINDER'S FEES. No broker, investment banker, financial
adviser or other person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in connection
with the transactions contemplated hereby based upon arrangements made
by or on behalf of such Stockholder.
(vi) NO SOLICITATION. Each Stockholder shall, in its capacity as
such, comply with the terms of Section 5.1(e) of the Nortek Agreement.
(vii) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE.
During the Option Period, except as required by this Agreement, such
Stockholder shall not, directly or indirectly without the
consent of Sub: (A) offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Shares, Options or any interest therein, (B) grant any
proxies of powers of attorney, deposit any Shares into a voting trust
or enter into a voting agreement with respect to any Shares, or (C)
exercise any of his Options (except to prevent the impending
expiration thereof), or (D) take any action that could reasonably be
expected to have the effect of preventing or disabling such
Stockholder from performing such Stockholder's obligations under this
Agreement, except in the case of clause (A) or (D) any transfer of
Shares that occurs by operation of law.
(viii) WAIVER OF APPRAISAL RIGHTS. Such Stockholder hereby waives
any rights of appraisal or rights to dissent from the Merger that the
Stockholder may have.
(ix) FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall
execute and deliver such additional documents as may be necessary or
desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
(b) Parent and Sub hereby represents and warrants to each of the other
parties hereto as follows:
(i) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent
and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with adequate
corporate power and authority to own its properties and carry on its
business as presently conducted. Each of Parent and Sub has the
corporate power
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and authority to enter into and perform all of its obligations under
this Agreement and to consummate the transactions contemplated hereby.
(ii) NO CONFLICTS. Except, if applicable, for filings under the
HSR Act, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal pubic body or authority is necessary
for the execution of this Agreement by either Parent or Sub and the
consummation by Parent and Sub of the transactions contemplated
hereby, except where the failure to obtain such consent, permit,
authorization, approval or filing would not interfere with its ability
to perform its obligations hereunder, and (B) none of the execution
and delivery of this Agreement by Parent or Sub, the consummation by
Parent or Sub of the transactions contemplated hereby or compliance by
Parent and Sub with any of the provisions hereof shall (1) conflict
with or result in any breach of any applicable organizational
documents applicable to Parent or Sub, (2) result in a violation or
breach of, or constitute (with or without notice or lapse of time or
both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which
Parent or Sub is a party or by which Parent or Sub or any of Parent's
or Sub's properties or assets may be bound, or (3) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to Parent or Sub or any of Parent's or Sub's properties or
assets, in each such case except to the extent that any conflict,
breach, default or violation would not interfere with the ability of
Parent or Sub to perform its obligations hereunder.
(iii) EXECUTION, DELIVERY AND PERFORMANCE BY PARENT AND SUB. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Parent and Sub, and each of
Parent and Sub has taken all other actions required by law, its
Certificate of Incorporation and its Bylaws in order to consummate the
transactions contemplated by this Agreement. This Agreement
constitutes the valid and binding obligations of Parent and Sub and is
enforceable in accordance with its terms, except as enforceability may
be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights
generally.
(c) Nortek and NTK hereby represents and warrants to each of the other
parties hereto as follows:
(i) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Nortek
and NTK is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with adequate
corporate power and authority to own its properties and carry on its
business as presently conducted. Each of Nortek and NTK has the
corporate power and authority to enter into and perform all of its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
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(ii) NO CONFLICTS. Except, if applicable, for filings under the
Exchange Act and the HSR Act, (A) no filing with, and no permit,
authorization, consent or approval of, any state or federal pubic body
or authority is necessary for the execution of this Agreement by
either Nortek or NTK and the consummation by Nortek and NTK of the
transactions contemplated hereby, except where the failure to obtain
such consent, permit, authorization, approval or filing would not
interfere with its ability to perform its obligations hereunder, and
(B) none of the execution and delivery of this Agreement by Nortek or
NTK, the consummation by Nortek or NTK of the transactions
contemplated hereby or compliance by Nortek and NTK with any of the
provisions hereof shall (1) conflict with or result in any breach of
any applicable organizational documents applicable to Nortek or NTK,
(2) result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or
obligation of any kind to which Nortek or NTK is a party or by which
Nortek or NTK or any of Nortek's or NTK's properties or assets may be
bound, or (3) violate any order, writ, injunction, decree, judgment,
order, statute, rule or regulation applicable to Nortek or NTK or any
of Nortek's or NTK's properties or assets, in each such case except to
the extent that any conflict, breach, default or violation would not
interfere with the ability of Nortek or NTK to perform its obligations
hereunder.
(iii) EXECUTION, DELIVERY AND PERFORMANCE BY NORTEK AND NTK. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Nortek and NTK, and each of
Nortek and NTK has taken all other actions required by law, its
Certificate of Incorporation and its Bylaws in order to consummate the
transactions contemplated by this Agreement. This Agreement
constitutes the valid and binding obligations of Nortek and NTK and is
enforceable in accordance with its terms, except as enforceability may
be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights
generally.
(d) The Company hereby represents and warrants to each of the other
parties hereto as follows:
(i) ORGANIZATION, STANDING AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with adequate corporate power
and authority to own its properties and carry on its business as
presently conducted. The Company has the corporate power and authority
to enter into and perform all of its obligations under this Agreement
and to consummate the transactions contemplated hereby.
(ii) NO CONFLICTS. Except, if applicable, for filings under the
HSR Act, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal pubic body or authority is necessary
for the execution of this Agreement by the Company
10
<PAGE> 11
and the consummation by the Company of the transactions contemplated
hereby, except where the failure to obtain such consent, permit,
authorization, approval or filing would not interfere with its ability
to perform its obligations hereunder, and (B) none of the execution
and delivery of this Agreement by the Company, the consummation by the
Company of the transactions contemplated hereby or compliance by the
Company with any of the provisions hereof shall (1) conflict with or
result in any breach of any applicable organizational documents
applicable to the Company, (2) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default
(or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which the Company is
a party or by which the Company or any of the Company's properties or
assets may be bound, or (3) violate any order, writ, injunction,
decree, judgment, order, statute, rule or regulation applicable to the
Company or any of the Company's properties or assets, in each such
case except to the extent that any conflict, breach, default or
violation would not interfere with the ability of the Company to
perform its obligations hereunder.
(iii) EXECUTION, DELIVERY AND PERFORMANCE BY THE COMPANY. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of the Company, and the Company
has taken all other actions required by law, its Certificate of
Incorporation and its Bylaws in order to consummate the transactions
contemplated by this Agreement. This Agreement constitutes the valid
and binding obligations of the Company and is enforceable in
accordance with its terms, except as enforceability may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally.
5. STOP TRANSFER. Each Stockholder agrees with, and covenants to, Sub that
during the Option Period such Stockholder shall not request that the Company
register (and the Company agrees not to register) the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of
such Stockholder's Shares, unless such transfer is made in compliance with
this Agreement.
6. RECAPITALIZATION. In the event of a stock dividend or distribution, or
any change in the Shares by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall be deemed to refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged and the Purchase Price shall be amended
as may be appropriate to reflect such event.
7. MERGER AGREEMENT. Parent, Sub and the Company hereby agree that the
provisions of Section 6.11 (insofar as it relates to the transactions
contemplated by this Agreement) and Section 9.2 of the Merger Agreement remain
in full force and effect notwithstanding the termination of the Merger Agreement
and that such Sections of the Merger Agreement are by reference
11
<PAGE> 12
incorporated herein and made a part hereof. In addition, the Company hereby
acknowledges that the transactions contemplated herein have been previously
approved by its Board of Directors for purposes of Section 203 of the Delaware
General Corporation Law, as amended. Atrium Corporation, Parent and Sub
hereby acknowledge that the Merger Agreement has been properly terminated by the
Company in accordance with its terms.
8. STOCKHOLDER CAPACITY. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer and nothing herein shall limit or affect any action taken by such person
in his or her capacity as a director or officer. Each Stockholder signs solely
in his or her capacity as the record and beneficial owner of, or the trustee of
a trust whose beneficiaries are the beneficial owners of, such Stockholder's
Shares or Options.
9. OTHER ACTIONS. Except as contemplated by Section 2 or by operation of
law, during the Option Period no Stockholder may take any action (including,
without limitation, any cashless exercise of any Option except with respect to
an Option that would otherwise expire unless so exercised) or enter into any
agreement or waiver, which would adversely affect Sub's rights under the
Purchase Options or the benefits to be derived by Sub from an exercise of the
Purchase Options.
10. RELEASE. Effective as of an Acquisition Event, each of the Company,
Nortek and NTK hereby releases and discharges Parent, Sub and Atrium
Corporation, together with their respective officers, directors, employees,
representatives and agents (collectively the "Released Parties") from any and
all liabilities, claims, causes of actions or demands of any nature whatsoever
(including, without limitation, arising under the Merger Agreement) that any of
them may have or claim to have (including, without limitation, the reservation
made in that certain letter of July 24, 1997 from the Company to Parent, Sub
and Atrium Corporation giving notice of the Company's termination of the Merger
Agreement) which are directly or indirectly attributable to or otherwise
related to the payment of $12,000,000 made by the Company on July 24, 1997
pursuant to that certain letter of July 24, 1997 from the Parent to the
Company, regardless of whether any such liabilities, claim, cause of action or
demand is known or unknown, matured or contingent or liquidated or
unliquidated. Prior to the occurrence of an Offer Termination Event, the
Company agrees not to initiate any proceedings against any of the Released
Parties with respect to any of the liabilities, claims, causes of actions or
demands described in the foregoing release. Notwithstanding any provision
contained herein to the contrary, the provisions of this Section 10 shall
remain in full force and effect and shall survive any termination or expiration
of this Agreement and the consummation of any of the transactions contemplated
herein. As used in this Section 10, an "Acquisition Event" shall mean the first
to occur of (i) the acceptance of any Shares for payment pursuant to the Offer,
(ii) the consummation of the Merger or (iii) the consummation of any
Acquisition Proposal with Nortek or any of its affiliates.
11. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Shares and Options
and shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares or Options shall pass, whether by operation of law or
otherwise, including, without limitation, such Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares or Options,
the transferor shall remain liable for the performance of all obligations under
this Agreement of the transferor.
12
<PAGE> 13
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other parties,
provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any affiliate of Parent or, after a Termination Event,
to any person making an Acquisition Proposal, but no such assignment shall
relieve Parent of its obligations hereunder if such assignee does not perform
such obligations.
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto; provided that either Schedule I or II hereto may be supplemented by
Parent by adding the name and other relevant information concerning any
stockholder of the Company who agrees to be bound by the terms of this Agreement
without the agreement of any other party hereto, and thereafter such added
stockholder shall be treated as a "Stockholder" for all purposes of this
Agreement; provided further that after a Termination Event, this Agreement may
be amended, changed, supplemented, waived or otherwise modified or terminated
without the consent of, or the execution of any written agreement on the part
of, Nortek and NTK, so long as such amendment, change, supplement, waiver or
modification does not increase the obligations of either Nortek or NTK
hereunder.
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses or the addresses set forth on the
signature pages hereto:
If to Mr. Silverman: Jeffrey S. Silverman
At his home address as supplementally provided
to the parties hereto.
copy to: Squadron Ellenoff Plesent & Sheinfeld
551 5th Avenue
New York, New York 10176
Attn: Joel I. Papernik
Telecopy: (212) 697-6686
If to Mr. Dooskin: Herbert P. Dooskin
At his home address as supplementally provided
to the parties hereto.
copy to: Squadron Ellenoff Plesent & Sheinfeld
551 5th Avenue
New York, New York 10176
13
<PAGE> 14
Attn: Joel I. Papernik
Telecopy: (212) 697-6686
If to Mr. Snyder: Dana R. Snyder
At his home address as supplementally provided
to the parties hereto.
copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attn: Richard D. Bohm
Telecopy: (212) 909-6836
If to Parent or Sub: Atrium Acquisition Holdings Corp.
and
Atrium/PG Acquisition Corp.
1341 West Mockingbird Lane
Suite 1200 West
Dallas, Texas 75247
Attn: Randall Fojtasek
Telecopy: (214) 630-5013
copies to: Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Jeffrey S. Fronterhouse
Telecopy: (214) 740-7313
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Telecopy: (214) 740-7313
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
Attn: A. Winston Oxley
Telecopy: (214) 999-7891
14
<PAGE> 15
If to the Company: Ply Gem Industries, Inc.
777 Third Avenue
New York, New York 10017
Attn: Jeffrey S. Silverman
Telecopy: (212) 888-0472
copy to: Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attn: Victor Lewkow
Telecopy: (212) 225-3999
If to Nortek or NTK: Nortek, Inc. and NTK Sub, Inc.
50 Kennedy Plaza
Providence, RI 02903
Attn: Richard L. Bready
Telecopy: (401) 751-4610
copy to: Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attn: David C. Chapin, Esq.
Telecopy: (617) 951-7050
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
15
<PAGE> 16
(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to be
for the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto; provided that, in the event of a Stockholder's
death, the benefits to be received by the Stockholder hereunder shall inure to
his successors and heirs.
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) JURISDICTION. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Court of Chancery in the State of Delaware in any
action, suit or proceeding arising in connection with this Agreement, and agrees
that any such action, suit or proceeding shall be brought only in such court
(and waives any objection based on forum non conveniens or any other objection
to venue therein); provided, however, that such consent to jurisdiction is
solely for the purpose referred to in this paragraph (l) and shall not be deemed
to be a general submission to the jurisdiction of said Court or in the State of
Delaware other than for such purposes. Each party hereto hereby waives any right
to a trial by jury in connection with any such action, suit or proceeding.
(m) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(n) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement. This Agreement shall not be
effective as to any party hereto until such time as this Agreement or a
counterpart thereof has been executed and delivered by each party hereto.
(o) PRIOR AGREEMENT. This agreement is executed and delivered as an
Amendment and Restatement of that certain Stockholders Agreement dated as of
June 24, 1997, between the parties hereto and this Agreement shall supersede
such prior agreement in its entirety.
16
<PAGE> 17
(p) TRUST FUNDS. In the event that any party hereto should
receive any funds that are to be paid to another party pursuant to the terms of
this Agreement, then the receiving party shall hold such funds in trust for the
benefit of the party entitled to receive such funds and shall promptly pay such
funds to the party entitled to receive such funds in accordance with this
Agreement.
12. ACKNOWLEDGMENT BY COMPANY. The parties hereby acknowledge and
agree that the acceptance of any Shares for payment pursuant to the Offer or
other tender offer for a majority of the outstanding Shares will constitute a
"change of control" under the terms of the various agreements governing the
Options set forth on Schedule II hereto and that for purposes of the
transactions contemplated by this Agreement all restrictions on transferability
and vesting applicable to any of the Unvested Stock or restricted Shares on
Schedule I hereto shall be terminated.
17
<PAGE> 18
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on this 24th day of July, 1997.
/s/ Jeffrey S. Silverman
-----------------------------------
Jeffrey S. Silverman
/s/ Dana R. Snyder
-----------------------------------
Dana R. Snyder
/s/ Herbert P. Dooskin
-----------------------------------
Herbert P. Dooskin
Atrium Acquisition Holdings Corp.
By: /s/ Jeffrey Fronterhouse
--------------------------------
Name: Jeffrey Fronterhouse
------------------------------
Title: Executive Vice President
-----------------------------
Atrium/PG Acquisition Corp.
By: /s/ Jeffrey Fronterhouse
----------------------------------
Name: Jeffrey Fronterhouse
--------------------------------
Title: Executive Vice President
-------------------------------
Ply Gem Industries, Inc.
By: /s/ Jeffrey S. Silverman
----------------------------------
Name: Jeffrey S. Silverman
--------------------------------
Title: Chairman
-------------------------------
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<PAGE> 19
Nortek, Inc.
By: /s/ Kevin W. Donnelly
--------------------------------------
Name: Kevin W. Donnelly
------------------------------------
Title: Vice President and General Counsel
-----------------------------------
NTK Sub, Inc.
By: /s/ Kevin W. Donnelly
--------------------------------------
Name: Kevin W. Donnelly
------------------------------------
Title: Vice President
-----------------------------------
19
<PAGE> 20
<TABLE>
SCHEDULE I TO
STOCKHOLDERS AGREEMENT
<CAPTION>
NAME OF STOCKHOLDER NUMBER OF SHARES OWNED
------------------- ----------------------
<S> <C>
Herbert P. Dooskin 1,337
Dana R. Snyder 3,747
Jeffrey S. Silverman 1,130,177
Jeffrey S. Silverman, Restricted Stock 100,000
</TABLE>
Excludes shares owned by pension/profit share/401(K)/TRA Plans.
<PAGE> 21
<TABLE>
SCHEDULE II TO
STOCKHOLDERS AGREEMENT
<CAPTION>
OPTION NUMBER OF OPTION
NAME DATE SHARES PRICE TYPE
- ------------------------------------ -------- --------- -------- --------
<S> <C> <C> <C> <C>
Herbert P. Dooskin 01/28/88 8,000 $10.750 ISO
01/28/88 75,000 10.750 NQSO
01/28/88 75,000 10.750 Note 1
01/26/89 75,000 12.250 NQSO
01/26/89 75,000 12.250 Note 1
01/26/89 8,000 12.250 ISO
01/23/92 10,000 9.750 ISO
11/24/92 75,000 10.250 NQSO
01/29/93 75,000 12.000 NQSO
05/20/93 9,000 10.375 ISO
11/07/94 50,000 19.125 NQSO
Jeffrey S. Silverman 01/28/88 300,000 10.750 NQSO
01/28/88 300,000 10.750 Note 1
01/26/89 300,000 12.250 NQSO
01/26/89 300,000 12.250 Note 1
11/24/92 325,000 10.250 NQSO
01/29/93 513,500 12.000 NQSO
05/20/93 9,000 10.375 ISO
11/07/94 750,000 19.125 NQSO
08/20/96 750,000 12.500 NQSO
Note 1. Options on Change of Control
Dana R. Snyder 06/02/95 6,250 16.000 ISO
06/02/95 293,750 16.000 NQSO
10/27/95 250,000 16.000 NQSO
01/02/96 6,060 16.500 ISO
01/02/96 210,782 16.500 NQSO
08/20/96 33,158 12.500 NQSO
08/20/96 116,842 12.500 NQSO
</TABLE>
