<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE OF 1934
PLY GEM INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.25 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
72941610
- --------------------------------------------------------------------------------
(CUSIP Number of Class of Securities)
Lawrence D. Stuart, Jr.
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Bidders)
Copy to:
Michael D. Wortley
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
- --------------------------------------------------------------------------------
June 24, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement on Schedule 13D
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this schedule because of Rule
13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 148 Pages
<PAGE> 2
CUSIP NO. 72941610
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Atrium/PG Acquisition Corp.
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, OO, BK
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
- ----------------------------------------------------------------------------------------------------------------------------------
8 SHARED VOTING POWER
1,235,261* shares
- ----------------------------------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- ----------------------------------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.8%
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On June 24, 1997, Atrium Acquisition Holdings Corp., a Delaware corporation
("Parent"), and Atrium/PG Acquisition Corp., a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Sub "), entered into a Stockholders
Agreement (the "Stockholders Agreement") with Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), and Jeffrey S. Silverman, Dana R. Snyder
and Herbert P. Dooskin (the "Stockholders"), pursuant to which the Stockholders
agreed to vote all shares of the Company's common stock, par value $.25 per
share (the "Common Stock") currently owned or subsequently acquired (the
"Shares"), for the Agreement and Plan of Merger among Atrium Acquisition
Holding Corp., Atrium/PG Acquisition Corp. and the Company dated as of June 24,
1997 (the "Merger Agreement"), and to grant Parent a proxy to vote the Shares
of the Stockholders. The Stockholders have also granted Parent an option to
purchase the 1,235,261 shares of Common Stock currently owned by the
Stockholders plus an option to purchase 4,999,342 shares of Common Stock which
may be acquired upon exercise of options currently held by the Stockholders.
The above discussion of the Stockholders Agreement is qualified in its entirety
by reference to the Stockholders Agreement which is filed as an exhibit to this
Schedule 13D.
2
<PAGE> 3
CUSIP NO. 72941610
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Atrium Acquisition Holdings Corp.
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, OO, BK
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
- ----------------------------------------------------------------------------------------------------------------------------------
8 SHARED VOTING POWER
1,235,261* shares
- ----------------------------------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- ----------------------------------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.8%
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO, HC
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On June 24, 1997, Atrium Acquisition Holdings Corp., a Delaware corporation
("Parent"), and Atrium/PG Acquisition Corp., a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Sub "), entered into a Stockholders
Agreement (the "Stockholders Agreement") with Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), and Jeffrey S. Silverman, Dana R. Snyder
and Herbert P. Dooskin (the "Stockholders"), pursuant to which the Stockholders
agreed to vote all shares of the Company's common stock, par value $.25 per
share (the "Common Stock") currently owned or subsequently acquired (the
"Shares"), for the Agreement and Plan of Merger among Atrium Acquisition
Holding Corp., Atrium/PG Acquisition Corp. and the Company dated as of June 24,
1997 (the "Merger Agreement"), and to grant Parent a proxy to vote the Shares
of the Stockholders. The Stockholders have also granted Parent an option to
purchase the 1,235,261 shares of Common Stock currently owned by the
Stockholders plus an option to purchase 4,999,342 shares of Common Stock which
may be acquired upon exercise of options currently held by the Stockholders.
The above discussion of the Stockholders Agreement is qualified in its entirety
by reference to the Stockholders Agreement which is filed as an exhibit to this
Schedule 13D.
3
<PAGE> 4
CUSIP NO. 72941610
<TABLE>
<S> <C> <C> <<C>
- ----------------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Atrium Corporation
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, OO BK
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
- ----------------------------------------------------------------------------------------------------------------------------------
8 SHARED VOTING POWER
1,235,261* shares
- ----------------------------------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- ----------------------------------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.8%
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO, HC
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On June 24, 1997, Atrium Acquisition Holdings Corp., a Delaware corporation
("Parent"), and Atrium/PG Acquisition Corp., a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Sub "), entered into a Stockholders
Agreement (the "Stockholders Agreement") with Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), and Jeffrey S. Silverman, Dana R. Snyder
and Herbert P. Dooskin (the "Stockholders"), pursuant to which the Stockholders
agreed to vote all shares of the Company's common stock, par value $.25 per
share (the "Common Stock") currently owned or subsequently acquired (the
"Shares"), for the Agreement and Plan of Merger among Atrium Acquisition
Holding Corp., Atrium/PG Acquisition Corp. and the Company dated as of June 24,
1997 (the "Merger Agreement"), and to grant Parent a proxy to vote the Shares
of the Stockholders. The Stockholders have also granted Parent an option to
purchase the 1,235,261 shares of Common Stock currently owned by the
Stockholders plus an option to purchase 4,999,342 shares of Common Stock which
may be acquired upon exercise of options currently held by the Stockholders.
The above discussion of the Stockholders Agreement is qualified in its entirety
by reference to the Stockholders Agreement which is filed as an exhibit to this
Schedule 13D.
4
<PAGE> 5
CUSIP NO. 72941610
<TABLE>
<S> <C> <C> <<C>
- ----------------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HM3 Coinvestors, L.P.
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, OO BK
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Texas
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
- ----------------------------------------------------------------------------------------------------------------------------------
8 SHARED VOTING POWER
1,235,261* shares
- ----------------------------------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- ----------------------------------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.8%
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On June 24, 1997, Atrium Acquisition Holdings Corp., a Delaware corporation
("Parent"), and Atrium/PG Acquisition Corp., a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Sub "), entered into a Stockholders
Agreement (the "Stockholders Agreement") with Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), and Jeffrey S. Silverman, Dana R. Snyder
and Herbert P. Dooskin (the "Stockholders"), pursuant to which the Stockholders
agreed to vote all shares of the Company's common stock, par value $.25 per
share (the "Common Stock") currently owned or subsequently acquired (the
"Shares"), for the Agreement and Plan of Merger among Atrium Acquisition
Holding Corp., Atrium/PG Acquisition Corp. and the Company dated as of June 24,
1997 (the "Merger Agreement"), and to grant Parent a proxy to vote the Shares
of the Stockholders. The Stockholders have also granted Parent an option to
purchase the 1,235,261 shares of Common Stock currently owned by the
Stockholders plus an option to purchase 4,999,342 shares of Common Stock which
may be acquired upon exercise of options currently held by the Stockholders.
The above discussion of the Stockholders Agreement is qualified in its entirety
by reference to the Stockholders Agreement which is filed as an exhibit to this
Schedule 13D.
5
<PAGE> 6
CUSIP NO. 72941610
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hicks, Muse, Tate & Furst Equity Fund III, L.P.
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC, OO, BK
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
- ----------------------------------------------------------------------------------------------------------------------------------
8 SHARED VOTING POWER
1,235,261* shares
- ----------------------------------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- ----------------------------------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.8%
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On June 24, 1997, Atrium Acquisition Holdings Corp., a Delaware corporation
("Parent"), and Atrium/PG Acquisition Corp., a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Sub "), entered into a Stockholders
Agreement (the "Stockholders Agreement") with Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), and Jeffrey S. Silverman, Dana R. Snyder
and Herbert P. Dooskin (the "Stockholders"), pursuant to which the Stockholders
agreed to vote all shares of the Company's common stock, par value $.25 per
share (the "Common Stock") currently owned or subsequently acquired (the
"Shares"), for the Agreement and Plan of Merger among Atrium Acquisition
Holding Corp., Atrium/PG Acquisition Corp. and the Company dated as of June 24,
1997 (the "Merger Agreement"), and to grant Parent a proxy to vote the Shares
of the Stockholders. The Stockholders have also granted Parent an option to
purchase the 1,235,261 shares of Common Stock currently owned by the
Stockholders plus an option to purchase 4,999,342 shares of Common Stock which
may be acquired upon exercise of options currently held by the Stockholders.
The above discussion of the Stockholders Agreement is qualified in its entirety
by reference to the Stockholders Agreement which is filed as an exhibit to this
Schedule 13D.
6
<PAGE> 7
CUSIP NO. 72941610
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HM3/GP Partners, L.P..
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, OO BK
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Texas
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
- ----------------------------------------------------------------------------------------------------------------------------------
8 SHARED VOTING POWER
1,235,261* shares
- ----------------------------------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- ----------------------------------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.8%
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On June 24, 1997, Atrium Acquisition Holdings Corp., a Delaware corporation
("Parent"), and Atrium/PG Acquisition Corp., a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Sub "), entered into a Stockholders
Agreement (the "Stockholders Agreement") with Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), and Jeffrey S. Silverman, Dana R. Snyder
and Herbert P. Dooskin (the "Stockholders"), pursuant to which the Stockholders
agreed to vote all shares of the Company's common stock, par value $.25 per
share (the "Common Stock") currently owned or subsequently acquired (the
"Shares"), for the Agreement and Plan of Merger among Atrium Acquisition
Holding Corp., Atrium/PG Acquisition Corp. and the Company dated as of June 24,
1997 (the "Merger Agreement"), and to grant Parent a proxy to vote the Shares
of the Stockholders. The Stockholders have also granted Parent an option to
purchase the 1,235,261 shares of Common Stock currently owned by the
Stockholders plus an option to purchase 4,999,342 shares of Common Stock which
may be acquired upon exercise of options currently held by the Stockholders.
The above discussion of the Stockholders Agreement is qualified in its entirety
by reference to the Stockholders Agreement which is filed as an exhibit to this
Schedule 13D.
7
<PAGE> 8
CUSIP NO. 72941610
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hicks, Muse GP Partners III, L.P.
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, OO, BK
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Texas
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
- ----------------------------------------------------------------------------------------------------------------------------------
8 SHARED VOTING POWER
1,235,261* shares
- ----------------------------------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- ----------------------------------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.8%
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On June 24, 1997, Atrium Acquisition Holdings Corp., a Delaware corporation
("Parent"), and Atrium/PG Acquisition Corp., a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Sub "), entered into a Stockholders
Agreement (the "Stockholders Agreement") with Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), and Jeffrey S. Silverman, Dana R. Snyder
and Herbert P. Dooskin (the "Stockholders"), pursuant to which the Stockholders
agreed to vote all shares of the Company's common stock, par value $.25 per
share (the "Common Stock") currently owned or subsequently acquired (the
"Shares"), for the Agreement and Plan of Merger among Atrium Acquisition
Holding Corp., Atrium/PG Acquisition Corp. and the Company dated as of June 24,
1997 (the "Merger Agreement"), and to grant Parent a proxy to vote the Shares
of the Stockholders. The Stockholders have also granted Parent an option to
purchase the 1,235,261 shares of Common Stock currently owned by the
Stockholders plus an option to purchase 4,999,342 shares of Common Stock which
may be acquired upon exercise of options currently held by the Stockholders.
The above discussion of the Stockholders Agreement is qualified in its entirety
by reference to the Stockholders Agreement which is filed as an exhibit to this
Schedule 13D.
8
<PAGE> 9
CUSIP NO. 72941610
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hicks, Muse Fund III Incorporated
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, OO
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Texas
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
- ----------------------------------------------------------------------------------------------------------------------------------
8 SHARED VOTING POWER
1,235,261* shares
- ----------------------------------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- ----------------------------------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.8%
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On June 24, 1997, Atrium Acquisition Holdings Corp., a Delaware corporation
("Parent"), and Atrium/PG Acquisition Corp., a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Sub "), entered into a Stockholders
Agreement (the "Stockholders Agreement") with Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), and Jeffrey S. Silverman, Dana R. Snyder
and Herbert P. Dooskin (the "Stockholders"), pursuant to which the Stockholders
agreed to vote all shares of the Company's common stock, par value $.25 per
share (the "Common Stock") currently owned or subsequently acquired (the
"Shares"), for the Agreement and Plan of Merger among Atrium Acquisition
Holding Corp., Atrium/PG Acquisition Corp. and the Company dated as of June 24,
1997 (the "Merger Agreement"), and to grant Parent a proxy to vote the Shares
of the Stockholders. The Stockholders have also granted Parent an option to
purchase the 1,235,261 shares of Common Stock currently owned by the
Stockholders plus an option to purchase 4,999,342 shares of Common Stock which
may be acquired upon exercise of options currently held by the Stockholders.
The above discussion of the Stockholders Agreement is qualified in its entirety
by reference to the Stockholders Agreement which is filed as an exhibit to this
Schedule 13D.
9
<PAGE> 10
CUSIP NO. 72941610
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Thomas O. Hicks
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, OO BK
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
- ----------------------------------------------------------------------------------------------------------------------------------
8 SHARED VOTING POWER
1,235,261* shares
- ----------------------------------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- ----------------------------------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,234,603* shares
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.8%
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* On June 24, 1997, Atrium Acquisition Holdings Corp., a Delaware corporation
("Parent"), and Atrium/PG Acquisition Corp., a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Sub "), entered into a Stockholders
Agreement (the "Stockholders Agreement") with Ply Gem Industries, Inc., a
Delaware corporation (the "Company"), and Jeffrey S. Silverman, Dana R. Snyder
and Herbert P. Dooskin (the "Stockholders"), pursuant to which the Stockholders
agreed to vote all shares of the Company's common stock, par value $.25 per
share (the "Common Stock") currently owned or subsequently acquired (the
"Shares"), for the Agreement and Plan of Merger among Atrium Acquisition
Holding Corp., Atrium/PG Acquisition Corp. and the Company dated as of June 24,
1997 (the "Merger Agreement"), and to grant Parent a proxy to vote the Shares
of the Stockholders. The Stockholders have also granted Parent an option to
purchase the 1,235,261 shares of Common Stock currently owned by the
Stockholders plus an option to purchase 4,999,342 shares of Common Stock which
may be acquired upon exercise of options currently held by the Stockholders.
The above discussion of the Stockholders Agreement is qualified in its entirety
by reference to the Stockholders Agreement which is filed as an exhibit to this
Schedule 13D.
10
<PAGE> 11
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This statement relates to shares of the common stock, par value $.25
per share (the "COMMON STOCK"), of 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 10017-1401
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c), (f) This Statement is filed by Atrium Acquisition
Holdings Corp. ("PARENT"), Atrium/PG Acquisition Corp. ("SUB"), Atrium
Corporation ("ATRIUM"), HM3 Coinvestors, L. P.("COINVESTORS"), Hicks, Muse,
Tate & Furst Equity Fund III, L.P. ("EQUITY FUND"), HM3/GP Partners,
L.P.,("HM3/GP") Hicks, Muse GP Partners III, L.P. ("GP PARTNERS"), Hicks, Muse
Fund III Incorporated ("FUND III"), and Thomas O. Hicks ("MR. HICKS"),
sometimes collectively referred to herein as the "REPORTING PERSONS."
Parent, a Delaware corporation, is a recently organized holding
company, the primary asset of which is the common stock of Sub. Parent, a
subsidiary of Atrium, was organized for the purpose of effecting the Merger (as
hereinafter defined) and acquire all of the outstanding shares of Common Stock.
Parent has not engaged in any activities except in connection with the Merger.
The principal executive office of Parent is 1341 W. Mockingbird Lane, Suite
1200W, Dallas, Texas 75247.
Sub, a Delaware corporation, was organized for the purpose of
effecting the Merger and has not conducted any unrelated activities since its
organization. All of the outstanding capital stock of Sub is owned by Parent.
The address of the principal business office of Sub is 1341 W. Mockingbird
Lane, Suite 1200W, Dallas, Texas 75247.
Atrium, a Delaware corporation, is a holding company, the primary
assets of which are the capital stock of Atrium Companies, Inc., which is
principally engaged in the manufacturing and distribution of residential
windows and doors in the Southwest, South and Southeast regions of the United
States, and Parent. The principal executive offices of Atrium are located at
1341 W. Mockingbird, Suite 1200W, Dallas, Texas 75247.
Equity Fund is a Delaware limited partnership whose sole general
partner is HM3/GP. Equity Fund is principally engaged in investing in
securities. The address of the principal business office of Equity Fund is 200
Crescent Court, Suite 1600, Dallas, Texas 75201.
Coinvestors is a Texas limited partnership principally engaged in
investing in securities. The sole general partner of Coinvestors is GP Partners
. The address of the principal business office of Coinvestors is 200 Crescent
Court, Suite 1600, Dallas, Texas 75201.
HM3/GP is a Texas limited partnership principally engaged in investing
in securities. The sole general partner of HM3/GP is GP Partners . The
address of the principal business office of HM3/GP is 200 Crescent Court, Suite
1600, Dallas, Texas 75201.
GP Partners is a Texas limited partnership principally engaged in
investing in securities. The sole general partner of GP Partners is Fund III.
The address of the principal business office of Sub is 200 Crescent Court,
Suite 1600, Dallas, Texas 75201.
Fund III is a Texas corporation. Fund III is a private investment
firm primarily engaged in investing in securities. The address of the
principal business office of Fund III is 200 Crescent Court, Suite 1600,
Dallas, Texas 75201.
Mr. Hicks is the controlling shareholder and the Chairman of the
Board, President, Chief Executive Officer, Chief Operating Officer and
Secretary of Fund III and Hicks, Muse, Tate & Furst Incorporated ("HICKS
MUSE"), a private
11
<PAGE> 12
investment firm primarily engaged in leveraged acquisitions, recapitalizations,
and other principal investing activities. The address of the principal
business office of Mr. Hicks is 200 Crescent Court, Suite 1600, Dallas, Texas
75201. Mr. Hicks is a citizen of the United States.
The name; business address; present principal occupation or
employment; and the name, principal business and address of each corporation or
other organization in which such occupation of employment is conducted for each
executive officer or director, each controlling person, and each executive or
director of such controlling person of Atrium, Parent, Sub, and Fund III are
set forth on Schedule I hereto, which Schedule I is incorporated herein by
reference.
(d)-(e) During the last five years, none of the Reporting Persons nor,
to their knowledge, any of the persons listed on Schedule I attached hereto,
(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 or order
enjoining future violations of, or prohibiting activities subject to, federal
or state securities laws or finding any violation of such laws.
ITEM 3. SOURCES AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The funds required to consummate the transactions contemplated by the
Merger Agreement (as hereinafter defined) will be obtained through (i) equity
financing, (ii) senior credit facilities and (iii) a possible debt offering.
Parent has delivered to the Company a binding commitment letter from Equity
Fund pursuant to which Equity Fund will provide equity financing in the amount
of up to $140 million in exchange for nonvoting common stock of Atrium. In
addition, Parent has delivered to the Company a binding commitment letter from
The Chase Manhattan Bank ("CHASE") and Chase Securities Inc. ("CSI") pursuant
to which Chase will make available to Atrium Companies, Inc., a Delaware
corporation and wholly owned subsidiary of Atrium ("ACI"), senior credit
facilities in the aggregate amount of $425 million. CSI will serve as the
arranger and advisor for the credit facilities. It is possible that ACI may
issue certain senior subordinated notes to institutional investors to finance
part of the transactions contemplated by the Merger Agreement. The proceeds of
any debt offering would be used to repay or replace a portion of the senior
credit facilities.
The Common Stock to which this Schedule 13D relates was acquired
pursuant to the Stockholders Agreement (as hereinafter defined) which is more
fully described in response to Item 6 and filed as an exhibit hereto. The
Stockholders Agreement is incorporated herein by reference.
ITEM 4. PURPOSE OF THE TRANSACTION.
The purpose of the acquisition of the Common Stock pursuant to the
Stockholders Agreement is to facilitate the merger of Sub with and into the
Company (the "MERGER"), with the Company surviving the Merger, pursuant to and
upon the terms of the Merger Agreement. At the effective time of the Merger,
each share of Common Stock issued and outstanding immediately prior to the
effective time shall be converted into the right to receive $18.75 payable to
the holder thereof in cash, without any interest thereon (the "MERGER
CONSIDERATION"), upon surrender and exchange of the certificate representing
such share of Common Stock and the Company will become a wholly owned
subsidiary of ACI.
ITEM 5. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) As of the close of business on June 24, 1997, the each of the
Reporting Persons may each be deemed to have beneficially owned 6,234,603
shares or 32.8 percent of the Common Stock by virtue of the terms of the
Stockholders Agreement.
12
<PAGE> 13
(b) On June 24, 1997, each of the Reporting Persons may be deemed
to have shared power to vote or to direct the vote of 1,234,261 shares of the
Company Common Stock. On June 24, 1997, each of the Reporting Persons may be
deemed to have shared power to dispose of or to direct the disposition of
6,234,603 shares of the Common Stock.
(d) Until such time as Parent's option is exercised, each of the
Stockholders (as hereinafter defined) will have the right to receive and the
power to direct the receipt of any dividends on the Common Stock. Upon
exercise of Parent's option under the Stockholders Agreement, the Stockholders
will receive the proceeds from the sale of the Shares (as hereinafter defined).
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
On June 24, 1997, Parent and Sub entered into a Stockholders Agreement
(the "STOCKHOLDERS AGREEMENT") with the Company and Jeffrey S. Silverman, Dana
R. Snyder and Herbert P. Dooskin (the "STOCKHOLDERS"). Pursuant to the terms
of the Stockholders Agreement, the Stockholders agreed, subject to certain
terms and conditions, to vote all shares of Common Stock currently owned or
subsequently acquired by them (the "SHARES") (i) in favor of the approval and
adoption of the Agreement and Plan of Merger among Parent, Sub and the Company
dated as of June 24, 1997 (the "MERGER AGREEMENT") and the Merger; (ii) against
any action or agreement that would result in a breach in any respect of any
covenant, representation, or warranty or any other obligation or agreement of
the Company under the Merger Agreement or the Stockholders Agreement; and (iii)
except as agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or its
subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (C)(1) any
change in a majority of the persons who constitute the board of directors of
the Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or Bylaws; (3) any
other material change in the Company's corporate structure or business; or (4)
any other action which, in the case of each of the matters referred to in
clauses (C) (1), (2), (3) or (4), is intended, or could reasonably be expected,
to impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by the Stockholders Agreement and the
Merger Agreement. During the term of the Stockholders Agreement, the
Stockholders shall not enter into any agreement or understanding with any
person or entity the effect of which would be inconsistent or violative of the
above provisions and agreements.
Pursuant to the Stockholders Agreement, each Stockholder has granted
to Parent a proxy to vote the Shares of such Stockholder. Each Stockholder
intends such proxy to be irrevocable and coupled with an interest and will take
such further action or execute such other instruments as may be necessary to
effectuate the intent of the proxy and revoke any proxy previously granted by
such Stockholder with respect to such Shares.
Pursuant to the Stockholders Agreement each Stockholder shall vote his
Shares in favor of the approval and adoption of the Merger and the Merger
Agreement (and Parent shall be entitled to exercise the proxy granted to Parent
as described in the previous paragraph to so vote) if, but only if, a majority
of the issued and outstanding Company Common Stock (that is not subject to the
Stockholders Agreement) that is represented in person or by proxy at any
meeting of the holders of Company Common Stock shall have voted to approve and
adopt the Merger and the Merger Agreement. In any other event a Stockholder
shall abstain with respect to the approval and adoption of the Merger and
Merger Agreement. This provision of the Stockholders Agreement is for the
benefit of, and may not be amended or waived without the written approval of,
the Company.
Each of the Stockholders has also granted to Parent an irrevocable
option (each, a "PURCHASE OPTION" and collectively, the "PURCHASE OPTIONS") to
purchase the Shares owned or which may be acquired by the Stockholders pursuant
to the options (including any additional Shares that may be issuable as a
result of a "CHANGE OF CONTROL") owned by such Stockholder as a result of the
Stockholder's exercise of the option at a purchase price per share equal to the
Merger Consideration (the "PURCHASE PRICE"). If the Merger Agreement is
terminated in a manner which results in the Company being obligated to pay
certain fees and reimbursements under Section 6.4 of the Merger Agreement (a
"TRIGGER
13
<PAGE> 14
TERMINATION"), the Purchase Options shall become exercisable, in whole but not
in part, upon the date of such termination and remain exercisable in whole but
not in part until the date which is 60 days (or 120 days if, as of the date of
such termination, no "change of control" shall have occurred under the terms of
the various agreements governing the Options) after the date of the occurrence
of such termination (the "OPTION PERIOD"), so long as: (i) all waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
required for the purchase 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 Purchase Options pursuant to the Stockholders Agreement. In the event that
Parent wishes to exercise the Purchase Options, Parent shall send a written
notice (the "NOTICE") to the Stockholders identifying the place and date (not
less than two nor more than 20 business days from the date of the Notice) for
the closing of such purchase.
Upon receipt of the Notice to the extent not previously exercised,
prior to or contemporaneously with the closing of the purchase of the Option
Shares, each Stockholder shall exercise in full the Options.
In the event that Parent has purchased the Option Shares pursuant to
the Purchase Option and, within 180 days after the closing of such purchase,
sells, transfers or disposes of any of the Option Shares in a transaction with
a non-affiliate of Parent (a "DISPOSITION") then, within two business days
after the closing of such Disposition, Parent 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 Option) of 25% of the Net Profit
realized by Parent in connection with such Disposition. As used herein, Net
Profit shall mean an amount equal to (a) the excess, if any, of the gross
amount realized by Parent from a Disposition over the Purchase Price paid with
respect to the Option Shares subject to such Disposition, minus the sum of (b)
all reasonable out-of- pocket fees, costs and expenses incurred by Parent and
its affiliates in connection 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 (c) all customary brokerage fees and
commissions, if any, incurred in connection with such Disposition.
Pursuant to a Financial Advisory Agreement dated November 27, 1996 an
affiliate of Fund III will receive an advisory fee of 1.5% of the "transaction
value." The term "TRANSACTION VALUE" means the total value of the transaction,
including without limitation, the aggregate amount of the funds required to
complete the transaction (excluding any fees payable pursuant to the Financial
Advisory Agreement), including the amount of any indebtedness, preferred stock
or similar items assumed (or remaining outstanding).
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
99(1) Joint Filing Agreement among the Reporting Persons
99(2) Chase Securities Inc. and The Chase Manhattan Bank Commitment Letter
Dated June 23, 1997.
99(3) Merger Agreement, including the Stockholders Agreement attached
thereto as an Exhibit B
99(4) Financial Advisory Agreement dated as of November 27, 1996 among
Atrium , ACI and Hicks, Muse & Co. Partners, L.P.
14
<PAGE> 15
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 3, 1997
ATRIUM/PG ACQUISITION CORP.
By:/s/ Jeffry S. Fronterhouse
--------------------------
Name: Jeffry S. Fronterhouse
--------------------------------------
Title: Executive Vice President and
Secretary
--------------------------------------
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 3, 1997
ATRIUM ACQUISITION HOLDINGS
CORP.
By:/s/ Jeffry S. Fronterhouse
--------------------------
Name: Jeffry S. Fronterhouse
---------------------------------
Title: Executive Vice President and
Secretary
--------------------------------
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 3, 1997
ATRIUM CORPORATION
By:/s/ Jeffry S. Fronterhouse
--------------------------
Name:Jeffry S. Fronterhouse
---------------------------------
Title:Executive Vice President
--------------------------------
<PAGE> 16
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 3, 1997
HM3 COINVESTORS, L.P.
By: Hicks, Muse GP Partners III, L.P.,
Its General Partner
By: Hicks, Muse Fund III Incorporated,
Its General Partner
By:/s/ Jeffry S. Fronterhouse
--------------------------
Name:Jeffry S. Fronterhouse
---------------------------------------
Title: Vice President
--------------------------------------
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 3, 1997
HICKS, MUSE, TATE & FURST EQUITY
FUND III, L.P.
By: HM3/GP Partners, L.P.,
Its General Partner
By: Hicks, Muse GP Partners III, L.P.,
Its General Partner
By: Hicks, Muse Fund III Incorporated,
Its General Partner
By:/s/ Jeffry S. Fronterhouse
--------------------------
Name:Jeffry S. Fronterhouse
---------------------------------------
Title: Vice President
--------------------------------------
<PAGE> 17
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 3, 1997
HM3/GP PARTNERS, L.P.
By: Hicks, Muse GP Partners III, L.P.,
Its General Partner
By: Hicks, Muse Fund III Incorporated,
Its General Partner
By:/s/ Jeffry S. Fronterhouse
--------------------------
Name:Jeffry S. Fronterhouse
-------------------------------------
Title: Vice President
------------------------------------
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 3, 1997
HICKS, MUSE GP PARTNERS III, L.P.
By: Hicks, Muse Fund III Incorporated,
Its General Partner
By:/s/ Jeffry S. Fronterhouse
--------------------------
Name:Jeffry S. Fronterhouse
-------------------------------------
Title: Vice President
------------------------------------
<PAGE> 18
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 3, 1997
HICKS, MUSE FUND III INCORPORATED
By:/s/ Jeffry S. Fronterhouse
--------------------------
Name:Jeffry S. Fronterhouse
------------------------------------
Title: Vice President
-----------------------------------
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 3, 1997
/s/ Thomas O. Hicks
-----------------------------------------
Thomas O. Hicks
<PAGE> 19
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF ATRIUM, PARENT, SUB AND HICKS, MUSE
A. DIRECTORS AND EXECUTIVE OFFICERS OF ATRIUM
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for each
director and executive officer of Atrium. Unless otherwise indicated below,
the address of each director and officer is Atrium Corporation, 1341 W.
Mockingbird, Suite 1200W, Dallas, Texas 75247 and each such person is a citizen
of the United States.
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL
BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT
---------------- ------------------------
<S> <C>
Randall S. Fojtasek . . . . . . . . . . . . . . . . Chairman of the Board, President and Chief Executive
Officer of Atrium
John R. Muse . . . . . . . . . . . . . . . . . . . Director of Managing Director and Principal,
200 Crescent Court, Suite 1600 Executive Vice President and Treasurer of Hicks Muse
Dallas, Texas 75201
Michael J. Levitt . . . . . . . . . . . . . . . . . Managing Director and Principal, and Executive Vice
1325 Avenue of the Americas President of Hicks Muse
25th Floor
New York, New York 10019
Michel Reichert . . . . . . . . . . . . . . . . . . Managing General Partner of Heritage Partners, Inc.
Heritage Fund I, L.P.
30 Rowes Wharf, Suite 300
Boston, MA 02110
Stephen M. Humphrey . . . . . . . . . . . . . . . . Director of Atrium
Riverwood International Corporation
3350 Cumberland Circle, Suite 1400
Atlanta, GA 30339
C. Dean Metropoulos . . . . . . . . . . . . . . . . Chief Executive Officer of C. Dean Metropoulos
Morningstar
3831 Turtle Creek Blvd.
Dallas, Texas 75219
Louis W. Simi, Jr. . . . . . . . . . . . . . . . . Executive Vice President of Atrium
Jeffry S. Fronterhouse . . . . . . . . . . . . . . Vice President of Hicks Muse
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Jeff L. Hull . . . . . . . . . . . . . . . . . . . Controller of Atrium
</TABLE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for each
director and executive officer of Parent. Unless otherwise indicated below,
<PAGE> 20
the address of each director and officer is Atrium Acquisition Holdings Corp.,
1341 W. Mockingbird, Suite 1200W, Dallas, Texas 75247 and each such person is
a citizen of the United States.
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL
BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT
---------------- ------------------------
<S> <C>
Michael J. Levitt . . . . . . . . . . . . . . . . . Managing Director and Principal, and Executive Vice
1325 Avenue of the Americas President of Hicks Muse
25th Floor
New York, New York 10019
Jeffry S. Fronterhouse . . . . . . . . . . . . . . Vice President of Hicks Muse
200 Crescent Court, Suite 1600
Dallas, Texas 75201
</TABLE>
C. DIRECTORS AND EXECUTIVE OFFICERS OF SUB
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment of each
director and executive officer of Sub. Unless otherwise indicated below, the
address of each director and officer is Atrium/PG Acquisition Corporation, 1341
W. Mockingbird, Suite 1200W, Dallas, Texas 75247 and each such person is a
citizen of the United States.
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL
BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT
---------------- ------------------------
<S> <C>
Michael J. Levitt . . . . . . . . . . . . . . . . . Managing Director and Principal, and Executive Vice
1325 Avenue of the Americas President of Hicks Muse
25th Floor
New York, New York 10019
Jeffry S. Fronterhouse . . . . . . . . . . . . . . Vice President of Hicks Muse
200 Crescent Court, Suite 1600
Dallas, Texas 75201
</TABLE>
D. DIRECTORS AND EXECUTIVE OFFICERS OF HICKS, MUSE FUND III INCORPORATED
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment of each
director and executive officer of Hicks, Muse Fund III Incorporated. Unless
otherwise indicated below, the address of each director and officer is Hicks,
Muse Fund III Incorporated, 200 Crescent Court, Suite 1600, Dallas, Texas
75201 and each such person is a citizen of the United States.
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL
BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT
---------------- ------------------------
<S> <C>
Thomas O. Hicks . . . . . . . . . . . . . . . . . . Chairman of the Board, President, Chief Executive
Officer, Chief Operating Officer and Secretary of
Hicks Muse
John R. Muse . . . . . . . . . . . . . . . . . . . Managing Director and Principal, Executive Vice
President and Treasurer of Hicks Muse
</TABLE>
<PAGE> 21
<TABLE>
<S> <C>
Charles W. Tate . . . . . . . . . . . . . . . . . . Managing Director and Principal, Executive Vice
President of Hicks Muse
Jack D. Furst . . . . . . . . . . . . . . . . . . . Managing Director and Principal, Executive Vice
President of Hicks Muse
Lawrence D. Stuart, Jr. . . . . . . . . . . . . . . Managing Director and Principal, Executive Vice
President of Hicks Muse
Alan B. Menkes . . . . . . . . . . . . . . . . . . Managing Director and Principal, Executive Vice
President of Hicks Muse
Michael J. Levitt . . . . . . . . . . . . . . . . . Managing Director and Principal, Executive Vice
1325 Avenue of the Americas President of Hicks Muse
25th Floor
New York, New York 10019
Michael D. Salim . . . . . . . . . . . . . . . . . Chief Financial and Administrative Officer, Vice
President, General Counsel and Assistant Secretary
of Hicks Muse
Eric C. Neuman . . . . . . . . . . . . . . . . . . Senior Vice President of Hicks Muse
Daniel S. Dross . . . . . . . . . . . . . . . . . . Vice President of Hicks Muse
Jeffry S. Fronterhouse . . . . . . . . . . . . . . Vice President of Hicks Muse
Patrick K. McGee . . . . . . . . . . . . . . . . . Vice President of Fund III
David W. Knickel . . . . . . . . . . . . . . . . . Treasurer, Assistant Secretary of Fund III
</TABLE>
<PAGE> 22
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
99(1) Joint Filing Agreement
99(2) Commitment Letter
99(3) Merger Agreement, including the Stockholders Agreement
attached thereto as an Exhibit
99(4) Financial Advisory Agreement dated as of November 27, 1996
among Atrium, ACI and Hicks, Muse & Co. Partners, L.P.
<PAGE> 1
EXHIBIT 99(1)
JOINT FILING AGREEMENT
The undersigned, and each of them, do hereby agree and consent to the
filing of a single statement on behalf of all of them on Schedule 13D and
amendments thereto, in accordance with the provisions of Rule 13d-1(f)(1) of
the Securities Exchange Act of 1934.
Dated: July 3, 1997
ATRIUM/PG ACQUISITION CORP.
By:/s/ Jeffry S. Fronterhouse
-----------------------------------
Name: Jeffry S. Fronterhouse
---------------------------------
Title: Executive Vice President and
Secretary
--------------------------------
ATRIUM ACQUISITION HOLDINGS
CORP.
By:/s/ Jeffry S. Fronterhouse
-----------------------------------
Name: Jeffry S. Fronterhouse
---------------------------------
Title: Executive Vice President and
Secretary
--------------------------------
ATRIUM CORPORATION
By:/s/ Jeffry S. Fronterhouse
-----------------------------------
Name: Jeffry S. Fronterhouse
---------------------------------
Title: Executive Vice President
--------------------------------
HM3 COINVESTORS, L.P.
By: Hicks, Muse GP Partners III,
L.P.,
Its General Partner
By: Hicks, Muse Fund III
Incorporated,
Its General Partner
By:/s/ Jeffry S. Fronterhouse
-----------------------------------
Name: Jeffry S. Fronterhouse
---------------------------------
Title: Vice President
--------------------------------
<PAGE> 2
HICKS, MUSE, TATE & FURST EQUITY
FUND III, L.P.
By: HM3/GP Partners, L.P.,
Its General Partner
By: Hicks, Muse GP Partners III,
L.P.,
Its General Partner
By: Hicks, Muse Fund III
Incorporated,
Its General Partner
By:/s/ Jeffry S. Fronterhouse
-----------------------------------
Name: Jeffry S. Fronterhouse
---------------------------------
Title: Vice President
--------------------------------
HM3/GP PARTNERS, L.P.
By: Hicks, Muse GP Partners III,
L.P.,
Its General Partner
By: Hicks, Muse Fund III
Incorporated,
Its General Partner
By:/s/ Jeffry S. Fronterhouse
-----------------------------------
Name: Jeffry S. Fronterhouse
---------------------------------
Title: Vice President
--------------------------------
HICKS, MUSE GP PARTNERS III, L.P.
By: Hicks, Muse Fund III
Incorporated,
Its General Partner
By:/s/ Jeffry S. Fronterhouse
-----------------------------------
Name: Jeffry S. Fronterhouse
---------------------------------
Title: Vice President
--------------------------------
HICKS, MUSE FUND III INCORPORATED
By:/s/ Jeffry S. Fronterhouse
-----------------------------------
Name: Jeffry S. Fronterhouse
---------------------------------
Title: Vice President
--------------------------------
/s/ Thomas O. Hicks
--------------------------------------
Thomas O. Hicks
<PAGE> 1
EXHIBIT 99(2)
[CHASE LOGO]
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
THE CHASE MANHATTAN BANK
270 Park Avenue
New York, New York 10017
June 23, 1997
COMMITMENT LETTER
Atrium Corporation
Atrium Companies, Inc.
1341 West Mockingbird Lane
Suite 1200 West
Dallas, Texas 75247
Attention: Randall Fojtasek, President and
Chief Executive Officer
Ladies and Gentlemen:
You have advised Chase Securities Inc. ("CSI") and The Chase
Manhattan Bank ("Chase") that Atrium Corporation, a Delaware corporation
("Holdings"), acting through two newly formed wholly-owned Delaware
corporations ("Acquisitionco A" and "Acquisitionco B"), proposes to acquire,
for a purchase price not exceeding $262,000,000 (which represents $18.75 per
share), all of the outstanding common stock of Ply Gem Industries, Inc., a
Delaware corporation (the "Acquired Company"). Acquisitionco A will be a direct
subsidiary of Holdings and Acquisitionco B will be a direct subsidiary of
Acquisitionco A. In conjunction therewith (i) Acquisitionco B will cause to be
cashed out and cancelled all outstanding options to purchase capital stock of
the Acquired Company (other than options held by Dana Snyder which will be
exchanged for options to acquire common stock of Holdings)
<PAGE> 2
2
for an aggregate consideration not exceeding $35,000,000 (which represents
$18.75 per share) net of option proceeds, (ii) Acquisitionco B and the Acquired
Company will be merged, with the Acquired Company as the surviving corporation
(the "Acquired Company Merger"), (iii) the Acquired Company will terminate or
modify or cause to be terminated or modified on satisfactory terms certain
existing contractual obligations between the Acquired Company and certain of
its shareholders for an aggregate consideration not exceeding $24,600,000 and
(iv) Holdings will repay in full and cause to be repaid in full substantially
all of the outstanding indebtedness of Holdings, the Acquired Company and their
respective subsidiaries (other than certain industrial development bond
obligations and capital lease obligations in the aggregate amount of
$20,000,000 and the currently outstanding senior subordinated notes of the
Borrower referred to below), the amount of indebtedness to be repaid currently
estimated to be approximately $166,700,000, and cause the Acquired Company's
accounts receivable facility to be liquidated. After giving effect to the
Acquired Company Merger, all of the capital stock of Acquisitionco A will be
contributed to Atrium Companies, Inc., a Delaware corporation (the "Borrower")
which is a wholly-owned subsidiary of Holdings, and Acquisitionco A and the
Borrower will be merged, with the Borrower as the surviving corporation (the
"Borrower Merger"; together with the Acquired Company Merger, the "Mergers").
The foregoing transactions are collectively referred to herein as the
"Acquisition". Upon completion of the Acquisition, all of the capital stock of
the Acquired Company will be directly owned by the Borrower, and all of the
capital stock of the Borrower will continue to be owned by Holdings. The date
on which the Acquisition is consummated is referred to as the "Closing Date".
You have also advised us that you propose to finance the
Acquisition and the related fees and expenses from the following sources: (a)
up to $425,000,000 of senior secured credit facilities (the "Credit
Facilities") of the Borrower comprised of four term loan facilities aggregating
not more than $325,000,000 (the "Term Loan Facilities") and a $100,000,000
revolving credit facility (the "Revolving Credit Facility") (with up to
$50,000,000, less the aggregate amount of the Acquired Company's industrial
development bond obligations and capital lease obligations which remain
outstanding at closing, of the Revolving Credit Facility being drawn at
closing) and (b) $140,000,000 in cash equity proceeds from funds managed by
Hicks Muse, Tate & Furst Incorporated ("HMT&F") and other persons satisfactory
to us from the sale of additional non-voting common stock of Holdings, the
proceeds of which will be contributed to the capital of the Borrower. A portion
of the Revolving Credit Facility would also be used to finance the continuing
operations of the Borrower and its subsidiaries.
CSI is pleased to advise you that it is willing to act as
exclusive advisor and arranger for the Credit Facilities. Furthermore, Chase is
pleased to advise you of its commitment to provide to the Borrower the entire
amount of the Credit Facilities and to act as exclusive administrative,
collateral, syndication and documentation agent in respect thereof. Attached
hereto as Exhibit A is a Summary of Terms and Conditions (the "Term Sheet")
setting forth the principal terms and conditions on and subject to which Chase
is committed to make available the Credit Facilities.
You have informed us that the Borrower intends to issue up to
$250,000,000 of its senior subordinated notes (the "Senior Subordinated Notes")
to finance the Acquisition. In the event all or any of the Senior Subordinated
Notes are issued, the aggregate amount of the Credit Facilities will be
<PAGE> 3
3
reduced by the principal amount of the Senior Subordinated Notes, in the
following order: first, to the Tranche C Term Loan Facility and the Tranche D
Term Loan Facility, with the allocation of the reduction of such Term Loan
Facilities to be satisfactory to the Lenders, second, to reduce the amount of
Revolving Credit Loans (but not the commitments under the Revolving Credit
Facility) which would otherwise be made on the Closing Date and third, to the
Tranche A Term Loan Facility and the Tranche B Term Loan Facility, with the
allocation of the reduction of such Term Loan Facilities to be satisfactory to
the Lenders. The Senior Subordinated Notes will have terms satisfactory to the
Lenders. You have advised us that CSI will act as exclusive manager, and has
the right to act as exclusive manager, for at least $175,000,000 of the Senior
Subordinated Notes to be issued at closing, the proceeds of which will be used
to repay or replace the Tranche C Term Loan and the Tranche D Term Loan.
As consideration for Chase's commitments hereunder and CSI's and
Chase's agreements to perform the services described herein with respect to the
Credit Facilities, you agree to pay to Chase the nonrefundable fees described
in the Term Sheet and in the separate Fee Letter dated the date hereof and
delivered herewith (the "Fee Letter").
You agree that no other agents, co-agents or arrangers will be
appointed, no other titles will be awarded and no compensation (other than that
expressly contemplated by the Term Sheet and the Fee Letter) will be paid in
connection with the Credit Facilities unless you and we shall so agree.
We intend to syndicate each of the Credit Facilities to a group
of financial institutions (together with Chase, the "Lenders") identified by us
in consultation with you. CSI intends to commence syndication efforts promptly
upon the execution of the merger agreement (the "Merger Agreement") for the
Acquisition, and you agree to actively assist CSI in completing a syndication
satisfactory to us and you. Such assistance shall include (a) the use of
commercially reasonable efforts to ensure that the syndication efforts benefit
materially from the existing lending relationships of the Borrower, of the
Acquired Company and of HMT&F, (b) the hosting, with CSI, of one or more
meetings with prospective Lenders and other direct contact between the proposed
Lenders and senior management and advisors of the Borrower, the Acquired
Company and HMT&F and (c) the preparation of a Confidential Information
Memorandum and other marketing materials to be used in connection with the
syndication.
CSI, in cooperation with you, will manage all aspects of the
syndication, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders. To assist CSI in its syndication efforts, you agree to promptly
prepare and provide to CSI and Chase all information with respect to Holdings
and its subsidiaries, the Acquired Company and its subsidiaries, the
Acquisition and the other transactions contemplated hereby, including
projections, pro forma financial statements, financial models and business
plans (the "Projections"), as we may reasonably request in connection with the
arrangement and syndication of the Credit Facilities.
<PAGE> 4
4
You hereby represent and covenant that (a) all information other
than the Projections (the "Information") that has been or will be made
available to Chase or CSI by you or any of your representatives is or will be,
when furnished, correct in all material respects and does not or will not, when
furnished, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
materially misleading in light of the circumstances under which such statements
are made and (b) the Projections that have been or will be made available to
Chase or CSI by you or any of your representatives have been or will be
prepared in good faith based upon reasonable assumptions. In arranging and
syndicating the Credit Facilities, we will use and rely on the Information and
Projections without independent verification thereof.
Chase's commitments hereunder and CSI's agreement to perform the
services described herein are subject to (a) our not becoming aware after the
date hereof of any information or other matter, which in our reasonable
judgment (i) could reasonably be expected to have a material adverse effect on
the business, operations, financial condition or prospects of the Borrower and
its subsidiaries taken as a whole or the Acquired Company and its subsidiaries
taken as a whole (including any material potential liability or contingent
obligation not reflected in the Projections) or on its ability to perform the
covenants and obligations in a timely manner under the financing agreements or
(ii) is inconsistent in a material and adverse manner with any information or
other matter disclosed to us prior to the date hereof, (b) there not having
occurred a material disruption of or material adverse change in financial,
banking or capital market conditions that, in our judgment, could materially
impair the syndication of any of the Credit Facilities, (c) our satisfaction
that there shall have been no competing offering, placement or arrangement of
any debt securities or bank financing by or on behalf of the Borrower, the
Acquired Company, or any of their respective subsidiaries or affiliates (other
than portfolio companies of HMT&F) prior to and during the syndication of the
Credit Facilities other than the offering and placement of up to $250,000,000
of Senior Subordinated Notes to be issued by the Borrower to finance the
Acquisition and any other such transaction that, in our judgment, is
satisfactorily coordinated with the syndication of the Credit Facilities and
does not materially impair such syndication, (d) the negotiation, execution and
delivery on or before December 31, 1997 of definitive documentation with
respect to the Credit Facilities satisfactory to Chase and its counsel, (e) the
liquidation and winding down of the Acquired Company's accounts receivables
facility on terms satisfactory to Chase, (f) at the time of the signing of the
Merger Agreement, the Mergers shall have been approved by the Board of
Directors of each of Holdings, Acquisitionco A, Acquisitionco B, and the
Acquired Company and the principal stockholder of the Acquired Company shall
have agreed to vote all his shares (including shares acquired pursuant to
options) in favor of the Acquired Company Merger under certain conditions, (g)
our satisfaction that, after giving effect to the Acquisition, no indebtedness
or preferred stock issued by Holdings or any of its subsidiaries will be
structurally senior to the Credit Facilities and (h) the other conditions set
forth in the Term Sheet. The terms and conditions of Chase's commitments
hereunder and of the Credit Facilities, to the extent not inconsistent with the
terms and conditions herein and the Term Sheet, are not limited to those set
forth herein and in the Term Sheet. Those matters that are not covered by the
provisions hereof and of the Term Sheets are subject to the approval and
agreement of Chase, CSI and you.
You agree (a) to indemnify and hold harmless Chase, CSI and their
respective officers, directors, employees, affiliates, advisors, agents and
controlling persons (each, an "indemnified person") from and against any and
all losses, claims, damages, expenses and liabilities ("Losses") to
<PAGE> 5
5
which any such indemnified person may become subject arising out of or in
connection with this Commitment Letter, the Credit Facilities, the use of the
proceeds thereof, the Acquisition or any related transaction or any claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any indemnified person is a party thereto, including,
without limitation, Losses consisting of legal or other expenses incurred in
connection with investigating or defending any of the foregoing, provided that
the foregoing will not apply to any Losses of an indemnified person to the
extent they are found by a final decision of a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct or material
breach of this Commitment Letter by such indemnified person, and (b) to
reimburse Chase, CSI and their affiliates on demand for all reasonable out-of-
pocket expenses (including due diligence expenses, syndication expenses, travel
expenses, and reasonable fees, charges and disbursements of counsel) incurred
in connection with the Credit Facilities and any related documentation
(including this Commitment Letter, the Term Sheet, the Fee Letter and the
definitive financing documentation), provided, that if the Acquisition is not
consummated you shall not be required to reimburse any expenses pursuant to
this clause (b) except to the extent that you or any of your affiliates shall
in turn be reimbursed for expenses and provided further that the amount of
expenses which you shall be required to reimburse pursuant to this clause (b)
if the Acquisition is not consummated shall not exceed a percentage (not to
exceed 50%) of the aggregate amount paid to you or your affiliates in
reimbursement of fees, costs and expenses equal to (i) the amount of the
expenses described in this clause (b) divided by (ii) the amount of your
aggregate actual expenses for the Acquired Company Merger. No indemnified
person shall be liable for any indirect or consequential damages in connection
with its activities related to the Credit Facilities.
This Commitment Letter shall not be assignable by you without the
prior written consent of Chase and CSI (and any purported assignment without
such consent shall be null and void; provided that you may assign your rights
under this Commitment Letter to a wholly-owned subsidiary of Holdings but
neither of you shall be released from your obligations hereunder), is intended
to be solely for the benefit of the parties hereto and is not intended to
confer any benefits upon, or create any rights in favor of, any person other
than the parties hereto. This Commitment Letter may not be amended or waived
except by an instrument in writing signed by you, Chase and CSI. This
Commitment Letter may be executed in any number of counterparts, each of which
shall be an original, and all of which, when taken together, shall constitute
one agreement. Delivery of an executed signature page of this Commitment Letter
by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. This Commitment Letter and the Fee Letter are the only
agreements which have been entered into among us with respect to the Credit
Facilities and set forth the entire understanding of the parties with respect
thereto. This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of New York. Your obligations under this
Commitment Letter shall be joint and several.
This Commitment Letter is delivered to you on the understanding
that neither this Commitment Letter, the Term Sheet or the Fee Letter nor any
of their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter, (b) the Commitment Letter and the
Term Sheet (but not the Fee Letter or the terms and substance thereof) may be
disclosed to the Acquired Company and its officers, agents and advisors who are
directly involved in the consideration of the
<PAGE> 6
6
matter and who are informed of the confidential nature hereof and thereof and
the terms of the Commitment Letter and the Term Sheet (but not of the Fee
Letter) may be described in proxy solicitations in connection with the Acquired
Company Merger or (c) as may be compelled in a judicial or administrative
proceeding or as otherwise required by law (in which case you agree to inform
us promptly thereof), provided, that the foregoing restrictions shall cease to
apply (except in respect of the Fee Letter and its terms and substance) after
this Commitment Letter has been accepted by you.
You acknowledge that Chase and CSI may be providing debt
financing, equity capital or other services (including financial advisory
services) to other companies in respect of which you may have conflicting
interests regarding the transactions described herein and otherwise. Neither
Chase nor CSI will use confidential information obtained from you by virtue of
the transactions contemplated by this Commitment Letter or its other
relationships with you in connection with the performance by Chase or CSI of
services for other companies, and neither Chase nor CSI will furnish any such
information to other companies. You also acknowledge that neither Chase nor CSI
has any obligation to use in connection with the transactions contemplated by
this Commitment Letter, or to furnish to you, confidential information obtained
by Chase or CSI from other companies.
The compensation, reimbursement, indemnification and
confidentiality provisions contained herein and in the Fee Letter shall remain
in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or Chase's commitment hereunder; provided
that, if definitive financing documentation is executed, the terms of such
definitive financing documentation shall supersede this Commitment Letter
(other than the confidentiality provisions hereof).
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof and of the Term Sheet and the Fee
Letter by returning to us executed counterparts hereof and of the Fee Letter
not later than 5:00 p.m., New York City time, on June 24, 1997. Chase's
commitments and CSI's agreements herein will expire at such time in the event
Chase has not received such executed counterparts in accordance with the
immediately preceding sentence.
Chase and CSI are pleased to have been given the opportunity to
assist you in connection with this important financing.
Very truly yours,
CHASE SECURITIES INC.
By:
---------------------------------------
Name:
Title:
<PAGE> 7
7
THE CHASE MANHATTAN BANK
By:
---------------------------------------
Name:
Title:
Accepted and agreed to
as of the date first
written above by:
ATRIUM CORPORATION
ATRIUM COMPANIES, INC.
By:
-----------------------------------
Name:
Title:
<PAGE> 8
EXHIBIT A
$425,000,000
ATRIUM COMPANIES, INC. SENIOR CREDIT FACILITIES
Summary of Terms and Conditions
June 23, 1997
__________________________________
Atrium Corporation, a Delaware corporation ("Holdings"), acting
through two newly-formed wholly-owned Delaware corporations ("Acquisitionco A"
and "Acquisitionco B"), proposes to acquire, for a purchase price not exceeding
$262,000,000 (which represents $18.75 per share), all of the outstanding common
stock of Ply Gem Industries, Inc., a Delaware corporation (the "Acquired
Company"). Acquisitionco A will be a direct subsidiary of Holdings and
Acquisitionco B will be a direct subsidiary of Acquisitionco A. In conjunction
therewith (i) Acquisitionco B will cause to be cashed out and cancelled all
outstanding options to purchase capital stock of the Acquired Company (other
than options held by Dana Snyder which will be exchanged for options to acquire
common stock of Holdings) for an aggregate consideration not exceeding
$35,000,000 (which represents $18.75 per share) net of option proceeds, (ii)
Acquisitionco B and the Acquired Company will be merged, with the Acquired
Company as the surviving corporation (the "Acquired Company Merger"), (iii) the
Acquired Company will terminate or modify or cause to be terminated or modified
on satisfactory terms certain existing contractual obligations between the
Acquired Company and certain of its shareholders for an aggregate consideration
not exceeding $24,600,000 and (iv) Holdings will repay in full and cause to be
repaid in full substantially all of the outstanding indebtedness of Holdings,
the Acquired Company and their respective subsidiaries (other than certain
industrial development bond obligations and capital lease obligations in the
aggregate amount of $20,000,000 and the currently outstanding senior
subordinated notes of the Borrower referred to below), the amount of
indebtedness to be repaid currently estimated to be approximately $166,700,000,
and cause the Acquired Company's accounts receivable facility to be liquidated.
After giving effect to the Acquired Company Merger, all of the capital of
Acquisitionco A will be contributed to Atrium Companies, Inc., a Delaware
corporation (the "Borrower") which is a wholly-owned subsidiary of Holdings,
and Acquisitionco A and the Borrower will be merged, with the Borrower as the
surviving corporation (the "Borrower Merger"; together with the Acquired
Company Merger, the "Mergers"). The foregoing transactions are collectively
referred to herein as the "Acquisition". Upon completion of the Acquisition,
all of the capital stock of the Acquired Company will be directly owned by the
Borrower, and all of the capital stock of the Borrower will continue to be
owned by Holdings. The following sets forth the terms and conditions for Credit
Facilities that will be made available to the Borrower in connection with the
Acquisition.
<PAGE> 9
2
I. Parties
Borrower: Atrium Companies, Inc., a Delaware corporation.
Guarantors: Holdings and each of Holdings' direct and indirect
subsidiaries after giving effect to the Merger (other
than the Excluded Foreign Subsidiaries and the
Borrower) (the "Guarantors"; the Borrower and the
Guarantors, collectively, the "Credit Parties").
Lenders: The banks, financial institutions and other entities,
including The Chase Manhattan Bank ("Chase"), selected
in the syndication effort (collectively, the
"Lenders").
Advisor and Arranger: Chase Securities Inc. (in such capacity, the
"Arranger").
Administrative Agent: Chase (in such capacity, the "Administrative Agent").
II. Types and Amounts of Credit Facilities
1. Term Loan Facilities
Type and Amount: A 6-1/2 year term loan facility (the "Tranche A Term
Loan Facility") in the amount of $50,000,000 (the
loans thereunder, the "Tranche A Term Loans"), an 8
year term loan facility (the "Tranche B Term Loan
Facility") in the amount of $100,000,000 (the loans
thereunder, the "Tranche B Term Loans"), an 8-1/2 year
term loan facility (the "Tranche C Term Loan
Facility") in the amount of $75,000,000 (the loans
thereunder, the "Tranche C Term Loans") and a 9 year
term loan facility (the "Tranche D Term Loan
Facility"; together with the Tranche A Term Loan
Facility, the Tranche B Term Loan Facility and the
Tranche C Term Loan Facility, the "Term Loan
Facilities") in the amount of $100,000,000 (the loans
thereunder, the "Tranche D Term Loans"; together with
the Tranche A Term Loans, the Tranche B Term Loans,
and the Tranche C Term Loans, the "Term Loans").
On the basis of market reception during the
syndication process, the amount of the Tranche A Term
Loan Facility, the Tranche B Term Loan Facility, the
Tranche C Term Loan Facility and/or the Tranche D Term
Loan Facility may be increased or decreased with the
consent of the Borrower (which will not be
unreasonably withheld), and the amount of the Tranche
A Term Loan Facility, the Tranche B Term Loan
Facility, the Tranche C Term Loan Facility and/or the
Tranche D Term Loan Facility may be correspondingly
<PAGE> 10
3
decreased or increased, provided that the aggregate
amount of the Term Loan Facilities will equal
$325,000,000.
Availability: The Term Loans shall be made in a single drawing on
the Closing Date.
Amortization: The Term Loans shall be repayable in semi-annual
installments in amounts to be agreed upon, provided
that the installments of the Tranche B Term Loans, the
Tranche C Term Loans and the Tranche D Term Loans
during years one through seven will be nominal in
amount in relation to the overall size of the Tranche
B Term Loan Facility, the Tranche C Term Loan Facility
and the Tranche D Term Loan Facility, respectively.
Purpose: The proceeds of the Term Loans shall be used to
finance a portion of the Acquisition and to pay
related fees and expenses.
2. Revolving Credit Facility
Type and Amount: A 6-1/2 year revolving credit facility (the "Revolving
Credit Facility" and together with the Term Loan
Facilities, the "Senior Credit Facilities") in the
amount of $100,000,000 (the loans thereunder, the
"Revolving Credit Loans").
Availability: The Revolving Credit Facility shall be available on a
revolving basis during the period commencing on the
Closing Date and ending on the earlier of (a) the date
which is 6-1/2 years after the Closing Date (the
"Scheduled Revolving Credit Termination Date") and (b)
the date on which the Term Loans mature or are repaid
in full (the "Revolving Credit Termination Date").
Letters of Credit: A portion of the Revolving Credit Facility in an
amount not exceeding $30,000,000 shall be available
for the issuance of letters of credit ("Letters of
Credit") by Chase (in such capacity, the "Issuing
Lender"). No Letter of Credit shall have an expiration
date after the earlier of (a) one year after the date
of issuance and (b) five business days prior to the
Scheduled Revolving Credit Termination Date, provided
that any Letter of Credit with a one-year tenor may
provide for the renewal thereof for additional one-
year
<PAGE> 11
4
periods (which shall in no event extend beyond the
date referred to in clause (b) above).
Drawings under any Letter of Credit shall be
reimbursed by the Borrower (whether with its own funds
or with the proceeds of Revolving Credit Loans) on the
same business day. To the extent that the Borrower
does not so reimburse the Issuing Lender, the Lenders
under the Revolving Credit Facility shall be
irrevocably and unconditionally obligated to reimburse
the Issuing Lender on a pro rata basis.
Swing Line Loans: A portion of the Revolving Credit Facility in an
amount to be agreed shall be available for swing line
loans (the "Swing Line Loans") from Chase (in such
capacity, the "Swing Line Lender") on same-day notice.
Each other Lender under the Revolving Credit Facility
shall agree to take, under certain circumstances, an
irrevocable and unconditional pro rata participation
in each Swing Line Loan.
Maturity: The Revolving Credit Termination Date.
Purpose: The proceeds of the Revolving Credit Loans shall be
used for general corporate purposes, including
financing permitted acquisitions; provided that no
more than $50,000,000, less the aggregate amount of
the Acquired Company's industrial development bond
obligations and capital lease obligations which remain
outstanding after the Closing Date, of Revolving
Credit Loans will be made on the Closing Date. Letters
of Credit shall also be used for general corporate
purposes.
3. Reduction of In the event that Holdings or any of its subsidiaries
Credit Facilities issues subordinated notes or other subordinated debt
(the "Senior Subordinated Notes") in connection with
the Acquisition, the Credit Facilities will be reduced
by the amount of such subordinated notes or
subordinated debt in the following order: first, to
the Tranche C Term Loan Facility and the Tranche D
Term Loan Facility, with the allocation of the
reduction of such Term Loan Facilities to be
satisfactory to the Lenders, second, to reduce the
amount of Revolving Credit Loans (but not the
commitments under the Revolving Credit Facility) which
would otherwise be made on the Closing Date and third,
to reduce the Tranche A Term Loan
<PAGE> 12
5
Facility and the Tranche B Term Loan Facility, with
the allocation of the reduction of such Term Loan
Facilities to be satisfactory to the Lenders. The
Senior Subordinated Notes will have terms satisfactory
to the Lenders.
III. General Payment
Provisions
Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments and
Commitment Reductions: Loans may be prepaid and commitments may be reduced by
the Borrower in minimum amounts to be agreed upon.
Optional prepayments of the Term Loans shall be
applied to the Tranche A Term Loans, the Tranche B
Term Loans, the Tranche C Term Loans and the Tranche D
Term Loans ratably and to the installments thereof
ratably in accordance with the then remaining number
of installments and may not be reborrowed, provided,
that an agreed upon amount of optional prepayments of
the Term Loans may be applied to such installments as
the Borrower may elect (other than de minimus
installments in respect of the Tranche B Term Loans,
Tranche C Term Loans and Tranche D Term Loans).
Mandatory Prepayments
and Commitment The following amounts shall be applied to prepay the
Reductions: Term Loans and reduce the amount of the Revolving
Credit Facility:
(a) 100% of the net proceeds of any sale or issuance
of equity or any incurrence of indebtedness after the
Closing Date by Holdings or by the Borrower or any of
its subsidiaries (subject to certain exceptions and
excluding equity sold or issued to finance permitted
acquisitions), subject to the provisions set forth
opposite the caption "Reduction of Credit Facilities"
above;
(b) 100% of the net proceeds of any sale or other
disposition by Holdings or by the Borrower or any of
their respective subsidiaries of any material assets,
except for the sale of inventory or obsolete or worn-
out property in the ordinary course of business and
subject to certain
<PAGE> 13
6
other customary exceptions (including a basket and
capacity for reinvestment) to be agreed upon; and
(c) a percentage of excess cash flow (to be defined in
a mutually satisfactory manner but treating as a use
of cash flow permitted capital investment) to be
agreed for each fiscal year of the Borrower
(commencing with the 1998 fiscal year).
Each such prepayment of the Term Loans shall be
applied to the Tranche A Term Loans, the Tranche B
Term Loans, the Tranche C Term Loans and the Tranche D
Term Loans (based on the respective outstanding
principal amounts thereof) and, in the case of any
such prepayment of the Tranche A Term Loans, the
Tranche B Term Loans, the Tranche C Term Loans or the
Tranche D Term Loans, such prepayment shall be applied
to the installments thereof ratably in accordance with
the then outstanding amounts thereof and may not be
reborrowed. The Revolving Credit Loans shall be
prepaid and the Letters of Credit shall be cash
collateralized or replaced to the extent such
extensions of credit exceed the amount of the
Revolving Credit Facility.
IV. Guarantees and Collateral
Guarantees: All obligations of the Borrower under the Credit
Documentation shall be unconditionally guaranteed by
the Guarantors.
Collateral: The Senior Credit Facilities, all interest rate
protection agreements entered into with any Lender and
all guarantees thereof will be secured by a perfected
first priority security interest in (a) all of the
capital stock of the Borrower and each of its direct
and indirect subsidiaries (provided, that if the
pledge of all of the capital stock of any foreign
subsidiary would have adverse tax consequences, only
65% of the capital stock of such foreign subsidiary
(an "Excluded Foreign Subsidiary") shall be required
to be pledged) and (b) all tangible and intangible
assets (including, without limitation, intellectual
property and real property) of each Credit Party,
except for those assets as to which the Administrative
Agent shall determine in its sole discretion that the
costs of obtaining such a security interest are
excessive in
<PAGE> 14
7
relation to the value of the security to be afforded
thereby provided, that, in the case of leasehold
interests in real estate, a security interest will be
granted therein only with respect to leases which are
material in the judgment of the Administrative Agent
and for which the relevant Credit Party can obtain any
required landlord's consent after using its reasonable
efforts.
V. Certain Conditions
Initial Conditions: The availability of the Credit Facilities on the
Closing Date shall be conditioned upon satisfaction on
or before the Closing Date (which shall occur no later
than December 31, 1997) of, among other things,
conditions precedent customary for facilities and
transactions of this type, including, without
limitation, the conditions set forth in Exhibit B, the
securing of representations and warranties, absence of
defaults, evidence of authority, and receipt of
necessary consents and approvals.
On-Going Conditions: The making of each extension of credit shall be
conditioned upon (a) all representations and
warranties in the Credit Documentation (including,
without limitation, the material adverse change and
litigation representations) being true and correct in
all material respects and (b) there being no default
or event of default in existence at the time of, or
after giving effect to the making of, such extension
of credit. As used herein and in the Credit
Documentation a "material adverse change" shall mean
any event, development or circumstance that has had or
could reasonably be expected to have a material
adverse effect on (a) the Acquisition, (b) the
business, assets, property, condition (financial or
otherwise) or prospects of the Borrower and its
subsidiaries taken as a whole, or (c) the validity or
enforceability of any of the Credit Documentation or
the rights and remedies of the Administrative Agent
and the Lenders thereunder.
VI. Representations, Warranties, Covenants and Events of Default
The Credit Documentation shall contain
representations, warranties, covenants and events of
default customary for
<PAGE> 15
8
financing of this type and other terms deemed
appropriate by the Lenders, including, without
limitation:
Representations and
Warranties: Accuracy of financial statements (including pro forma
financial statements); absence of undisclosed
liabilities; no material adverse change; corporate
existence; compliance with law; corporate power and
authority; enforceability of Credit Documentation; no
conflict with law or contractual obligations; no
material litigation; no default; ownership of
property; liens; intellectual property; no burdensome
restrictions; taxes; Federal Reserve regulations;
ERISA; Investment Company Act; subsidiaries;
environmental matters; solvency; accuracy of
disclosure; status of obligations under the Credit
Facilities as senior debt; and creation and perfection
of security interests.
Affirmative Covenants: Delivery of financial statements, reports,
accountants' letters, projections, officers'
certificates and other information requested by the
Lenders; payment of other obligations; continuation of
business and maintenance of existence and material
rights and privileges; compliance with laws and
material contractual obligations; maintenance of
property and insurance; maintenance of books and
records; right of the Lenders to inspect property and
books and records; notices of defaults, litigation and
other material events; compliance with environmental
laws; agreement to grant security interests in after-
acquired property; and agreement to obtain, within a
period after the Closing Date to be agreed, interest
rate protection in an amount which shall assure that
at least 50% of the aggregate principal amount of the
Senior Subordinated Notes and the Term Loans is at a
fixed interest rate or subject to interest rate
protection, on satisfactory terms and conditions.
Financial Covenants: Minimum EBITDA, Maximum Leverage and Minimum Fixed
Charge Coverage.
Negative Covenants: Limitations on: indebtedness (including preferred
stock and guarantee obligations); liens; mergers,
consolidations, liquidations and dissolutions; sales
of assets; leases; dividends, stock repurchases and
other payments in respect of capital stock; capital
<PAGE> 16
9
expenditures; investments, loans and advances (with an
exception for permitted acquisitions on terms to be
agreed upon); optional payments of subordinated debt;
modifications of equity and debt instruments;
transactions with affiliates; sale and leasebacks;
changes in fiscal year; negative pledge clauses;
changes in lines of business; and changes in passive
holding company status of Holdings. Certain of the
negative covenants shall include customary exceptions.
Events of Default: Nonpayment of principal when due; nonpayment of
interest, fees or other amounts within five business
days after the date due; material inaccuracy of
representations and warranties; violation of covenants
(subject, in the case of certain affirmative
covenants, to a 30-day grace period); cross-default;
bankruptcy; certain ERISA events; material judgments;
actual or asserted invalidity of any guarantee or
security document, subordination provisions or
security interest; and a change of control of
Holdings, the failure of Holdings to own (free of
liens except liens in favor of the Lenders) all of the
capital stock of the Borrower and of the Borrower to
own (free of liens except liens in favor of the
Lenders) all of the capital stock of the Acquired
Company.
VII. Certain Other Terms
Voting: Amendments and waivers with respect to the Credit
Documentation shall require the approval of Lenders
holding Loans and commitments representing not less
than 51% of the aggregate amount of the Loans and
commitments under the Credit Facilities, except that
(a) the consent of each Lender directly affected
thereby shall be required with respect to (i)
reductions in the amount or extensions of the
scheduled date of maturity of any Loan, (ii)
reductions in the rate of interest or any fee or
extensions of any due date thereof, and (iii)
increases in the amount or extensions of the expiry
date of any Lender's commitment and (b) the consent of
100% of the Lenders shall be required with respect to
(i) modifications to any of the voting percentages and
(ii) releases of all or substantially all of the
collateral or guarantees. Class voting provisions
shall be included with respect to changes in the
application of prepayments and certain other matters.
<PAGE> 17
10
Assignments and The Lenders shall be permitted to assign and sell
Participations: participations in their Loans and commitments,
subject, in the case of assignments (other than to
another Lender or to an affiliate of the assigning
Lender), to the consent of the Administrative Agent
and the Borrower (which consent in each case shall not
be unreasonably withheld). Non-pro rata assignments
shall be permitted. In the case of partial
assignments, the minimum assignment amount shall be
$5,000,000 unless otherwise agreed by the Borrower and
the Administrative Agent. Participants shall have the
same benefits as the Lenders with respect to yield
protection and increased cost provisions. Voting
rights of participants shall be limited to those
matters with respect to which the affirmative vote of
the Lender from which it purchased its participation
would be required as described under "Voting" above.
Pledges of Loans in accordance with applicable law
shall be permitted without restriction. Promissory
notes shall be issued under the Credit Facilities only
upon request.
Yield Protection: The Credit Documentation shall contain customary
provisions (a) protecting the Lenders against loss of
yield resulting from changes in reserve, tax, capital
adequacy and other requirements of law and from the
imposition of withholding or other taxes and (b)
indemnifying the Lenders for "breakage costs" incurred
in connection with, among other things, prepayment of
a Eurodollar Loan (as defined in Annex I) on a day
other than the last day of an interest period with
respect thereto.
Expenses and The Borrower shall pay (a) all reasonable out-of-
Indemnification: pocket expenses of the Administrative Agent and the
Arranger associated with the syndication of the Credit
Facilities and the preparation, execution, delivery
and administration of the Credit Documentation and any
amendment or waiver with respect thereto (including
due diligence expenses and the reasonable fees and
disbursements and other charges of counsel) and (b)
all out-of-pocket expenses of the Administrative Agent
and the Lenders in connection with the enforcement of
the Credit Documentation (including the fees and
disbursements and other charges of counsel).
The Borrower shall indemnify, pay and hold harmless
the Administrative Agent, the Arranger and the Lenders
(and
<PAGE> 18
11
their respective directors, officers, employees and
agents) against any loss, liability, cost or expense
incurred in respect of the financing contemplated
hereby or the use or the proposed use of proceeds
thereof (except to the extent resulting from the gross
negligence or willful misconduct of the indemnified
party or material breach by the indemnified party of
the definitive documents).
Governing Law and Forum: State of New York.
Counsel to the Arranger Simpson Thacher & Bartlett.
and the Administrative
Agent:
Commitment Termination The Credit Documentation must have been entered into
Date: on or before December 31, 1997.
<PAGE> 19
Annex I
to Exhibit A
- --------------------------------------------------------------------------------
Interest and Certain Fees
Interest Rate Options: The Borrower may elect that all or a portion of the
Loans bear interest at a rate per annum equal to:
the ABR plus the Applicable Margin; or
the Eurodollar Rate plus Applicable Margin.
provided, that all Swing Line Loans shall bear
interest at a rate per annum equal to the ABR plus the
Applicable Margin.
As used herein:
"ABR" means the highest of (i) the rate of interest
publicly announced by Chase as its prime rate in
effect at its principal office in New York City (the
"Prime Rate"), (ii) the secondary market rate for
certificates of deposit (grossed up for maximum
statutory reserve requirements) plus 1% and (iii) the
federal funds effective rate from time to time plus
0.5%.
"Applicable Margin" means (a) with respect to ABR
Loans (as defined below), 1.5% in the case of the
Tranche A Term Loan Facility and the Revolving Credit
Facility, 1.75% in the case of the Tranche B Term Loan
Facility, 2% in the case of the Tranche C Term Loan
Facility and 2.25% in the case of the Tranche D Term
Loan Facility and (b) with respect to Eurodollar Loans
(as defined below), 2.5% in the case of the Tranche A
Term Loan Facility and the Revolving Credit Facility
2.75% in the case of the Tranche B Term Loan Facility,
3% in the case of the Tranche C Term Loan Facility and
3.25% in the case of the Tranche D Term Loan Facility.
The Applicable Margin in respect of the Tranche A Term
Loan Facility and the Revolving Credit Facility shall
be subject to reduction after the first anniversary of
the Closing Date by amounts to be agreed upon based on
the achievement of performance targets to be
determined. Each Applicable Margin will be reduced by
.50% in the event that at least $175,000,000 of Senior
Subordinated Notes are issued and
<PAGE> 20
2
the Credit Facilities are reduced as described in the
Term Sheet to which this Annex I is attached.
"Eurodollar Rate" means the rate (grossed-up for
maximum statutory reserve requirements for
eurocurrency liabilities) at which eurodollar deposits
for one, two, three or six or, to the extent available
to all Lenders, nine or twelve months (as selected by
the Borrower) are offered to Chase in the interbank
eurodollar market in the approximate amount of Chase's
share of the relevant Loan.
Interest Payment Dates: In the case of Loans bearing interest based upon the
ABR ("ABR Loans"), quarterly in arrears.
In the case of Loans bearing interest based upon the
Eurodollar Rate ("Eurodollar Loans"), on the last day
of each relevant interest period and, in the case of
any interest period longer than three months, on each
successive date three months after the first day of
such interest period.
Commitment Fees: The Borrower shall pay a commitment fee calculated at
the rate of .50% per annum on the average daily unused
portion of the Senior Credit Facilities, payable
quarterly in arrears. Swing Line Loans shall, for
purposes of the commitment fee calculations only, not
be deemed to be a utilization of the Revolving Credit
Facility. Letters of Credit, however, for the purposes
of the commitment fee, shall be deemed utilization of
the Revolving Credit Facility. The foregoing
commitment fee shall be subject to reduction after the
first anniversary of the Closing Date by amounts to be
agreed upon based on the achievement of performance
targets to be determined.
Letter of Credit Fees: The Borrower shall pay a commission on the face amount
of all outstanding Letters of Credit at a per annum
rate equal to the Applicable Margin then in effect
with respect to Eurodollar Loans under the Revolving
Credit Facility less the fronting fee referred to
below. Such commission shall be shared ratably among
the Lenders participating in the Revolving Credit
Facility (including the Issuing Lender) and shall be
payable quarterly in arrears.
A fronting fee equal to 1/4% per annum on the face
amount of each Letter of Credit shall be payable
quarterly in arrears
<PAGE> 21
3
to the Issuing Lender for its own account. In
addition, customary administrative, issuance,
amendment, payment and negotiation charges shall be
payable to the Issuing Lender for its own account.
Default Rate: At any time when the Borrower is in default in the
payment of any amount due under the Senior Credit
Facilities, the principal of all Loans (and amounts
owed in respect of drawings under Letters of Credit)
shall bear interest at 2% above the rate otherwise
applicable thereto. Overdue interest, fees and other
amounts shall bear interest at 2% above the rate
applicable to ABR Loans.
Rate and Fee Basis: All per annum rates shall be calculated on the basis
of a year of 360 days (or 365/366 days, in the case of
ABR Loans the interest rate payable on which is then
based on the Prime Rate) for actual days elapsed.
<PAGE> 22
EXHIBIT B
The availability of each of the Credit Facilities, in addition to
the conditions set forth in Exhibit A, shall be subject to the satisfaction of
the following conditions. Capitalized terms used but not defined herein have
the meanings given in said Exhibit, with references to the Borrower and its
subsidiaries being deemed to include the Acquired Company and its subsidiaries
after giving effect to the Acquisition.
(a) Each Credit Party shall have executed and
delivered satisfactory definitive financing
documentation with respect to the Senior Credit
Facilities (the "Credit Documentation").
(b) Holdings shall have received gross cash proceeds
of at least $140,000,000 from the sale by Holdings of
its newly issued non-voting common stock to funds
managed by Hicks Muse and other persons approved by
the Administrative Agent, the proceeds of which will
be contributed to the capital of the Borrower.
(c) The Acquisition shall have been consummated for
an aggregate consideration consisting of the
following amounts: $262,000,000 shall be
consideration for the Acquired Company Merger,
$24,600,000 shall be consideration for termination or
modification on terms satisfactory to the Lenders of
certain contractual obligations owed to stockholders
of the Acquired Company, $35,000,000 (net of option
proceeds) shall be consideration for the purchase or
cancellation of options to acquire capital stock of
the Acquired Company (other than options held by Dana
Snyder which will be exchanged for options to acquire
common stock of Holdings) and $166,700,000 shall be
applied to the repayment on terms satisfactory to the
Lenders of substantially all existing indebtedness of
Holdings, the Acquired Company and their respective
subsidiaries, other than certain industrial
development bond obligations and capital lease
obligations in the aggregate amount of $20,000,000
and the currently outstanding senior subordinated
notes of the Borrower), and pursuant to a merger
agreement (the "Merger Agreement") and other
documentation in each case having terms satisfactory
to the Lenders, and no provision of such
documentation shall have been waived, amended,
supplemented or otherwise modified in any material
respect adverse to the Borrower, the Acquired Company
or the Lenders. The accounts receivable facility of
the Acquired Company shall have been liquidated on
satisfactory terms. The Mergers shall have been
approved by the requisite number of shareholders of
each of Holdings, the Acquired Company, Acquisitionco
A and Acquisitionco B and their respective boards of
directors. The ownership, capitalization, management
and structure of each Credit Party after the
Acquisition shall be
<PAGE> 23
2
reasonably satisfactory in all respects, and the
sources and uses shall be consistent with Annex I
hereto.
(d) The fees and expenses incurred by Holdings and
its subsidiaries (including the Acquired Company and
its subsidiaries) in connection with the Acquisition
and the financing thereof shall not exceed
$26,700,000.
(e) All fees and expenses required to be paid on or
before the Closing Date shall have been paid or
provision for payment with proceeds of the initial
funding of the Credit Facilities shall have been
made.
(f) All material governmental and third party
approvals (including landlords' and other consents
and Hart Scott Rodino approvals) necessary in
connection with the Acquisition, the financing
contemplated hereby and the continuing operations of
the Borrower and its subsidiaries shall have been
obtained and be in full force and effect, and all
applicable waiting periods shall have expired without
any action being taken or threatened by any competent
authority which would restrain, prevent or otherwise
impose adverse conditions on the Acquisition or the
financing thereof. Without limitation, the Credit
Facilities and the Acquisition shall comply with the
indenture governing the Borrower's existing senior
subordinated notes, including the debt incurrence
covenant set forth in such indenture.
(g) The Lenders shall have received (i) a reasonably
satisfactory pro forma consolidated balance sheet of
the Borrower and its subsidiaries, as at the Closing
Date and after any effect to the Acquisition and the
financings contemplated hereby and consistent in all
material respects with the sources and uses of cash
for the Acquisition as previously described to the
Lenders and described in forecasts previously
provided to the Lenders; (ii) any audited, unaudited
interim and other financial statements (including pro
forma financial statements) and schedules of the
Borrower and its subsidiaries of the type that the
Securities and Exchange Commission would require in a
registered public offering of senior subordinated
notes; (iii) unaudited interim consolidated financial
statements of each of Holdings and its subsidiaries
and of the Borrower and its subsidiaries, for each
fiscal month and quarterly period ended subsequent to
the date of the latest audited consolidated financial
statements of Holdings and its subsidiaries and of
the Borrower and its subsidiaries as to which such
financial statements are available, and such
financial statements shall not, inthe reasonable
judgment of the Lenders, reflect any material adverse
change in the consolidated financial condition of
Holdings and its subsidiaries or the Borrower and its
subsidiaries, as
<PAGE> 24
3
reflected in the financial statements or projections
previously furnished to the Lenders; and (iv)
unaudited interim consolidated financial statements
of the Acquired Company and its subsidiaries, for
each fiscal month and quarterly period ended
subsequent to the date of the latest audited
consolidated financial statements of the Acquired
Company and its subsidiaries as to which such
financial statements are available, and such
financial statements shall not, in the reasonable
judgment of the Lenders, reflect any material adverse
change in the consolidated financial condition of the
Borrower and its subsidiaries, as reflected in the
financial statements or projections previously
furnished to the Lenders.
(h) The Lenders shall have received a budget (i) for
the Borrower and its subsidiaries (before giving
effect to the Mergers) for fiscal year 1997, (ii) for
the Acquired Company and its subsidiaries (before
giving effect to the Mergers) for fiscal year 1997
and (iii) a preliminary budget for the Borrower and
its subsidiaries for fiscal year 1998.
(i) The Administrative Agent shall have received the
results of a recent lien, tax and judgment search in
each of the jurisdictions and offices where assets of
the Borrower and its subsidiaries and the Acquired
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 Credit Documentation.
(j) The Lenders shall have received a satisfactory
solvency opinion from an independent valuation firm
satisfactory to the Administrative Agent which shall
opine as to the solvency of each of Holdings and its
subsidiaries and the Borrower and its subsidiaries
after giving effect to the Acquisition and the other
transactions contemplated hereby.
(k) The Administrative Agent shall have determined
that reasonably satisfactory insurance relating to
the Borrower and its subsidiaries will be in place
after the Acquisition.
(l) The Lenders shall have received such legal
opinions (including opinions (i) from counsel to the
Borrower and its subsidiaries, (ii) delivered to the
Borrower by counsel to the Acquired Company,
addressed to or accompanied by reliance letters in
favor of the Lenders and (iii) from such special and
local counsel as may be required by the Administrative
Agent), documents and other instruments as are
customary for transactions of this type or as they
may reasonably request.
<PAGE> 25
4
(m) The Borrower and its subsidiaries shall not be in
breach or violation in any material respect of any of
its obligations under the documentation relating to
the Acquisition or the financing thereof.
(n) The Financing Parties shall have received, within
45 days after the date of execution of the Merger
Agreement, with respect to the Senior Subordinated
Notes, an initial draft of a Registration Statement
or a Rule 144A Offering Memorandum relating to such
Securities (including the audited financial
statements referred to in clause (g) above and
appropriate pro forma financial statements).
<PAGE> 26
Annex I
to Exhibit B
Proposed Sources and Uses
<TABLE>
<S> <C> <C>
Sources:
- -------
Tranche A Term Loans $ 50,000,000
Tranche B Term Loans $ 100,000,000
Tranche C Term Loans $ 75,000,000
Tranche D Term Loans $ 100,000,000
Revolving Credit Facility $ 50,000,000 1/
Common Equity $ 140,000,000
-------------
Total Sources $ 515,000,000
=============
Uses:
- ----
Acquired Company Merger Consideration $ 262,000,000
Refinance Existing Debt $ 166,700,000
Shareholder Contractual Obligations $ 24,600,000
Options for Acquired Company Stock $ 35,000,000 2/
Fees and Expenses $ 26,700,000
-------------
Total Uses $ 515,000,000
=============
</TABLE>
- ---------------
1/ From a $100,000,000 Revolving Credit Facility. The $50,000,000 will
be reduced by the aggregate amount of the Acquired Company's
industrial development bonds that will remain outstanding after
closing.
2/ Net of option proceeds.
<PAGE> 1
EXHIBIT 99(3)
===============================================================================
AGREEMENT AND PLAN OF MERGER
among
ATRIUM ACQUISITION HOLDINGS CORP.,
ATRIUM / PG ACQUISITION CORP.
and
PLY GEM INDUSTRIES, INC.
dated as of June 24, 1997
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1
APPROVALS OF THE BOARD OF DIRECTORS AND STOCKHOLDERS
1.1 Company Actions.............................................2
1.2 Company Stockholder Approval................................2
1.3 Sub Stockholder Approval....................................3
1.4 Proxy Statement.............................................3
ARTICLE 2
THE MERGER
2.1 The Merger..................................................3
2.2 Closing.....................................................4
2.3 Effective Time of the Merger................................4
2.4 Effects of the Merger.......................................4
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF THE CERTIFICATES
3.1 Effect on Capital Stock.....................................5
3.2 Conversion of Shares........................................5
3.3 Payment for Shares..........................................6
3.4 Stock Transfer Books........................................7
3.5 Stock Option Plans..........................................8
3.6 Dissenting Shares...........................................9
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company..............10
4.2 Representations and Warranties of Parent and Sub...........27
4.3 Representations and Warranties of Atrium...................29
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company...................................30
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE 6
ADDITIONAL AGREEMENTS
<S> <C>
6.1 Access to Information.....................................34
6.2 Assistance................................................34
6.3 Compliance with New Jersey ISRA...........................35
6.4 Fees and Expenses.........................................35
6.5 Brokers or Finders........................................36
6.6 Indemnification; Directors' and Officers' Insurance.......37
6.7 Reasonable Efforts........................................39
6.8 Publicity.................................................39
6.9 Withholding Rights........................................39
6.10 Real Estate Taxes.........................................39
6.11 HSR and Other Governmental Approvals......................40
6.12 Notification of Certain Matters...........................40
6.13 Solvency Letter...........................................40
6.14 Continuation of Employee Benefits.........................41
6.15 Trustees..................................................41
6.16 Withdrawal Liability......................................42
ARTICLE 7
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to
Effect the Merger......................................42
7.2 Conditions to Obligations of Parent and Sub................43
7.3 Conditions to Obligations of the Company...................43
ARTICLE 8
TERMINATION AND AMENDMENT
8.1 Termination................................................44
8.2 Effect of Termination......................................46
8.3 Amendment..................................................46
8.4 Extension; Waiver..........................................46
ARTICLE 9
GENERAL PROVISIONS
9.1 Nonsurvival of Covenants and Agreements....................46
9.2 Confidentiality Agreement..................................46
9.3 Notices....................................................46
9.4 Interpretation.............................................48
9.5 Counterparts...............................................48
9.6 Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership .......................................48
9.7 Governing Law..............................................48
9.8 Assignment.................................................48
9.9 Director and Officer Liability.............................49
9.10 Specific Performance......................................49
ARTICLE 10
GUARANTEE
10.1 Limited Guarantee.........................................49
</TABLE>
ii
<PAGE> 4
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
Exhibits
Exhibit A -- Stockholders Agreement
Exhibit B -- Option Conversion Agreement
Exhibit C -- Option Surrender Agreement, Release and Waiver
Exhibit D -- Non-Compete and Termination Agreement
Exhibit E -- Termination and Release Agreement
iii
<PAGE> 5
LIST OF DEFINED TERMS
<TABLE>
<S> <C> <C>
--A-- --F--
Acquisition Proposal, .......32 Financial Advisor,............2
Affiliate,...................27 Financing Commitments, ......28
Agreement.....................1 FTC, ........................40
Antitrust Division,..........40
Appraiser, ..................40 --G--
Associate, ..................27
Atrium, ......................1 GAAP, .......................13
Gains and Transfer Taxes, ...12
--B-- Governmental Entity, ........12
Benefit Liabilities, ........19 --H--
Benefit Plans,.............. 17
Bylaws, ......................4 Hazardous Material,..........24
HSR Act, ....................12
--C--
--I--
Capitalization Date, ........10
CERCLA, .....................24 Indemnified Liabilities, ....37
Certificate of Incorporation,.2 Indemnified Parties, ........37
Certificate of Merger, .......4 Injunction, .................42
Certificates, ................6 IRS, ........................16
Closing, .....................4 ISRA, .......................13
Closing Date, ................4
Code, .......................16 --L--
Company, .....................1
Company Common Stock, ........1 Laws, .......................12
Company Intangible Property, 23
Company Litigation, .........14 --M--
Company Order, ..............14
Company Permits, ............14 Material Adverse Effect, ....10
Company SEC Documents, ......13 Material Contracts, .........26
Company Stockholder Meeting Date, ...............13
Approval, ...................13 Merger,.......................1
Company Stockholder Meeting,..2 Merger Consideration, ........5
Company Voting Debt, ........11
Confidentiality Agreement, ..34
Constituent Corporations, ....4 --N--
--D-- NJDEPE, .....................35
Non-Compete and Termination
Agreement, ...................1
DGCL, ........................2
Dissenting Shares,............9 --O--
Option Consideration,.........8
--E-- Option Conversion
Agreement, ...................1
Effective Time, ..............4 Options,......................8
Employee Arrangements, ......17 OSHA, .......................24
Environmental Costs and
Liabilities, ................23
Environmental Law,...........23
ERISA Affiliate,.............17 --P--
Exchange Act,................13
Parent, ......................1
Paying Agent, ................6
Payment Fund, ................6
PBGC, .......................18
Preferred Stock, ............10
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C> <C> <C>
Proxy Statement, .............2
Surviving Corporation, .......4
--R-- --T--
Real Property Leases, .......26
Release,.....................24 Tax, ........................16
Remedial Action, ............24 Tax Return, .................16
Representatives, ............31 Taxes, ......................16
Termination and Release
Agreement, ...................1
--S-- Transaction Documents, .......2
SEC,..........................3 --U--
Securities Act, .............13
Shares,.......................1 Unvested Stock, ..............8
Solvency Letter, ............40 Unvested Stock
Stock Option Plans, ..........8 Consideration, ...............8
Stockholders Agreement, ......1
Sub, .........................1
Subsidiary, ..................8 --V--
Violation, ..................12
</TABLE>
v
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 24, 1997 (the
"Agreement"), is made and entered into by and among ATRIUM ACQUISITION HOLDINGS
CORP., a Delaware corporation ("Parent"), ATRIUM/PG ACQUISITION CORP., a
Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), and PLY
GEM INDUSTRIES, INC., a Delaware corporation (the "Company"). In addition to
the above parties, Atrium Corporation, a Delaware corporation and the sole
stockholder of Parent ("Atrium"), hereby joins in the execution and delivery of
this Agreement for purposes of Section 4.3 and Articles 9 and 10.
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the merger (the "Merger") of Sub with and into the
Company upon 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, contemporaneously with the
execution and delivery hereof, certain beneficial and record holders of
outstanding shares of common stock, par value $0.25 per share, of the Company
("Shares" or "Company Common Stock") and Options (as defined in Section 3.5)
enter into a Stockholders Agreement substantially in the form of Exhibit A
hereto (the "Stockholders Agreement") and, in order to induce Parent and Sub to
enter into this Agreement, the Company and such holders are executing and
delivering concurrently herewith the Stockholders 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 (i) an Option Conversion
Agreement substantially in the form of Exhibit B hereto (an "Option Conversion
Agreement") and/or (ii) an Option Surrender Agreement, Release and Waiver
substantially in the form of Exhibit C 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 D 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 E 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
<PAGE> 8
hereof, the Company has received true and complete copies of the financing
commitments described in Section 4.2(e); and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger 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
APPROVALS OF THE BOARD OF DIRECTORS
AND STOCKHOLDERS
1.1 Company Actions. The Company hereby consents to the Merger and
represents that (a) its Board of Directors (at a meeting duly called and held)
has (i) determined that this Agreement, the Stockholders Agreement, the Option
Conversion Agreements, the Option Release Agreements, 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 Merger, are fair to and 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 Merger, and such approval
constitutes approval of the foregoing for purposes of Section 203 of the
Delaware General Corporation Law, as amended (the "DGCL"), (iii) resolved to
recommend 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 of Directors of the Company its opinion that, as of such date and
based upon and subject to the matters set forth therein, the Merger
Consideration (as defined in Section 3.2) to be received by the holders of
Company Common Stock in the Merger is fair, from a financial point of view, to
such holders.
1.2 Company Stockholder Approval. The Company shall, in accordance with
applicable law and the Company's Certificate of Incorporation, as amended (such
Certificate of Incorporation as amended being hereinafter referred to as the
"Certificate of Incorporation"), and By-Laws, (i) duly call, give notice of,
convene and hold a special meeting of its stockholders as promptly as
practicable for the purpose of considering and taking action on this Agreement
and the transactions contemplated hereby (the "Company Stockholder Meeting")
and (ii) subject to the fiduciary obligations of the Board of Directors of the
Company as advised by independent legal counsel, include in the proxy statement
(such proxy statement as amended or supplemented from time to time being
hereinafter referred to as the "Proxy Statement") the recommendation of the
Board of Directors that the stockholders of the Company approve and adopt this
Agreement and the transactions contemplated hereby, including, without
limitation, the Merger, and use all reasonable efforts to obtain such approval
and adoption.
1.3 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.
1.4 Proxy Statement. As promptly as practicable after the execution of
this Agreement, the Company shall prepare and file with the Securities and
Exchange Commission
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<PAGE> 9
(the "SEC") the preliminary Proxy Statement with respect to the actions to be
taken at the Company Stockholder Meeting; provided, however, that the Company
shall furnish such preliminary Proxy Statement to Parent for review before such
filing with the SEC and that such filing shall be subject to Parent's prior
approval of the preliminary Proxy Statement, which approval shall not be
unreasonably withheld or delayed. Parent and the Company shall cooperate with
each other in the preparation of the Proxy Statement, and the Company shall
notify Parent of the receipt of any comments of the SEC with respect to the
Proxy Statement and of any requests by the SEC for any amendment or supplement
thereto or for additional information and shall provide to Parent promptly
copies of all correspondence between the Company or any representative of the
Company and the SEC. As promptly as practicable after comments are received
from the SEC with respect to the preliminary Proxy Statement, the Company shall
use all reasonable efforts to respond to the comments of the SEC. The Company
shall give Parent and its counsel the opportunity to review all amendments and
supplements to the Proxy Statement and all responses to requests for additional
information and replies to comments of the SEC prior to their being filed with
or sent to the SEC; provided, however, that the Company shall furnish such
proposed amendments, supplements and responses to Parent for review before
filing any of such with the SEC and that the filing of such shall be subject to
Parent's prior approval, which approval shall not be unreasonably withheld or
delayed. Parent shall promptly provide the Company with such information as may
be required to be included in the Proxy Statement or as may be reasonably
required to respond to any comment of the SEC. After all the comments received
from the SEC have been cleared by the SEC staff and all information required to
be contained in the Proxy Statement, to the reasonable satisfaction of Parent,
has been included therein by the Company, the Company shall file with the SEC
the Proxy Statement and the Company shall use all reasonable efforts to have
the Proxy Statement cleared by the SEC as soon thereafter as practicable. The
Company shall cause the Proxy Statement to be mailed to its stockholders of
record, as of the record date established by the Board of Directors of the
Company, as promptly as practicable after clearance by the SEC. Unless the
Board of Directors of the Company, after consultation with its outside legal
counsel, concludes that such recommendation is no longer consistent with the
discharge of applicable fiduciary duties of the Board of Directors of the
Company, the Company shall cause the Proxy Statement to include, and continue
to include until the vote is taken at the Company Stockholder Meeting, the
recommendation of the Board of Directors of the Company in favor of this
Agreement and the transactions contemplated hereby, including, without
limitation, the Merger.
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 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
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<PAGE> 10
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 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.
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.
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<PAGE> 11
(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 $18.75 (the "Merger Consideration"), payable to the holder
thereof in 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
5
<PAGE> 12
payment thereof. The Payment Fund shall not be used for any purpose except as
expressly provided in this Agreement.
(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.
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.
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<PAGE> 13
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 (x) cancelled and shall
represent the right to receive the following consideration in settlement
thereof or (y) as may be otherwise agreed upon by Parent and the holder
thereof, converted into an option to purchase shares as described in clause
(ii) below, as follows: (i) as to all Options that are to be cancelled, 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, (ii) as to the Options that are to be converted, each such Option shall
be converted into an equivalent option to purchase a number of shares of common
stock, par value $0.01, of Atrium Corporation upon expiration of the vesting
periods, if any, currently applicable to such Options, and at the exercise
price as agreed to by Parent and each such holder of Options (such amount in
cash or such options received upon conversion as described in clauses (i) and
(ii) above being hereinafter referred to as the "Option Consideration"), and
(iii) 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.
(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 (as defined below) 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 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. As used in this Agreement,
the word "Subsidiary", with respect to any party, means any corporation,
partnership, joint venture or other organization, whether incorporated or
unincorporated, of which: (i) such party or any other Subsidiary of such party
is a general partner; (ii) voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation, partnership, joint venture or other organization is held by such
party or by any one or more of its Subsidiaries, or by such party and any one
or more of its Subsidiaries; or (iii) at least 50% of the equity, other
securities or other interests is, directly or indirectly, owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
any one or more of its Subsidiaries.
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<PAGE> 14
(c) Payment Procedures. Upon the later of the Effective Time or the
delivery of a duly executed (1) Option Release Agreement by a holder of Options
to be cancelled or Unvested Stock or (ii) an Option Conversion Agreement by a
holder of Options that are to be converted, as applicable, 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.
(e) Without the consent or agreement of any other party hereto, at
any time, and from time to time, prior to the date that the Proxy Statement is
first mailed to the holders of Company Common Stock, Parent, may amend,
supplement or otherwise modify the terms and provisions of the Option
Conversion Agreements with the consent of any holder of Options affected by
such amendment or modification, by executing a written instrument, signed by
Parent and the affected holder of the Options subject thereto, setting forth
the terms and conditions of any such amendment, supplement or other
modification. Parent shall give each of the other parties to this Agreement
prompt notice of any such amendment, supplement or modification.
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.
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
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<PAGE> 15
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
By-Laws 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
$0.23 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 (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 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
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<PAGE> 16
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 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. 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, 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
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<PAGE> 17
defined in Section 4.1(k)), Company 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 Company Stockholder Meeting and (2)
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.
(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
Securities Exchange Act of 1934 (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
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<PAGE> 18
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 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 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,
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<PAGE> 19
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 ("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.
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<PAGE> 20
(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 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 168(h) of the Code) or
"tax-exempt bond financed property" (within the meaning of Section
168(g)(5) of the Code).
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<PAGE> 21
(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:
(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
15
<PAGE> 22
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 Purchaser: (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.
(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)
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<PAGE> 23
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 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),
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<PAGE> 24
neither the Company nor any of its ERISA Affiliates is a participant in
any plan to which Sections 4063 or 4064 of ERISA apply.
(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.
(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.
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<PAGE> 25
(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
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 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, (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
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<PAGE> 26
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 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.
(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 Consideration to be received by the holders of Company Common Stock in the
Merger is fair from a financial point of view to such holders, 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,
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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 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 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
21
<PAGE> 28
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 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,
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<PAGE> 29
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 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
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<PAGE> 30
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.
(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 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 Merger, taken together, are
fair to and in the best interests of the stockholders of
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<PAGE> 31
the Company and has approved the same and (ii) resolved to recommend that the
holders of the shares of Company Common Stock 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.
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
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<PAGE> 32
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) 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; (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. 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 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
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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 the Parent has determined by unanimous written consent that each
of the Transaction Documents to which it is a party and the transactions
contemplated thereby, including 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 (i) a letter of commitment obtained by Parent from The
Chase Manhattan Bank to provide debt financing for the transactions
contemplated hereby pursuant to a senior credit facility; (ii) a letter of
engagement obtained by Parent from Chase Securities Inc. with respect to senior
subordinated debt financing for the transactions contemplated hereby pursuant
to the sale by Parent of senior subordinated notes; and (iii) a letter of
commitment from Hicks Muse Equity Fund III, L.P. to provide certain equity
financing (collectively, the "Financing Commitments"). Executed copies of the
Financing Commitments are attached hereto as Schedule 4.2(e). Assuming that the
financing contemplated by the Financing Commitments is consummated in
accordance with the terms thereof, the funds to be borrowed and/or provided
thereunder will provide sufficient funds to pay the Merger Consideration 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 Commitments. Parent agrees to promptly notify the
Company if the statements in the immediately preceding sentence are no longer
true and correct.
4.3 Representations and Warranties of Atrium. Atrium represents and
warrants to the Company as follows:
(a) Organization, Standing and Power. Atrium 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
Parent is owned directly by Atrium free and clear of any lien, mortgage,
pledge, charge or encumbrance of any kind.
(b) Authority; No Violations; Consents and Approvals.
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(i) Atrium has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Atrium. This Agreement has been
duly executed and delivered by Atrium and, assuming that such constitutes
the valid and binding agreement of the other parties hereto constitutes a
valid and binding obligation of Atrium enforceable in accordance with its
terms and conditions except that the enforcement hereof 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) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Atrium will not
(A) result in any Violation pursuant to any provision of the Restated
Certificate of Incorporation or Amended and Restated By-Laws of Atrium 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
4.3 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 Atrium or its 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 Atrium,
materially impair the ability of Atrium to perform its obligations
hereunder or perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
(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 Atrium in
connection with its execution and delivery of this Agreement or the
consummation by Atrium of the transactions contemplated hereby, 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; (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.
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):
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(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), 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 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
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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 1.1 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 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
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reasonably could be expected to lead to: (A) any 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 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.
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(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.
(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).
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
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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 April 23, 1997, between affiliates of 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 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 Commitments, 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
Commitments 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
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expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.
(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 Company
Stockholder 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
Company Stockholder 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 Commitments, 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
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.
(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) In the event that (i) 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 Company Stockholder Meeting, or at any adjournment thereof,
(ii) the holders of Company Common Stock that are parties to the Stockholders
Agreement shall not have voted their respective shares of Company Common Stock
because of Section 2(c) of the Stockholders Agreement and (iii) the Company
Stockholder Approval would have been obtained had the holders of Company Common
Stock that are parties to the Stockholders Agreement voted their respective
shares of Company Common Stock in favor of the approval of this Agreement, then
the Company shall promptly pay to Parent or Parent's designee the amount
described in clause (y) of Section 6.4(b) in immediately available funds. In
the event that the provisions of Section 6.4(b) and this Section 6.4(d) should
be applicable to a single event, then the provisions of this Section 6.4(d)
shall govern the payment of the amounts described in clause (y) of Section
6.4(b), and Sections 6.4(b) and 6.4(c) shall govern the payment of the amounts
described in clause (x) of Section 6.4(b).
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(e) 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 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 Hicks, Muse, Tate & Furst
Incorporated, The Chase Manhattan Bank and Chase Securities 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 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 a
corporation is permitted under the DGCL to indemnify its own directors or
officers as the case may be (and the Company and the Surviving Corporation, 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 approved by the Indemnified Party (which approval
shall not be unreasonably withheld), and who has not otherwise performed
services for the Surviving Corporation or its 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 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 after
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the Effective Time), and the Company (or after the Effective Time, the
Surviving Corporation) 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) will use all reasonable best efforts to assist in the vigorous
defense of any such matter, provided that neither the Company nor the Surviving
Corporation 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)
(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) 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 or the Surviving Corporation, as the case may be) may be retained by
the Indemnified Parties at the cost and expense of the Company (or Surviving
Corporation). 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) 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 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
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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 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.
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.
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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 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.
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 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 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 and in the Stockholders Agreement. 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 and in the Stockholders Agreement, 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 Merger or the
taking of any other action contemplated by this Agreement and in the
Stockholders 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 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
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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.
(a) Parent shall use its reasonable efforts to deliver to the Board
of Directors of the Company prior to the Closing a letter ("Solvency Letter")
from an independent third party selected by Parent and reasonably satisfactory
to the Company (the "Appraiser") attesting that, immediately after the
Effective Time, the Surviving Corporation: (i) will be solvent (in that both
the fair value of its assets will not be less than the sum of its debts and
that the present fair saleable value of its assets will not be less than the
amount required to pay its probable liability on its debts as they become
absolute and matured), (ii) will have adequate capital with which to engage in
its business; and (iii) will not have incurred and does not plan to incur debts
beyond its ability to pay as they become absolute and matured, based upon the
proposed financing structure for the Merger and certain other financial
information to be provided to the Appraiser by Parent and the Company and after
giving effect to any changes in the Surviving Corporation's assets and
liabilities as a result of the Merger and the financing relating thereto.
Subject to the foregoing, the Solvency Letter shall be in form and substance
reasonably satisfactory to the Company. Except with the prior written consent
of the Company's Board of Directors, Parent will not consummate the Merger
unless and until such Board of Directors shall have received the Solvency
Letter.
(b) Parent will request the Appraiser to deliver the Solvency Letter
as promptly as practicable. The parties agree to cooperate with the Appraiser
in connection with the preparation of the Solvency Letter, including, without
limitation, providing the Appraiser with any information reasonably available
to them necessary for the Appraiser's preparation of such letter.
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 Atrium 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 Atrium. 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 Atrium provided as of the Effective Time to the same extent
as if such amounts had been paid under such medical plan of Atrium.
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(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 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 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 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
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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) ISRA Approval. All necessary approvals or consents shall have
been obtained from NJDEPE that are required under ISRA to preclude any
imposition of material penalties or any other material sanction that may be
assessed or obtained under N.J.S.A. 13:1K-13 or any other provision of ISRA.
7.2 Conditions to Obligations of Parent and Sub. The obligations of
Parent and Sub to effect the Merger shall be subject to the satisfaction prior
to the Closing Date of the following conditions, any or all of which may be
waived in whole or in part by Parent and Sub:
(a) Financing. Parent shall have received the debt and equity
financing for the transactions contemplated hereby on terms substantially as
outlined in the Financing Commitments.
(b) Dissenting Shares. No more than ten percent (10%) of the shares
of Company Common Stock outstanding immediately prior to the Effective Time
shall be Dissenting Shares.
(c) Representations and Warranties of the Company. Each of the
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all respects (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) as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, except for such breaches
that would not, individually or in the aggregate with any other breaches on the
part of the Company, (i) have a Material Adverse Effect on the Company or (ii)
materially adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereby, and Parent and Sub shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer,
President and Chief Financial Officer of the Company to such effect.
(d) Performance of Obligations of the Company. The Company shall
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 this Agreement at or prior to the Closing Date, and
Parent and Sub shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer, President and Chief Financial Officer
of the Company to such effect.
7.3 Conditions to Obligations of the Company.
(a) Representations and Warranties of Parent and Sub. Each of the
representations and warranties of Parent and Sub set forth in this Agreement
shall be true and correct in all respects (provided that any representation or
warranty of Parent and Sub contained herein that is subject to a materiality,
Material Adverse Effect or similar qualification shall not be
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so qualified for purposes of determining the existence of any breach thereof on
the part of Parent and/or Sub) as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date, except for
such breaches that would not, individually or in the aggregate with other
breaches on the part of Parent and/or Sub, (i) have a Material Adverse Effect
on Parent or Sub or (ii) materially adversely affect the ability of the parties
hereto to consummate the transactions contemplated hereby, and the Company
shall have received a certificate signed on behalf of each of Parent and Sub by
the President and Vice President of each of Parent and Sub to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall 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 them under this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of each of Parent
and Sub by the President and Vice President of each of Parent and Sub to such
effect.
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 Company
Stockholder Meeting, or at any adjournment thereof;
(c) by either the Company or Parent if the Merger shall not have
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 fulfill
any covenant or agreement under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date;
(d) by Parent, 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;
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(e) by Parent, 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, 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;
(g) by the Company, 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 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 1.1 in the Proxy Statement or
shall have withdrawn or modified, in any manner which is adverse to Parent, its
recommendation or approval of 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 receipt of the Company Stockholder
Approval, 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
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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.
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, 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 Date 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. 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 Date.
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 or by the
Stockholders Agreement. Upon the Closing, the terms and provisions of the
Confidentiality Agreement shall terminate in full.
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
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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 Atrium, Parent or Sub, to:
Atrium Corporation,
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
with copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Jeffry 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
(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
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with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attn: Victor I. Lewkow
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 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.
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, 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
Purchaser 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.
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
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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.
ARTICLE 10
GUARANTEE
10.1 Limited Guarantee. Atrium hereby guarantees the full and complete
performance of each of the covenants and agreements made in this Agreement by
either Parent or Sub and the respective obligations of Parent and Sub arising
under this Agreement; provided, however, that the above guarantee by Atrium is
hereby expressly limited in that in no event shall Atrium's liabilities or
obligations under such guarantee exceed $5,000,000.
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<PAGE> 54
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:
ATRIUM ACQUISITION HOLDINGS CORP.
By: /s/ Jeff S. Fronterhouse
-----------------------------
Name: Jeff S. Fronterhouse
Title: Executive Vice President
SUB:
ATRIUM / PG ACQUISITION CORP.
By: /s/ Jeff S. Fronterhouse
-----------------------------
Name: Jeff S. Fronterhouse
Title: Executive Vice President
COMPANY:
PLY GEM INDUSTRIES, INC.
By: /s/ Jeffrey S. Silverman
-----------------------------
Name: Jeffrey S. Silverman
Title: Chairman
Solely for purposes of Section 4.3 and
Articles 9 and 10:
ATRIUM CORPORATION
By: /s/ Jeff S. Fronterhouse
-----------------------------
Name: Jeff S. Fronterhouse
Title: Executive Vice President
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EXHIBIT A
Stockholders Agreement
<PAGE> 56
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated as of June 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 direct wholly-owned subsidiary of Parent ("Sub"), and Jeffrey
S. Silverman, Dana R. Snyder and Herbert P. Dooskin (collectively, the
"Stockholders" and individually a "Stockholder"). In addition to the above
parties, Ply Gem Industries, Inc., a Delaware corporation (the "Company")
hereby joins in the execution and delivery of this Agreement for purposes of
Sections 2(c) and 5.
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, Sub, the Company and, for
limited purposes, Atrium Corporation, 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"); and
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Stockholder agree, and the
Stockholder 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. Definitions. For purposes of this Agreement:
(a) "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" as within the meanings of Section
13(d)(3) of the Exchange Act.
(b) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
2. Provisions Concerning Company Common Stock.
(a) Each Stockholder hereby, severally and not jointly and
severally, agrees that during the period commencing on the date hereof and
continuing until the first to occur of the Effective Time, the termination of
this Agreement or termination of the Merger Agreement in
<PAGE> 57
accordance with its terms, at any meeting of the holders of Company Common
Stock, however called, such Stockholder shall vote (or cause to be voted) all
of the issued and outstanding Shares held of record or Beneficially Owned by
such Stockholder, whether heretofore owned or hereafter acquired, to the extent
each Stockholder has the right to vote such Shares, (i) as provided in Section
2(c) with respect to the approval and adoption of the Merger Agreement and the
Merger; (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement or this Agreement; and
(iii) except as otherwise agreed to in writing in advance by Parent, against
the following actions (other than the Merger and the transactions contemplated
by the Merger Agreement): (A) any extraordinary corporate transaction, such as
a merger, consolidation or other business combination involving the Company or
its Subsidiaries; (B) a sale, lease or transfer of a material amount of assets
of the Company or its Subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its Subsidiaries; (C)(1) any
change in a majority of the persons who constitute the board of directors of
the Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or Bylaws; (3) any
other material change in the Company's corporate structure or business; or (4)
any other action which, in the case of each of the matters referred to in
clauses (C) (1), (2), (3) or (4), is intended, or could reasonably be expected,
to impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by this Agreement and the Merger
Agreement, and during such period such Stockholder shall not enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions and agreements contained in this
Section 3.
(b) Each Stockholder hereby grants to Parent a proxy to vote the
Shares of such Stockholder. Each Stockholder intends such proxy to be
irrevocable and coupled with an interest and will take such further action or
execute such other instruments as may be necessary to effectuate the intent of
this proxy and hereby revokes any proxy previously granted by such Stockholder
with respect to such Shares.
(c) A Stockholder shall vote his Shares in favor of the approval and
adoption of the Merger and the Merger Agreement (and Parent shall be entitled
to exercise the proxy granted to Parent under Section 2(b) to so vote) if, but
only if, a majority of the issued and outstanding Company Common Stock (that is
not subject to Section 2(a)) that is represented in person or by proxy at any
meeting of the holders of Company Common Stock shall have voted to approve and
adopt the Merger and the Merger Agreement. In any other event a Stockholder
shall abstain with respect to the approval and adoption of the Merger and
Merger Agreement. This Section 2(c) is for the benefit of, and may not be
amended or waived without the written approval of, the Company.
3. Options. In order to induce Parent and Sub to enter into the Merger
Agreement, each of the Stockholders hereby grants to Parent 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
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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, the "Option Shares") at a purchase price per share equal to the
Merger Consideration (the "Purchase Price"). If the Merger Agreement is
terminated in a manner which results in the Company being obligated to pay
certain fees and reimbursements under Section 6.4 of the Merger Agreement (a
"Trigger Termination"), the Purchase Options shall become exercisable, in whole
but not in part, upon the date of such termination and remain exercisable in
whole but not in part until the date which is 60 days (or 120 days if, as of
the date of such termination, no "change of control" shall have occurred under
the terms of the various agreements governing the Options) after the date of
the occurrence of such termination (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 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 Purchase Options pursuant to this Agreement. In the event
that Parent wishes to exercise the Purchase Options, Parent shall send a
written notice (the "Notice") to the Stockholders identifying the place and
date (not less than two nor more than 20 business days from the date of the
Notice) for the closing of such purchase.
Upon receipt of the Notice to the extent not previously exercised, prior
to or 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.
In the event that Parent has purchased the Option Shares pursuant to the
Purchase Option and, within 180 days after the closing of such purchase, sells,
transfers or disposes of any of the Option Shares in a transaction with a
non-affiliate of Parent (a "Disposition") then, within two business days after
the closing of such Disposition, Parent 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 Option) of 25% of the Net Profit
realized by Parent in connection with such Disposition. As used herein, Net
Profit shall mean an amount equal to (a) the excess, if any, of the gross
amount realized by Parent from a Disposition over the Purchase Price paid with
respect to the Option Shares subject to such Disposition, minus the sum of (b)
all reasonable out-of-pocket fees, costs and expenses incurred by Parent and
its affiliates in connection 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 (c) all customary brokerage fees and
commissions, if any, incurred in connection with such Disposition.
4. Covenants, Representations and Warranties of Each Stockholder.
(a) Each Stockholder hereby, severally and not jointly and
severally, represents and warrants to Parent as follows:
(i) Ownership of Shares. Such Stockholder is either (i) the
record and Beneficial Owner of, or (ii) the Beneficial Owner but not
the record holder of, the number
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of Shares and Options respectively set forth opposite the Stockholder's
name on Schedules I and II hereto. On the date hereof, 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 voting power and sole 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, 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
HSR Act, if applicable, and the filings required under the Merger
Agreement (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
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the extent that any conflict, breach, default or violation would not
interfere with the ability of such Stockholder to perform its obligations
hereunder.
(iv) No Encumbrances. Except as required by Section 2, the proxy
granted under Section 2(b), and liens or security interests that will be
released at the closing, if any, of a purchase under the Purchase Option,
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 Merger Agreement.
(vii) Restriction on Transfer, Proxies and Non-Interference. Except
as required by this Agreement, at any time during the period beginning on
the date hereof and ending upon the earlier to occur of the Effective
Time or the termination of this Agreement, such Stockholder shall not,
directly or indirectly: (i) 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; (ii) grant any
proxies or powers of attorney, deposit any Shares into a voting trust or
enter into a voting agreement with respect to any Shares; or (iii) 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.
(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) Reliance by Parent. Such Stockholder understands and
acknowledges that Parent is entering into, and causing Sub to enter into,
the Merger Agreement in reliance upon such Stockholder's execution and
delivery of this Agreement.
(x) 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.
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Parent hereby represents and warrants to each Stockholder as follows:
(i) Organization, Standing and Corporate Power. Parent 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. Parent has the corporate power and authority to enter into and
perform all of Parent's obligations under this Agreement and to
consummate the transactions contemplated hereby.
(ii) No Conflicts. Except for filings under the HSR Act, if
applicable, and the filings required under the Merger Agreement (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 Parent and the consummation by Parent of the
transactions contemplated hereby, except where the failure to obtain such
consent, permit, authorization, approval or filing would not interfere
with Parent's ability to perform its obligations hereunder, and (B) none
of the execution and delivery of this Agreement by Parent, the
consummation by Parent of the transactions contemplated hereby or
compliance by Parent with any of the provisions hereof shall (1) conflict
with or result in any breach of any applicable organizational documents
applicable to Parent, (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 is a party or by which Parent or
any of Parent'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 any of Parent'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 to perform
its obligations hereunder.
(iii) Execution, Delivery and Performance by Parent. 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 Parent 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 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.
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5. Stop Transfer. Each Stockholder agrees with, and covenants to, Parent
that such Stockholder shall not request that the Company 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 (including the provisions of Section 2 hereof).
In the event of a stock dividend or distribution, or any change in the Company
Common Stock 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.
6. Termination. Except as otherwise provided herein (which shall include
the survival of the provisions of Sections 3 and 9 hereof), the covenants and
agreements contained herein with respect to the Shares shall terminate upon the
termination of the Merger Agreement in accordance with its terms by Parent or
the Company.
7. 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.
8. Merger Agreement and Options. Each Stockholder hereby consents and
agrees to the cancellation or conversion, as applicable, of each Stockholder's
Options and Unvested Stock as set forth in Section 3.5 of the Merger Agreement.
9. Other Actions. 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 Parent's rights under the
Purchase Option or the benefits to be derived by Parent from an exercise of the
Purchase Option.
10. Indemnification Agreements. Effective as of the Effective Time, each
Stockholder hereby waives and releases all rights that such Stockholder may
have under his respective indemnification agreement, if any, with the Company
or any of its Subsidiaries, to have a trust established thereunder; provided
that any such indemnification shall otherwise remain in full force and effect
in accordance with its terms.
11. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof.
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(b) Certain Events. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Shares and shall
be binding upon any person or entity to which legal or beneficial ownership of
such Shares 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, the transferor shall remain
liable for the performance of all obligations under this Agreement of the
transferor.
(c) Assignment. This Agreement shall not be assigned by operation
of law or otherwise without the prior written consent of the other party,
provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any affiliate of Parent, 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.
(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 Stockholder: At the addresses set forth on signature pages hereto
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
8
<PAGE> 64
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
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 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.
9
<PAGE> 65
(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. Except as provided in Section
2(c), 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.
10
<PAGE> 66
IN WITNESS WHEREOF, Parent, Sub and each Stockholder have caused
this Agreement to be duly executed as of the day and year first
above written.
Atrium Acquisition Holdings Corp.
By:______________________________
Name:____________________________
Title:___________________________
Atrium/PG Acquisition Corp.
By:______________________________
Name:____________________________
Title:___________________________
Stockholders:
_________________________________
Jeffrey S. Silverman
Address:_________________________
_________________________
_________________________
with a 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
_________________________________
Dana R. Snyder
Address:_________________________
_________________________
_________________________
11
<PAGE> 67
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attn: Richard D. Bohm
Telecopy: (212) 909-6836
__________________________________
Herbert P. Dooskin
Address:__________________________
__________________________
__________________________
with a 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
12
<PAGE> 68
AGREED TO AND ACKNOWLEDGED
(with respect to Sections 2(c) and 5 hereof and for
purposes of acknowledging its consent hereto):
Ply Gem Industries, Inc.
By:______________________________
Name:____________________________
Title:___________________________
13
<PAGE> 69
EXHIBIT B
Option Conversion Agreement
<PAGE> 70
OPTION CONVERSION AGREEMENT
THIS OPTION CONVERSION AGREEMENT, dated as of ___________, 1997, is
made and entered into by Atrium Acquisition Holdings Corp., a Delaware
corporation ("Parent"), Atrium/PG Acquisition Corp., a Delaware corporation and
a direct wholly-owned subsidiary of Parent ("Sub"), and the undersigned holder
(the "Optionholder").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, Sub, Ply Gem Industries,
Inc., a Delaware corporation (the "Company") and, for limited purposes, Atrium
Corporation, a Delaware corporation, 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"); and
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Optionholder agree, and the
Optionholder 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. Options. The Optionholder hereby consents and agrees to the
conversion, cancellation and treatment of each of the Optionholder's Options as
set forth in Section 3.5(a)(ii) of the Merger Agreement.
2. New Option Agreement. To the extent that any of the
Optionholder's Options are converted into options to purchase shares of Atrium
Corporation pursuant to Section 3.5(a)(ii) of the Merger Agreement, the
Optionholder hereby acknowledges that all options issued as a result of such
conversion shall be evidenced by an Option Award Agreement in a form agreed to
by Parent and the Optionholder.
3. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute 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. The Optionholder agrees that this Agreement and
the obligations hereunder shall attach to such Optionholder's Options and shall
be binding upon any person or entity to which legal or beneficial ownership of
such Options shall pass, whether by operation of law or otherwise, including,
without limitation, such Optionholder's heirs,
<PAGE> 71
guardians, administrators or successors. Notwithstanding any transfer of
Options, the transferor shall remain liable for the performance of all
obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
Parent may assign, in its sole discretion, its rights and obligations hereunder
to any direct or indirect wholly owned subsidiary of Parent, 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.
(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 Optionholder: At the addresses set forth on signature pages hereto
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: Jeffry 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
2
<PAGE> 72
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
Attn: A. Winston Oxley
Telecopy: (214) 999-7891
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 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
3
<PAGE> 73
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.
(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.
4
<PAGE> 74
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.
IN WITNESS WHEREOF, Parent, sub and each Stockholder have caused
this Agreement to be duly executed as of the day and year first above written.
Atrium Acquisition Holdings Corp.
By:______________________________
Name:____________________________
Title:___________________________
Atrium/PG Acquisition Corp.
By:______________________________
Name:____________________________
Title:___________________________
Optionholder:
By:______________________________
Name:____________________________
Title:___________________________
AGREED TO AND ACKNOWLEDGED:
Ply Gem Industries, Inc.
By: _______________________________
Name: _____________________________
Title: ____________________________
5
<PAGE> 75
EXHIBIT C
Option Surrender Agreement, Release and Waiver
<PAGE> 76
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 Atrium Acquisition Holdings Corp., Atrium/PG
Acquisition Corp. ("Atrium/PG"), the Company and, for limited purposes, Atrium
Corporation, dated as of June __, 1997 (the "Merger Agreement"), the Company
will be cancelling Options (as defined below) in return for cash consideration
effective at the time the proposed merger of Atrium/PG 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 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
<PAGE> 77
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 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.
2
<PAGE> 78
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> 79
- ---------------------------------------------------------------------
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> 80
EXHIBIT D
Non-Compete and Termination Agreement
<PAGE> 81
NON-COMPETE AND TERMINATION AGREEMENT
THIS NON-COMPETE AND TERMINATION AGREEMENT (this "Agreement"), dated as
of June 24, 1997, is made and entered into by Atrium Acquisition Holdings
Corp., 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, Atrium/PG Acquisition Corp. (the
"Sub"), the Company and, for limited purposes, Atrium Corporation, 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"). [Annex I
intentionally omitted.]
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). As liquidated damages for the termination of the Employment
Agreement, the
<PAGE> 82
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.
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 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.
2
<PAGE> 83
(b) 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, 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
3
<PAGE> 84
"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. 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
4
<PAGE> 85
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;
(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,
5
<PAGE> 86
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 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.
(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,
LLP
551 Fifth Avenue
New York, New York 10176
Attn: Joel I. Papernik
Telecopy: (212) 697-6686
If to Parent: Atrium Acquisition Holdings Corp.
1341 West Mockingbird Lane
Suite 1200 West
Dallas, Texas 75247
Attn: Randall Fojtasek
Telecopy: (214) 630-5013
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<PAGE> 87
copies to: Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Jeffry 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
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 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
7
<PAGE> 88
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 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 forms for these
amounts.
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<PAGE> 89
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.
9
<PAGE> 90
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
___________________________________
Jeffrey S. Silverman
Address:
___________________________________
___________________________________
___________________________________
___________________________________
Atrium Acquisition Holdings Corp.
By:________________________________
Name:______________________________
Title:_____________________________
Ply Gem Industries, Inc.
By:________________________________
Name:______________________________
Title:_____________________________
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<PAGE> 91
EXHIBIT E
Termination and Release Agreement
<PAGE> 92
TERMINATION AND RELEASE AGREEMENT
THIS TERMINATION AND RELEASE AGREEMENT (this "Agreement"), dated as of
June 24, 1997, is made and entered into by Atrium Acquisition Holdings Corp., 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, Atrium/PG Acquisition Corp. (the
"Sub"), the Company and, for limited purposes, Atrium Corporation 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"). [Annex
I intentionally omitted.]
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 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
<PAGE> 93
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) 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.
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<PAGE> 94
(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 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
3
<PAGE> 95
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.
(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
4
<PAGE> 96
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: Atrium Acquisition Holdings 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: Jeffry 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
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 to the others in writing in the manner set forth above.
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<PAGE> 97
(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 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
6
<PAGE> 98
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 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
__________________________________
Address:
__________________________________
__________________________________
__________________________________
__________________________________
Atrium Acquisition Holdings Corp.
By:_______________________________
Name:_____________________________
Title:____________________________
Ply Gem Industries, Inc.
By:_______________________________
Name:_____________________________
Title:____________________________
7
<PAGE> 1
EXHIBIT 99(4)
FINANCIAL ADVISORY AGREEMENT
THIS FINANCIAL ADVISORY AGREEMENT (this "Agreement") is made and
entered into as of November 27, 1996 among Atrium Corporation, a Delaware
corporation, ("Holdings"), Atrium Companies, Inc., a Delaware corporation, (the
"Company"), and Hicks, Muse & Co. Partners, L.P., a Texas limited partnership
(together with its successors, "HMCo").
WHEREAS, certain affiliates of HMCo are simultaneously with the
execution of this Agreement, purchasing 32,000,000 shares of the common stock
of Holdings (the "Acquisition") and as a result of the Acquisition, the debt
and equity financing thereof and certain other transactions related thereto
(collectively with the Acquisition, the "Transaction") such affiliates will own
82% of the outstanding shares of common stock of Holdings;
WHEREAS, Holdings and the Company have requested that HMCo render, and
HMCo has rendered, financial advisory services to Holdings and the Company in
connection with the negotiation of the Transaction; and
WHEREAS, Holdings and the Company have requested that HMCo render
financial advisory, investment banking and other similar services to them with
respect to any future proposals for a tender offer, acquisition, sale, merger,
exchange offer, recapitalization, restructuring or other similar transaction
directly involving the Company or any of its subsidiaries and any other person
or entity (collectively, "Add-on Transactions");
NOW, THEREFORE, in consideration of the services rendered and to be
rendered by HMCo to Holdings and the Company, and to evidence the obligations
of Holdings and the Company to HMCo and the mutual covenants herein contained,
Holdings and the Company hereby jointly and severally agree with HMCo as
follows:
1. Retention.
(a) Holdings and the Company hereby acknowledge that they
have retained HMCo, and HMCo acknowledges that it has acted, as financial
advisor to Holdings and the Company in connection with the Transaction.
(b) Each of Holdings and the Company acknowledges that it
has retained HMCo as its exclusive financial advisor in connection with any
Add-on Transactions that may be consummated during the term of this Agreement,
and that Holdings and the Company will not retain any other person or entity to
provide such services in connection with any such Add-on Transaction without
the prior written consent of HMCo. HMCO agrees that it shall provide such
financial advisory, investment banking and other similar services in connection
with any such Add-on Transaction as may be requested from time to time by the
board of directors of Holdings.
<PAGE> 2
2. Term. The term of this Agreement shall continue until the
earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the
date on which HMCo's affiliates cease to own beneficially, directly or
indirectly, any securities of Holdings, the Company or their successors.
3. Compensation.
(a) As compensation for HMCo's services as financial
advisor to Holdings and the Company in connection with the Transaction, the
Company hereby irrevocably agrees to pay, and Holdings hereby agrees to cause
the Company to pay, to HMCo a cash fee of $2,000,000 to be paid at the closing
of the Transaction, which will occur substantially simultaneously with the
execution of this Agreement. The parties hereto agree that the compensation
due pursuant to this Section 3(a) shall be allocated among the segments of the
financing for the Transaction in proportion to the dollar amount of each such
segment.
(b) As compensation for HMCo's financial advisory,
investment banking and other similar services rendered in connection with any
Add-on Transaction pursuant to Section 1(b) hereof, Holdings and the Company
shall, and Holdings shall cause the Company to, pay to HMCo, at the closing of
any such Add-on Transaction, a cash fee in the amount of 1.5% of the
Transaction Value of such Add-on Transaction. As used herein, the term
"Transaction Value" means the total value of the Add-on Transaction, including,
without limitation, the aggregate amount of the funds required to complete the
Add-on Transaction (excluding any fees payable pursuant to this Section 3(b))
including the amount of any indebtedness, preferred stock or similar items
assumed (or remaining outstanding).
4. Reimbursement of Expenses. In addition to the compensation to
be paid pursuant to Section 3 hereof, Holdings and the Company agree to, and
Holdings shall cause the Company to, reimburse HMCo, promptly following demand
therefor, together with invoices or reasonably detailed descriptions thereof,
for all reasonable disbursements and out-of-pocket expenses (including fees and
disbursements of counsel) incurred by HMCo (i) as financial advisor to Holdings
and the Company in connection with the Transaction or (ii) in connection with
the performance by it of the services contemplated by Section 1(b) hereof.
5. Indemnification. Holdings and the Company jointly and
severally shall indemnify and hold harmless each of HMCo, its affiliates and
their respective directors, officers, controlling persons (within the meaning
of Section 15 of the Securities Act of 1933 or Section 20(a) of the Securities
Exchange Act of 1934), if any, agents and employees (HMCo, its affiliates, and
such other specified persons being collectively referred to as "Indemnified
Persons" and individually as an "Indemnified Person") from and against any and
all claims, liabilities, losses, damages and expenses incurred by any
Indemnified Person (including those arising out of an Indemnified Person's
negligence and fees and disbursements of the respective Indemnified Person's
counsel) which (A) are related to or arise out of (i) actions taken or omitted
to be taken (including any untrue statements made or any statements omitted to
be made) by Holdings and/or the Company or (ii) actions taken or omitted to be
taken by an Indemnified Person with Holdings' or the Company's consent or in
conformity with Holdings' or the Company's instructions or Holdings' or the
Company's actions or omissions or (B) are otherwise related to or arise out of
HMCo's engagement, and will reimburse each Indemnified Person for all costs and
expenses, including fees of any Indemnified Person's
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<PAGE> 3
counsel, as they are incurred, in connection with investigating, preparing for,
defending, or appealing any action, formal or informal claim, investigation,
inquiry or other proceeding, whether or not in connection with pending or
threatened litigation, caused by or arising out of or in connection with HMCo's
acting pursuant to the engagement, whether or not any Indemnified Person is
named as a party thereto and whether or not any liability results therefrom.
Neither Holdings nor the Company will, however, be responsible for any claims,
liabilities, losses, damages or expenses pursuant to clause (B) of the
preceding sentence that have resulted primarily from HMCo's bad faith, gross
negligence or willful misconduct. Holdings and the Company also agree that
neither HMCo nor any other Indemnified Person shall have any liability to
Holdings or the Company for or in connection with such engagement except for
any such liability for claims, liabilities, losses, damages, or expenses
incurred by Holdings and/or the Company that have resulted primarily from
HMCo's bad faith, gross negligence or willful misconduct. Holdings and the
Company further agree that neither of them will, without the prior written
consent of HMCo, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not any Indemnified
Person is an actual or potential party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of HMCo and each other Indemnified Person hereunder from
all liability arising out of such claim, action, suit or proceeding. HOLDINGS
AND THE COMPANY EACH HEREBY ACKNOWLEDGE THAT THE FOREGOING INDEMNITY SHALL BE
APPLICABLE TO ALL CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE
RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE
SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF HMCO OR ANY OTHER INDEMNIFIED
PERSON.
The foregoing right to indemnity shall be in addition to any rights
that HMCo and/or any other Indemnified Person may have at common law or
otherwise and shall remain in full force and effect following the completion or
any termination of the engagement. Holdings and the Company hereby consent to
personal jurisdiction and to service and venue in any court in which any claim
which is subject to this Agreement is brought against HMCo or any other
Indemnified Person.
It is understood that, in connection with HMCo's engagement, HMCo may
also be engaged to act for Holdings and/or the Company in one or more
additional capacities, and that the terms of this engagement or any such
additional engagements may be embodied in one or more separate written
agreements. This indemnification shall apply to the engagement specified in
the first paragraph hereof as well as to any such additional engagement(s)
(whether written or oral) and any modification of said engagement or such
additional engagement(s) and shall remain in full force and effect following
the completion or termination of said engagement or such additional
engagements.
Holdings and the Company further understand and agree that if HMCo is
asked to furnish Holdings and/or the Company a financial opinion letter or act
for Holdings and/or the Company in any other formal capacity, such further
action may be subject to a separate agreement containing provisions and terms
to be mutually agreed upon.
6. Confidential Information. In connection with the performance
of the services hereunder, HMCo agrees not to divulge any confidential
information, secret processes or trade secrets disclosed by Holdings or the
Company to it solely in its capacity as a financial advisor, unless Holdings
and the Company consent to the divulging thereof or such information, secret
processes
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<PAGE> 4
or trade secrets are publicly available or otherwise available to HMCo without
restriction or breach of any confidentiality agreement or unless required by
any governmental authority or in response to any valid legal process.
7. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the State of Texas,
excluding any choice-of-law provisions thereof.
8. Assignment. This Agreement and all provisions contained
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned (other than with respect to the rights and obligations of HMCo, which
may be assigned to any one or more of its principals or affiliates) by any of
the parties without the prior written consent of the other parties.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.
10. Other Understandings. All discussions, understandings and
agreements heretofore made between any of the parties hereto with respect to
the subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the Agreement of the parties hereto.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
HICKS, MUSE & CO. PARTNERS, L.P.
By: HM PARTNERS INC.,
its General Partner
By: /s/ MICHAEL D. SALIM
------------------------
Michael D. Salim
Chief Financial Officer
ATRIUM CORPORATION
By: /s/ RANDALL S. FOJTASEK
------------------------
Randall S. Fojtasek
President
ATRIUM COMPANIES, INC.
By: /s/ RANDALL S. FOJTASEK
------------------------
Randall S. Fojtasek
President
[SIGNATURE PAGE TO FINANCIAL ADVISORY AGREEMENT]
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