SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 24, 1997
PLY GEM INDUSTRIES, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-4087 11-1727150
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(State or Other Jurisdiction (Commission (IRS employer
of Incorporation) File Number) Identification No.)
777 Third Avenue, New York, New York 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 832-1550
--------------------------
Not Applicable
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(former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On June 24, 1997, Ply Gem Industries, Inc. (the "Company")
entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Atrium Acquisition Holdings Corp., a Delaware
corporation ("Parent") and Atrium/PG Acquisition Corp., a
Delaware corporation ("Merger Sub"). Parent is a subsidiary of
Atrium Corporation, a Delaware corporation ("Atrium"), which is a
party to the Merger Agreement for certain limited purposes
described therein. Parent and Atrium are affiliates of the
investment firm Hicks, Muse, Tate & Furst, Inc.
Pursuant to the Merger Agreement, and subject to the terms
and conditions thereof, Merger Sub will be merged with and into
the Company (the "Merger"), which shall be the surviving
corporation and shall become a wholly owned subsidiary of Parent.
In the Merger, each outstanding share of common stock, par value
$0.25 per share, of the Company ("Company Common Stock") will be
converted into the right to receive $18.75 in cash. The foregoing
description of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is attached
hereto as Exhibit 2 and which is incorporated herein by
reference.
Contemporaneously with the execution and delivery of the
Merger Agreement, Jeffrey S. Silverman, Chairman of the Board and
Chief Executive Officer of the Company, Dana R. Snyder, President
and Chief Operating Officer of the Company, and Herbert P.
Dooskin, Executive Vice President of the Company, entered into a
Stockholders Agreement (the "Stockholders Agreement") with Parent
and Merger Sub, which Stockholders Agreement was acknowledged by
the Company. The foregoing description of the Stockholders
Agreement is qualified in its entirety by reference to Exhibit A
to the Merger Agreement, a copy of which is attached hereto as
Exhibit 2 and which is incorporated herein by reference.
Contemporaneously with the execution and delivery of the
Merger Agreement, Mr. Silverman also entered into a Non-Compete
and Termination Agreement (the "Non-Compete Agreement") with
Parent and the Company, a copy of which is included as Exhibit D
to the Merger Agreement, a copy of which is attached hereto as
Exhibit 2 and which is incorporated herein by reference.
Contemporaneously with the execution and delivery of the
Merger Agreement, Mr. Dooskin also entered into a Termination and
Release Agreement (the "Termination Agreement") with Parent and
the Company, a copy of which is included as Exhibit E to the
Merger Agreement, a copy of which is attached hereto as Exhibit 2
and which is incorporated herein by reference.
A copy of the press release issued by the Company on June
25, 1997 is attached hereto as Exhibit 99 and is incorporated by
reference herein.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
<PAGE>
2 Agreement and Plan of Merger, dated as of June 24,
1997, by and among Atrium Acquisition Holdings
Corp., Atrium/PG Acquisition Corp. and Ply Gem
Industries, Inc.
99 Press release issued by Ply Gem Industries, Inc.
on June 25, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: June 25, 1997
PLY GEM INDUSTRIES, INC.
(Registrant)
By: /s/ HERBERT P. DOOSKIN
------------------------------
Name: Herbert P. Dooskin
Title: Executive Vice President
<PAGE>
EXHIBIT INDEX
2 Agreement and Plan of Merger, dated as of June 24,
1997, by and among Atrium Acquisition Holdings
Corp., Atrium/PG Acquisition Corp. and Ply Gem
Industries, Inc.
99 Press release issued by Ply Gem Industries, Inc.
on June 25, 1997.
<PAGE>
=================================================================
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>
TABLE OF CONTENTS
Page
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
i
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ARTICLE 6
ADDITIONAL AGREEMENTS
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
<PAGE>
ii
ARTICLE 10
GUARANTEE
10.1 Limited Guarantee.........................................49
iii
<PAGE>
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
iv
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LIST OF DEFINED TERMS
--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
vi
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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
vi
<PAGE>
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>
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
2
<PAGE>
(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
3
<PAGE>
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.
4
<PAGE>
(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>
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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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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(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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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>
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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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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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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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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(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>
(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>
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)
16
<PAGE>
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),
17
<PAGE>
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.
18
<PAGE>
(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>
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,
20
<PAGE>
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
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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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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
23
<PAGE>
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
24
<PAGE>
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
25
<PAGE>
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
26
<PAGE>
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.
27
<PAGE>
(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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<PAGE>
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
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
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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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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>
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>
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
2
<PAGE>
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
3
<PAGE>
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
4
<PAGE>
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.
5
<PAGE>
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.
6
<PAGE>
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.
7
<PAGE>
(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>
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>
(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>
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:_________________________
_________________________
_________________________
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<PAGE>
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>
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:___________________________
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<PAGE>
EXHIBIT B
Option Conversion Agreement
<PAGE>
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>
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>
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>
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>
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>
EXHIBIT C
Option Surrender Agreement, Release and Waiver
<PAGE>
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>
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>
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>
- --------------------------------------------------------------------
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>
EXHIBIT D
Non-Compete and Termination Agreement
<PAGE>
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>
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>
(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>
"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>
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>
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
6
<PAGE>
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>
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.
8
<PAGE>
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>
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:________________________________
10
<PAGE>
EXHIBIT E
Termination and Release Agreement
<PAGE>
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>
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.
2
<PAGE>
(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>
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>
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.
5
<PAGE>
(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>
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>
For Immediate Release Contact: James Zeumer
Vice President
(212) 832-1550
PLY GEM TO MERGE WITH ATRIUM CORPORATION
NEW YORK, NY, June 25, 1997 -- PLY GEM INDUSTRIES, INC.
(NYSE:PGI) announced today the execution of a definitive
agreement providing for the acquisition of PLY GEM by Atrium
Corporation, a privately-held company controlled by the
investment firm Hicks, Muse, Tate & Furst, Inc., through a
merger between PLY GEM and a subsidiary of Atrium.
The merger agreement, which has been unanimously approved
by the Board of Directors of both PLY GEM and Atrium, provides
for a merger in which shareholders of PLY GEM will receive $18.75
in cash for each outstanding PLY GEM share. The transaction is
valued at approximately $482 million, including the assumption of
debt.
The merger, which is subject to approval of the
shareholders of PLY GEM, is anticipated to close by the end of
the third quarter of 1997. In addition to shareholder approval,
the merger is subject to the completion of contemplated
financing, receipt of necessary regulatory approvals and other
customary conditions.
Hicks, Muse has committed to provide to Atrium affiliates
$140 million of equity capital to finance the acquisition and The
Chase Manhattan Corporation has committed to provide to Atrium
affiliates all of the debt financing necessary, together with
equity financing to be provided by Hicks, Muse, to fund the
merger, the refinancing of certain outstanding indebtedness of
PLY GEM and the payment of transaction expenses.
PLY GEM is being advised by Furman Selz LLC.
PLY GEM Industries, Inc., is a leading manufacturer and
distributor of building products used in remodeling and new
construction of residential and light-commercial properties. The
company offers a wide variety of products including vinyl and
wood windows and doors, vinyl siding and accessories, skylights,
specialty wood products, treated and fire-retardant lumber, wall
coverings, tile and other home decorating and improvement
products.
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