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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _________________ to _________________
COMMISSION FILE NUMBER 0-23688
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AMERICAN BUILDINGS COMPANY
(Exact name of registrant as specified in its charter)
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DELAWARE 63-0931058
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P. O. Box 800, State Docks Road, Eufaula, Alabama 36027
(Address of principal executive offices)
(334) 687-2032
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
par value $.01 per share
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /x/
The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $133,865,082 as of the close of business on
March 17, 1997.
The number of shares of Common Stock, $.01 par value, outstanding as of
March 17, 1997 was 5,316,243.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement to be used in
connection with its Annual Meeting of Stockholders to be held on April 29, 1997,
are incorporated by reference into Part III of this Report.
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ITEM 1. BUSINESS
American Buildings Company ("ABC" or the "Company") is a diversified
manufacturer and marketer of construction products and services for
non-residential applications. The Company designs, manufactures and sells metal
building systems, which consist of structural framing and wall and roof panels,
for industrial, commercial and institutional markets. The Company's metal
building systems are generally custom-designed to meet the specific needs of the
end-user and to allow for easy on-site assembly by builders and independent
erectors. The Company's metal building systems average approximately 12,000
square feet in size, although the Company frequently provides larger buildings
of up to one million square feet or more. The Company markets its metal building
systems nationwide through approximately 1,064 authorized builder/dealers. ABC
has capitalized on its extensive builder/dealer network and engineering
expertise to expand into the emerging metal roofing market. The Company has a
separate roofing products' sales, engineering and customer service organization,
which markets and sells the Company's roofing products to its builder/dealer
network and approximately 368 preferred roofing contractors. In addition, the
Company also provides specialty engineering services for large, complex building
structures, manufactures and markets mini-warehouses to serve the growing
self-storage market and secondary building components to serve the Company's
builder/dealers and roofers as well as the general construction industry, and
paints steel coils. The Company also operates an ICC-licensed trucking
subsidiary, and has recently begun to manufacture and market modular structures
and residential steel framing systems. ABC markets its products and services
throughout North America and in selected international countries. The Company
derived 95.2% and 95.0% of its respective 1995 and 1996 net sales from the sale
of metal building systems and roofing and architectural products and secondary
building components.
INDUSTRY OVERVIEW
Since the inception of the metal buildings industry in the 1940s, metal
building systems have become a highly accepted method of construction for
low-rise, non-residential structures, such as factories, warehouses,
distribution centers, athletic and event centers, office buildings, retail
establishments, banks and schools. Based upon information reported by the Metal
Building Manufacturers Association ("MBMA"), an industry trade association,
metal building systems accounted, on a square footage basis, for approximately
70% of low-rise, non-residential structures of up to 150,000 square feet
constructed in 1996, compared to 65% in 1995 and 54% in 1987. The Company
believes the cost of the metal building system generally represents
approximately 15% of the total cost of constructing the building. In 1995, the
non-residential market for metal buildings consisted primarily of three distinct
markets: (1) commercial buildings, which accounted for approximately 36% of
metal building systems industry sales; (2) manufacturing buildings, which
accounted for approximately 40% of such industry sales; and (3) institutional
buildings and other categories, which in the aggregate accounted for
approximately 24% of such industry sales.
Industry demand for metal building systems is cyclical and highly
sensitive to overall economic conditions, dependent to a large degree upon the
level of non-residential construction activity, the availability of financing
for construction projects, interest rates and other factors that affect the
construction industry. According to information reported by the MBMA, metal
buildings industry sales increased from approximately $1.0 billion in 1982 to
approximately $1.7 billion in 1989, but subsequently declined to approximately
$1.3 billion in 1991. Demand in the metal buildings industry was flat in 1992 at
approximately $1.3 billion, but increased
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to approximately $1.5 billion in 1993, $1.9 billion in 1994, $2.2 billion in
1995 and $2.3 billion in 1996(1). The decline in industry volume during 1990 and
1991 and flatness during 1992 adversely impacted all manufacturers, and caused a
number of them to close manufacturing facilities. The five largest manufacturers
of metal buildings in the United States, including ABC, collectively accounted
for approximately 68% of 1995 industry sales and approximately 69% of 1996
industry sales reported to the MBMA; the balance of the manufacturers are
predominantly small or regional competitors.
In the early years of the industry, metal building systems were most often
used for factories, warehouses, distribution centers and other applications in
which the exterior appearance of the building was not as significant a
consideration to customers as construction cost, efficiency, speed of
construction and other factors. Technological advances in products and
materials, as well as the advent of modern computer-aided engineering and design
techniques, have led to the development of structural and roofing systems that
are compatible with more traditional construction materials. Architects and
designers now often combine a metal building system with masonry, glass and wood
exterior facades in order to meet the aesthetic requirements of building codes
and potential customers while preserving the inherent favorable characteristics
of metal building systems. As a result, the uses for metal building systems now
include office buildings, showrooms, retail stores, banks, schools and other
non-residential buildings for which aesthetics and architectural features are
important considerations. The Company believes that competing in markets where
customers seek unique aesthetic or functional features for a structure places a
premium on the manufacturer's custom design and engineering capabilities, as
well as the strength of its distribution network.
The Company believes that, as a result of improvements in metal building
design and engineering, metal systems construction have become more competitive
with the more traditional forms of construction, although some customers may
prefer other forms of construction for aesthetic reasons. Nevertheless, the
Company believes that metal building systems have gained market share from the
more traditional forms of construction for the following reasons:
Short Construction Time. In many instances, it takes less time to
construct a metal building system in comparison to other building types, in part
due to the fact that a contractor can prepare the building site while the
manufacturer designs and manufactures the building system. In addition, since
most of the work is done in the factory, the likelihood of construction delays
resulting from bad weather is reduced.
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(1) The market share information of ABC in the metal buildings industry (which
is measured in terms of sales dollars shipped (as opposed to sales orders
received)) and sales information for the metal buildings industry,
including the total market and the market share and sales information for
competitors of the Company, included herein are derived solely from data
reported by the MBMA, an industry trade association, in February 1997. The
Company believes that the 31 manufacturers of metal building systems who
are currently members of and report information to the MBMA represent
approximately 90% of the total industry sales. The sales data which the
Company reports to the MBMA, and on which the Company's metal buildings
industry market share information included herein is based, consist of
sales of the Company's Construction Products Group (which are referred to
herein collectively as "the Company's metal buildings industry sales"). In
1996 the Company created a Construction Products Group, which consists of
the Company's metal buildings systems, roofing, mini-warehouse, heavy
fabrication, components and international divisions.
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Low Material Costs. Most metal building system manufacturers use
computer-aided analysis and design to fabricate structural members with high
strength-to-weight ratios, minimizing raw materials costs.
Low Construction Costs. Factory labor rates are generally lower than field
construction labor rates. Additionally, building system components produced in a
controlled factory environment generally tend to be of higher quality than
components built under the sometimes adverse weather conditions in the field.
Ease of Expansion and Flexibility. Metal building systems can be modified
quickly and economically before, during or after the building system is
completed to accommodate expansion. Typically, a building system can be expanded
by removing the end or side walls, erecting new framework, and adding matching
wall and roof panels.
Low Operating Costs. Metal will not deteriorate because of cracking, damp
rot and insect damage and metal buildings are easy to insulate. Furthermore,
factory applied roof and siding panel coatings resist cracking, peeling,
chipping, chalking and fading.
Improved Aesthetics. Metal building systems' aesthetic qualities have
dramatically improved with advances in design, materials and coatings. Metal
building systems can be combined with masonry, glass or wood facades in order to
meet customers' aesthetic requirements while maintaining many of the basic
advantages of metal buildings. The Company believes that an end-user's decision
between metal buildings and buildings constructed with more traditional
materials (e.g., wood, brick) is based on personal preferences for aesthetic
features and price.
The cost of metal building systems compares favorably to conventional
construction primarily because the secondary structural framing and covering
system are made from cold-formed steel products, thus reducing cost. The rigid
primary structural framing is also manufactured in a low labor-intensive
process, relying to a large extent on semi-automatic welding machinery to form
the various structural parts. Cost competitiveness can vary based on the type
and complexity of the building, including bay spacing, loads and cover system
requirements.
In addition to metal building systems, some metal building systems
companies have targeted the non-residential roofing business as an opportunity
to expand the applications of their base product. The development of the
standing seam roof as an alternative to the traditional through-fastened metal
roof and long life panel finishes have accelerated the growth of this market by
providing the industry with a product to market as a replacement for built-up
and single-ply roofs or as a retrofit over those roofs. Although the upfront
costs of a metal roof are 20-25% greater than those of roofs constructed with
more traditional materials, ABC believes that the cost savings over the 20-year
life of the metal roof exceed 10% per year due to energy efficiencies and lower
maintenance requirements. According to the National Roofing Contractors
Association, the market for non-residential roofing in 1995 was approximately
$13.2 billion, divided between retrofit roofing (approximately $9.9 billion) and
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new roofing (approximately $3.3 billion)(2). Metal roofing in 1996 accounted for
approximately 4.6% of the total non-residential roofing market.
The non-residential construction industry is highly sensitive to overall
economic conditions, and from time to time has been negatively impacted in
numerous geographic regions by unfavorable economic conditions, relatively high
vacancy rates, changes in tax laws impacting the real estate industry and the
unavailability of financing. Demand for the Company's products may be adversely
affected by the weakness of demand within particular customer groups or a
recession in the construction industry or particular geographic regions, which
may adversely affect the Company's results of operations. The timing and
severity of future economic or industry downturns are not currently
determinable, and any such downturn could have a material adverse effect on the
Company's results of operations and business.
COMPANY STRATEGY
The Company's business strategy is focused on increasing long-term
profitability through enhancement of its strong builder/dealer network,
technological innovations, cost efficiencies, internal investment, capacity
expansion and expansion into related lines of business. The Company believes
that its recent growth and prospects for the future result from its
implementation of the following strategies:
Strong National Builder/Dealer Network: The Company has established, and
continues to enhance, its strong builder/dealer network. ABC focuses on
attracting design/build and negotiating contractors, which typically have higher
margins than bid-oriented general contractors. In 1995 and 1996, ABC added 152
and 184 builders, respectively, to its builder/dealer network and dropped 238
poorly performing builders in aggregate during these years. In 1995, the 152
builders accounted for approximately 7% of the Company's metal buildings
industry sales and approximately 25% of the $77.1 million increase in the
Company's metal buildings industry sales. In 1996, the 184 builders accounted
for approximately 9% of the Company's metal buildings industry sales. The
Company believes that its product mix, which includes roofing and architectural
products and its specialty engineering group responsible for the design of
large, complex buildings, as well as its national accounts program, which
focuses on developing business from large, frequent builders of metal building
systems and relationships with major engineering, architectural and construction
firms, will assist ABC in attracting and retaining the industry's highest
caliber builders as well as establishing relationships with large frequent
purchasers of metal building systems. The Company's relationship with its
builder/dealers and preferred roofing contractors is non-exclusive.
Technology Design Leadership: In 1991 the Company introduced Spectrum, a
personal computer-based proprietary design, estimating and ordering software
system which allows a builder to rapidly design projects and produce complete
cost data and computer generated drawings for most of the Company's metal
building systems. The Company believes that Spectrum's ease of use provides a
competitive edge to ABC's builders. Approximately 86% of
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(2) The sales information for the roofing industry is derived from data
published by the National Roofing Contractors Association ("NRCA"), an
industry trade association, in March 1996, which compiles information from
roofing contractors and makes certain extrapolations to determine the total
market. The NRCA has informed the Company that it does not expect to
publish 1996 data until mid-April 1997.
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the Company's builders are currently trained and licensed to use Spectrum. Based
upon the success of Spectrum, the Company introduced Summit, a personal
computer-based proprietary design, estimating and ordering software system
specifically designed for the metal roofing market, in April 1994. Approximately
72% of the Company's preferred roofing contractors are currently trained and
licensed to use Summit. The Company intends to continue to enhance its
technology to improve its ability to accurately and competitively price the
Company's products and use this competitive strength to recruit new builders.
Expansion of Non-Residential Metal Roofing Business: The Company has
focused on expanding its roofing and architectural products business to take
advantage of the rapid growth and acceptance of metal roofing in the $9.9
billion retrofit roofing and $3.3 billion new roofing markets. ABC devotes a
separate sales, engineering and customer service organization for the
distribution of non-residential roofing products. The Company believes that this
division also offers a new product line to its builder/dealer network, and that
this product line assists the Company in attracting and retaining the industry's
highest quality builders.
Internal Expansion: ABC opened the initial phase of its manufacturing
facility in Virginia in October 1994, and completed this facility in December
1995. Because of the significance of freight and delivery charges to the
delivered cost of metal building systems, the Company believes it is
advantageous to sell and deliver its products within a 500 mile radius of its
manufacturing facilities. The Company believes that locating a facility in
Virginia has allowed it to meet increasing demand in the East Coast market while
relieving capacity constraints at the Company's Alabama and Illinois facilities,
allowing continued growth in the markets supplied by these facilities. In
addition, during 1996 the Company increased the capacity of its Polymer Coil
Coaters division by upgrading the line speed.
Improvement of Manufacturing Efficiency and Productivity: Following the
Company's recapitalization in January 1993 (see "--Company History"), the
Company implemented a capital expenditure program to improve manufacturing
efficiency and productivity. The Company spent $10.3 million in 1995 (including
$5.3 million to complete the expansion of its Virginia facility) and $9.3
million during 1996 (including $3.6 million of capital expenditures for its
Virginia facility, $2.9 million to increase capacity at its Polymer Coil Coaters
division and $2.1 million for office expansion) and currently intends to spend
$6.0 million during 1997 for new equipment, production controls and other
capital expenditures which the Company believes will enhance the Company's
overall profitability by improving manufacturing efficiency and productivity,
reducing costs and increasing capacity to meet increasing demand. ABC is
committed to ongoing reductions in its cost of producing metal building systems
in order to increase its sales and market share in the metal buildings industry.
International Opportunities: The Company intends to pursue international
opportunities through export of its products and formation of joint ventures.
The Company's joint venture, American Buildings Company Asia, L.P., was formed
to pursue the manufacture and sale of metal building systems in The People's
Republic of China and certain other countries in Southeast Asia. The Company is
also currently marketing its products in Latin America. See "--International
Opportunities."
Expansion into Related Lines of Business. The Company intends to expand
the construction products and services it offers, both through acquisition and
internal development. In November 1996, ABC acquired the Liberty, North Carolina
manufacturing facility of American Modular Technologies, L.L.C. for the
manufacture of modular buildings.
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In December 1996, the Company formed a new division to pursue the manufacture
and marketing of steel framing for the residential market.
CUSTOMERS AND DISTRIBUTION NETWORK
The Company distributes its metal building systems through a nationwide
network of approximately 1,064 authorized builder/dealers. ABC markets to
builders through a sales force of approximately 45 persons located throughout
the United States. The Company currently has an organization of approximately
368 preferred roofing contractors, including approximately 180 builders which
are part of the Company's metal building systems builder/dealer network. The
Roofing & Components Group primarily markets roofing products and secondary
components through a separate sales force of 24 persons to ABC's builder/dealer
network and preferred roofing contractors. In both cases, the Company's
engineering, manufacturing and marketing personnel work directly with the
builder and contractor to establish job specifications and modifications,
determine the appropriate pricing for the Company's products and services,
generate drawings and establish production and delivery schedules. The Company's
relationship with its builder/dealers and preferred roofing contractors is
non-exclusive.
The Company's authorized builder/dealer organization consists of
independent contractors who market ABC products to end-users. These builders
usually erect the metal building system on the customer's site, and provide
contracting and other ancillary services to the completion of the project. The
Company prices its products to the builder, which usually marks up the price to
its customer as part of the overall construction arrangement or bid with its
customer. The Company focuses on developing relationships with the strongest
builders in each market and recruiting design/build and negotiating contractors,
which typically have higher margins than bid-oriented general contractors.
Before a builder can become an authorized ABC builder, the Company performs a
market analysis of the builder's region to determine their market share and
position, as well as background and credit checks to ensure that the builder
meets ABC's standards. ABC believes the reputation of the builder/general
contractor, price and the ability to meet customer specifications and deliver on
time are key factors utilized by end-users in selecting among competing metal
building systems. Geographic location is also important to customer service,
helping ensure reliable delivery and minimizing freight expense. During 1995 and
1996, the Company's largest builder accounted for approximately 2.1% and 1.5%,
respectively, of the Company's total metal building systems sales, while the ten
largest builders accounted for approximately 13.6% and 11.3%, respectively, of
such sales.
The Company has written agreements with its authorized builder/dealers
which generally grant the builder the non-exclusive right to market the
Company's products and are generally cancelable by either party on 90 days'
notice (five days in the case of certain specified events). The agreements do
not prohibit the builder from marketing metal building systems of other
manufacturers, although as a matter of practice most of the Company's builders
work only with ABC because of ABC's commitment to its builders. The Company
provides its builders with sales and pricing information, design and engineering
manuals, drawings and assistance, Spectrum for estimating and quoting jobs,
advertising and promotional literature, a full-time customer service
representative and training for the builder's personnel. The Company often
participates on a limited basis with cooperative advertising arrangements, such
as yellow pages advertisements, with its builders. The Company also sponsors
periodic builders meetings at which it conducts seminars to assist builders in
marketing the Company's
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products. In 1993, the Company established the Golden Eagle program, designed to
recognize and reward the Company's highest caliber, highest volume builders. For
these builders, the Company provides special levels of support, including free
upgrades on Spectrum, free access to the Company's training seminars, special
customer service telephone lines and eligibility for incentive awards.
Approximately 180 builders are currently participants in the Golden Eagle
program.
The builder functions as the Company's direct link to the end-user. The
Company provides marketing support and engineering resources for its builders
and relies upon each builder's knowledge of the local market. The Company
believes that its builder relationships give it prompt and cost effective entry
into a local market. The metal buildings industry generally has gravitated
toward the builder-manufacturer relationship. However, two of the other three
largest national manufacturers has its own construction company, circumventing
local builders in the marketplace. This direct approach allows these
manufacturers to compete for large projects without involving the services of a
local builder. The Company believes that by not forming a construction
subsidiary, it has strengthened its relationship with its builders, because it
does not compete with them to construct buildings, and has encouraged builders
to pursue a relationship with the Company.
The Company continually seeks to enhance its strong builder/dealer
network. The following table sets forth information relating to the total number
of the Company's authorized builder/dealers, and the number of builder/dealers
added to and terminated from its builder/dealer network, in each of the
Company's last three fiscal years:
Number of
Builder/Dealers 1994 1995 1996
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At January 1,............. 982 966 983
Added..................... 136 152 184
Terminated................ 152 135 103
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At December 31, .......... 966 983 1,064
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Although some builder/dealers chose not to continue to be part of the Company's
authorized builder/dealer network during this period, the substantial majority
of builder/dealers who ceased to be part of the Company's authorized
builder/dealer network were dropped by the Company for poor performance. In
order to enhance its builder/dealer network, the Company began focusing in 1993
on identifying and dropping from its builder/dealer network poorly performing
builders. The Company expects that it will continue to enhance its
builder/dealer network by actively recruiting strong builders and dropping
poorly performing builders. The Company anticipates that it will add
approximately as many new authorized builders/dealers to its builder/dealer
network as are terminated and, as a result, the Company expects the number of
authorized builder/dealers will remain relatively constant over the next two
years, although there can be no assurance of this.
The Company's Heavy Fabrication division is a specialty engineering group
that combines the Company's metal buildings technology with conventional
construction techniques and applications to design and engineer large, complex
buildings. This division markets primarily to major architectural and
engineering firms, large general contractors and ABC
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builder/dealers. The Company anticipates that its national accounts program will
enhance the growth of the Heavy Fabrication division by assisting it in closing
orders and developing relationships with prospective partners such as major
engineering, architectural and construction firms. The Company also believes
that its Heavy Fabrication division offers its builder/dealer network an
additional service.
The Company's Roofing & Components Group's sales force markets metal
roofing products and secondary components to both the Company's authorized
builder/dealer network and to preferred roofing contractors. The Company
believes that roofing contractors are far more likely to be contacted by a
building owner when a new roof is needed, and, accordingly, the Company
established a network of preferred roofing contractors to market its metal
roofs. The Company devotes a separate sales, engineering and customer service
organization to the distribution of non-residential roofing products. By having
a separate organization whose compensation is tied directly to the sales of
roofing products, the Company believes it has created a more motivated work
force than if it used its established metal building systems sales organization.
As with its metal building systems builder/dealer network, the Company supports
its contractors with sales and pricing information, design and engineering
manuals, a full-time customer service representative and training for the
roofer's personnel.
In late 1992, the Company reinstated its national accounts program, which
focuses on developing business from large, frequent builders and users of metal
buildings and relationships with major engineering, architectural and
construction firms. The Company believes that a national accounts program allows
it to establish relationships with large industrial and retail companies on
their specific projects, which it can then refer to local builders who may not
have a relationship with such company at the corporate level. The Company
believes this will further strengthen ABC's relationships with its strongest
builders and assist in recruiting new builders. ABC believes this program
benefits its Heavy Fabrication, Roofing, Components and Metal Building Systems
divisions.
DESIGN AND ENGINEERING
The manufacture and marketing of metal building systems depend
significantly upon engineering and design capability and capacity. Metal
building systems must be designed to meet end-users' requirements and to satisfy
applicable local building codes.
The Company's metal building systems are typically planned and designed by
the builder using Spectrum, which was introduced in 1991 to enhance the
productivity of the sales and estimating functions. The Spectrum database, which
is periodically updated, includes all local building codes, the Company's
products and prices therefor, delivery costs and design features. The Spectrum
software system allows a builder to produce complete cost data and computer
generated drawings for most of the Company's metal building systems. Spectrum
produces purchase order documentation, and supports builders by compiling
specification reports, proposals and other sales related documentation designed
to support the builder's selling efforts. Since the pricing of the building to
the builder is included in the Spectrum software, the calculation of project
costs is on-line, thereby eliminating the time consuming process of pricing a
building component by component from a catalogue. The system further enables the
Company's builder/dealer network to rapidly design projects and allows the
Company and its builders to price projects to achieve desired margins.
Furthermore, Spectrum provides builders with the flexibility to make
modifications to the design of the project and receive instant cost data and
project renderings reflecting such changes. Although several of
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the Company's competitors have also introduced design, estimating and ordering
software for use by their builders, the Company believes Spectrum's ease of use
provides a competitive edge to ABC's builders. Approximately 86% of ABC's
builders are currently trained and licensed to use Spectrum.
Typically, a builder estimates a metal building system using Spectrum.
However, there may be projects, generally for large or complex buildings, which
require the builder to seek estimating and design assistance from the Company.
In these cases, the initial Spectrum designs are improved upon by the Company's
sales and engineering departments, working in close coordination with the
builder, in an attempt to determine the most cost-effective design within the
guidelines provided by the end-user or the architect or engineer working on the
project.
The Company has also developed a personal computer-based proprietary
design, estimating and ordering software system, Summit, to enhance the
productivity of the sales and estimating functions for the metal roofing market.
Summit, which the Company introduced in April 1994, operates similarly to
Spectrum. Approximately 72% of the Company's preferred roofing contractors are
currently trained and licensed to use Summit.
After receipt of an order that has been priced using the pre-design
features of Spectrum, the Company's engineering department develops actual
engineering design, construction and fabrication drawings to fulfill the order
requirements. The engineering department ensures that the order, the drawings
and the estimate agree. Change orders are developed to correct any discrepancies
and to address any changes after the order is received. The project is then
engineered to meet the local building code requirements, job specific
characteristics and customer specifications. This includes, but is not limited
to, addressing the member sizes needed to resist live loads, collateral loads,
snow loads and seismic forces. This design data is then utilized to develop the
construction drawings and fabrication drawings. The construction drawings are
furnished to the builder for construction and permit purposes. The fabrication
drawings are furnished to the plants, either in hard copy or electronically, as
needed for fabrication.
As part of a strategy to bring engineering services closer to its dealers,
ABC operates eleven decentralized engineering services centers across the U.S.
to increase the Company's ability to provide value added engineering support and
increase flexibility in addressing dealers' and customers' needs.
MANUFACTURING
Once the specifications and designs of the customer's project have been
finalized, the manufacturing process begins. The fabrication of the primary
structural framing consists of a process in which pieces of rigid steel plates
and bar stock are sheared and punched, routed through a semi-automatic welding
machine and sent through further fitting and welding processes. This process is
the most labor intensive in the fabrication of metal building systems.
The secondary structural framing and the covering subsystem are
roll-formed steel products. In roll forming, coils of steel are decoiled and
passed through a series of progressive forming rolls which shape the steel into
various profiles of medium-gauge structural shapes and light-gauge sheets and
panels. The fabrication of the secondary framing and covering subsystems is more
automated than that of the primary structural framing.
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Structural framing members and covering subsystems are shipped to the job
site for assembly by local builders or independent erectors. ABC generally is
not responsible for any on-site construction, although employees of the
Company's marketing and engineering departments may monitor the project until
completion. The time elapsed between the Company's receipt of an order and
shipment of a completed building system historically ranges from four to eight
weeks, depending upon the backlog at each manufacturing facility and the time
required for the builder to obtain all required governmental approvals as well
as approval of the builder's architect.
The Company operates seven manufacturing facilities. Because of the
significance of freight and delivery charges to the delivered cost of metal
building systems, the Company believes it is advantageous to sell and deliver
its products within a 500 mile radius of its manufacturing facilities. Metal
building systems and roofing and architectural products are manufactured at the
Eufaula, Alabama; El Paso, Illinois; Carson City, Nevada; and La Crosse,
Virginia plants. ABC's coil painting plant is located in Birmingham, Alabama.
Modular systems are manufactured in Liberty, North Carolina. The components
division operates out of a leased facility in Birmingham. See "Item 2.
Properties."
PRODUCTS AND SERVICES
The Company conducts its business through ten operating divisions,
Buildings, Roofing, Heavy Fabrication, Mini-Warehouse, Components, Polymer Coil
Coaters, International, Modular Buildings, Residential Steel Framing and
Transportation, which are organized by markets. These divisions complement each
other through a combination of common distribution channels, common
manufacturing facilities or vertical integration of products or services. The
Construction Products Group, which consists of the Buildings Group (consisting
of the Buildings, Heavy Fabrication, Mini-Warehouse and International divisions)
and the Roofing & Components Group (consisting of the Roofing and Components
divisions) all use as a distribution base the Company's nationwide network of
approximately 1,064 authorized builder/dealers, with the Roofing & Components
Group expanding from that base to other distribution networks. Products for
these Groups are manufactured in the Company's four metal building systems
manufacturing facilities. Because the primary structural framing is the most
labor intensive portion of the manufacturing process, capacity for roofing and
steel component parts exists even when the primary structural lines are
operating at full capacity. In addition, the Company has a manufacturing
facility devoted solely to the manufacture of components. The Polymer Coil
Coaters division paints coils for both the Buildings and the Roofing &
Components Groups. The Modular Buildings division, which was acquired in late
November, 1996, manufactures and markets modular buildings for the
non-residential market. ABC's residential steel framing division was formed in
late 1996 to address the market for residential steel framing. The ABC
Transportation division transports raw materials to the Company's manufacturing
facilities and delivers finished products to customers throughout the United
States.
BUILDINGS GROUP
The Buildings Group, which consists of the Buildings, Mini-Warehouse,
Heavy Fabrication and International divisions, designs, engineers, manufactures
and sells metal building systems for the low rise, non-residential construction
market. Typical structures include factories, warehouses, distribution
facilities, public buildings, schools, churches, healthcare facilities, aircraft
hangars, showrooms, office buildings, retailing establishments,
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self-storage mini-warehouses and numerous other private sector and community
purposes. The Company's metal building systems are custom-designed and
engineered to meet the specific needs of the end-user and to allow for easy
on-site assembly by builders or independent erectors. Each building system is
manufactured for a specific customer order. The Company's average order size is
$47,900, representing a building of approximately 12,000 square feet in size,
although the Company frequently provides larger buildings of up to one million
square feet or more.
The metal building systems manufactured by the Company are comprised of
(1) primary structural framing, (2) secondary structural framing, and (3) the
covering system, which includes the roof, walls and trim. The building system is
designed to support externally applied loads.
Primary Structural Framing. The primary structural framing, fabricated
from steel plate and bar stock, supports the secondary structural framing, roof
and walls. Through the primary framing, the force of all applied loads is
structurally transferred to the foundation.
Secondary Structural Framing. The secondary structural framing consists of
medium-gauge, roll-formed steel components called purlins and girts. Purlins are
attached to the primary frame to support the roof. Girts are attached to the
primary frame to support the walls. The secondary structural framing is designed
to strengthen the primary structural framing and efficiently transfer applied
loads from the roof and walls to the primary structural framing.
Covering System. The covering system consists of roof and wall panels.
These panels not only lock out the weather but also contribute to the structural
integrity of the overall building system. Roof and siding panels are fabricated
from light-gauge, roll-formed steel. Accessory components, such as doors,
windows, gutters and interior partitions, complete the metal building system.
The Heavy Fabrication division is a specialty engineering group which is
responsible for the design of large, complex building structures such as heavy
industrial facilities, exhibition halls, athletic and event centers, airplane
maintenance facilities and cogeneration and waste-to-energy facilities. This
division's design/build approach combines conventional construction techniques
and applications with the advantages of the Company's metal building systems to
design and engineer large complex buildings. Typically, over one-half of the
fabrication for these projects is done by the Company's plants and the balance
by outside structural fabricators. In 1996, Heavy Fabrication's larger projects
included two steel mills (one each in Indiana and Illinois) and a fiberboard
plant in Arkansas.
See "--International Opportunities" for a discussion of the Company's
International division.
ROOFING & COMPONENTS GROUP
The Roofing division manufactures and markets metal roofing systems that
can be installed on any type of building, metal systems construction or
conventional, new or existing. The Company's engineers work closely with
architects and contractors to design custom roofing systems according to exact
building specifications. The Company's roofing systems can be adapted to suit a
wide variety of architectural and design specifications. ABC's roofing systems
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consist of secondary framing and roofing panels of coated cold-rolled steel. The
roofing panels are galvanized or galvalume coated for higher corrosion
resistance. Metal roofing systems can be painted in a number of colors, which is
becoming an increasingly important trend in commercial and pubic sector
construction. The majority of the Company's roofing systems are standing seam
roofs which ABC believes have considerable advantages over conventional roofing
materials. Standing seam roofs reduce the potential for leaks because there are
fewer through-the-roof fasteners and the seams stand up to three inches above
the roof drainage plane. By means of a substructure of light gauge steel
members, slope can be imposed on any roof. Panels are locked together as a seam
raised above the roof drainage plane. In addition, when required by design, the
use of movable clips to attach the roof panels to the structural support system
allows the roof surface to "float" over its structural supports, enabling the
roof panels to expand and contract with fluctuations in temperature without
developing cracks, fissures and other common causes of roof leakage. The
increased longevity of standing seam metal roofing systems has led to greater
market acceptance. The Company believes that such systems will continue to gain
market share from conventional roofing materials. The following are the
advantages of metal roofing systems over conventional roofing materials:
Lower Lifecycle Cost - The total cost over the life of metal roofing
systems is lower than that of conventional roofing systems for both new
construction and replacement roofing. For new construction, the cost of
installing metal roofing is equal to the cost of conventional roofing, and
the longer life and lower maintenance costs of metal roofing make the
total cost much more attractive. For replacement roofing, although
installation costs are 60 to 70 percent higher for metal roofing due to
the need for a sloping support system, the lower ongoing costs more than
offset the initial expenditure.
Longevity - Metal roofing systems last for twenty to thirty years without
requiring major maintenance or replacement, compared to five to ten years
for conventional roofs. The cost of leaks and roof failure can be very
high, including damage to building interiors and disruption of the
functional usefulness of the building. Metal roofing prolongs the
intervals between costly and time-consuming repair work.
Aesthetics - Metal roofing systems allow architects and builders to
integrate colors and geometric design into the roofing of new and existing
buildings, providing a new and increasingly fashionable means of enhancing
a building's aesthetics. Conventional roofing material is generally
unsightly tar paper or a gravel surface, and building designers tend to
conceal roofs made with such materials.
The Company's roofing systems meet all necessary and appropriate industry
codes and specifications. All orders received by ABC for roofing and
architectural products are fabricated in the Company's plants.
The Components division manufactures and markets secondary components,
which consist of wall and roofing panels, trim and other metal building
accessories. This division primarily serves the general construction industry,
frame fabricators who do not have production capability other than primary
frames, and the Company's builder/dealer network. These customers use the
components for repair and replacement jobs, or as parts for small buildings.
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POLYMER COIL COATERS
The Polymer Coil Coaters division paints steel coils. This division's
facility is located in Birmingham, Alabama, adjacent to the U.S. Steel Division
of USX Corp.'s plant, providing the Company with substantial cost advantages
with respect to services performed for U.S. Steel. Approximately 27%, 30% and
25% of the division's gross sales for 1994, 1995 and 1996, respectively (before
intercompany eliminations), were to the U.S. Steel Division for that division's
customers who desired painted (as opposed to unpainted) coil. Approximately 41%,
43% and 51% of Polymer Coil Coaters' gross sales for 1994, 1995 and 1996,
respectively (before intercompany eliminations), were to the Company and the
balance to industrial customers. In October 1995, the Company began a $3.5
million capital expenditure program for new coater heads and a 40% increase in
line speed to increase capacity at the facility, which was completed in January
1997. U.S. Steel recently added a new galvanizing/galvalume line at its
Birmingham, Alabama plant. The Company believes its ability to add additional
lines at its existing facility is limited by local environmental regulations,
particularly those relating to air pollution. See "--Competition."
TRANSPORTATION
The ABC Transportation division transports raw materials to the Company's
manufacturing plants and delivers finished goods to customers around the United
States. This division operates approximately 135 leased truck cabs and
approximately 350 leased flatbed trailers. The Company believes that operating
its own transport service enhances the quality of services provided by it to its
builder/dealer network. This division also transports materials for third party
customers. The Company's ABC Transportation subsidiary is an ICC-licensed common
carrier, licensed to carry all types of materials other than explosives and
household goods.
MODULAR BUILDINGS
In November 1996 the Company acquired the Liberty, North Carolina
manufacturing facility of American Modular Technologies, L.L.C. for the
manufacture of modular buildings. This acquisition complements ABC's presence in
the low-rise non-residential construction market with a modular approach used by
major oil companies for convenience stores and canopy systems at their gas
stations. The Company intends to expand this division's activities into other
segments of the market where modular is an accepted form of construction, such
as classrooms and correctional facilities.
RESIDENTIAL STEEL FRAMING
The Company formed this division in December 1996 to pursue the
residential steel framing market. Although currently fewer than 25,000 of the
approximately 1.4 million annual new housing starts have steel framing, steel
framing has slowly been making inroads. Steel frames tend to have less price
fluctuation than wood and have the inherent characteristics of added strength,
particularly important in seismic and high wind areas. Steel frames are also
superior to wood frames in areas where there are termites and high humidity.
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INTERNATIONAL OPPORTUNITIES
As part of its effort to increase the Company's presence in international
markets, in August 1995 ABC and China Renaissance Industries, L.P., a
partnership formed to invest in non-listed enterprises in The People's Republic
of China, formed a joint venture to pursue the manufacture of metal building
systems in the PRC and their sale throughout most of Southeast Asia (the
"Territory"). ABC has a 30% interest in the joint venture, and exclusively
licensed to the joint venture on a royalty-free basis the right to use certain
of ABC's technology to pursue the manufacture and sale of metal building systems
in the Territory. The joint venture completed its initial manufacturing facility
in the PRC in October 1996. ABC will receive a technology license fee of $1.5
million, of which $750,000 was paid in 1995 and the remainder of which will be
paid over a period of up to two years. ABC invested approximately $3.8 million
in the joint venture through the end of 1996 and expects to invest up to an
additional $0.7 million in 1997. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources." The Company is currently marketing its products in Asia and Latin
America, and is currently developing a dealer network in Latin America to
facilitate its sales there.
SUPPLIERS
The principal raw material used in the manufacture of metal buildings,
metal roofing and components is steel. Components are fabricated from commonly
available steel products produced by mills including bars, plates and cold
rolled gauge and galvanized sheeting. In 1996, the Company purchased
approximately 50% of its steel requirements from two steel companies, the
largest of which accounted for approximately 30% of the Company's steel
purchases. Since the steel required for the Company's operations currently is
available from a number of domestic and foreign suppliers at competitive prices
and the Company has not to date experienced any significant quality or delivery
problems with its current suppliers, the Company has not traditionally
maintained an inventory of steel in excess of its current production
requirements. However, there can be no assurance that steel will remain
available or that prices will remain stable. If the available supply of steel
declines, or if one or more of the current sources for any reason is unable to
meet the Company's requirements, the Company could experience price increases, a
deterioration of service from its suppliers, or interruptions or delays that may
cause the Company to fail to meet delivery schedules to its customers. The
Company believes it obtains delivery and service benefits from its suppliers
because it concentrates its purchases among a small number of them; nonetheless,
there can be no assurance that these benefits will continue to be realized in
the future.
BACKLOG
At December 31, 1996, the total backlog for orders believed by the Company
to be firm was $79.9 million, all of which the Company expects to fill during
the current fiscal year. This compares with a total backlog of $56.3 million at
December 31, 1995 and $76.0 million at December 31, 1994. Job orders, including
those believed by the Company to be firm, generally are cancelable by customers
at any time for any reason, although the customer is obligated to pay any costs
incurred by the Company prior to cancellation of an order. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
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WARRANTIES
The Company provides three different warranties for its metal building
products. First, the fabricated steel portion of the product carries a one-year
warranty against defective material and workmanship. Second, an extended
material warranty is provided by the Company's suppliers and passed through to
the Company's customers. These material warranties relate to long-life paint (20
years), Premium 70, a prepainted galvanized steel (20-25 years), and galvalume
aluminized or zincalume steel (20 years). Third, a twenty-year weather-tightness
warranty against leaks under normal weather and atmospheric conditions is
available for standing seam roofs. Historically, claims under these warranties
have been immaterial.
COMPETITION
On the basis of data reported by the MBMA, the Company's 1996 sales of
metal building systems products constituted approximately 11.4% of reported
industry sales, placing it as the fourth largest domestic manufacturer behind
the Building Systems division of Butler Manufacturing Company, NCI Building
Systems, Inc. (including Mesco Metal Buildings, which was acquired in early
1996) and the Varco-Pruden Building Division of United Dominion Industries,
Inc., which accounted for approximately 21.3%, 13.6% and 12.5%, respectively, of
total 1996 industry sales reported by the MBMA. Other major competitors include
the Star and Ceco Divisions of Robertson-Ceco Corp. and United Structures of
America, Inc. Several of the Company's competitors have greater financial
resources than the Company. The Company believes its American Buildings brand is
the third largest brand behind the Butler and Varco-Pruden brands. Competition
in the metal buildings industry is intense and is based primarily on price,
service, quality of the builder/dealer network and the ability to provide added
value in the design of a building. The Company's ability to expand its market
share depends in part on its ability to persuade builders to market the
Company's products in lieu of those of its competitors, attract conventional
contractors to the metal buildings industry and develop a separate network of
preferred roofing contractors to market its roofing products. In addition, the
Company and others in the metal building systems industry compete with
alternative methods of building construction. Although the Company maintains
metal building manufacturing facilities in Alabama, Illinois, Nevada and
Virginia, the Company's ability to quote competitive prices to customers located
more than 500 miles from one of these facilities may be limited because of the
significance of freight and delivery charges to the cost of metal buildings.
Foreign companies are not presently a significant factor in the domestic
marketplace, and the Company does not expect them to be in the near future,
mainly because of transportation costs and the short lead times generally
required by customers.
There are currently four other companies engaged in painting steel coil in
the southeastern United States. The Company believes that the recent addition of
two of these facilities has resulted in overcapacity for steel coil painting in
the southeastern United States and has created competitive pressure. However,
the Company believes that its location adjacent to a U.S. Steel plant provides
it with substantial cost advantages with respect to services performed for U.S.
Steel.
REGULATORY MATTERS
The Company's manufacturing facilities are subject to many federal, state
and local requirements relating to the protection of the environment. The
Company believes it is in
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compliance in all material respects with environmental standards applicable to
its operations. The Company does not anticipate material capital expenditures to
meet current environmental quality control standards, but there can be no
assurance that more stringent regulatory standards will not be established which
might require such expenditures. The metal building systems manufactured by the
Company must meet zoning and building code requirements promulgated by local
governmental agencies.
The Company's operations are also governed by laws and regulations
relating to workplace safety and worker health, principally the Occupational
Safety and Health Act and regulations thereunder which, among other
requirements, establish noise and dust standards. Management believes that it is
in substantial compliance with these laws and regulations and does not believe
that future compliance with such laws and regulations will have a material
adverse effect on its results of operations, liquidity or financial condition.
PATENTS, LICENSES AND PROPRIETARY RIGHTS
The Company has a United States patent on its standing seam roof system.
The Company uses various trade names and trademarks in the conduct of its
business but has not registered such names or marks with any governmental
authorities.
EMPLOYEES
At December 31, 1996, the Company employed approximately 1,900 people, of
whom 97 were general and administrative personnel, approximately 80 were sales
personnel, approximately 350 were engineering personnel, and the remainder were
production workers (including drivers). The hourly production and maintenance
employees of the Company's Polymer Coil Coaters Division are represented by a
labor union; the remainder of the Company's employees are not represented by a
labor union or a collective bargaining agreement. The Company regards its
employee relations as excellent.
COMPANY HISTORY
The Company and its predecessors have been engaged in the manufacture and
marketing of metal building systems since 1947. In July 1986, a management group
led by the Company's chief executive officer at that time, together with a
private investment firm, acquired the Company and Polymer Metals, Inc. from
Cronus Industries, Inc. in a $106.1 million leveraged buyout (the "1986 LBO").
Financing for the 1986 LBO consisted of $51.5 million of senior debt, $45.0
million of senior and subordinated notes, $4.2 million of cash on hand, and
approximately $5.4 million of equity. Following the 1986 LBO, the Company
operated under significant cash constraints and, in response thereto, the
Company sold certain of its non-core businesses, leased its Texas manufacturing
facility, which took the Company out of a significant market and resulted in
decreased sales and closed two manufacturing facilities in Iowa and Ohio in
order to cut costs. During the period following the 1986 LBO until the
Restructuring (defined below) was effected, the Company was able to retire $28.4
million of acquisition indebtedness through sales of assets and cash flow from
operations. By the end of 1990, the Company was experiencing significant
financial difficulties as a result of its negative net worth and substantial
interest payments, which severely limited the Company's capital spending and
working capital. As a result of the cash constraints and the general decline in
total metal buildings industry sales, the Company's net sales decreased from
$162.2 million in 1989 to $117.7 million in 1991, the Company incurred net
losses in each of
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1989, 1990 and 1991, and the Company's metal buildings industry market share
decreased from 8.9% in 1989 to 8.4% in 1990 before increasing to 8.6% in 1991.
In March 1991, the Company's debt and equity holders completed a financial
restructuring (the "Restructuring"), effective December 31, 1990, pursuant to
which the Company restructured its senior term and revolving credit loans and
$21.5 million of subordinated debt from the 1986 LBO was converted into
1,644,174 shares of Common Stock, representing 77.5% of the Company's then
outstanding Common Stock. In the Restructuring, the subordinated debt holders
gained control of the Company's Board of Directors. The Restructuring was
accounted for as a "quasi-reorganization," an elective accounting procedure that
permits a company emerging from financial difficulty to restate its accounts and
establish a fresh start in an accounting sense. The Restructuring permitted ABC
to meet all of its debt service obligations, although ABC remained highly
leveraged. Despite the Company's continued capital constraints during 1992, the
Company's revenues grew from $117.7 million in 1991 to $134.4 million in 1992,
and the Company's metal buildings industry market share increased from 8.6% to
9.7%.
In January 1993, ABC completed a recapitalization sponsored by Sterling
Ventures Limited in conjunction with New Street Capital Corporation (the
"Recapitalization"), which reduced interest expense, retired higher rate debt
and provided the Company with greater operating flexibility to pursue its growth
strategy and to invest in its businesses through its capital expenditures
program. In May 1994, the Company completed an initial public offering of an
aggregate of 1,825,000 shares of Common Stock at a purchase price of $10.00 per
share in an underwritten public offering managed by Dean Witter Reynolds Inc.
and Prudential Securities Inc. In addition, certain stockholders of the Company
sold an aggregate of 1,016,757 shares of Common Stock in such offering. The net
proceeds to the Company of the offering were used to repay long-term debt. The
Company incurred an extraordinary loss of $2.4 million (net of applicable income
tax benefit of $1.5 million) resulting from the write-off of the deferred
financing costs and unamortized discount related to the early extinguishment of
debt with the proceeds of the offering. In July 1995, certain stockholders of
the Company sold an aggregate of 1,466,250 shares of Common Stock at a price of
$22.00 per share in an underwritten public offering managed by Dean Witter
Reynolds Inc. and Wheat First Butcher Singer.
Beginning in 1992, following the 1991 Restructuring and the appointment of
Robert Ammerman as Chief Executive Officer and accelerating in 1993, 1994 and
1995 with the financial flexibility provided by the Recapitalization and the
Company's initial public offering, the Company began to pursue several strategic
initiatives to strengthen its core operations and to rebuild its metal buildings
industry market share. These strategic initiatives initially included aggressive
pricing of its products, but subsequently focused on enhancement of ABC's
builder/dealer network. The Recapitalization and the initial public offering
have enabled the Company to pursue a business strategy focused on increasing
long-term profitability through enhancement of its strong builder/dealer
network, technological innovations, cost efficiencies, internal investment and
capacity expansion. As a result, the Company's metal buildings industry sales
increased 14.8% in 1992, while metal buildings industry sales were flat, and the
Company's metal buildings industry sales increased 24.8%, 23.9% and 40.3% in
1993, 1994 and 1995, respectively, while metal buildings industry sales
increased 16.1%, 26.0% and 18.1%, respectively, as the U.S. economy emerged from
the economic recession that began in 1989. The Company's metal buildings
industry sales decreased 3.9% in 1996, while metal buildings industry sales were
flat. Furthermore, ABC's domestic metal buildings industry market share
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(which is measured in terms of sales dollars shipped (as opposed to sales orders
received)) increased from 8.6% in 1991 to 9.7% in 1992, and 10.4% in 1993,
before decreasing to 10.2% in 1994. ABC's domestic metal buildings industry
market share increased to 11.9% in 1995 but decreased to 11.6% in 1996. The
decrease in market share in 1994 was primarily attributable to the high product
demand which exceeded the Company's manufacturing and engineering capacity. The
Company believes that the establishment of new engineering service centers as
well as the completion of the Company's new Virginia facility in 1995, have
alleviated these capacity constraints. The decrease in sales and market share in
1996 was primarily due to lower backlog at December 31, 1995 resulting from
increased capacity in 1995 and lowering of sale prices in the first half of 1996
to stimulate new business. In addition, the unusually severe weather in the
eastern half of the United States in early 1996 also adversely affected 1996
sales. See "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations."
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers and key employees of the Company are as follows:
Name Age Present Position with the Company
- ---- --- ---------------------------------
Robert T. Ammerman 57 Chief Executive Officer and Director
R. Charles Blackmon, Jr. 47 Executive Vice President--Chief Financial Officer
Byron L. Brumfield 53 Vice President--Human Resources
William R. Buchholz 53 Vice President--Operations
Joseph M. Grigelevich, Jr. 54 President--American Modular Technologies
Richard B. Haws 40 President--Residential Steel Framing Division
Barry L. Milling 53 Vice President--Technical Services
William W. Riley 64 President of ABC Transportation Company
Anne M. Savage 41 Controller
Roy L. Smith 58 Vice President--Polymer Division
Joel R. Voelkert 48 President--Construction Products Group
Mr. Ammerman has been Chief Executive Officer and a director since joining the
Company in July 1992, and served as President from July 1992 through August
1996. From 1973 until he joined the Company, Mr. Ammerman was employed by United
Dominion Industries, Inc. and its affiliates, including Varco-Pruden Buildings,
a manufacturer of metal buildings. Mr. Ammerman served in various capacities,
including Vice-President/General Manager Eastern Division of Varco-Pruden
Buildings and President of the Buildings segment of United
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Dominion Industries, Inc., which included Varco-Pruden Buildings, Stran
Buildings and AEP/Span. Mr. Ammerman was Chairman and a member of the Executive
Committee of the Metal Building Manufacturers Association in 1995.
Mr. Blackmon has been Executive Vice President--Chief Financial Officer of the
Company since August 1996. Mr. Blackmon served as Vice President--Chief
Financial Officer of the Company from October 1994 to August 1996, as Vice
President--Finance and Administration of the Company from May 1992 to October
1994, as Controller of the Company from 1982 to May 1992 and as Assistant
Controller from 1981 to 1982. Mr. Blackmon is a CPA.
Mr. Brumfield joined the Company as Vice President--Human Resources in August
1995. From July 1984 until he joined the Company, Mr. Brumfield served in
various human resources corporate positions with Hercules Inc., a major chemical
company. Prior to that he was employed in the aerospace, aluminum and hardboard
industries for 20 years.
Mr. Buchholz has been Vice President--Operations of the Company since January
1991. Mr. Buchholz is responsible for all manufacturing operations and
purchasing. From May 1979 to December 1990, Mr. Buchholz served the Company in
various capacities, including Manager of Industrial Engineering and plant
manager of the Company's former Houston facility.
Mr. Grigelevich has been President of American Modular Technologies since
joining the Company in November 1996 in connection with the Company's
acquisition of the Liberty, North Carolina manufacturing operations of American
Modular Technologies, L.L.C. ("AMT"). Prior to joining the Company, Mr
Grigelevich served as a management consultant in 1995, and consulted for AMT.
From 1976 to 1995, Mr. Grigelevich served in various positions with Bird
Corporation, including Vice President - Finance & Administration from 1993 to
1995 and Treasurer from 1990 to 1993.
Mr. Haws joined the Company as President--Residential Steel Framing Division in
December 1996. Prior to joining ABC, he was Manager-Light Construction of
American Iron and Steel Institute from October 1990 to November 1996 and Senior
Development Engineer for H.H. Robertson from March 1989 to September 1990.
Mr. Milling has served as Vice President--Technical Services since joining the
Company in October 1992, and is responsible for all functions of the Company's
Engineering Department. Prior to joining ABC, Mr. Milling served as Vice
President and General Manager of the Eastern Region of the Ceco-Building
Division of Robertson-Ceco Corp. since November 1990, and prior thereto held
various positions in operations, engineering, research and development, and
customer service at Robertson-Ceco Corporation since 1969. Mr. Milling is a
Registered Professional Engineer in a number of states.
Mr. Riley has been President of ABC Transportation Company since November 1992,
and served as Vice President/General Manager of ABC Transportation Company from
September 1979 until his election as President.
Ms. Savage has been Controller of the Company since January 1994. She joined the
Company in April 1993 as Manager of Customer Financial Services. From May 1983
until she joined the Company, Ms. Savage was employed by United Dominion
Industries, Inc. and held financial positions at its corporate office and two of
its metal building industry operating divisions,
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Varco-Pruden Buildings and Stran Buildings. Prior to joining United Dominion
Industries, Ms. Savage was an audit manager at Ernst & Young. Ms. Savage is a
CPA.
Mr. Smith has been Vice President--Polymer Division since July 1986 and since
January 1981 has also served as President of Polymer Coil Coaters and its
predecessors. Prior to joining ABC, Mr. Smith was employed by United States
Steel Corporation (now known as USX Corp.) for 15 years in various capacities
including General Manager of Galvanizing Finishing.
Mr. Voelkert has been President--Construction Products Group of the Company
since August 1996. From April 1991 to August 1996 Mr. Voelkert served as Vice
President--Sales and Marketing of the Company. Prior thereto, Mr. Voelkert
served in various capacities with the Company since joining in 1976, including
as General Sales Manager, General Manager of Marketing Services, Director of
Marketing and District Sales Manager--Florida and the Caribbean. Mr. Voelkert
was responsible for starting the roofing and architectural division in 1987.
ITEM 2. PROPERTIES
Because of the significance of freight and delivery charges to the
delivered cost of metal building systems, the Company believes it is
advantageous to sell and deliver its products within a 500 mile radius of its
manufacturing facilities. The following sets forth certain information with
respect to each of the Company's operating facilities:
OWNED OR
LOCATION/PURPOSE AREA LEASED
---------------- ---- --------
Eufaula, Alabama/Executive Office and 295,000 square feet Owned
Manufacturing Facility.................. 48.2 acres
El Paso, Illinois/Manufacturing Facility. 182,000 square feet Owned
10.3 acres
Carson City, Nevada/Manufacturing 142,000 square feet Owned
Facility................................ 18.8 acres
Birmingham, Alabama/Manufacturing 84,000 square feet Owned
Facility................................ 6.0 acres
Birmingham, Alabama/Manufacturing
Facility................................ 56,000 square feet Leased
La Crosse, Virginia/Manufacturing 197,000 square feet Owned
Facility................................ 28 acres
Liberty, North Carolina/Manufacturing 160,000 square feet Owned
Facility................................ 29.3 acres
The Company also leases a 156,000 square foot facility in Jamestown, Ohio
which is currently not being utilized in the Company's operations. This facility
ceased operations in
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October 1990 as part of ABC's cost cutting efforts in response to cash
constraints resulting from its 1986 leveraged buyout. See "Item 1.
Business--Company History"
All of the Company facilities are in good operating condition.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings that are incidental
to the conduct of its business. The Company is not involved in any pending or
threatened legal proceedings which the Company believes could reasonably be
expected to have a material adverse effect on the Company's financial condition,
liquidity or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER
Not Applicable.
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PART II.
ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED
TOCKHOLDER MATTERS
The Common Stock is quoted on the Nasdaq National Market under the symbol
"ABCO". The Common Stock was initially offered to the public on April 28, 1994
at $10.00 per share. The following table sets forth for the periods indicated
the high and low reported sale prices per share for the Common Stock as reported
by the Nasdaq National Market.
High Low
---- ---
YEAR ENDED DECEMBER 31, 1995
----------------------------
First Quarter................................ $18.375 $15.75
Second Quarter .............................. $19.625 $15.875
Third Quarter................................ $27.00 $17.375
Fourth Quarter............................... $26.00 $20.50
High Low
---- ---
YEAR ENDED DECEMBER 31, 1996
----------------------------
First Quarter................................ $24.375 $19.125
Second Quarter............................... $34.375 $22.00
Third Quarter................................ $29.75 $20.75
Fourth Quarter............................... $26.75 $19.75
The number of stockholders of record of Common Stock on March 17, 1997 was
approximately 111. On March 17, 1997, the last reported sale price of the Common
Stock as reported by the Nasdaq National Market was $26.00.
The Company has never paid cash dividends on the Common Stock.
-22-
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales .................................. $273,953 $281,450 $ 204,666 $ 166,805 $ 134,388
--------- --------- --------- --------- ---------
Cost and expenses:
Cost of sales ............................ 229,260 228,088 164,694 140,431 116,063
Selling, general and administrative ...... 24,311 26,567 21,830 18,282 12,923
--------- --------- --------- --------- ---------
253,571 254,655 186,524 158,713 128,986
--------- --------- --------- --------- ---------
Operating income ........................... 20,382 26,795 18,142 8,092 5,402
Interest expense (income) .................. 143 (175) 1,369 3,362 5,972
--------- --------- --------- --------- ---------
Income (loss) before provision for income
taxes, extraordinary item and
cumulative effect of change in
accounting principle ..................... 20,239 26,970 16,773 4,730 (570)
--------- --------- --------- --------- ---------
Provision for income taxes(1) .............. 7,792 9,380 6,318 1,921 100
--------- --------- --------- --------- ---------
Income (loss) before extraordinary item
and cumulative effect of change in
accounting principle(1) .................. 12,447 17,590 10,455 2,809 (670)
Extraordinary loss on early extinguishment
of long-term debt(2) ..................... -- -- (2,425) (413) --
Cumulative effect of change in accounting
for income taxes ......................... -- -- -- 1,022 --
--------- --------- --------- --------- ---------
Net income (loss)(1) ....................... $ 12,447 $ 17,590 $ 8,030 $ 3,418 $ (670)
========= ========= ========= ========= =========
Income (loss) per common and common
equivalent share:
Income (loss) before extraordinary item
and cumulative effect of change in
accounting principle(1) ................ $ 2.06 $ 2.68 $ 1.81 $ 0.66 $ (0.31)
Extraordinary loss on early
extinguishment of long-term debt ....... -- -- (0.42) (0.10) --
Cumulative effect of change in accounting
for income taxes ....................... -- -- -- 0.24 --
--------- --------- --------- --------- ---------
Net income (loss) per common and
common equivalent share(1) ............... $ 2.06 $ 2.68 $ 1.39 $ 0.80 $ (0.31)
========= ========= ========= ========= =========
Weighted average number of common and
common equivalent shares
outstanding .............................. 6,040 6,554 5,780 4,288 2,133
========= ========= ========= ========= =========
</TABLE>
-23-
<PAGE>
<TABLE>
<CAPTION>
As of December 31,
-------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................... $13,710 $ 27,116 $18,182 $14,093 $13,723
Total assets........................ 101,970 101,343 85,149 60,744 58,224
Current maturities of long-term debt 1,051 970 1,863 6,636 5,180
Long-term debt, net of current
maturities(3)..................... 10,872 7,760 12,376 18,071 36,850
Stockholders' equity (deficit)(4)... 41,466 53,511 37,075 12,822 (553)
</TABLE>
- ------------------
(1) In 1995, the Company eliminated a valuation allowance on net operating
loss carryforwards which resulted in a one-time reduction of its tax
provision and corresponding increase in net income of $1,005,000, or $0.15
per share.
(2) In 1994, the Company incurred an extraordinary loss of $2,425,000 (net of
applicable tax benefit of $1,436,000), resulting from the write-off of the
deferred financing costs and unamortized discount related to the early
extinguishment of its remaining senior notes with the proceeds from the
Company's initial public offering. In 1993, the Company extinguished
$4,415,000 principal amount of senior notes prior to scheduled maturity,
which resulted in an extraordinary loss of $413,000 (net of income tax
benefit of $259,000). See Note 3 of Notes to Consolidated Financial
Statements.
(3) Net of unamortized discount of $3,875,000 on the Company's New Class A
Notes and New Class B Notes at December 31, 1993, which notes were repaid
from the net proceeds to the Company from the Company's initial public
offering. Net of unamortized discount of $5,192,000 on the Company's 12%
Class A and Class B Senior Notes at December 31, 1992.
(4) Includes a reduction of $26,531,000 and $1,071,000 in 1996 and 1995,
respectively, which represents the Company's purchases of Treasury Stock.
-24-
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Statements in this Annual Report on Form 10-K concerning the Company's
business outlook or future economic performance; anticipated profitability,
revenues, expenses or other financial items; and product line growth, together
with other statements that are not historical facts, are "forward-looking
statements" as that term is defined under the Federal Securities Laws.
Forward-looking statements are subject to risks, uncertainties and other factors
which could cause actual results to differ materially from those stated in such
statements. Such risks, uncertainties and factors include, but are not limited
to, industry cyclicality, fluctuations in customer demand and order pattern, the
seasonal nature of the business, changes in pricing or other actions by
competitors, and general economic conditions, as well as other risks detailed in
the Company's filings with the Securities and Exchange Commission, including
this Annual Report on Form 10-K.
RESULTS OF OPERATIONS
1996 COMPARED TO 1995
Net sales decreased 2.7% to $274.0 million in 1996 from $281.5 million in
1995. Backlog at December 31, 1996 was 41.9% higher than backlog at December 31,
1995. The Company's metal buildings industry domestic market share, which is
measured in terms of sales dollars shipped by the Construction Products Group
(consisting of the Company's Buildings Group and Roofing & Components Group),
decreased slightly to 11.6% compared to 11.9% in 1995. Net sales in the
Buildings Group (consisting of the Company's Metal Buildings, Heavy Fabrication,
Mini-Warehouse and International divisions) were $215.5 million, down 4.7% from
$226.1 million in 1995. This decrease was primarily the result of lower volume
in the first quarter of 1996 which was caused by a combination of a low backlog
coming into the year plus the effect of the severe weather conditions across
most U.S. markets which caused customers to delay shipment of their orders as
construction sites were not yet prepared. Also contributing to the decrease in
net sales was lower per unit selling prices as a result of the pass-through of
cost decreases from suppliers, compounded further by the aggressive pricing
strategy implemented during the first half of 1996 to rebuild backlog. Net sales
in the Roofing & Components Group (consisting of the Company's Roofing and
Components divisions), increased 6.8% to $44.8 million from $41.9 million in
1995 due to continued increasing acceptance of metal in the roofing market and
continued expansion of the preferred roofing contractor network. Gross sales of
the Polymer Group increased .7% to $18.4 million from $18.3 million in 1995.
This group has operated essentially at capacity for the last two years;
consequently, a capital project was begun in late 1995 and completed in January
1997 which will increase the capacity of this group by approximately 40%. Net
sales after eliminations in the Polymer Group decreased 14.0% to $9.0 million
from $10.4 million in 1995 as proportionately more of the Group's resources were
directed toward production for other divisions of the Company as opposed to
third parties. Gross sales before eliminations in the Transportation Group
increased 6.3% to $20.5 million from $19.3 million in 1995. Net sales after
eliminations increased 27.6% to $3.8 million from $3.0 million in 1995 due to
increased revenues from hauling of third party loads.
Gross profit for 1996 decreased 16.3% to $44.7 million from $53.4 million
in 1995. Gross margins decreased 14.0% to 16.3% in 1996 compared to 19.0% in
1995. This decrease was primarily caused by lower volume plus lower selling
prices which were the result of the
-25-
<PAGE>
Company's strategy through the first half of 1996 to be market and price
aggressive in order to build backlog and better utilize expanded production
capabilities.
Selling, general and administrative expenses for 1996 decreased 8.5% to
$24.3 million from $26.6 million in 1995. As a percentage of net sales, these
expenses decreased to 8.9% in 1996 from 9.4% in 1995. The decrease resulted from
the Company's strategy to mitigate the impact of reduced volume and selling
prices by reducing costs wherever possible without adversely affecting its
long-term growth objectives.
The Company had net interest expense of $.1 million in 1996 compared to
net interest income in 1995 of $.2 million. The increase in interest expense
resulted primarily from the Company's repurchase of its common stock and, to a
much lesser degree, the purchase of certain assets of American Modular
Technologies' ("AMT") Liberty, North Carolina manufacturing operations which has
caused it to incur borrowings under its Revolver. Additionally, the Company is
currently earning less interest income on the unused proceeds from its
Industrial Revenue Bond transaction which is included on the accompanying
Consolidated Balance Sheets as Restricted Cash as most of these proceeds have
now been invested in the Virginia manufacturing facility.
Net income for 1996 was $12.4 million as compared to $16.6 million in
1995, which was net income before the $1.0 million one-time tax provision credit
for the reversal of a valuation allowance on net operating loss carryforwards.
Including this one-time credit, net income in 1995 was $17.6 million.
1995 COMPARED TO 1994
Net sales increased 37.5% to $281.5 million in 1995 from $204.7 million in
1994. The Company's metal buildings industry domestic market share, which is
measured in terms of sales dollars shipped by the Construction Products Group,
increased 17.0% to 11.9% in 1995 from 10.2% in 1994, primarily as a result of
high product demand and the Company's additional capacity as a result of the
addition of its new Virginia manufacturing facility. Backlog at December 31,
1995 was 26% lower than backlog at December 31, 1994. Net sales in the Buildings
Group were up 43.4%, increasing to $226.1 million in 1995 from $157.7 million in
1994. This increase resulted from continued enhancement of the Company's
builder/dealer network, increased demand for metal buildings, improved selling
prices and the added capacity provided by the new Virginia manufacturing
facility. Also contributing to the increase was the Heavy Fabrication division's
increase of 212.0% to $14.0 million in net sales from $4.5 million in 1994, due
primarily to the completion of much of its high backlog entering the year plus
its booking and execution of a large contract for a steel mill in Ohio. Net
sales in the Roofing & Components Group increased 25.9% to $41.9 million from
$33.3 million in 1994, due to continued increasing acceptance of metal in the
roofing market and expansion of the preferred roofing contractor network. Gross
sales before eliminations in the Polymer Group increased 5.1% to $18.3 million
in 1995 compared to $17.4 million in 1994. Net sales in the Polymer Group
increased 1.5% to $10.4 million from $10.3 million, primarily due to product
mix. Gross sales before eliminations in the Transportation Group increased 18.7%
to $19.3 million in 1995 compared to $16.3 million in 1994 primarily as a result
of the sales growth of the Construction Products Group. Net sales in the
Transportation Group decreased 13.4% million to $3.0 million from $3.4 million
due to decreased revenues from hauling of third party loads which was the result
of its having to commit a greater proportion of its resources to hauling
products shipped by the other divisions of the Company.
-26-
<PAGE>
Gross profit for 1995 increased 33.5% to $53.4 million from $40.0 million
in 1994. Gross margins decreased 2.9% to 19.0% in 1995 compared to 19.5% in
1994. This decrease was the result of a higher mix of Heavy Fabrication division
sales in 1995 which by their nature carry lower margins. Excluding these sales,
gross margins were approximately equal to those of 1994 as the improvement in
margins resulting from improved selling prices and manufacturing efficiency
improvements was offset by higher engineering costs which were incurred to
support the Company's sales growth.
Selling, general and administrative expenses for 1995 increased 21.7% to
$26.6 million from $21.8 million in 1994. As a percentage of net sales, these
expenses decreased to 9.4% in 1995 from 10.7% in 1994.
The Company had net interest income in 1995 of $.2 million compared to net
interest expense in 1994 of $1.4 million. The decrease in interest expense
resulted primarily from the completion on May 5, 1994 of the Company's initial
public offering of Common Stock and the resulting reduction in debt from the
utilization of the net proceeds from the offering and also from the repayment on
May 10, 1995 of an outstanding term loan. Additionally, the Company earned
interest income on its excess cash as well as the unused proceeds from its
Industrial Revenue Bond transaction which was closed on December 7, 1994 in
order to provide financing for its new Virginia manufacturing facility. These
unused proceeds are invested in highly liquid short-term investments and are
included on the accompanying Consolidated Balance Sheets as Restricted Cash.
Net income for 1995, before a $1.0 million one-time tax provision credit
for the reversal of a valuation allowance on net operating loss carryforwards,
was $16.6 million. This compares to $10.5 million in 1994 before an
extraordinary loss on extinguishment of debt of $2.4 million. Including tax
credits and extraordinary items net income for 1995 increased 119.1% to $17.6
million from $8.0 million in 1994.
-27-
<PAGE>
The following table presents the Company's gross sales attributable to
each of its operating divisions for the periods indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
Buildings Group .................. $ 215,456 $ 226,119 $ 157,661 $128,569 $103,490
Roofing & Components Group ....... 44,790 41,943 33,313 25,608 20,009
Transportation Group(1) .......... 20,535 19,314 16,272 13,430 11,252
Polymer Group(2) ................. 18,379 18,251 17,368 16,398 14,937
American Modular
Technologies(3) ................. 962 -- -- -- --
--------- --------- --------- --------- ---------
Gross Sales ...................... 300,122 305,627 224,614 184,005 149,688
Eliminations ..................... (26,169) (24,177) (19,948) (17,200) (15,300)
--------- --------- --------- --------- ---------
Net sales ........................ $ 273,953 $ 281,450 $ 204,666 $166,805 $134,388
========= ========= ========= ========= =========
</TABLE>
- ---------------
(1) Includes intercompany sales of $16.7 million, $16.3 million, $12.8
million, $10.9 million and $9.3 million, respectively.
(2) Includes intercompany sales of $9.4 million, $7.8 million, $7.1 million,
$6.3 million and $6.0 million, respectively.
(3) American Modular Technologies was purchased on November 26, 1996. The
above represents net sales for the one-month period since the acquisition.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its operations from cash flows from
operations, bank borrowings and sales of its debt and equity securities.
Net cash provided by operations was $14.0 million, $24.2 million and $17.7
million in 1996, 1995 and 1994, respectively. Net income plus depreciation and
amortization was $16.6 million, $20.9 million and $10.8 million in the same
periods, respectively. For 1996, cash provided by continuing operations was
lower than net income plus depreciation and amortization due to an increased
investment in working capital which was required to support fourth quarter
volume. For 1995, cash provided by operating activities exceeded net income plus
depreciation and amortization primarily due to further improvement in working
capital management which was partially offset by an increase in net noncurrent
assets and liabilities. For 1994, cash provided by operating activities exceeded
net income plus depreciation and amortization primarily due to improved working
capital management and the extraordinary loss on the early extinguishment of
debt, partially offset by an increase in net noncurrent assets and liabilities.
Net cash used for investing activities was $9.6 million, $5.4 million and
$16.2 million in 1996, 1995 and 1994, respectively. For 1996, this was primarily
the result of additions to property, plant and equipment of $9.3 million, the
purchase of certain assets of AMT for $2.0 million, and the investment in the
China Joint Venture of $2.9 million partially offset by the application of $3.6
million of restricted cash to capital expenditures related to the Virginia
manufacturing facility. The restricted cash resulted from the proceeds of the
industrial revenue bond financing, which was completed on December 7, 1994, for
the construction of the
-28-
<PAGE>
new Virginia manufacturing facility. The restricted cash is drawn down as cash
is expended and various phases of construction are completed on that facility.
For 1995, this was primarily the result of additions to property, plant and
equipment of $10.3 million partially offset by the application of $5.5 million
of restricted cash to capital expenditures related to the Virginia manufacturing
facility. For 1994, this was the result of additions to property, plant and
equipment of $6.5 million and the investment of the $9.6 million of proceeds,
net of closing costs of $0.1 million, from the industrial revenue bond financing
of the construction of the Company's new Virginia manufacturing facility.
Net cash (used for) provided by financing activities was ($21.5) million,
($6.7) million and $1.6 million for 1996, 1995 and 1994, respectively. For 1996,
long-term debt repayments of $1.0 million and purchases of treasury stock of
$25.5 million were funded by cash provided by operating activities and by
borrowings under the Company's Revolver. For 1995, long-term debt repayments,
payment of stock registration costs and purchases of treasury stock were funded
by cash provided by operating activities. For 1994, long-term debt payments,
paydown of the revolving credit line and payment of debt issuance costs were
funded by cash provided by operating activities and net proceeds of $16.2
million from the issuance of Common Stock in the Company's initial public
offering. Additionally, in December 1994, the Company borrowed $9.7 million from
the Industrial Development Authority of Mecklenburg County, Virginia (the "IDA")
to finance the construction of the Company's new Virginia manufacturing
facility. The IDA financed the loan through the issuance of industrial
development revenue bonds ("IDA Bonds"). The loan bears interest at a variable
rate equal to the rate necessary to allow the IDA bonds to be sold at 100% of
the principal amount thereof; the Company has the option to change the interest
rate to a fixed rate for a specified term (which may be the remaining term of
the IDA Bonds). The IDA Bonds mature December 1, 2004, are subject to mandatory
sinking fund redemption of $970,000 per year, and are subject to mandatory
redemption under certain circumstances. The Company has secured its obligations
in respect of the IDA Bonds through the issuance of a letter of credit, which
reduces each year by the amount of principal payments.
The Company currently has budgeted an aggregate of $6.0 million for
capital expenditures in 1997, consisting of $1.1 million to complete the
Virginia manufacturing facility and Eufaula office expansion projects and $4.9
million primarily for machinery and equipment at its other existing facilities.
The Company expects to be able to fund these expenditures from cash provided by
operations, borrowings under its revolving credit facility and, in the case of
its Virginia facility, the remaining proceeds from the IDA Bonds. There can be
no assurance that budgeted capital expenditures will be made as planned or that
additional capital expenditures will not be required.
In January 1993, in connection with the Recapitalization, the Company
entered into a Loan and Security Agreement (the "Loan Agreement") with LaSalle
Business Credit, Inc. ("LaSalle") and Continental Bank N.A. On May 10, 1995, the
Company's Loan Agreement was amended to increase the revolving credit facility
(the "Revolver"), lower the interest rate on the Revolver and reduce certain
fees associated with the facility. Also, as of that date, the outstanding $4.2
million of term loans were repaid from cash from operations and LaSalle became
the sole lender under the facility. The Loan Agreement as currently in effect
provides the Company with a $33.0 million revolving credit facility. The
Revolver expires on January 19, 1998 and is automatically renewable for
successive one year periods unless terminated by the Company or LaSalle.
Borrowings under the Revolver are subject to certain borrowing base limitations
based on eligible accounts receivable and inventory less amounts outstanding
under letters of credit. Loans under the Revolver bear interest at a rate equal
to, at the option of the
-29-
<PAGE>
Company, either (i) the sum of two and one-half percent plus the interest rate
in the London interbank market for loans in an amount substantially equal to the
amount of the borrowing and for the period of the borrowing selected by the
Company or (ii) the sum of one percent plus LaSalle's reference rate (which is
generally equivalent to the prime rate). In addition, the Company is required to
pay LaSalle a fee of 0.25% per year for the unused amount under the Revolver and
a 1.25% fee per annum on the average undrawn face amount of letters of credit.
Up to $13.0 million of the Revolver at any one time outstanding is available for
the issuance of letters of credit. The Revolver is secured by substantially all
the assets of the Company. The amount of the Revolver is reduced each year by
approximately $1.0 million in conjunction with the Company's repayment of
approximately $1.0 million of IDA bonds, so that the total available facility,
once the IDA Bonds are repaid, will be $25.0 million.
The Loan Agreement limits the Company's ability to incur indebtedness, to
create or incur liens on assets, to pay dividends and to purchase or redeem the
Company's stock. In addition, the Loan Agreement requires that the Company meet
certain financial tests, and provides LaSalle with the right to require the
payment of all amounts outstanding under the Loan Agreement if a change in
control of the Company occurs. At December 31, 1996, the Company had $4.0
million of outstanding borrowings under the Revolver and LaSalle had issued
letters of credit aggregating $10.2 million, including a $7.8 million letter of
credit in favor of the Trustee for the IDA Bonds.
At December 31, 1996, the Company's outstanding debt (including current
portion) was $11.9 million, which includes $7.8 million of IDA Bonds used to
finance the Virginia manufacturing facility and $4.0 million under its Revolver.
On November 26, 1996, the Company acquired certain assets of the Liberty,
North Carolina facility of American Modular Technologies ("AMT") for $2.0
million which approximated the fair value of the assets acquired. AMT produces
modular structures used for convenience stores which are sold to major oil
companies and its technology has also been used for correctional facilities,
schools and warehouses.
During 1995 and 1996, the Board of Directors authorized the Company to
repurchase up to 1.3 million shares of its Common Stock to be purchased at any
time in the open market, subject to market conditions. At December 31, 1996 and
1995 the Company had repurchased 1.0 million shares costing $26.5 million and
.046 million shares costing $1.1 million, respectively. These shares are
reflected as Treasury Stock on the accompanying Consolidated Balance Sheets and
were purchased from a combination of cash provided by operations and borrowings
under the Company's Revolver.
In August 1995, the Company entered into a joint venture with China
Renaissance Industries, L.P. to pursue the manufacture of metal building systems
in the People's Republic of China ("PRC") for sale throughout most of Southeast
Asia. The Company has a 30% interest in the joint venture and exclusively
licensed to the joint venture on a royalty-free basis the right to use certain
elements of the Company's technology. The Company will receive a technology
license fee of $1.5 million, of which it received $0.75 million during 1995. The
joint venture completed construction of its initial manufacturing facility in
the PRC in October 1996. At December 31, 1996 and 1995 the Company had $3.8
million and $.9 million invested in the joint venture, which was funded by cash
provided by operating activities, and expects to invest up to an additional $.7
million in 1997.
-30-
<PAGE>
The Company believes that the cash generated from operations and
borrowings under the Revolver will be sufficient to meet its working capital and
capital expenditure requirements, as well as the anticipated additional capital
to be invested in its joint venture in China, through at least 1998. There can
be no assurance that liquidity would not be impacted by a decline in general
economic conditions and higher interest rates which would affect the Company's
ability to obtain external financing.
The Company carries insurance on its activities in scope and amounts which
it believes are reasonable in light of the risks of the business. However, there
can be no assurance that it will not incur a liability which is not covered or
is in excess of coverage, which liability could have a material adverse effect
on the Company.
INFLATION
The Company has from time to time in the past experienced increases in
costs of sales and operating costs, including the costs of raw materials,
supplies and labor due to inflation. The Company has generally been able to
offset the effects of such inflation through periodic price increases. In recent
years, the rate of domestic inflation has abated significantly. No assurance can
be given, however, that the inflation rate will not increase in future years or
that the Company will be able to increase prices to match increases in costs.
FLUCTUATIONS OF QUARTERLY OPERATING RESULTS
The metal buildings business is seasonal in nature in that shipments are
normally lower in the first half of each year compared to the second half
because of unfavorable weather conditions for construction, particularly in the
northern portion of the United States, and normal business planning cycles
affecting construction. This seasonality not only affects sales, but also
profitability for the quarter. See Note 9 of Notes to Consolidated Financial
Statements for selected unaudited quarterly financial data for the years ended
December 31, 1996 and 1995. The quarterly data reflect, in the opinion of the
Company, all adjustments (which include only normal recurring adjustments)
necessary for a fair presentation of the results of operations for such periods.
Results of any one or more quarters are not necessarily indicative of annual
results or continuing trends.
-31-
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
The following consolidated financial statements of American Buildings
Company and Subsidiaries are filed as part of this report.
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
Report of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Operations for the Years Ended December 31,
1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Years Ended December 31,
1996, 1995 and 1994
Notes to Consolidated Financial Statements
-32-
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
American Buildings Company:
We have audited the accompanying consolidated balance sheets of AMERICAN
BUILDINGS COMPANY (a Delaware corporation) AND SUBSIDIARIES as of December 31,
1996 and 1995 and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Buildings Company and
subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 10, 1997
-33-
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
1996 1995
-------- --------
CURRENT ASSETS:
<S> <C> <C>
Cash $ 0 $ 17,100
Accounts receivable, net of allowance for doubtful
accounts of $3,345 and $2,589 in 1996 and 1995,
respectively 36,332 29,473
Inventories 19,823 15,088
Deferred income taxes 3,333 2,361
Other 1,084 468
-------- --------
Total current assets 60,572 64,490
-------- --------
PROPERTY, PLANT, AND EQUIPMENT, AT COST 71,880 61,454
Less accumulated depreciation 38,686 35,585
-------- --------
33,194 25,869
-------- --------
RESTRICTED CASH 466 4,100
-------- --------
DEFERRED INCOME TAXES 1,313 2,057
-------- --------
OTHER ASSETS, NET 6,425 4,827
-------- --------
$101,970 $101,343
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 1,051 $ 970
Accounts payable 32,306 23,579
Accrued liabilities 12,137 11,312
Accrued income taxes 1,368 1,513
-------- --------
Total current liabilities 46,862 37,374
-------- --------
LONG-TERM DEBT, NET OF CURRENT MATURITIES 10,872 7,760
-------- --------
OTHER NONCURRENT LIABILITIES 2,770 2,698
-------- --------
COMMITMENTS AND CONTINGENCIES (NOTE 7)
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 4,000 shares
authorized, no shares issued and outstanding in
1996 and 1995 0 0
Common stock, $.01 par value; 25,000 shares
authorized, 6,312 and 6,237 shares issued in 1996
and 1995, respectively 63 62
Additional paid-in capital 31,049 30,082
Retained earnings 36,885 24,438
-------- --------
67,997 54,582
Less treasury stock, at cost (1,001 and 46 shares in
1996 and 1995, respectively) (26,531) (1,071)
-------- --------
Total stockholders' equity 41,466 53,511
-------- --------
$101,970 $101,343
======== ========
</TABLE>
The accompanying notes are an integral
part of these consolidated balance sheets.
-34-
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
NET SALES $273,953 $281,450 $204,666
-------- -------- --------
COSTS AND EXPENSES:
Cost of sales 229,260 228,088 164,694
Selling, general, and administrative 24,311 26,567 21,830
-------- -------- --------
253,571 254,655 186,524
-------- -------- --------
OPERATING INCOME 20,382 26,795 18,142
NET INTEREST EXPENSE (INCOME) 143 (175) 1,369
-------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES AND EXTRAORDINARY ITEM 20,239 26,970 16,773
PROVISION FOR INCOME TAXES 7,792 9,380 6,318
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEM 12,447 17,590 10,455
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF LONG-TERM DEBT, NET OF TAX
BENEFIT OF $1,436 0 0 (2,425)
-------- -------- --------
NET INCOME $ 12,447 $ 17,590 $ 8,030
======== ======== ========
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Income before extraordinary item $2.06 $2.68 $1.81
Extraordinary loss on early extinguishment of long-term debt 0.00 0.00 (0.42)
-------- -------- --------
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $2.06 $2.68 $1.39
======== ======== ========
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES 6,040 6,554 5,780
======== ======== ========
</TABLE>
The accompanying notes are an integral
part of these consolidated balance sheets.
-35-
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK RETAINED
---------------- PAID-IN EARNINGS TREASURY
SHARES AMOUNT CAPITAL (DEFICIT) (STOCK) TOTAL
------ ------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993 4,398 $ 44 $13,960 $(1,182) $ 0 $ 12,822
Net income 0 0 0 8,030 0 8,030
Stock issued to employees 1 0 0 0 0 0
Issuance of common stock, net of issuance
expenses 1,825 18 16,200 0 0 16,218
Exercise of stock options 1 0 5 0 0 5
----- ------- ------- ------- -------- --------
BALANCE, DECEMBER 31, 1994 6,225 $ 62 $30,165 $ 6,848 $ 0 $ 37,075
Net income 0 0 0 17,590 0 17,590
Stock issued to employees 3 0 0 0 0 0
Exercise of stock options and related tax
benefits 9 0 124 0 0 124
Stock registration costs 0 0 (207) 0 0 (207)
Purchase of 46 shares of treasury stock 0 0 0 0 (1,071) (1,071)
----- ------- ------- ------- -------- --------
BALANCE, DECEMBER 31, 1995 6,237 $ 62 $30,082 $24,438 $ (1,071) $ 53,511
Net income 0 0 0 12,447 0 12,447
Exercise of stock options and related tax
benefits 75 1 967 0 0 968
Purchase of 955 shares of treasury stock 0 0 0 0 (25,460) (25,460)
----- ------- ------- ------- -------- --------
BALANCE, December 31, 1996 6,312 $ 63 $31,049 $36,885 $(26,531) $ 41,466
===== ======= ======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated statements.
-36-
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,447 $ 17,590 $ 8,030
-------- -------- --------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 4,128 3,353 2,775
Amortization of debt discount 0 0 124
Extraordinary loss on early extinguishment of
long-term debt 0 0 2,425
Gain on sales of fixed assets (64) (102) 0
Gain on sales of nonoperating property 0 0 (7)
Changes in assets and liabilities, net of assets of acquired businesses:
Accounts receivable, net (6,859) (984) (1,467)
Inventories (4,119) 1,226 (7,056)
Accounts payable 8,549 (711) 9,745
Accrued liabilities and income taxes 452 5,726 2,543
Other working capital changes (616) (1,176) 1,482
Other, net 113 (695) (881)
-------- -------- --------
Total adjustments 1,584 6,637 9,683
-------- -------- --------
Net cash provided by operating activities 14,031 24,227 17,713
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (9,335) (10,316) (6,541)
Purchase of American Modular Technologies (2,037) 0 0
Decrease (increase) in restricted cash 3,634 5,537 (9,637)
Investment in China Joint Venture (2,940) (900) 0
Proceeds from sales of fixed assets 94 237 0
Proceeds from sales of nonoperating property, net 952 0 9
-------- -------- --------
Net cash used for investing activities (9,632) (5,442) (16,169)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of
issuance costs 968 124 16,223
Long-term debt payments (970) (5,509) (14,353)
Changes in revolving credit facility, net 3,963 0 (9,690)
Proceeds from issuance of IDA bonds 0 0 9,637
Payment of debt issuance costs 0 0 (234)
Payment of stock registration costs 0 (207) 0
Purchase of treasury stock (25,460) (1,071) 0
-------- -------- --------
Net cash (used for) provided by financing activities (21,499) (6,663) 1,583
-------- -------- --------
NET (DECREASE) INCREASE IN CASH (17,100) 12,122 3,127
CASH, BEGINNING OF PERIOD 17,100 4,978 1,851
-------- -------- --------
CASH, END OF PERIOD $ 0 $ 17,100 $ 4,978
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 559 $ 1,385 $ 808
======== ======== ========
Cash paid for income taxes $ 7,748 $ 6,064 $ 10,562
======== ======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated statements.
-37-
<PAGE>
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995, AND 1994
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
American Buildings Company and its wholly owned subsidiaries (the
"Company"), after elimination of all material intercompany items.
The Company is a diversified manufacturer and marketer of construction
products and services for nonresidential and residential applications. The
Company designs, manufactures, and sells metal building systems for
industrial, commercial, institutional, and other nonresidential markets.
Metal building systems consist of structural framing and wall and roof
panels. The Company's metal building systems are generally custom-designed
to meet the specific needs of the end user and to allow for easy on-site
assembly. The Company markets its metal building systems nationwide through
authorized builder/dealers. The Company has a separate roofing products'
sales, engineering, and customer service organization, which markets and
sells the Company's roofing products to its builder/dealer network and to
preferred roofing contractors. In addition, the Company paints steel coils,
manufactures and markets building components, mini warehouse systems, and
provides specialty engineering services for large, complex building
structures. The Company markets and produces modular structures and
residential steel framing systems and also operates an ICC-licensed
trucking subsidiary.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Revenue is primarily derived from the sale of metal buildings and
components to customers and is recorded upon delivery of product to the
customer.
INVENTORIES
Inventories are stated at the lower of cost or market. The last-in,
first-out ("LIFO") method is used for determining the cost of substantially
all raw material inventories and material costs included in work in
process. The first-in, first-out method is used for determining the cost of
all other inventories, including direct labor and overhead incurred in the
manufacturing process. Market is defined as replacement cost for raw
materials and net realizable value for work in process and finished goods.
-38-
<PAGE>
Inventories consist of the following:
1996 1995
------- -------
Raw materials $17,151 $13,846
Work in process 2,862 2,574
Finished goods 357 328
------- -------
20,370 16,748
Allowance to state inventories at LIFO
costs (547) (1,660)
------- -------
$19,823 $15,088
======= =======
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. Depreciation is provided
for using the straight-line method over the estimated useful lives of 20 to
40 years for buildings, approximately 7 years for machinery and equipment,
and 3 to 15 years for all other items. Leasehold improvements are amortized
over the shorter of the useful life of the asset or the term of the lease.
Property, plant, and equipment, at cost, consist of the following:
1996 1995
------- -------
Land $ 938 $ 784
Buildings and leasehold improvements 20,710 16,778
Machinery and equipment 43,730 38,772
Furniture and fixtures 6,502 5,120
------- -------
$71,880 $61,454
======= =======
RESTRICTED CASH
In December 1994, the Company obtained proceeds of $9,637, net of closing
costs of $63, related to the issuance of industrial revenue bonds (Note 3).
The proceeds, which have been invested in highly liquid short-term
investments, are restricted to purchases of property, equipment, and
buildings for the Virginia manufacturing facility. At December 31, 1996 and
1995, $466 and $4,100, respectively, of the proceeds were available for
future purchases of property, equipment, and buildings.
OTHER ASSETS
The Company is the beneficiary of life insurance policies covering certain
current and former management employees to fund the Company's obligations to
such employees under a noncontributory retirement and death benefit plan
(Note 6). The cash surrender value of these life insurance policies is
$1,899 and $1,688 at December 31, 1996 and 1995, respectively, and is
included in other assets in the accompanying balance sheets. These policies
have been assigned as collateral for the Company's revolving credit facility
(Note 3).
-39-
<PAGE>
ACCRUED LIABILITIES
The Company accrues estimated insurance claims for the self-insured portion
of its workers' compensation, property and casualty, and health insurance
plans. At December 31, 1996 and 1995, insurance claim reserves of $4,711 and
$3,483, respectively, were included in accrued liabilities.
STATEMENTS OF CASH FLOWS
The Company considers all highly liquid investments with purchased
maturities of three months or less to be cash equivalents.
CONCENTRATIONS OF CREDIT RISK
Concentrations of credit risk with respect to trade receivables are limited
due to the wide variety of customers and markets for which the Company's
services are provided, as well as their dispersion across many different
geographic areas. As a result, as of December 31, 1996, the Company does not
consider itself to have any significant concentrations of credit risk.
LONG-LIVED ASSETS
The Company periodically reviews the values assigned to long-lived assets,
such as property and equipment and other assets, to determine if any
impairments are other than temporary. Management believes that the
long-lived assets in the accompanying balance sheets are appropriately
valued.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the
current year presentation.
-40-
<PAGE>
3. LONG-TERM DEBT
1996 1995
------- -------
Revolver balance $ 3,963 $ 0
IDA of Mecklenburg County, Virginia;
Industrial Revenue Bonds 7,760 8,730
Other debt 200 0
------- -------
11,923 8,730
Less current maturities 1,051 970
------- -------
$10,872 $ 7,760
======= =======
The Company has a revolving credit facility which provides for maximum
borrowings of $33,000 at December 31, 1996. Interest is payable monthly at
an interest rate of prime plus 1% or LIBOR plus 2.5%, at the option of the
Company. The revolving credit facility availability is based on eligible
accounts receivable and inventory, less amounts outstanding under letters
of credit. The Company can obtain up to $13,000 of letters of credit
subject to availability under the facility. At December 31, 1996, $3,963 of
the revolver was outstanding, $10,168 of letters of credit was outstanding,
and $18,869 was available under the facility. The facility expires on
January 19, 1998 and is automatically renewable for successive one-year
periods unless terminated by the Company or the bank. The amount of the
facility is reduced each year by approximately $1,000 in conjunction with
the Company's annual repayment of $970 of IDA bonds, described below, so
that the total available facility, once the IDA bonds are repaid, will be
$25,000. The revolving credit facility is secured by a first lien on
substantially all assets of the Company.
In December 1994, the Company closed a $9,700 industrial revenue bond
transaction with the Industrial Development Authority ("IDA") of
Mecklenburg County, Virginia, for the purpose of financing its new
manufacturing facility located in Virginia. The bonds bear interest at a
variable rate (4% at December 31, 1996). Additionally, the Company pays a
.25% remarketing fee on the bond balance. The bonds mature on December 1,
2004 and are subject to a mandatory sinking fund redemption of $970 per
year and to a mandatory redemption under certain circumstances. The Company
has secured its obligation with respect to the IDA bonds through the
issuance of a letter of credit. The carrying amount of the bonds is assumed
to approximate fair value due to the bonds' variable rate structure.
During 1994, the Company extinguished $13,500 of senior notes with proceeds
from the initial public offering discussed in Note 4; consequently, an
extraordinary loss of $2,425 (net of income tax benefit of $1,436), or $.42
per share, resulted from the write-off of the debt issuance costs and
unamortized discount.
-41-
<PAGE>
4. STOCKHOLDERS' EQUITY
STOCK OFFERINGS
In May 1994, the Company completed a public offering of its common stock.
The offering consisted of 2,592 shares (excluding the underwriters'
overallotment option from certain stockholders) of common stock, of which
1,825 shares were sold by the Company and 767 shares were sold by certain
stockholders, at an initial public offering price of $10 per share. The net
proceeds to the Company of $16,218 were used to reduce long-term debt (Note
3). In June 1994, certain stockholders sold an aggregate of 250 shares to
the underwriters to cover overallotments.
In July 1995, the Company completed a secondary public offering of its
common stock which consisted of 1,275 shares (excluding the underwriters'
overallotment option from a certain stockholder) of common stock which were
sold by certain stockholders at a public offering price of $22 per share.
The Company incurred offering expenses of $207 and did not receive any
proceeds from the sale of the shares of common stock. Subsequently, a
certain stockholder sold 191 shares to the underwriters to cover
overallotments.
PREFERRED STOCK
In February 1994, the board of directors authorized 4,000 shares of
preferred stock with $.01 par value. The board of directors has the
authority to issue these preferred shares and to fix dividends, voting and
conversion rights, redemption provisions, liquidation preferences, and
other rights and restrictions.
TREASURY STOCK
In 1995, the board of directors authorized the Company to repurchase up to
300 shares of its outstanding common stock through October 1996, as deemed
appropriate by management. During 1996, the board authorized the Company to
repurchase an additional 1,000 shares of its outstanding common stock at
any time, as directed by management. At December 31, 1996 and 1995,
repurchases of 1,001 and 46 shares, respectively have been effected at
prevailing market prices from time to time on the open market. These
repurchased shares represent additions to treasury stock and are carried at
cost in the accompanying balance sheets.
STOCK OPTION PLANS
In January 1993, the Company adopted the American Buildings Company
Management Incentive Plan. The Company reserved 223 shares for issuance
under the plan. Stock incentives granted pursuant to the plan may include
(a) nonqualified stock options, (b) incentive stock options, or (c)
restricted stock awards. All options were issued at an exercise price no
less than fair value as of the date of grant.
In February 1994, the board of directors approved the 1994 Employee Stock
Option Plan. The plan, as amended, provides for the issuance of incentive
and nonqualified stock options to acquire up to 480 shares of common stock.
Options become exercisable as
-42-
<PAGE>
determined at the date of grant by a committee of the board of directors.
Options expire ten years after the date of grant unless an earlier
expiration date is set at the time of grant. To date, the exercise price of
all issuances of options have been at fair market value at the date of
grant.
In addition, the Company has a stock option plan for nonemployee directors
which authorizes options to purchase up to 160 shares of common stock. The
option price for future grants is to be determined by the board of
directors but shall not be less than the fair market value of the common
shares on the date the stock option is granted.
Transactions under the Company's stock option plans during each of the two
years ended December 31, 1996 are summarized as follows:
NUMBER
OF
SHARES OPTION PRICE
------ ------------
Outstanding at December 31, 1994 617 $5.18-$16.38
Granted 115 $18.06-$24.50
Exercised (9) $5.18-$10.00
Canceled (1) $5.18
---
Outstanding at December 31, 1995 722 $5.18-$24.50
Granted 19 $21.13-$21.69
Exercised (75) $5.18-$18.06
Canceled (14) $10.00-$24.50
---
Outstanding at December 31, 1996 652 $5.18-$24.50
===
Exercisable at December 31, 1996 402 $5.18-$24.50
===
At December 31, 1996, options to purchase 126 shares were available for
future grant under the above option plans.
During 1995, the Financial Accounting Standards Board issued SFAS No. 123
("Accounting for Stock-Based Compensation") which defines a fair
value-based method of accounting for an employee stock option plan or
similar equity instrument. However, it also allows an entity to continue to
measure compensation cost for those plans using the method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees." Entities electing to remain
with the accounting in APB No. 25 must make pro forma disclosures of net
income and, if presented, earnings per share, as if the fair value-based
method of accounting defined in the statement had been applied.
The Company has elected to account for its stock-based compensation plans
under APB No. 25; however, the Company has computed for pro forma
disclosure purposes the value of all options granted during 1995 and 1996
using the Black-Scholes option pricing model as prescribed by SFAS No. 123
using the following weighted average assumptions used for grants in 1995
and 1996:
-43-
<PAGE>
Risk free interest rate 6.16%
Expected dividend yield 0%
Expected lives 5 years
Expected volatility .35%
The total values of the options granted during the year ended December 31,
1996 and 1995 were computed as approximately $133962 and $962133,
respectively, which would be amortized over the vesting period of the
options. If the Company had accounted for these plans in accordance with
SFAS No. 123, the Company's reported pro forma net income and pro forma net
income per common and common equivalent share for the years ended December
31, 1996 and 1995 would have decreased to the following pro forma amounts:
1996 1995
------- -------
Net income:
As reported $12,447 $17,590
Pro forma 12,285 17,540
Primary EPS:
As reported 2.06 2.68
Pro forma 2.03 2.68
5. INCOME TAXES
The provision for income taxes consists of the following:
1996 1995 1994
------ ------- ------
Current:
Federal $7,291 $10,194 $5,150
State 729 1,020 547
Deferred (228) (829) 875
Change in valuation allowance 0 (1,005) (254)
------ ------- ------
$7,792 $ 9,380 $6,318
====== ======= ======
In addition to the above, the Company recorded a deferred income tax
benefit of $1,436 in 1994 related to the extraordinary loss on early
extinguishment of long-term debt.
Under SFAS No. 109, a valuation allowance is recorded if it is "more likely
than not" deferred tax assets will not be realized. Due to prior operating
losses, a valuation allowance for available net operating loss
carryforwards was established in connection with the adoption of SFAS No.
109 on January 1, 1993. During fiscal 1995, management determined expected
future taxable income would be more than sufficient to utilize the
remaining loss carryforwards. Accordingly, the valuation allowance was
eliminated, which had the effect of reducing income tax expense by $1,005.
-44-
<PAGE>
The provision for income taxes differs from the amounts resulting from
multiplying the income before income taxes by the statutory federal income
tax rate. The reasons for these differences are as follows:
1996 1995 1994
---- ---- ----
Federal income tax provision at
statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal
benefit 4.0 4.0 4.5
Other (0.5) (0.5) (0.3)
Valuation allowance 0.0 (3.7) (1.5)
---- ---- ----
38.5% 34.8% 37.7%
==== ==== ====
The sources of the difference between the financial accounting and tax
bases of the Company's assets and liabilities which give rise to the
deferred tax assets and liabilities and the tax effects of each are as
follows as of December 31, 1996 and 1995:
1996 1995
------ ------
Deferred tax assets:
Accrued liabilities $1,706 $1,355
Deferred compensation 1,138 1,096
Allowance for doubtful accounts 1,288 981
Reserves on nonoperating assets 417 760
Net operating loss carryforwards 497 751
Other 339 25
------ ------
5,385 4,968
------ ------
Deferred tax liabilities:
Property, plant, and equipment (496) (285)
Other (243) (265)
------ ------
(739) (550)
------ ------
Net deferred tax asset $4,646 $4,418
====== ======
As of December 31, 1996, net operating losses of approximately $1,293 are
available for carryforward through 2007.
6. EMPLOYEE BENEFIT PLANS
The Company has a contributory 401(k) plan, the American Buildings Company
Savings Plan, under which all full-time employees are eligible to
participate. The Company matches at least $.25 per $1 of eligible employee
contributions and can make an additional contribution at the discretion of
the board of directors. The plan requires a minimum company contribution of
1% of eligible gross payroll annually. Company contributions to this plan
were $996, $1,214, and $990 for 1996, 1995, and 1994, respectively.
-45-
<PAGE>
The Company has a noncontributory retirement and death benefit plan which
covers certain management employees. The plan provides a death benefit
prior to obtaining retirement age, as defined by the plan, to be paid over
a minimum ten-year period and a mutually exclusive retirement benefit,
after obtaining the defined retirement age, to be paid over a ten-year
period. Benefits under this plan do not vest until retirement, and the
Company has the right to modify or terminate this plan at any time. The
Company's liability for benefits under this plan was $2,955 and $2,846 as
of December 31, 1996 and 1995, respectively. This liability is based on the
estimated present value of the retirement obligation, accrued over the
estimated service period, and included in the accompanying balance sheets.
The Company does not provide any other significant postretirement or
postemployment benefits.
7. COMMITMENTS AND CONTINGENCIES
RELATED-PARTY TRANSACTION
In January 1993, the Company entered into a management consulting agreement
with a certain stockholder. The agreement, as amended, calls for annual
fees of $275 to be paid to the stockholder for providing financial and
management consulting services.
INSURANCE
The Company participates in self-insured workers' compensation, general
liability, and health insurance plans. Reserves are estimated for both
reported and unreported claims using industry loss development factors.
Revisions to estimated reserves are recorded in the period in which they
become known. Estimated self-insurance reserves as of December 31, 1996 and
1995 totaling $4,711 and $3,483, respectively, represent management's best
estimate. In the opinion of the Company's management, any future
adjustments to estimated reserves will not have a material impact on the
financial statements.
LEASES
The Company leases certain property, plant, and equipment under operating
leases. Minimum future lease payments under operating leases with initial
or remaining noncancelable lease terms in excess of one year are as
follows:
1997 $1,027
1998 936
1999 860
2000 818
2001 818
Thereafter 1,763
------
Total $6,222
======
-46-
<PAGE>
Total rent expense for all operating leases was $3,811, $3,249, and $2,928
in 1996, 1995, and 1994, respectively.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with seven senior
executives for terms expiring December 31, 1997. The agreements provide for
severance, up to the longer of the remaining term of the agreement or one
year, for termination of employment for any reason other than good cause.
LITIGATION
The Company is involved in various claims and lawsuits incidental to its
business. In the opinion of management, the ultimate resolution of such
claims and lawsuits will not have a material effect on the Company's
financial position, liquidity, or results of operations.
8. ACQUISITIONS AND INVESTMENT IN JOINT VENTURE
ACQUISITION
On November 26, 1996, the Company acquired certain assets of the Liberty,
North Carolina facility of American Modular Technologies ("AMT") for $2,037
which approximated the fair value of the assets acquired. The transaction
was accounted for as a purchase. The financial statements include the
operating results of AMT from the date of acquisition. AMT provides
specialty modular building structures, primarily for the retail petroleum
industry.
JOINT VENTURE
In August 1995, the Company entered into a joint venture with China
Renaissance Industries, L.P. to pursue the manufacture and sale of metal
building systems in the People's Republic of China ("PRC") and certain
countries in Southeast Asia (the "Joint Venture"). The Company has a 30%
interest in the Joint Venture and exclusively licensed to the Joint Venture
on a royalty-free basis the right to use certain elements of the Company's
technology. The Company will receive a technology license fee of $1,500, of
which it received $750 during 1995. The Joint Venture completed
construction of its initial manufacturing facility in the PRC during
October 1996. At December 31, 1996 and 1995, the Company had $3,840 and
$900, respectively, invested in the Joint Venture.
-47-
<PAGE>
9. QUARTERLY FINANCIAL DATA (UNAUDITED)
1996
----------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- ------- -------- --------
Net sales $48,180 $66,302 $78,171 $81,300
Operating income 1,849 5,690 5,917 6,926
Interest (income) expense (175) 2 164 152
Net income 1,245 3,499 3,537 4,166
Net income per common and common
equivalent share 0.19 0.56 0.61 0.74
1995
-------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- ----------
Net sales $62,298 $67,769 $80,182 $71,201
Operating income 4,518 6,396 8,024 7,857
Interest expense (income) 85 (9) (92) (159)
Net income 2,748 3,970 4,938 5,934(1)
Net income per common and common
equivalent share 0.42 0.61 0.75 0.90(1)
(1) During the fourth quarter 1995, the Company's valuation allowance on
net operating loss carryforwards was eliminated, which had the effect
of reducing income tax expense and therefore increasing net income by
$1,005, or $.15 per share.
48
<PAGE>
The accompanying notes are an integral part
of these consolidated statements.
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
Additions
Balance at Charged Balance
Beginning to Costs and at
Fiscal Year Ended of Year Expense Deductions* End of Year
----------------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Allowance for doubtful accounts $2,589 $1,667 ($311) $3,345
------ ------ ----- ------
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful accounts $1,768 $1,577 ($756) $2,589
------ ------ ----- ------
YEAR ENDED DECEMBER 31, 1994:
Allowance for doubtful accounts $1,230 $1,136 ($598) $1,768
------ ------ ----- ------
</TABLE>
*Charges to the allowance for purposes for which the allowance was created.
-49-
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
- --------------------------------------------------------------------------------
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- --------------------------------------------------------------------------------
Directors
The information set forth under the caption Proposal No. 1 - Election of
Directors in the Company's definitive Proxy Statement to be used in connection
with the 1997 Annual Meeting of Stockholders is incorporated herein by
reference.
Executive Officers
See "Part I - Executive Officers of the Company."
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
The information set forth under the caption "Executive Compensation" in
the Company's definitive Proxy Statement to be used in connection with the 1997
Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
- --------------------------------------------------------------------------------
The information set forth under the caption "Principal Stockholders" in
the Company's definitive Proxy Statement to be used in connection with the 1997
Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
The information set forth under the captions "Compensation Committee
Interlocks and Insider Participation" and "Certain Transactions" in the
Company's definitive Proxy Statement to be used in connection with the 1997
Annual Meeting of Stockholders is incorporated herein by reference.
-50-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
- --------------------------------------------------------------------------------
(a) DOCUMENT LIST
1. Financial Statements
The financial statements of the Company filed herewith are set forth in
Part II, Item 8 of this Report.
2. Financial Statement Schedules
The following financial statement schedule and opinion thereon are filed
as a part of this Report:
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore have
been omitted.
3. Exhibits Required by Securities and Exchange Commission Regulation S-K
(a) The following exhibits are filed as part of this report or are
incorporated herein by reference (Exhibit Nos. 10.2, 10.22, 10.25, 10.26, 10.27,
10.34, 10.35, 10.36, 10.37, 10.38, 10.39 and 10.46 are management contracts,
compensatory plans or arrangements):
Exhibit No. Description
- ----------- -----------
3.1 Restated Certificate of Incorporation, as amended.*
3.2 Amended and Restated By-laws.*
4. Form of Common Stock Certificate.*
10.1 Subscription Agreement, dated November 9, 1992, between Robert T.
Ammerman and the Company.*
10.2 Stock Option Agreement, dated November 9, 1992, between Robert T.
Ammerman and the Company, as amended.*
10.3 Amended and Restated Registration Rights Agreement, dated as of
January 19, 1993, among the Company and certain of the Company's
stockholders.*
-51-
<PAGE>
10.4 Management Agreement, dated as of January 19, 1993, between the
Company and Sterling Ventures Limited, as amended.*
10.5 Loan and Security Agreement, dated as of January 19, 1993, among
the Company, as Borrower, StanChart Business Credit, Inc. and
Continental Bank N.A., as Lenders, and StanChart Business Credit,
Inc., as Agent for the Lenders.*
10.6 Amendment No. 1 to Loan and Security Agreement dated as of May 6,
1994, among the Company, LaSalle Business Credit, Inc.
(successor-in- interest to StanChart Business Credit, Inc.),
Continental Bank, N.A. and LaSalle Business Credit, Inc., as
Agent for the Lenders.**
10.7 Amendment No. 2 to Loan and Security Agreement dated as of
December 6, 1994, among LaSalle Business Credit, Inc.
(successor-in- interest to StanChart Business Credit, Inc.), Bank
of America Illinois (successor-in-interest to Continental Bank,
N.A.) and LaSalle Business Credit Inc., as Agent for the
Lenders.***
10.8 Guaranty and Security Agreements, dated as of January 19 1993,
made by ABC Transportation Company and ABC Brokerage Co. in favor
of StanChart Business Credit, Inc.*
10.9 Pledge and Security Agreement, dated as of January 19, 1993, made
by the Company in favor of StanChart Business Credit, Inc.*
10.10 Pledge and Security Agreement, dated as of January 19, 1993, made
by ABC Transportation Company in favor of the StanChart Business
Credit, Inc.*
10.11 Patent Collateral Security Agreement, Patent Assignment of
Security and Special Power of Attorney, dated as of January 19,
1993, between the Company and StanChart Business Credit, Inc.*
10.12 Net True Lease Agreement, dated September 22, 1986, between ABC
Transportation Company and PACCAR Leasing Corporation and related
Schedules.*
10.13 Master Maintenance Agreement between ABC Transportation Company
and Eufaula Trucking Company.*
10.14 Term Lease Master Agreement, dated June 11, 1984, between
American Buildings Company and IBM Credit Corporation and related
Lease Supplements and Schedules.*
10.15 Commercial Building Lease, dated February 1, 1992, between USX
Corporation and Polymer Coil Coaters, Inc. relating to Fairfield,
Alabama leased real property.*
10.16 Commercial Building Lease, dated April 1, 1992, between USX
Corporation and Polymer Coil Coaters, Inc., relating to
Fairfield, Alabama leased real property.*
-52-
<PAGE>
10.17 Commercial Building Lease, dated April 17, 1985, between USX
Corporation and Polymer Coil Coaters, Inc., relating to
Fairfield, Alabama leased property.*
10.18 Form of Spectrum Software License Agreement.*
10.19 Form of Builder Agreement.*
10.20 Form of Roofing Contractor Agreement.*
10.21 Form of Indemnity Agreement.*
10.22 1994 Stock Option Plan.*
10.23 Form of Stock Option Agreement under 1994 Stock Option Plan.*
10.24 Stock Option Plan for Non-Employee Directors.***
10.25 Incentive Bonus Plan.*
10.26 Management Security Plan.*
10.27 Form of Non-Plan Stock Option Agreement.*
10.28 Industrial Development Authority of Mecklenburg County, Virginia
Purchase Contract dated November 22, 1994, with the Company and
Merchant Capital Corporation.***
10.29 Loan Agreement between Industrial Development Authority of
Mecklenburg County, Virginia and the Company dated December 1,
1994.***
10.30 Form of Note (included in Loan Agreement).***
10.31 Remarketing Agreement dated as of December 1, 1994, among the
Company, Merchant Capital Corporation, NationsBank of Virginia,
N.A. and the Industrial Development Authority of Mecklenburg
County, Virginia.***
10.32 Indenture of Trust between Industrial Development Authority of
Mecklenburg County, Virginia and NationsBank of Virginia, N.A.,
as Trustee.***
10.33 Pledge Agreement, dated as of December 1, 1994, between the
Company and LaSalle National Bank.***
10.34 Employment Agreement, dated as of October 21, 1994, between the
Company and Robert T. Ammerman.***
10.35 Employment Agreement, dated as of October 21, 1994, between the
Company and Joel R. Voelkert.***
10.36 Employment Agreement, dated as of October 21, 1994, between the
Company and Roy L. Smith.***
-53-
<PAGE>
10.37 Employment Agreement, dated as of October 21, 1994, between the
Company and Barry L. Milling.***
10.38 Employment Agreement, dated as of October 21, 1994, between the
Company and William R. Buchholz.***
10.39 Amendment No. 3 to Loan and Security Agreement, dated May 10,
1995, between the Company and LaSalle Business Credit, Inc.****
10.40 Second Amended and Restated Loan Note, dated May 10, 1995, in
principal amount of $35 million.****
10.41 Mortgage Modification Agreement, dated May 10, 1995, between the
Company and LaSalle Business Credit, Inc.****
10.42 Limited Partnership Agreement of American Buildings Company Asia,
L.P., dated August 15, 1995.*****
10.43 Technology License Agreement between American Buildings Company
Asia, L.P. and American Buildings Company International, Inc.,
dated August 15, 1995.*****
10.44 Amendment No. 2 to Management Agreement, dated as of October 11,
1995, between the Company and Sterling Ventures Limited.******
10.45 Acquisition Agreement among AMT/Beaman Corporation, American
Modular Technologies, LLC and Beaman Corporation, dated as of
November 26, 1996.
10.46 Employment Agreement, dated as of November 27, 1996, between the
Company and Joseph M. Grigelevich, Jr.
10.47 Description of Shareholder Value Added Plan
11 Computation of Earnings Per Share.
21 Subsidiaries of the Company.*
23.1 Consent of Arthur Andersen LLP.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed from October 1,
1996 through December 31, 1996.
(c) Exhibits.
See (a)(3) above.
27. Financial Data Schedule
- ----------------------
* Incorporated by reference to Exhibits to the Registration Statement on
Form S-1 (Registration No. 33-76054).
** Incorporated by reference to Exhibits to the Quarterly Report on Form
10-Q for the period ended September 30, 1994.
-54-
<PAGE>
*** Incorporated by reference to Exhibits to the Annual Report on Form 10-K
for the year ended December 31, 1994.
**** Incorporated by reference to Exhibits to the Registration Statement on
Form S-3 (Registration No. 33-94082).
***** Incorporated by reference to Exhibits to the Quarterly Report on Form
10-Q for the period ended September 30, 1995.
****** Incorporated by reference to Exhibits to the Annual Report on Form 10-K
for the period ended December 31, 1995.
-55-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERICAN BUILDINGS COMPANY
By: /s/ ROBERT T. AMMERMAN
-------------------------------------
Robert T. Ammerman,
President and Chief Executive Officer
March 24, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ ROBERT T. AMMERMAN
- ------------------------------ President, Chief Executive March 24, 1997
Robert T. Ammerman Officer and Director
/s/ R. CHARLES BLACKMON, JR.
- ------------------------------ Executive Vice President - March 24, 1997
R. Charles Blackmon, Jr. Chief Financial Officer
(principal financial
officer)
/s/ ANNE M. SAVAGE
- ------------------------------ Controller (principal March 24, 1997
Anne M. Savage accounting officer)
/s/ WILLIAM L. SELDEN
- ------------------------------ Chairman of the Board March 24, 1997
William L. Selden and Director
/s/ HAROLD LEVY
- ------------------------------ Director March 24, 1997
Harold Levy
/s/ DOUGLAS L. NEWHOUSE
- ------------------------------ Director March 24, 1997
Douglas L. Newhouse
- ------------------------------ Director March 24, 1997
Ralph Saul
-56-
<PAGE>
Signature Title Date
--------- ----- ----
/s/ ROBERT F. SHAPIRO
- ------------------------------ Director March 24, 1997
Robert F. Shapiro
/s/ KENDRICK WILSON, III
- ------------------------------ Director March 24, 1997
Kendrick Wilson, III
-57-
EXHIBIT 10.45
================================================================================
ACQUISITION AGREEMENT
BY AND AMONG
AMT/BEAMAN CORPORATION
AS "PURCHASER"
AND
AMERICAN MODULAR TECHNOLOGIES, LLC
AND
BEAMAN CORPORATION
COLLECTIVELY, AS "SELLER"
DATED AS OF NOVEMBER 26, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
I. DEFINITIONS .......................................................... 1
II. PURCHASE AND SALE OF ASSETS .......................................... 4
Section 2.1. Purchase and Sale of the Assets ..................... 4
Section 2.2. Excluded Assets ..................................... 5
Section 2.3. Assumption of Liabilities ........................... 6
Section 2.4. Excluded Liabilities ................................ 6
Section 2.5. Closing ............................................. 8
Section 2.6. Purchase Price ...................................... 8
Section 2.7. Post Closing Adjustments ............................ 9
Section 2.8. Delivery of Purchase Price and Transfer of Assets ... 10
Section 2.9. Allocation of Purchase Price ........................ 12
Section 2.10. Third Party Consents ................................ 12
Section 2.11. Further Assurances, Etc. ............................ 12
III. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER .................... 13
Section 3.1. Representations and Warranties Accurate ............. 13
Section 3.2. Performance by Seller ............................... 13
Section 3.3. Authorization ....................................... 13
Section 3.4. Certificate ......................................... 13
Section 3.5. Opinion of Counsel .................................. 13
Section 3.6. Legal Prohibition ................................... 13
Section 3.7. Legislation ......................................... 14
Section 3.8. Consents and Approvals .............................. 14
Section 3.9. No Material Adverse Change .......................... 14
Section 3.10. Governmental Licenses ............................... 14
Section 3.11. Closing Matters ..................................... 15
Section 3.12. Instruments of Transfer, Conveyance and Assignment .. 15
Section 3.13. Title ............................................... 15
Section 3.14. Lender Approval ..................................... 16
Section 3.15. [Deleted] ........................................... 16
Section 3.16. Accounts Payable Aging Report ....................... 16
Section 3.17. Delivery of Secretary's Certificate ................. 17
Section 3.18. Account Receivable Schedule ......................... 17
IV. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER ........................ 17
Section 4.1. Representations and Warranties Accurate ............. 17
Section 4.2. Performance by Purchaser ............................ 17
Section 4.3. Authorization ....................................... 17
Section 4.4. Certificate ......................................... 18
Section 4.5. Opinion of Counsel .................................. 18
Section 4.6. Legal Prohibition ................................... 18
i
<PAGE>
Section 4.7. Delivery of Secretary's Certificate ................. 18
V. REPRESENTATIONS AND WARRANTIES OF SELLER ............................. 18
Section 5.1. Organization and Qualification/Ownership of Seller .. 18
Section 5.2. Due Authorization ................................... 18
Section 5.3. No Conflict ......................................... 19
Section 5.4. Equity Investments .................................. 20
Section 5.5. Title to Properties ................................. 20
Section 5.6. Real Property; Encumbrances ......................... 20
Section 5.7. Environmental Matters ............................... 23
Section 5.8. Financial Statements and Related Matters ............ 25
Section 5.9. Absence of Undisclosed Liabilities .................. 26
Section 5.10. Absence of Certain Changes or Events ................ 26
Section 5.11. Insurance ........................................... 27
Section 5.12. Contracts, Obligations and Commitments .............. 28
Section 5.13. Litigation .......................................... 29
Section 5.14. Compliance with Law ................................. 30
Section 5.15. Licenses; Registrations; Permits; Etc. .............. 30
Section 5.16. Labor Matters ....................................... 31
Section 5.17. Personnel; Employee Plans ........................... 31
Section 5.18. Intellectual Property ............................... 32
Section 5.19. Property to Operate Business ........................ 33
Section 5.20. Related Transactions ................................ 33
Section 5.21. Brokers ............................................. 33
Section 5.22. AccountsEReceivable ................................. 33
Section 5.23. Product Warranties .................................. 33
Section 5.24. Taxes ............................................... 33
Section 5.25. Suppliers and Customers ............................. 34
Section 5.26. Beaman Corporation .................................. 35
Section 5.27. Disclosure .......................................... 35
VI. REPRESENTATIONS AND WARRANTIES OF PURCHASER ......................... 35
Section 6.1. Organization ........................................ 35
Section 6.2. Due Authorization ................................... 35
Section 6.3. No Conflict ......................................... 36
Section 6.4. Disclosure .......................................... 36
VII. AGREEMENTS PENDING CLOSING .......................................... 37
Section 7.1. Conduct and Preservation of Business ................ 37
Section 7.2. Access to Information ............................... 37
Section 7.3. Filings and Authorizations .......................... 37
Section 7.4. Public Announcements ................................ 38
Section 7.5. Schedules ........................................... 38
Section 7.6. Notice of Developments .............................. 38
Section 7.7. Updated Financial Statements ........................ 38
Section 7.8. No Shopping ......................................... 38
ii
<PAGE>
Section 7.9. Rally Buildings ..................................... 39
.................
VIII. POST-CLOSING MATTERS ............................................... 39
Section 8.1. Hiring of Employees ................................. 39
Section 8.2. Use of Name ......................................... 40
Section 8.3. Non-Competition/Non-Solicitation .................... 40
Section 8.4. Subrogation of Purchaser ............................ 40
Section 8.5. Payments Received ................................... 40
Section 8.6. Collection of Accounts Receivable/Payment of Trade
Payables .......................................... 41
Section 8.8. Payment of Liabilities .............................. 42
Section 8.9. Sharing of Data ..................................... 42
Section 8.10. Change in Name ...................................... 42
IX. INDEMNIFICATION ..................................................... 43
Section 9.1. Survival of Representations and Warranties .......... 43
Section 9.2. Seller's Indemnity .................................. 43
Section 9.3. Purchaser's Indemnity ............................... 44
Section 9.4. Limitations ......................................... 44
Section 9.5. Notice and Defense of Claims ........................ 44
Section 9.6. Payment/Reimbursement ............................... 45
X. TERMINATION .......................................................... 46
Section 10.1. Termination Events .................................. 46
Section 10.2. Effect of Termination ............................... 46
XI. MISCELLANEOUS ....................................................... 47
Section 11.1. Expenses ............................................ 47
Section 11.2. Risk of Loss ........................................ 47
Section 11.3. Brokers' and Finders' Fees .......................... 48
Section 11.4. Amendment ........................................... 48
Section 11.5. Entire Agreement; Assignment ........................ 48
Section 11.6. Headings ............................................ 48
Section 11.7. Notices ............................................. 49
Section 11.8. Severability ........................................ 50
Section 11.9. Waiver .............................................. 50
Section 11.10. Counterparts ........................................ 50
Section 11.11. Governing Law ....................................... 50
Section 11.12. Third Parties 50
iii
<PAGE>
EXHIBITS
Exhibit 2.8 Bill of Sale and Assumption Agreement
Exhibit 3.5 Opinion of Seller's Counsel
Exhibit 4.5 Opinion of Purchaser's Counsel
SCHEDULES
Schedule 2.1(a) Real Property
Schedule 2.1(b) Fixed Assets
Schedule 2.1(d) Asset Leases
Schedule 2.1(g) Intellectual Property
Schedule 2.1(h) Licenses/Permits
Schedule 2.1(i) Prepaid Expenses
Schedule 2.2(c) Rally's Buildings
Schedule 2.2(d) Trucks
Schedule 2.2(e) Causes of Action
Schedule 2.3(a) Accounts Payable Aging Report
Schedule 2.4(i) Liabilities
Schedule 2.9 Allocation of Purchase Price
Schedule 3.8 Material Assumed Contracts
Schedule 5.1 Foreign Qualifications
Schedule 5.3 Conflicts
Schedule 5.5 Permitted Liens
Schedule 5.6 Real Property
Schedule 5.7 Environmental Matters
Schedule 5.8 Financial Statements
Schedule 5.9 Undisclosed Liabilities
Schedule 5.10 Certain Changes or Events
Schedule 5.11 Insurance
Schedule 5.12 Contract Exceptions
Schedule 5.13 Litigation
Schedule 5.15 Licenses; Registrations; Permits; Etc.
Schedule 5.16 Labor Matters
Schedule 5.17 Personnel; Employee Plans
Schedule 5.18 Intellectual Property
Schedule 5.19 Property
Schedule 5.20 Related Transactions
Schedule 5.22 Accounts Receivable
Schedule 5.23 Product Warranties
Schedule 5.24 Taxes
Schedule 5.25 Suppliers and Customers
Schedule 5.26 Beaman Corporation
Schedule 6.3 Conflicts
Schedule 8.6 Trade Payables
iv
<PAGE>
ACQUISITION AGREEMENT
Acquisition Agreement, dated as of November 26, 1996, by and among
AMT/Beaman Corporation, a Delaware corporation ("Purchaser"), and American
Modular Technologies, LLC ("AMT"), a Texas limited liability company, and Beaman
Corporation, a North Carolina corporation ("Beaman" and together with AMT,
"Seller").
WHEREAS, Purchaser desires to purchase, and Seller desires to sell, all of
the assets used or useful in connection with the conduct of the Business (as
defined herein); and
WHEREAS, in order to effectuate the sale and purchase of the Business as
described herein, Seller shall sell and Purchaser shall purchase substantially
all the assets, properties and rights of Seller used in the Business as a going
concern, all upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in reliance upon the covenants and agreements set forth
herein, the parties hereto agree as follows:
I. DEFINITIONS
The following terms shall have the following respective meanings for all
purposes of this Agreement:
"Account" has the meaning set forth in Section 2.6(a).
"Accounts Receivable" has the meaning set forth in Section 3.18.
"Acquisition Transaction" has the meaning set forth in Section
7.8.
"Adjusted Net Book Value" has the meaning set forth in Section
2.7(f).
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes hereof, "control" when
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings relative to the foregoing.
"Agreement" means this Acquisition Agreement, as it may be from
time to time amended.
<PAGE>
"Assets" has the meaning set forth in Section 2.1.
"Assumed Contracts" has the meaning set forth in Section 5.12.
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Bill of Sale" has the meaning set forth in Section 2.8(b).
"Business" means the business conducted by Seller at its Liberty,
North Carolina manufacturing facility.
"Closing" means the completion of the acquisition of the Assets
pursuant to this Agreement.
"Closing Date" means the date the Closing takes place.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
"Employee Plan" has the meaning set forth in Section 5.17.
"Employees" has the meaning set forth in Section 8.1.
"Environmental Laws" has the meaning set forth in Section 5.7.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section 5.17.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.4.
"Fixed Assets" has the meaning set forth in Section 2.1(b).
"Governmental Entity" means any court, administrative agency or
commission or other governmental authority or instrumentality.
"Intellectual Property" means all industrial and intellectual
property rights, including without limitation patents, patent applications,
patent rights, trademarks, trademark applications, tradenames (including,
without limitation, "Beaman"), service marks, service mark applications,
copyrights, know-how, franchises, licenses, trade secrets, proprietary processes
and formulae, methods, plans, research data, marketing plans and strategies,
forecasts, product designs, fabrication data, research and development,
operating rights, software (including without limitation all
2
<PAGE>
source codes and object codes), permits and other similar intangible property
and rights relating to the Business.
"Interim Balance Sheet" has the meaning set forth in Section 5.8.
"Interim Balance Sheet Date" has the meaning set forth in Section
5.8.
"Inventory" has the meaning set forth in Section 2.1(c).
"Laws" has the meaning set forth in Section 5.6.
"Licenses" has the meaning set forth in Section 3.10.
"Material Assumed Contracts" means the Assumed Contracts set
forth in Section 3.8. hereto.
"Person" means an individual, partnership, corporation, limited
liability company, joint venture, unincorporated organization, trust, other
legal entity, cooperative or a governmental entity or agency thereof.
"Permitted Exceptions" has the meaning set forth in Section
3.13(a).
"Permitted Liens" has the meaning set forth in Section 5.5.
"Rally Buildings" has the meaning set forth in Section 2.2(c).
"Real Property" has the meaning set forth in Section 2.1(a).
"Taxes" has the meaning set forth in Section 5.24.
"Title Company" has the meaning set forth in Section 3.13(a).
"Title Exceptions" has the meaning set forth in Section 3.13(b).
"Trade Payables" has the meaning set forth in Section 2.4(b).
"Warranty Deed" has the meaning set forth in Section 2.8(b).
"Warranty Deposit" has the meaning set forth in Section 2.6(a).
"Warranty Liabilities" has the meaning set forth in Section
2.4(o).
3
<PAGE>
II. PURCHASE AND SALE OF ASSETS
Section 2.1. Purchase and Sale of the Assets. At the Closing, upon the
terms and subject to the terms and conditions contained herein, Seller shall
sell, transfer, convey, assign and deliver to Purchaser, effective as of the
Closing, and Purchaser shall purchase and acquire from Seller, all of the
properties, assets and rights of Seller used or useful in connection with the
Business, of every kind and description, real, personal and mixed, tangible and
intangible, wherever located, except the Excluded Assets, free and clear of all
liens, mortgages, pledges, encumbrances and charges of every kind other than the
Permitted Liens (collectively, the "Assets"). Without limiting the generality of
the definition of the Assets being purchased by Purchaser, the Assets shall
include the following:
(a) all real property and interests therein of Seller used or held
for use in the conduct of the Business and more fully described in Schedule
2.1(a) and all buildings, structures and improvements located thereon and
appurtenances attached thereto including, without limitation, all air rights,
subsurface rights, water rights, wells and all appurtenant development rights,
if any, or easements, licenses, privileges, variances and other agreements used
by Seller in the Business as presently conducted (the "Real Property");
(b) all machinery, equipment, inventory, molds, assembly machinery,
fixtures, computers, computer hardware and software, tools, supplies,
construction in progress, furniture, vehicles and other tangible personal
property and assets of Seller related to the Business, all of which are
described on Schedule 2.1(b), including without limitation Seller's rights under
warranties (expressed and implied) relating thereto (the "Fixed Assets");
(c) all Seller's inventories of raw material, work in progress,
finished products, supplies, catalogs and promotional and marketing materials
used in the conduct of the Business (the "Inventory");
(d) all the interest of, and the rights and benefits accruing to,
Seller as lessee under all leases or rental agreements covering machinery,
equipment (including office equipment), computer hardware, tools, supplies,
furniture and fixtures, vehicles and other tangible assets used in the Business
including, without limitation, those described in Schedule 2.1(d);
(e) all of the rights and benefits accruing to Seller under all
Assumed Contracts;
(f) all currently existing operating data and records of Seller
relating to the Business, including without limitation, lists of all currently
existing customers and all customer records, research and development reports
and records, production reports and records, standard operating procedures,
schematics, equipment logs, operating guides and manuals, part lists and
specifications, vendor lists, copies of
4
<PAGE>
personnel records of the Employees, correspondence and other similar documents
and records relating to the foregoing;
(g) all of the Intellectual Property of Seller, including, without
limitation, all such property and rights listed in Schedule 2.1(g);
(h) all licenses, permits, approvals, qualifications, consents and
other authorizations necessary for the lawful conduct, ownership and operation
of the Business including, without limitation, those listed on Schedule 2.1(h),
other than those licenses, permits, approvals, qualifications, consents and
other authorizations which by law are not transferable, as so indicated on
Schedule 2.1(h);
(i) all prepaid expenses, advances and deposits arising in the
conduct of the Business, other than prepaid premiums related to insurance
policies, all of which are listed on Schedule 2.1(i);
(j) all goodwill and going concern value of the Business, including
without limitation, the right to use, the names "Beaman" and "American Modular
Technologies" and any derivatives thereof used by Seller;
(k) all interests in and to telephone, telex and telecopier numbers
and all listings in all telephone books and directories;
(l) all stationery, forms, labels, catalogs, brochures, art work,
photographs and advertising material;
(m) all rights in and to insurance and indemnity claims, chooses in
action, judgments, claims, demands and other rights of the Business or Seller
(solely as it relates to the Business) against third parties (other than claims,
chooses in action, judgments, claims, demands and other rights which are
Excluded Assets or relate to Excluded Liabilities);
(n) all assignable federal, state and local governmental licenses,
permits, authorizations and approvals, if any, of, or relating to, the Business;
and
(o) lockbox account #___________________________________ at
NationsBank.
Section 2.2. Excluded Assets. Anything to the contrary in Section 2.1
notwithstanding, the Assets shall exclude and Purchaser shall not purchase the
following property and assets used by Seller in connection with the conduct of
the Business (collectively, the "Excluded Assets"):
(a) all Accounts Receivable and all cash or cash equivalents in
transit, in hand or in bank accounts arising in the conduct of the Business;
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(b) the corporate minute books, stock books, tax returns or other
records (other than the records relating to the Business included in the Assets
pursuant to Section 2.1(f) hereof) of Seller;
(c) all buildings constructed for Rally's Hamburgers, Inc. which are
located on the Real Property, as more fully described on Schedule 2.2(c) (the
"Rally Buildings"), it being understood that Seller does not own the Rally
Buildings;
(d) the trucks, and the leases related thereto, as more fully
described on Schedule 2.2(d);
(e) the causes of action against Seller's former employees, as set
forth on Schedule 2.2(e);
(f) all real property owned or leased by Seller which is located in
South Carolina or California;
(g) all prepaid expenses, advances and deposits arising in the
conduct of the Business, other than those set forth on Schedule 2.1(i); and
(h) the rights which accrue or will accrue to Seller under this
Agreement.
Section 2.3. Assumption of Liabilities. At the Closing, upon the terms and
subject to the conditions contained herein, simultaneously with the transfer,
conveyance and assignment to Purchaser of the Assets, Purchaser shall assume,
effective as of the Closing, and discharge in accordance with their terms, only
the obligations and liabilities of Seller under the Assumed Contracts to the
extent that they shall remain uncompleted and outstanding at the Closing Date;
provided, however, Purchaser expressly does not assume (i)Eany liabilities,
duties or obligations of Seller under any Assumed Contracts which are
performable or have arisen or may arise with respect to provisions of or any
breaches of such contracts or agreements occurring before the Closing Date, or
(ii)Eany damages or other sums that may be or become payable to third parties
resulting from acts, events or omissions of any party under the Assumed
Contracts occurring before the Closing Date. For convenience of reference, the
foregoing liabilities and obligations of Seller being assumed by Purchaser are
collectively referred to herein as the "Assumed Liabilities".
Section 2.4. Excluded Liabilities. Purchaser shall not assume, pay,
discharge, become liable for or perform when due, and Seller shall not cause
Purchaser so to assume, pay, discharge, become liable for or perform, any
liabilities (contingent or otherwise), debts, contracts, commitments and other
obligations of Seller of any nature whatsoever other than the Assumed
Liabilities. Without limitation of the foregoing, Purchaser shall not assume,
pay or discharge, and shall not be liable for any liability, commitment or
expense of Seller as a result of or arising from any of the following
(collectively, the "Excluded Liabilities"):
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(a) Seller's obligations and any liabilities arising under or
related to this Agreement;
(b) trade payables and similar liabilities incurred in the ordinary
course of the Business prior to the Closing Date (collectively, "Trade
Payables");
(c) any obligation of Seller for federal, state, local or foreign
tax liability (including interest, penalties or additions to tax relating
thereto) arising from the operation of the Business or ownership of the Assets
up to the Closing Date or arising out of the consummation of the transactions
contemplated hereby (including, without limitation, the sale by Seller of the
Assets pursuant hereto);
(d) any obligation of Seller for expenses incurred in connection
with the sale of the Assets pursuant hereto including, without limitation, the
fees and expenses of its counsel and independent auditors;
(e) any liability or obligation including, without limitation, any
liability for Seller's attorney's fees or expenses, relating to or arising out
of any action, suit, claim, investigation, legal or administrative or
arbitration proceeding or judgment, decree, injunction or order disclosed in
Schedule 5.13;
(f) any liability, contract, commitment or other obligation of
Seller, known or unknown, fixed or contingent, the existence of which
constitutes or will constitute a breach of any representation, warranty,
covenant or agreement of Seller contained in or made pursuant to this Agreement
or which Purchaser is not assuming hereunder;
(g) any liabilities or obligations of Seller under any contracts or
agreements relating to the Excluded Assets;
(h) any liabilities or obligations of Seller to any Affiliate
thereof;
(i) any liabilities or obligations of Seller for borrowed money and
guarantees of borrowed money or letters of credit, except as set forth on
Schedule 2.4(i);
(j) any liability, obligation, claim or demand of any nature
whatsoever (including, without limitation, any liability, obligation, claim or
demand in respect of personal injury, property damage, workers' or workmen's
compensation, grievance proceeding or actual or threatened litigation, suit,
claim, demand or governmental proceeding) arising out of the conduct of the
Business prior to the Closing Date including, without limitation, liabilities
and obligations arising out of transactions entered into prior to the Closing
Date, any action or inaction prior to the Closing Date or any state of facts
existing prior to the Closing Date (regardless of when asserted), not expressly
assumed by Purchaser pursuant to this Agreement;
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(k) any liability or obligation to any employee or former employee
of Seller or to any third party, under any pension, insurance, bonus,
profit-sharing or other employee benefit plan or arrangement or any obligation
relating to salaries, bonuses, vacation or severance pay, or any obligation
under any statute, rule or regulation, including without limitation, ERISA;
(l) any liability, contract, commitment or other obligation of
Seller, known or unknown, fixed or contingent, the existence of which
constitutes or will constitute a breach of any representation or warranty of
Seller contained in or made pursuant to this Agreement or which Purchaser is not
assuming hereunder;
(m) FICA and other employee withholding taxes;
(n) any liability or obligation to any broker, finder, consultant,
investment banker or other intermediary engaged by Seller in connection with the
sale of all or any portion of the Business; and
(o) liabilities and obligations of Seller under warranties given in
respect of products manufactured or sold prior to the Closing Date ("Warranty
Liabilities")
Section 2.5. Closing. Subject to the provisions of Articles III and IV
hereof, the Closing shall take place at 10:00 a.m., New York time, at the
offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York
10103, no later than the second business day after satisfaction of the latest to
occur of the conditions set forth in Articles III and IV hereof (other than the
delivery of the officers' certificates and opinions referred to therein and
other than any conditions which are waived in accordance with said Articles) or
such other time, place or date as the Seller and Purchaser may mutually agree.
Failure to consummate the transactions provided for in this Agreement on the
date and time selected pursuant to this Section 2.5 shall not, except as
permitted by Article X hereof, result in the termination of this Agreement and
shall not relieve any party to this Agreement of any obligation hereunder.
Section 2.6. Purchase Price. The aggregate purchase price for the
Assets shall be as follows:
(a) $1,800,000, of which $1,700,000 shall be paid by Purchaser
to Seller at the Closing (the "Fixed Payment") and $100,000 (the
"Warranty Deposit") shall be deposited in a bank account to be
established by Seller at Eufaula Bank and Trust Company (the
"Account");
(b) an amount in cash equal to the Adjusted Net Book Value of
the Inventory; and
(c) Purchaser's assumption of the Assumed Liabilities.
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The amount of cash to be paid to Seller at Closing shall be reduced by the
amount set forth on Schedule 2.4(i).
Section 2.7. Post Closing Adjustments. (a) At least five (5) business days
prior to the Closing Date, Seller shall prepare and deliver to Purchaser a good
faith estimate, prepared in accordance with United States generally accepted
accounting principles ("GAAP"), applied in a manner consistent with the
preparation of the financial statements referred to in Section 5.8 hereof,
except as otherwise expressly provided below, and accompanied by a certificate
of the chief financial officer of Seller to that effect, of the aggregate amount
of the Adjusted Net Book Value of the Inventory determined in accordance with
clause (f) below (the "Estimated Amount") as of the Closing Date.
(b) At Closing, Purchaser shall (i) deliver to Seller an amount
equal to 80% of the Estimated Amount (the "Initial Payment Amount") and (ii)
cause the Account to be credited with an amount equal to 20% of the Estimated
Amount (the "Remaining Amount").
(c) On or about the Closing Date, Seller and Purchaser shall jointly
conduct a physical count of all Inventory as of such date. The physical count of
the Inventory shall be conducted in accordance with procedures to be mutually
agreed upon by the parties. To the extent such count takes place on a day other
than the Closing Date, the physical count shall be adjusted for receipts and
usages of Inventory between the date of the physical count and the Closing Date.
As promptly as practicable thereafter, but in no event more than thirty (30)
days following the Closing Date, Purchaser shall prepare or cause to be prepared
and shall deliver to Seller a reasonably detailed statement setting forth the
Adjusted Net Book Value of the Inventory, determined in accordance with clause
(f) below (the "Purchaser Statement"). Unless within thirty (30) days after its
receipt of the Purchaser Statement Seller shall deliver to Purchaser a
reasonably detailed statement describing its objections to the Purchaser
Statement (a "Statement of Objection"), the amount of the Adjusted Net Book
Value of the Inventory determined in accordance with this clause (c) shall be
final and binding on the parties hereto and the Purchaser Statement shall be the
final statement hereunder (the "Closing Date Statement").
(d) If Seller shall deliver to Purchaser a timely Statement of
Objection, Purchaser and Seller shall negotiate in good faith and use reasonable
best efforts to resolve any disputes. If a resolution is reached, such
resolution shall be final and binding on the parties and Purchaser and Seller
shall set forth the Adjusted Net Book Value of the Inventory on a mutually
acceptable statement and such statement shall be the Closing Date Statement. If
a final resolution is not reached within fifteen (15) days after Seller has
submitted its Statement of Objection, any remaining disputes shall be resolved
by a firm of independent accountants (the "Reviewing Accountants") selected
jointly by the parties' independent accounting firms. The Reviewing Accountants
shall be instructed to resolve any matters in dispute as promptly as
practicable, but in no event more than thirty (30) days, and set forth their
resolution
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in a statement setting forth the Net Book Value of the Inventory (the
"Accountant Statement"). In such event, the determination of the Reviewing
Accountants shall be final and binding on the parties hereto and the Accountant
Statement shall be the Closing Date Statement.
(e) Seller and Purchaser each shall pay one-half of the fees and
expenses of the Reviewing Accountants. Seller and the Purchaser shall cooperate
with each other and the Reviewing Accountants in connection with the matters
contemplated by this Section 2.7, including Purchaser's preparation of and
Seller's review of the Closing Date Statement, including by furnishing such
information and access to books, records (including accountants' work papers),
personnel and properties as may be reasonably requested.
(f) The "Adjusted Net Book Value" shall be equal to the tangible net
book value of the Inventory, less mutually agreed upon reserves for slow moving,
obsolete and damaged goods, as set forth on the Closing Date Statement. The
Closing Date Statement shall be prepared in accordance with GAAP applied in a
manner consistent with the financial statements referred to in Section 5.8
hereof, except as otherwise expressly set forth in this Section 2.7.
(g) If the Adjusted Net Book Value set forth in the Closing Date
Statement exceeds the Initial Payment Amount, Seller and Purchaser shall
distribute to Seller in cash out of the Remaining Amount the amount of such
excess and to Purchaser the remainder, if any, of the Remaining Amount. Interest
earned on the Remaining Amount in the Account shall be distributed to Seller and
Purchaser in proportion to the amount of the Remaining Amount paid to each of
them, as the case may be.
(h) If the Adjusted Net Book Value set forth in the Closing Date
Statement is less than the Initial Payment Amount, Seller shall pay the
difference to Purchaser in immediately available funds, plus interest on such
amount from the Closing Date to the date of payment at the rate of 8% per annum.
In such event, Seller and Purchaser shall pay the Remaining Amount to Purchaser.
(i) If the Adjusted Net Book Value set forth in the Closing Date
Statement exceeds the Estimated Amount, then, in addition to distribution of the
Remaining Amount pursuant to clause (g) above, Purchaser shall pay the
difference to Seller in immediately available funds, plus interest on such
amount from the Closing Date to the date of payment at the rate of 8% per annum.
(j) The Remaining Amount may only be disbursed from the Account upon
the signature of one each of the Seller's Representatives and the Purchaser's
Representatives.
Section 2.8. Delivery of Purchase Price and Transfer of Assets. (a) On the
Closing Date, Purchaser shall deliver (i) to Seller the Fixed Payment and the
Initial
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Payment Amount by wire transfer of immediately available federal funds to an
account specified by Seller at least two business days prior to Closing and (ii)
the Warranty Deposit to the Account.
(b) At the Closing, Seller shall deliver to Purchaser (A) a Bill of
Sale and Assumption Agreement, substantially in the form of Exhibit 2.8 hereof
(the "Bill of Sale"), (B) a special warranty deed to the Real Property, subject
to the exceptions permitted by this Agreement or otherwise approved by Purchaser
(the "Warranty Deed"), (C) duly executed title and transfer documents covering
any of the Assets for which there exists a certificate of title (provided,
however, that certificates of title for the vehicles set forth on Schedule
2.1(b) shall be delivered to Purchaser on, or prior to, December 6, 1996),
(D) duly executed assignments covering any of the Intellectual Property, in form
and substance reasonably acceptable to Purchaser and in recordable form as
appropriate, and (E) such other deeds, bills of sale, endorsements, assignments
and other instruments of sale, conveyance, transfer and assignment, reasonably
satisfactory in form and substance to Purchaser and its counsel, as shall be
necessary and effective to transfer and assign to, and vest in, Purchaser all of
Seller's right, title and interest in and to the Assets including, without
limitation, (i) good and valid title in and to all of the Assets owned by
Seller, (ii) good and valid leasehold interests in and to all of the Assets
leased by Seller as lessee, and (iii) subject to Section 2.10 hereof, all of
Seller's rights under all Assumed Contracts and, simultaneously with such
delivery, all such steps will be taken as may reasonably be required to put
Purchaser in actual possession and operating control of the Assets.
(c) At the Closing, closing costs shall be paid and prorations made
as follows:
(i) Closing Costs. Purchaser and Seller shall each pay their
own attorneys' fees. Seller shall pay documentary transfer taxes and
recording charges customarily paid by Seller. Purchaser shall pay
recording costs customarily paid by Purchaser and any costs for any
title insurance coverage desired by Purchaser.
(ii) Prorations.
(A) Taxes. Real and personal property taxes and general
and special assessments shall be prorated through the Closing
Date on the basis of the fiscal year for such taxes and
assessments. If the Closing Date shall occur before the real
or personal property tax rate for such fiscal year is fixed,
the apportionment of taxes shall be made on the basis of the
taxes assessed for the preceding fiscal year. After the real
and personal property taxes are finally fixed for the fiscal
year in which the Closing Date occurs, Seller and Purchaser
shall make a recalculation of the apportionment of such taxes,
and Seller or Purchaser, as the case may be, shall make an
appropriate payment to the other based on such recalculation.
The provisions of this clause shall survive the Closing.
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(B) Utilities. Charges and assessments for sewer and
water and other utilities, including charges for consumption
of electricity, steam and gas and any other receipts or
charges which Purchaser has accepted hereunder, as applicable,
and the value of fuel stored on the Real Property, at the
price charged by Seller's supplier including any taxes, shall
be apportioned by Purchaser and Seller as of the Closing Date.
(C) Lease and Contract Payments. Payments by Seller
under the leases and contracts set forth on Schedule 2.1(d)
shall be apportioned by Purchaser and Seller as of the Closing
Date.
Section 2.9. Allocation of Purchase Price. The Purchase Price shall be
allocated in its entirety among the Assets in accordance with Schedule 2.9
hereto and as required by Section 1060 of the Code. Seller and Purchaser shall
file all information and tax returns (and any amendments thereto) in a manner
consistent with this Section 2.9 and Section 1060 of the Code and comply with
the applicable information reporting requirements of Section 1060 of the Code.
If, contrary to the intent of the parties hereto as expressed in this
Section 2.9, any taxing authority makes or proposes an allocation different from
that contained in this Section 2.9, Seller and Purchaser shall cooperate with
each other in good faith to contest such taxing authority's allocation (or
proposed allocation); provided, however, that, after consultation with the party
adversely affected by such allocation (or proposed allocation), another party
hereto may file such protective claims or returns as may reasonably be required
to protect its interests.
Section 2.10. Third Party Consents. To the extent that Seller's rights
under any Assumed Contract, or with respect to any Asset to be assigned to
Purchaser hereunder, may not be assigned without the consent of another Person
which has not been obtained prior to the Closing, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and Seller, at its expense, shall
use its reasonable best efforts to obtain any such required consent(s) as
promptly as possible after the Closing, but Seller shall not be obligated to pay
any amounts to such Person to obtain such consent. Until any such consent shall
be obtained or if any attempted assignment would be ineffective or would impair
Purchaser's rights with respect to the Asset in question so that Purchaser would
not in effect acquire the benefit of all such rights, Seller, to the maximum
extent permitted by law and the Asset, shall act after the Closing as
Purchaser's agent in order to obtain for it the benefits thereunder and shall
cooperate, to the maximum extent permitted by law and the Asset, with Purchaser
in any other reasonable arrangement designed to provide such benefits to
Purchaser.
Section 2.11. Further Assurances, Etc. Seller shall, at any time and from
time to time after the Closing, upon the request of Purchaser and at the expense
of Purchaser, do, execute, acknowledge and deliver, and cause to be done,
executed, acknowledged or delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney or assurances as may be reasonably
required for the
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better transferring, assigning, conveying, granting, assuring and confirming to
Purchaser, or for aiding and assisting in the collection, or reducing to
possession by Purchaser, of the Assets, or to vest in Purchaser good and
marketable title to the Assets. Each of the parties hereto will cooperate with
the other and execute and deliver to the other such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by the other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
III. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser under this Agreement to consummate the
purchase of the Assets at the Closing shall be subject to the satisfaction, at
or prior to the Closing, of all of the following conditions, to the satisfaction
of Purchaser (any of which may be waived in writing in whole or in part by
Purchaser):
Section 3.1. Representations and Warranties Accurate. All representations
and warranties of Seller contained in this Agreement (including the Schedules
hereto), qualified as to materiality shall be true, complete and correct in all
respects, and those not so qualified shall be true, complete and correct in all
material respects, as of the date when made and on and as of the Closing Date
with the same force and effect as though such representations and warranties
were made on and as of the Closing Date.
Section 3.2. Performance by Seller. Seller shall have performed and
complied in all material respects with all agreements, covenants and conditions
required by this Agreement to be performed and complied with by Seller prior to
or on the Closing Date.
Section 3.3. Authorization. All action necessary to authorize the
execution, delivery and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken, and Seller shall have full power and right to sell the Assets as
contemplated hereby.
Section 3.4. Certificate. Purchaser shall have received a certificate,
dated as of the Closing Date, signed by an authorized officer of AMT, to the
effect that the conditions set forth in Sections 3.1, 3.2, 3.3 and 3.9
(excluding the Real Property) have been satisfied and a certificate, dated as of
the Closing Date, signed by an authorized officer of Beaman, to the effect that
the conditions set forth in Sections 3.1, 3.2, 3.3 and 3.9 (with respect to the
Real Property) have been satisfied.
Section 3.5. Opinion of Counsel. Purchaser shall have received from
Stutzman & Bromberg, counsel to Seller, a written opinion, dated the Closing
Date, substantially in the form attached hereto as Exhibit 3.5.
Section 3.6. Legal Prohibition. On the Closing Date, no injunction or
order shall be in effect prohibiting consummation of the transactions
contemplated hereby or
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which would make the consummation of such transactions unlawful and no action or
proceeding shall have been instituted and remain pending or threatened before a
Governmental Entity to restrain or prohibit the transactions contemplated by
this Agreement.
Section 3.7. Legislation. No federal, state or local statute, rule or
regulation shall have been enacted the effect of which would be to prohibit,
restrict, impair or delay in any material respect the consummation of the
transactions contemplated hereby or any of the conditions to the consummation of
such transactions or restrict or impair in any material respect the ability of
Purchaser to own or conduct the Business as currently conducted.
Section 3.8. Consents and Approvals. All authorizations, consents,
waivers, approvals, orders, registrations, qualifications, designations,
declarations, filings or other action required with or from any federal, state
or local Governmental Entity or third party (including, without limitation, all
parties to each of the Assumed Contracts) in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly obtained and shall be
reasonably satisfactory to Purchaser and its counsel, and copies thereof shall
have been delivered to the Purchaser no later than three (3) days prior to the
Closing. No such consent or approval (a)Eshall be conditioned on the
modification, cancellation or termination of any Assumed Contract, or (b)Eshall
impose on Purchaser any material condition or provision or requirement with
respect to the Business or its operation, as currently conducted by Seller, that
is more restrictive than or different from the conditions imposed upon such
operation prior to Closing, unless Purchaser gives its prior written approval.
With respect to any Assumed Contract, the assignment of which by its terms
requires prior consent of the parties thereto, if such consent is not obtained
prior to the Closing Date, Seller may satisfy this condition by delivering to
Purchaser written documentation setting forth arrangements for the transfer of
the economic benefits of such Assumed Contract(s) to Purchaser as of the Closing
Date under terms and conditions reasonably acceptable to Purchaser.
Notwithstanding anything to the contrary contained in this Section 3.8, if
Seller is unable to deliver to Purchaser prior to the Closing Date a consent to
the assignment of any of the Assumed Contracts that Purchaser deems to be
material to the Business and has listed on Schedule 3.8 hereto (the "Material
Assumed Contracts"), then this Section 3.8 shall not be deemed to be satisfied
and Purchaser shall have the right to terminate this Agreement in accordance
with Section 10.1 hereof.
Section 3.9. No Material Adverse Change. There shall have been no material
adverse change in the condition of the Assets or the operations of the Business
from the date hereof to the Closing Date.
Section 3.10. Governmental Licenses. Purchaser shall have obtained from
all applicable Governmental Entities all approvals, authorizations, permits,
licenses and consents necessary to conduct the Business as conducted on the date
hereof (the "Licenses").
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Section 3.11. Closing Matters. All proceedings to be taken by the Seller
in connection with the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby shall be reasonably satisfactory in form
and substance to Purchaser and its counsel.
Section 3.12. Instruments of Transfer, Conveyance and Assignment.
Purchaser shall have received a duly executed Bill of Sale and such other
instruments of transfer, conveyance and assignment as are reasonably required to
effect the sale, transfer, conveyance and assignment of the Assets to Purchaser
in accordance herewith.
Section 3.13. Title. (a) Purchaser shall have obtained a commitment for
the issuance of a standard ALTA fee owner's title insurance policy, in an amount
of coverage equal to the allocated value of the Real Property and all
improvements thereon, from a nationally recognized title insurance company
qualified to conduct title insurance business in the State of North Carolina
(the "Title Company"), insuring that title to each parcel of the Real Property
and improvements thereon shall be free and clear of all liens, assessments,
restrictions, encumbrances, easements, leases, tenancies, claims or rights of
use or possession and other title objections, except for (i) the standard
exceptions normally contained in the ALTA owner's title insurance policy and any
exceptions that are standard in the State of North Carolina, (ii) building and
zoning laws, ordinances, state and federal regulations, (iii) restrictions of
record relating to use or improvement of the premises without effective
forfeiture provisions, and (iv) utility and other easements that do not
materially adversely affect the intended use or the value of the Real Property
in its current use (collectively, the "Permitted Exceptions"); provided,
however, that Seller, at Purchaser's request, shall provide such affidavits to
the Title Company or take such other actions as may be reasonably requested that
would enable the Title Company to remove any of such standard exceptions.
Purchaser shall also have obtained surveys of the Real Property made by a
registered land surveyor bearing a certificate addressed to Purchaser and
Purchaser's title insurance company, signed by the surveyor, certifying that the
survey was actually made on the ground and that there are no encumbrances except
as shown, and complying with the minimum detail requirements for land title
surveys as adopted by the Land Title Association. Purchaser shall pay all
premiums and other expenses relating to such surveys and title insurance policy
commitment including, without limitation, the title insurance premium.
(b) Seller shall have the right, but not the obligation, to remove
any title exception ("Title Exception") which is not a Permitted Exception if so
requested by Purchaser. In the event of Seller's election to take action to
remove such Title Exception, Seller shall be entitled to one adjournment of the
Closing Date for a period not to exceed sixty (60) days or such longer period as
may be reasonably needed to cure such Title Exceptions, and such Closing Date
shall be adjourned to such date as may be specified by Seller. If (i) for any
reason whatsoever Seller shall not have succeeded in removing such Title
Exceptions at the expiration of such adjourned period, or (ii) at such time
prior thereto as Seller determines that it will not be able to satisfy the same,
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Seller shall give Purchaser written notice thereof and Purchaser shall have five
(5) business days from the expiration of such adjourned period or the receipt of
such notice, as the case may be, to elect by written notice to Seller to
purchase the Real Property subject to such Title Exceptions without abatement or
reduction of the Purchase Price or any other liability of Seller. If Purchaser
fails to make such election or shall otherwise be unwilling to waive the same
and to close this transaction without abatement of the Purchase Price or
allowance of any kind, this Agreement shall be and be deemed to be terminated in
accordance with Section 10.1(d), and Seller shall reimburse Purchaser for all
out of pocket expenses incurred by Purchaser in connection with the transactions
contemplated hereby. Nothing herein contained shall obligate Seller to bring any
action or proceeding or otherwise incur any expense in order to cure or remedy
any defect in title.
If on the Closing Date there may be any liens or encumbrances which Seller
is obligated to pay or discharge in order to convey to Purchaser such title as
is herein provided to be conveyed, Seller may use any portion of the Fixed
Payment to satisfy the same, provided (i) Seller shall deliver to Purchaser on
the Closing Date instruments in recordable form and sufficient to satisfy such
liens or encumbrances of record, together with the cost of recording or filing
said instruments or (ii) Seller, having made arrangements with the Title
Company, shall deposit with the Title Company sufficient monies to insure the
obtaining and the recording of such satisfaction(s) and removal of said liens or
encumbrances as exceptions to the coverage of the policy of insurance issued by
the Title Company. The existence of any such liens or encumbrances shall not be
deemed objections to title if Seller shall comply with the foregoing
requirements.
(c) The acceptance of the deeds by Purchaser shall be deemed to be
full performance and discharge of every agreement and obligation on the part of
the Beaman to be performed herein pursuant to the terms of this Agreement with
respect to the Real Property, except as to those which are specifically stated
herein to survive the Closing, and except that nothing herein is intended to
limit any obligation of Seller hereunder which is to be performed in whole or in
part after the Closing.
Section 3.14. Lender Approval. Purchaser shall have received the written
approval of the senior lender(s) of American Buildings Company, Purchaser's
parent company, authorizing Purchaser to consummate this Agreement and the
transactions contemplated hereby. Purchaser agrees to use its reasonable best
efforts to obtain such consent and to keep Seller informed with respect to the
status of obtaining such consent.
Section 3.15. [Deleted]
Section 3.16. Accounts Payable Aging Report. Seller shall have delivered
to Purchaser an Accounts Payable Aging Report that is dated the Closing Date and
certified as true and correct by the Chief Financial Officer of Seller which
lists the Trade Payables as of the Closing Date.
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Section 3.17. Delivery of Secretary's Certificate. AMT shall have
delivered to Purchaser a certificate of its Secretary with attached to such
certificate (i) a copy of the Articles of Organization and Operating Agreement
of AMT, (ii) a certified copy of a Certificate of Existence issued by the
Secretary of State of Texas and the Secretary of State of North Carolina, dated
no earlier than three (3) days before the Closing Date, and (iii) a certified
copy of a Certificate of Tax Good Standing issued by the Secretary of State of
Texas and the Secretary of State of North Carolina, dated no earlier than three
(3) days before the Closing Date. Beaman shall have delivered to Purchaser a
certificate of its Secretary with attached to such certificate (i) a copy of the
Articles of Incorporation and Bylaws of Beaman, (ii) a certified copy of a
Certificate of Existence issued by the Secretary of State of North Carolina,
dated no earlier than three (3) days before the Closing Date, and (iii) a
certified copy of a Certificate of Tax Good Standing issued by the Secretary of
State of North Carolina, dated no earlier than three (3) days before the Closing
Date.
Section 3.18. Account Receivable Schedule. Seller shall have delivered to
Purchaser a schedule of all notes and accounts receivable of Seller which have
arisen in the ordinary course of the Business (the "Accounts Receivable"),
together with an aging schedule of such Accounts Receivable, and such schedule
shall show that there are Accounts Receivable not more than 30 days past due
which aggregate at least the greater of (a) $1.5 million or (b) an amount equal
to twice the amount of Trade Payables included on Schedule 8.6.
IV. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller under this Agreement to consummate the sale of
the Assets at the Closing shall be subject to the satisfaction, at or prior to
the Closing, of all of the following conditions, to the reasonable satisfaction
of Seller:
Section 4.1. Representations and Warranties Accurate. All representations
and warranties of Purchaser contained in this Agreement qualified as to
materiality shall be true, complete and correct in all respects, and those not
so qualified shall be true, complete and correct in all material respects, as of
the date when made and on and as of the Closing Date, with the same force and
effect as though such representations and warranties were made on and as of the
Closing Date.
Section 4.2. Performance by Purchaser. Purchaser shall have performed and
complied in all material respects with all agreements, covenants and conditions
required by this Agreement to be performed and complied with by Purchaser prior
to or on the Closing Date.
Section 4.3. Authorization. All action necessary to authorize the
execution, delivery and performance of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken, and Purchaser shall have full power and right to acquire the
Assets and assume the Assumed Liabilities as contemplated hereby.
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Section 4.4. Certificate. Seller shall have received a certificate, dated
as of the Closing Date, signed by an authorized officer of Purchaser, to the
effect that the conditions set forth in Sections 4.1, 4.2 and 4.3 have been
satisfied.
Section 4.5. Opinion of Counsel. Seller shall have received from Fulbright
& Jaworski L.L.P., counsel to Purchaser, a written opinion, dated the Closing
Date, substantially in the form of Exhibit 4.5 hereto.
Section 4.6. Legal Prohibition. On the Closing Date, no injunction or
order shall be in effect prohibiting consummation of the transactions
contemplated hereby or which would make the consummation of such transactions
unlawful and no action or proceeding shall have been instituted and remain
pending before a Governmental Entity to restrain or prohibit the transactions
contemplated by this Agreement.
Section 4.7. Delivery of Secretary's Certificate. Purchaser shall have
delivered to Seller a certificate of its Secretary with attached to such
certificate (i) a copy of the Certificate of Incorporation and Bylaws of
Purchaser and (ii) a certified copy of a Certificate of Existence issued by the
Secretary of State of Delaware, dated no earlier than three (3) days before the
Closing Date.
V. REPRESENTATIONS AND WARRANTIES OF SELLER
AMT and Beaman jointly and severally represent, warrant and agree that:
Section 5.1. Organization and Qualification/Ownership of Seller. (i)EAMT
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Texas, and has all requisite corporate
power and authority and all material licenses and permits necessary to conduct
the Business as presently conducted, and to own, lease and operate the
properties and assets owned, leased or operated by it and used in connection
therewith. Beaman is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina, and has all requisite
corporate power and authority and all material licenses and permits necessary to
own the Real Property. AMT is qualified as a foreign corporation in each
jurisdiction required to conduct the Business as presently conducted or to own,
lease or operate the Assets which are owned, leased or operated by it, all of
which jurisdictions are listed in Schedule 5.1 hereto. Beaman is not qualified
as a foreign corporation in any jurisdiction, and Beaman is not required to
qualify or otherwise be authorized to do business as a foreign corporation in
any jurisdiction. Seller has not knowingly taken any action, or failed to take
any action, which action or failure will preclude or prevent Purchaser from
conducting the Business substantially in the same manner in which Seller has
heretofore conducted the same.
Section 5.2. Due Authorization. (a) Seller has all requisite corporate
power and authority to execute and deliver this Agreement, and all other
agreements to which it is a party, to perform its obligations hereunder and
thereunder and to consummate
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the transactions contemplated hereby and thereby. The execution and delivery by
Seller of this Agreement, and the other documents contemplated hereby, the
performance by Seller of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of Seller.
This Agreement has been duly and validly executed by Seller and this Agreement
is, and each other agreement contemplated hereby to which Seller is a party will
be, upon execution and delivery thereof by Seller, a legal, valid and binding
obligation of Seller, enforceable against it in accordance with its terms
(except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency or other laws affecting creditors' rights generally or by
general principles of equity, regardless of whether such enforceability is
considered in equity or at law).
(b) Seller has complete and unrestricted power and the unqualified
right to sell, convey, assign, transfer and deliver the Assets to Purchaser
(subject to any consents or waivers of third parties required in connection with
such sale, conveyance, assignment, transfer and delivery of the Assets or any
part thereof, all of which consent(s) or waiver(s) have been duly obtained by
Seller, or have not been duly obtained and are set forth in Schedule 5.3), and
the instruments of transfer, conveyance and assignment to be executed and
delivered by Seller to Purchaser at the Closing will be, upon execution and
delivery thereof, valid and binding obligations of Seller, enforceable in
accordance with their respective terms, sufficient for purposes of recordation
and filing where permitted by law, sufficient to transfer, convey and assign to
Purchaser all right, title and interest of Seller in and to the Assets, and,
except for the permits and registrations set forth in Schedule 5.3, sufficient
to vest in Purchaser the full right, power and authority to conduct the Business
as currently conducted.
Section 5.3. No Conflict. Except as set forth in Schedule 5.3, neither the
execution and delivery by Seller of this Agreement, the Bill of Sale or the
Warranty Deed or any of the other documents contemplated hereby nor the
consummation by Seller of the transactions contemplated hereby or thereby, nor
compliance by Seller with any of the provisions hereof or thereof, will (a)
conflict with, result in a breach or violation of or constitute (or with notice
or lapse of time or both constitute) a default under, in any material respect,
(i) the Articles of Organization and Operating Agreement of AMT, (ii) the
Articles of Incorporation or Bylaws of Beaman, (iii) any law, statute, rule,
regulation, order, judgment, decree, writ or injunction applicable to Seller,
any of the Assets or the Business, or (iv) any of the terms, conditions or
provisions of any note, bond, lease, mortgage, indenture, license or other
instrument, contract or agreement to which Seller is a party or by which Seller
(or any of the Assets) is subject or bound; (b) result in the creation of, or
give any party the right to create, any lien, charge, option, security interest
or other encumbrance upon the Assets; (c) terminate or modify, or give any third
party the right to terminate or modify, the provisions or terms of any Assumed
Contract; (d) require Seller or, to the best of Seller's knowledge, Purchaser to
obtain any authorization, consent, approval or waiver from, or to make any
filing with, any Governmental Entity or to obtain the approval or consent of any
other Person; or (e) result in any suspension, revocation, impairment,
forfeiture or
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nonrenewal of any permit, license, qualification, authorization or approval
applicable to Seller or the Business. No authorization, consent or approval by,
or waiver from, or notification of or filing with, any Governmental Entity or
approval or consent of any other Person is required to be obtained by Seller in
connection with the execution, delivery and performance by Seller of this
Agreement, the Bill of Sale, the Warranty Deed or the other documents
contemplated hereby or thereby or the consummation by Seller of the transactions
contemplated hereby and thereby, except as set forth in Schedule 5.3 and except
for such authorizations, consents, approvals, waivers, notifications or filings,
the failure of which to obtain or make will not have a material adverse effect
on the Business or Seller's ability to consummate the transactions contemplated
hereby and thereby.
Section 5.4. Equity Investments. AMT does not own any capital stock or
other proprietary interest, directly or indirectly, in any corporation,
association, trust, partnership, joint venture or other entity which conducts a
business constituting any portion or aspect of the Business except for Beaman.
Beaman does not own any capital stock or other proprietary interest, directly or
indirectly, in any corporation, association, trust, partnership, joint venture
or other entity which conducts a business constituting any portion or aspect of
the Business.
Section 5.5. Title to Properties. Seller has good and valid title to, or
valid and subsisting leasehold interests in or valid licenses to use, all of its
properties and assets, real, personal and mixed, included in the Assets, free
and clear of all mortgages, liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever, except for (i) liens for current real or personal property taxes not
yet due and payable, and (ii) liens disclosed on Schedule 5.5 hereto ("Permitted
Liens"). None of the Assets are owned, leased or used by any Person other than
Seller.
Section 5.6. Real Property; Encumbrances. (a) Seller has not transferred
any air rights or development rights relating to the Real Property. Except as
set forth on Schedule 5.6, there are no outstanding contracts made by Seller for
any improvements to the Real Property which have not been fully paid for. At the
Closing, Seller shall cause to be discharged all mechanics' or materialmen's
liens arising from any labor or materials furnished to the Real Property prior
to the time of Closing.
(b) Except as set forth on Schedule 5.6, and except for those
matters which would be revealed by a reasonably diligent visual inspection
(which Seller and Purchaser agree Purchaser has conducted), all buildings,
structures, improvements, fixtures, facilities, equipment, all components of all
buildings, structures and other improvements included within the Real Property,
including but not limited to the roofs and structural elements thereof and the
heating, ventilation, air conditioning, plumbing, electrical, mechanical, sewer,
waste water, storm water, paving and parking equipment, systems and facility
included therein, and other material items of tangible property and assets
included in the Assets are, in the aggregate, in good operating condition and
repair, subject to normal wear and maintenance, are usable in the regular and
ordinary
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course of business, and conform in all material respects to all applicable
statutes, rules, regulations, ordinances, orders, writs, injunctions, judgments,
decrees, awards and restrictions of every Governmental Entity having
jurisdiction over any of the Real Property or the Business, and every
instrumentality or agency thereof (including, without limitation, applicable
statutes, rules, regulations, orders and restrictions relating to zoning, land
use, safety, health, environment, hazardous substances, pollution controls,
employment and employment practices and access by the handicapped)
(collectively, "Laws"). Except as set forth on Schedule 5.6, there are no
unsatisfied requests for any repairs, restorations or improvements to the Real
Property from any Person, including without limitation any Governmental Entity,
there are no ongoing material repairs to the Real Property being made by or on
behalf of Seller, and no maintenance or repair to the Real Property has
knowingly been deferred. No person other than Seller owns any equipment or other
tangible assets or properties situated on the Real Property or necessary to the
operation of the Business, except for leased or licensed items and the Rally
Buildings disclosed in Schedule 5.6 hereto. Except as set forth in Schedule 5.6
and except for those matters which would be revealed by a reasonably diligent
visual inspection (which Seller and Purchaser agree Purchaser has conducted),
the walls, roof and subterranean portions, if any, of the improvements on the
Real Property presently are, and as of the Closing will be, sound and watertight
and presently there is, and as of the Closing there will be, no water, chemical
or gaseous seepage, diffusion or other intrusion into said buildings, including
any subterranean portions which would impair Purchaser's beneficial use of the
Real Property.
(c) Except as set forth on Schedule 5.6, the construction, use and
operation of the Real Property by Seller is in full compliance in all material
respects with all Laws, covenants, conditions, restrictions, easements,
disposition agreements and similar matters affecting the Real Property and,
effective as of the Closing, Purchaser shall have the right under all Laws to
continue the use and operation of the Real Property in the conduct of the
Business in the manner it was conducted by Seller without dependence on the
granting of any special permit, exception, approval or variance. Seller has not
received any notice of any violation (or claimed violation) of or investigation
regarding any Laws which has not been remedied or cured.
(d) Except as set forth on Schedule 5.6, none of the buildings,
structures and other improvements located on the Real Property, the
appurtenances thereto or the equipment therein or the operation or maintenance
thereof by the Seller in the conduct of the Business violates any restrictive
covenant or encroaches on any property owned by others or any easement, right of
way or other encumbrance or restriction affecting such Real Property in any
manner which would have a material adverse effect on the ability of Purchaser to
use such buildings, structures, improvements, appurtenances or equipment or to
conduct the Business, nor does any building or structure of any third party
encroach upon the Real Property or any easement or right of way benefitting the
Real Property. The Real Property and its continued use, occupancy and operation
as used, occupied and operated in the conduct of the Business do not constitute
a nonconforming use under any Law.
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(e) Except as set forth on Schedule 5.6, Seller has not received
notice of, or otherwise has knowledge of, any condemnation, fire, health,
safety, building, environmental, hazardous substances, pollution control, zoning
or other land use regulatory proceedings, either instituted and currently
pending or planned to be instituted, nor has Seller received notice of any
special assessment proceedings affecting any of the Real Property.
(f) Except as set forth on Schedule 5.6 hereto, all water, sewer,
gas, electric, telephone and drainage facilities, and all other utilities
required by any applicable law or by the use and operation of the Real Property
in the conduct of the Business are installed to the property lines of the Real
Property, are connected pursuant to valid permits to municipal or public utility
services or proper drainage facilities, are fully operable and are adequate to
service the Real Property in the operation of Business and to permit full
compliance in all material respects with the requirement of all Laws and normal
usage of the Real Property. No fact or condition exists which could result in
the termination or material reduction of the current access from the Real
Property to existing roads or to sewer or other utility services presently
serving the Real Property.
(g) All licenses, permits, certificates, easements and rights of
way, including proof of dedication, required from all Governmental Entities
having jurisdiction over the Real Property for the use and operation of the Real
Property in the conduct of the Business and to ensure vehicular and pedestrian
ingress to and egress from the Real Property have been obtained, except such
thereof which, if not obtained, would not have a material adverse effect on the
ability of the Purchaser to use and operate the Real Property and conduct the
Business.
(h) Seller has not received written notice and has no knowledge of
any pending or threatened condemnation proceeding affecting the Real Property or
any part thereof or of any sale or other disposition of the Real Property or any
part thereof in lieu of condemnation.
(i) Except as set forth on Schedule 5.6, no portion of the Real
Property has suffered any material damage by fire or other casualty which has
not heretofore been completely repaired and restored to its original condition
in all material respects.
(j) Except as set forth on Schedule 5.6, there are no encroachments
or other facts or conditions affecting the Real Property that would be revealed
by an accurate survey thereof which would, individually or in the aggregate, (i)
interfere in any material respect with the use, occupancy or operation thereof
as used, occupied and operated in the conduct of the Business or (ii) interfere
in any material respect with receiving a title insurance policy. Seller has
delivered to Purchaser true, correct and complete title policies and surveys in
its possession with respect to the Real Property. Except as set forth on
Schedule 5.6, no portion of any improvement encroaches upon
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any property not included within the Real Property or upon the area of any
easement burdening the Real Property.
(k) Seller does not lease any real property in connection with the
conduct of the Business.
(l) Except as set forth in Schedule 5.6, Seller does not owe any
money to any architect, contractor, engineer, subcontractor or materialman for
labor or materials performed, rendered or supplied to or in connection with any
Real Property. There is no work being done at, or materials being supplied to,
any parcel of Real Property on the date hereof other than routine maintenance
projects having an aggregate cost through completion of not more than $25,000.
Section 5.7. Environmental Matters. (a) Seller has obtained all permits,
licenses and other authorizations which are required to conduct the Business
under all Federal, state, county and local statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, concessions, grants, franchises,
agreements or governmental restrictions relating to the environment or the
general treatment, storage, recycling, transportation, release or disposal of
any materials into the environment (collectively, "Environmental Laws"). The
Business is in compliance (i) with the terms and conditions of all such permits,
licenses and authorizations and (ii) with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any Environmental Law applicable to it in connection
with the conduct of the Business or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder. In addition, except as set forth on Schedule
5.7, (i) no notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or, to the best of
Seller's knowledge, threatened by any Federal, regional, state, county or local
government or any executive, legislative, judicial, regulatory or administrative
entity, or other Governmental Entity with respect to any alleged failure by
Seller to have any permit, license or authorization required in connection with
the conduct of the Business or with respect to any generation, treatment,
storage, recycling, transportation, release or disposal, or any release as
defined in 42 U.S.C. Section 9601(22) ("Release") of any hazardous substance,
waste or material regulated under Environmental Laws or other Hazardous
Materials generated by Seller in the conduct of the Business. For the purposes
of this Agreement, "Hazardous Materials" shall mean substances defined as
"hazardous substances", "toxic substances" or "hazardous wastes" in the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"); the Federal Hazardous Materials Transportation Act, as
amended; the Federal Resource Conservation and Recovery Act, as amended; oil and
underground storage tanks; asbestos and material containing asbestos; those
substances defined as "hazardous wastes", "hazardous materials" or "hazardous
substances" under the laws of the State of North Carolina; and as such
substances are defined under the regulations adopted and publications
promulgated pursuant to said laws.
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(b) Except as set forth on Schedule 5.7, Seller has not handled any
Hazardous Material on any property now owned or leased by Seller with respect to
the Business; and to the best of Seller's knowledge:
(i) no PCB is or has been present at any property now owned or
leased by Seller with respect to the Business;
(ii) no asbestos is or has been present at any property now
owned or leased by Seller with respect to the Business;
(iii) there are no underground storage tanks for Hazardous
Materials, active or abandoned, at any property now owned or leased
by Seller with respect to the Business;
(iv) no Hazardous Materials have been released by Seller, in a
reportable quantity, where such a quantity has been established by
statute, ordinance, rule, regulation or order, at, on or under any
property now owned or leased by Seller with respect to the Business;
and
(v) no Hazardous Materials have been otherwise released by
Seller at, on or under any property now owned or leased by Seller
with respect to the Business, and no Hazardous Materials have ever
been released at, on or under any property adjoining any property
now or previously owned or leased by Seller with respect to the
Business.
(c) Except as set forth on Schedule 5.7, Seller has not transported
or arranged for the transportation of any Hazardous Materials generated by
Seller in the conduct of the Business to any location which is listed on the
National Priorities List under CERCLA, listed for possible inclusion on the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Information System ("CERCLIS") by the Environmental
Protection Agency or on any similar state list or which is the subject of
Federal, state or local enforcement actions or other investigations which may
lead to claims against Seller for clean-up costs, remedial work, damages to
natural resources or personal injury claims, including, but not limited to,
claims under CERCLA.
(d) No Hazardous Material generated by Seller in the conduct of the
Business has been recycled, treated, stored, disposed of or released by Seller
at any location(s) other than those listed in Schedule 5.7 attached hereto.
(e) Except as set forth as Schedule 5.7, no written or, to the best
of Seller's knowledge, oral notification of a Release of a Hazardous Material
has been filed by or on behalf of Seller with any Governmental Entity with
respect to the Business and no property now or previously owned or, to the best
of Seller's knowledge, leased by Seller with respect to the Business is listed
or, to the best of Seller's knowledge, proposed for listing on the National
Priorities List promulgated pursuant
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to CERCLA, on CERCLIS or on any similar state list of sites requiring
investigation or clean-up.
(f) Except as set forth as Schedule 5.7, there are no encumbrances
in favor of any Governmental Entity for (A) any liability under Environmental
Laws or (B) damages arising from or costs incurred by such Governmental Entity
in response to a Release or threatened Release of Hazardous Waste or any toxic
waste, substance or constituent or other substance into the environment
(collectively, "Environmental Encumbrances") arising under or pursuant to any
Environmental Laws, and, to the best of Seller's knowledge, no governmental
actions have been taken or are in process which could reasonably be anticipated
to subject the Business to such Environmental Encumbrances.
Section 5.8. Financial Statements and Related Matters. (a) Attached hereto
as Schedule 5.8 are the unaudited balance sheets of Seller as of May 31, 1996
and September 30, 1996 (the "Interim Balance Sheet Date") and the unaudited
income statements of Seller for the year ended May 31, 1996 and the four-month
period ended on the Interim Balance Sheet Date (collectively, the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods covered by such statements, are true, correct and complete in all
material respects in accordance with generally accepted accounting principles,
are in accordance with the books and records of Seller, and present fairly, in
accordance with generally accepted accounting principles consistently applied,
the financial position of Seller on the dates as of which such statements are
presented and the results of operations of Seller for each of the periods
covered by such statements, subject to normal audit adjustments and the absence
of footnotes normally associated with audited financial statements. The
statements of operations included in the Financial Statements do not contain any
material items of special or non-recurring income or other income not earned in
the ordinary course of business of the Seller except as expressly specified
therein. The balance sheet dated as of September 30, 1996 included in the
Financial Statements is sometimes referred to herein as the "Interim Balance
Sheet".
(b) The inventory of the Business consists of raw materials and
supplies, manufactured and purchased parts, goods in process, and finished
goods, all of which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is slow-moving, obsolete, damaged,
or defective, except as set forth on Schedule 5.8.
(c) All properties and tangible assets reflected in the Interim
Balance Sheet have a fair market or realizable value at least equal to the value
thereof as reflected therein.
(d) The books, records, and accounts of Seller accurately and fairly
reflect, in reasonable detail, the transactions and their assets and
liabilities. Neither Seller nor any of its Affiliates has engaged in any
transaction with respect to the
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Business, maintained any bank account for the Business or used any of its funds
in the conduct of the Business except for transactions, bank accounts and funds
which have been and are reflected in its normally maintained books and records.
Section 5.9. Absence of Undisclosed Liabilities. Except as set forth on
Schedule 5.9, Seller has no liabilities or obligations with respect to the
Business, either direct or indirect, matured or unmatured or absolute,
contingent or otherwise, except:
(a) those liabilities or obligations set forth on the Interim
Balance Sheet (or liabilities or obligations which arose in the ordinary course
of business (none of which is a liability for breach of contract, breach of
warranty, tort, infringement claim or lawsuit) but are not required under
generally accepted accounting principles to be disclosed on the Interim Balance
Sheet) and not heretofore paid or discharged;
(b) those liabilities or obligations arising in the ordinary course
of business under any agreement, contract, commitment, lease or plan
specifically disclosed on any Schedule hereto; and
(c) those liabilities or obligations incurred, consistent with past
business practice, in or as a result of the normal and ordinary course of the
Business since the Interim Balance Sheet Date.
Section 5.10. Absence of Certain Changes or Events. Except as set
forth on Schedule 5.10, since the Interim Balance Sheet Date, Seller has not:
(a) suffered any material adverse change in its condition (financial
or otherwise), the Assets, the Business or the results of operations or
prospects of the Business, and, to the knowledge of Seller, no fact or condition
exists or is contemplated or threatened which could reasonably be anticipated to
cause such a change in the future other than a result of changes which affect
the economy generally;
(b) suffered any damage, destruction or casualty loss, whether
covered by insurance or not, which could materially and adversely affect the
Assets, the Business or the results of operations or financial condition of the
Business;
(c) except in the ordinary course of business and consistent with
past practice, increased the compensation payable to, or entered into any
employment, bonus or compensation agreement with, any employees or consultants;
(d) incurred any obligation or liability (absolute or contingent) in
excess of $25,000, except liabilities and obligations incurred in the ordinary
course of the Business and obligations under contracts entered into in the
ordinary course of the Business;
(e) made or suffered any amendment or termination of any Assumed
Contract;
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(f) sold, transferred or otherwise disposed of any assets or
properties which, if the Closing had occurred on the date hereof, would have
been included in the Assets, or entered into any agreement or commitment
therefor, other than sales, transfers or other dispositions, or agreements or
commitments therefor, entered into in the ordinary course of business and
consistent with past practice;
(g) received written notice of any actual or threatened labor
dispute which could have an adverse effect on the conduct of the Business;
(h) created, incurred, assumed or guaranteed any indebtedness or
liability for money borrowed (other than trade payables incurred and leases of
equipment entered into in the ordinary course of business), for itself, any
Affiliate or others, or any commitment to borrow money, or to become obligated
in any manner in respect of borrowed money, or mortgaged, pledged or subjected
any of its Assets to any mortgage, lien, pledge, security interest, conditional
sales contract or other encumbrance of any nature whatsoever, except for
Permitted Liens;
(i) made any payment, discharge or satisfaction of any claim in
connection with the conduct of the Business outside of the ordinary course of
business;
(j) had any write-off in excess of reserves as uncollectible of any
accounts or notes receivable of Seller, or any portion thereof, relating to the
Business;
(k) made any amendment, termination or waiver of any rights of the
Business having a value in excess of $25,000;
(l) relating to the Business, made any change in the accounting
methods or practices followed by Seller relating to the Business or any change
in depreciation or amortization policies or rates theretofore adopted;
(m) issued or sold any stock, notes, bonds or other securities, or
any option to purchase the same, or entered into any agreement with respect
thereto; or
(n) entered into any agreement or commitment outside of the ordinary
course of the Business.
Section 5.11. Insurance. Schedule 5.11 contains a true and complete list
of all policies of liability, theft, fidelity, life, fire, product liability,
medical coverage, workmen's compensation and other forms of insurance held by or
applicable to the Business (specifying the insurer, amount of coverage, type of
insurance and renewal or expiration date), and any pending claims thereunder.
The policies listed on Schedule 5.11 are outstanding and duly in force and all
premiums currently due and payable with respect to such policies have been paid.
Except as set forth in Schedule 5.11, Seller has no reason to believe that, on
the respective renewal dates thereof, any such policy of insurance will be
canceled or subject to a material increase in the premium payable thereunder or
a material reduction of the coverage provided thereby. Except as set
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forth in Schedule 5.11, Seller has not, during the past three fiscal years, been
denied or had revoked or rescinded any policy of insurance or made a claim in
excess of $10,000 in resect of any such agreements or policies. Seller has
heretofore made available to Purchaser true and correct copies of all policies
set forth in Schedule 5.11.
Section 5.12. Contracts, Obligations and Commitments. In connection with
the Assets and the operation of the Business, Seller has no existing contract,
obligation, commitment, agreement or other instrument (written or oral) of any
nature including, without limitation, the following, except as set forth on
Schedule 5.12 hereto:
(a) contracts or commitments for the employment or severance of any
employee or consultant or any other type of contract or understanding with any
current employee or consultant;
(b) profit-sharing, bonus, stock option, stock purchase, pension,
retirement, disability, medical coverage, hospitalization, insurance or similar
plan or agreement, formal or informal, providing benefits to any current or
former employee or consultant;
(c) loan or other agreements, notes, indentures, or instruments
relating to or evidencing indebtedness for borrowed money or mortgaging,
pledging or granting or creating a lien or security interest or other
encumbrance on any of the Assets or any agreement or instrument evidencing any
guaranty by Seller of payment or performance by any other person;
(d) agreements with any labor union or collective bargaining
organization or other labor agreements;
(e) any contract or series of contracts with the same person for
the furnishing or purchase of equipment, goods or services;
(f) any contract or commitment for capital expenditures in
excess of $25,000 in the aggregate;
(g) any agreement or arrangement for the sale of any assets,
properties or rights requiring the consent of any party to the transfer and
assignment of such assets, properties and rights;
(h) any joint venture contract or arrangement or other agreement
involving a sharing of profits or expenses to which Seller is a party or by
which it is bound;
(i) any lease under which Seller is either lessor or lessee
relating to the Assets or any property at which the Assets are located;
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(j) any contract, commitment or arrangement not made in the ordinary
course of business; or
(k) any agreements with the federal government or any state or local
government or any agency thereof.
For purposes hereof, each purchase order, contract, agreement, arrangement,
plan, lease or similar instrument listed in clauses (e) and (i) of Schedule 5.12
and each other contract, agreement, arrangement, plan, lease or similar
instrument listed in Schedule 5.12 and designated as an Assumed Contract are
collectively referred to herein as the "Assumed Contracts." Except as set forth
on Schedule 5.12, each Assumed Contract is a valid and binding obligation of
Seller and, to the best of Seller's knowledge, the other parties thereto,
enforceable in accordance with its terms (except as the enforceability thereof
may be limited by any applicable bankruptcy, insolvency or other laws affecting
creditors' rights generally or by general principles of equity, regardless of
whether such enforceability is considered in equity or at law), and is in full
force and effect (except for any Assumed Contracts which by their terms expire
after the date hereof or are terminated after the date hereof in accordance with
the terms thereof; provided, however, that Seller shall not terminate any
Material Assumed Contract after the date hereof without the prior written
consent of Purchaser), and, to the best of Seller's knowledge, neither Seller
nor any other party thereto has breached any material provision of, nor, to the
best of Seller's knowledge, is in default in any material respect under the
terms of (and, to the best of Seller's knowledge, no condition exists which,
with the passage of time, the giving of notice, or both, would result in a
default under the terms of), any of the Assumed Contracts. Except as set forth
in Schedule 5.12 hereto, each of the Assumed Contracts is validly assignable to
the Purchaser without the consent of any other party thereto so that, after the
assignment thereof to the Purchaser pursuant to this Agreement, the Purchaser
will be entitled to the full economic and other benefits thereof. Seller shall
give Purchaser prompt written notice of each Assumed Contract which is
terminated after the date hereof. Seller has heretofore made available to
Purchaser copies of all Assumed Contracts.
Section 5.13. Litigation. Except as set forth on Schedule 5.13, (a)
neither Seller, nor any current director, manager, officer, or employee of
Seller, is a party to any pending or threatened action, suit, proceeding or
investigation, at law or in equity or otherwise in, before or by any court or
governmental board, commission, agency, department or office, or private
arbitration tribunal related to the Business, nor does Seller know, after due
inquiry, of any basis therefor, (i) arising in connection with the conduct by
Seller of the Business, (ii) to restrain, prohibit or invalidate, or to obtain
damages or other relief from Seller, or any of its current officers, directors,
managers or employees, or equitable or other relief in respect of this Agreement
or the transactions contemplated hereby, (iii) which arises out of any contract,
agreement, letter of intent or arrangement alleged to have been entered into or
agreed to by Seller and which conflicts with this Agreement or the transactions
contemplated hereby, or gives rise to a claim or right of any kind of any person
as a result of the execution of this Agreement or the consummation of the
transactions contemplated hereby, (iv)
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which, if successful, could adversely affect the right of Purchaser after the
Closing Date to own any of the Assets or to conduct the Business as currently
conducted, or (v) to suspend, revoke, annul, limit, terminate, amend or modify
any permit, license, consent, qualification, authorization or approval
applicable to the Business as currently conducted; and (b) Seller is not a party
or subject to any order, ruling, judgment, decree or stipulation which affects
the Business, or which would prevent the transactions contemplated by this
Agreement. To the best of Seller's knowledge after due inquiry, except as set
forth on Schedule 5.13, no facts exist, and no investigation has been instituted
by any Governmental Entity, which might result in any such action or proceeding.
True, correct and complete copies of all pleadings and correspondence relating
to each matter set forth on Schedule 5.13 have previously been delivered to
Purchaser.
Section 5.14. Compliance with Law. The Business has been conducted, and is
now being conducted, in compliance with all applicable laws, rules, regulations
and court or administrative orders and processes (including, without limitation,
any that relate to consumer protection, health and safety, products and
services, proprietary rights, anti-competitive practices, collective bargaining,
ERISA, equal opportunity, improper payments and environmental regulation).
Seller, and its current officers, directors and managers and the Employees, (i)
are not, and during the past two years were not, in violation of, or not in
compliance with, all such applicable laws, rules, regulations, orders and
processes with respect to their conduct of the Business; (ii) have not received
any notice from any Governmental Entity and, to the best of Seller's knowledge
after due inquiry of its current officers, directors and managers and the
Employees, none is threatened, alleging that Seller has violated, or not
complied with, any of the above; and (iii) are not a party to any agreement or
instrument, or subject to any judgment, order, writ, rule, regulation, code or
ordinance which could adversely affect the Business.
Section 5.15. Licenses; Registrations; Permits; Etc. Seller now has and,
in a manner consistent with good business practices, will maintain in effect
through the Closing Date all Licenses necessary to carry on, as currently
conducted, the Business, which necessary Licenses are set forth on Schedule 5.15
hereto, and true, complete and correct copies of which Licenses have been made
available to Purchaser. All such Licenses are in full force and effect as of the
date hereof and, to the best of Seller's knowledge, no suspension or
cancellation of any of them is threatened. Seller has complied in all material
respects and will comply in all material respects with all terms of such
Licenses and will take any and all actions necessary to ensure that all such
Licenses remain in full force and effect and that the terms of such Licenses are
not violated in any material respect through the Closing Date. To the best of
Seller's knowledge, it is not in default in any material respect under any of
such Licenses which default would result in the forfeiture of any such License
necessary to carry on the Business as currently conducted and no event has
occurred and no condition exists which, with the giving of notice, the passage
of time, or both, would constitute a default thereunder the effect of which
would result in a forfeiture thereof. Except as set forth in Schedule 5.15, all
of such Licenses can be transferred to Purchaser.
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Section 5.16. Labor Matters. Except as set forth on Schedule 5.16, there
are not in existence or, to the best of Seller's knowledge, threatened any (a)
work stoppages or material labor disputes respecting Employees; (b) unfair labor
practice complaints against Seller in respect of Employees; or (c) any material
grievance between Seller and its Employees. Except as set forth on Schedule
5.16, Seller is not delinquent in payments to any Employee for any wages,
salaries, commissions, bonuses or other compensation for services performed by
them prior to the date hereof or for amounts required to be reimbursed to such
Employee, other than compensation to be paid at the end of the payroll period
ending after the date hereof. Seller is in compliance in all material respects
with all federal, state and local laws and regulations respecting labor,
employment and employment practices, terms and conditions of employment and
wages and hours. No representation question exists respecting the Employees nor,
to the best of Seller's knowledge, has any application been filed, submitted or
initiated with respect to the certification or recognition of the Employees as a
collective bargaining unit, and no collective bargaining agreement is currently
being negotiated by Seller with respect to the Employees. True and complete
copies of the current written personnel policies, employee manuals and/or
employee handbooks of Seller used in the Business have been made available to
Purchaser.
Section 5.17. Personnel; Employee Plans. Schedule 5.17 comprises a
complete and correct list of (i) the names, titles, and current annual salary
rates (as of November 15, 1996) and all other compensation and fringe benefits
of each of the Employees or consultants of Seller who is engaged in the conduct
of the Business, (ii) the amount of accrued bonuses, vacation, earned time, sick
leave, maternity leave and other leave for such personnel as of November 15,
1996 and (iii) the persons who are currently on the Seller's payroll but not
actively engaged in the conduct of the Business, indicating such persons. The
Seller has not instituted any "freeze" of, or deferred or delayed the grant of,
any cost-of-living or other salary adjustments for any of the Employees. With
respect to each Employee hired after November 6, 1996, a copy of the Form I-9
completed pursuant to the Immigration Reform and Control Act of 1986, and the
rules and regulations promulgated thereunder, has been made available to
Purchaser. Except as set forth on Schedule 5.17, there are no employee benefit
plans, contracts or arrangements of any type (including, without limitation,
employee benefit plans described in Section 3(3) of ERISA and insurance, stock
option, bonus, severance, incentive or other compensatory plans, contracts or
arrangements which are not so described) which cover any current or former
Employee or under which the Seller has or in the future may have, directly, or
indirectly through any other person, firm or entity which is aggregated with the
Seller under Section 414 of the Code (an "ERISA Affiliate"), any liability with
respect to any current or former Employee or an ERISA Affiliate (each of which
employee benefit plans, contracts and arrangements is herein referred to as an
"Employee Plan"). With respect to each Employee Plan, Seller has made available
to Purchaser correct and complete copies of the plan documents and agreements,
as well as related trust agreements, insurance contracts, collective bargaining
agreements and amendments of same. There are no pending claims against any
Employee Plan (other than for benefits in accordance with its terms), nor has
Seller received any written threat of a claim by any participant thereof or
beneficiary
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thereunder. Without limiting the generality of the foregoing, all Employee Plans
are in compliance in all material respects with all applicable reporting,
disclosure, filing and other administrative requirements pertaining to employee
benefit plans set forth in the Code and ERISA and rules and regulations
promulgated under either. Except as set forth on Schedule 5.17, neither Seller
nor any ERISA Affiliate is or was at any time obligated to contribute to or is
or was otherwise a party or subject to any employee pension benefit plan which
is or was a pension plan covered by Title IV of ERISA, including, without
limitation, a multiemployer plan within the meaning of Section 3(37) of ERISA.
With respect to each Employee Plan which is an "employee benefit plan" within
the meaning of Section 3(3) of ERISA or which is a "plan" within the meaning of
Section 4975(e) of the Code, there has occurred no transaction which is
prohibited by Section 406 of ERISA or which constitutes a "prohibited
transaction" under Section 4975(c) of the Code and with respect to which a
prohibited transaction exemption has not been granted and is not currently in
effect.
Section 5.18. Intellectual Property. Except as set forth on Schedule 5.18,
Seller owns or is licensed or otherwise has the right to use all Intellectual
Property necessary to permit Purchaser to carry on the Business as currently
conducted by Seller. All licenses, if any, of Seller to use all Intellectual
Property necessary to permit Purchaser to carry on the Business as currently
conducted by Seller are in full force and effect and neither the Seller nor, to
the best of Seller's knowledge, any of the other parties to such licenses are in
breach in any material respect of any provision of, or in default in any
material respect under any of the terms of, such licenses. Except as set forth
on Schedule 5.18, Seller does not pay royalties to anyone for use of the
Intellectual Property. Except as set forth on Schedule 5.18, Seller has not
granted or otherwise transferred to any person any license or other right to use
any of the Intellectual Property necessary to permit Purchaser to carry on the
Business as currently conducted, whether requiring the payment of royalties or
not. To the best of Seller's knowledge, no person is infringing upon, or is in
violation of, any of Seller's Intellectual Property or rights thereto, except as
set forth on Schedule 5.18. Except as set forth on Schedule 5.18, subsequent to
the Closing, Seller shall not own or have the right to use any Intellectual
Property which has been utilized in the Business. Schedule 5.18 sets forth all
patents, trademarks, copyrights and service marks and applications for patents,
trademarks, copyrights and service marks owned by or licensed to Seller for use
in the Business and whether or not Seller has the exclusive right to use all
such patents, trademarks, copyrights and service marks. To the best of Seller's
knowledge, no product or service marketed or sold by Seller which utilizes any
of the Intellectual Property violates or infringes any rights of another party,
except as set forth on Schedule 5.18. There is no pending or, to the best of
Seller's knowledge, threatened claim or litigation against Seller contesting the
right to use its Intellectual Property in the conduct of the Business, asserting
the misuse of any thereof or asserting that Seller has violated or infringed the
rights of another party. This Agreement and the transactions contemplated hereby
will not in any manner affect Purchaser's rights with respect to, or ability to
use, the Intellectual Property necessary to permit Purchaser to carry on the
Business as currently conducted, assuming all required consents, if any,
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to assignment thereof are obtained. Seller shall deliver to Purchaser all
documents relating to such Intellectual Property promptly after the date hereof.
Section 5.19. Property to Operate Business. The Assets constitute, in the
aggregate, all the assets and property (other than working capital) necessary
for the conduct of the Business as currently conducted. All of the Assets are
located at the Real Property, except as set forth on Schedule 5.19. The Bill of
Sale, Warranty Deed, assignment(s) of Intellectual Property, agreements,
contracts and other arrangements, and other instruments delivered to Purchaser
by Seller on the Closing Date will be in form and substance sufficient to vest
in the Purchaser good and marketable title to, and all rights necessary to
utilize, the Assets, free and clear, except as otherwise permitted by this
Agreement, of all liens, mortgages, pledges, encumbrances, charges, restrictions
or rights of any other party whatsoever.
Section 5.20. Related Transactions. Except as set forth in Schedule 5.20,
and except for compensation to Employees for services rendered, no current
officer or Employee or, to the best of Seller's knowledge former officer or
employee, of Seller is, in each case in their individual capacity, presently a
party to any material transaction with Seller (including, but not limited to,
any contract, agreement or other arrangement providing for the furnishing of
services by, or rental of real or personal property from, or otherwise requiring
payments to, any such officer or Employee).
Section 5.21. Brokers. Seller has not paid or become obligated to
pay any fee or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by this Agreement.
Section 5.22. Accounts Receivable. All Accounts Receivable have arisen in
the ordinary course of the Business and are collectible in the ordinary course
of the Business (recognizing Seller's usual experience for uncollectible
accounts), in each case in the aggregate recorded amounts thereof, less the
applicable reserves with respect thereto reflected on the Accounts Receivable
Schedule delivered pursuant to Section 3.18 hereof. Seller has not factored,
discounted or agreed to factor or discount any Accounts Receivable, except as
set forth on Schedule 5.22. The values at which the Accounts Receivable are
carried reflect the accounts receivable valuation policy of Seller that Seller
has consistently applied.
Section 5.23. Product Warranties. Schedule 5.23 sets forth Seller's
standard form of product warranties and guarantees with respect to the products
sold or leased by the Business. Except as set forth on Schedule 5.23, there are
no outstanding claims of any Person against Seller, or to the best of Seller's
knowledge any threatened claims, based on any warranty or guarantee or on any
contention that products sold or leased in connection with the Business failed
to meet quality standards with respect to such products.
Section 5.24. Taxes. (a) Except as specifically set forth in Schedule
5.24, (i) Seller has filed on a timely basis (taking into account any extensions
received from the
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relevant taxing authorities) all returns and reports of all Federal, state,
local and foreign income, profits, franchise, unincorporated business, capital,
general corporate, sales, use, occupation, property, excise and any and all
other taxes (all such taxes, irrespective of the period for which such taxes are
payable or attributable, hereinafter referred to as "Taxes") relating to the
Assets or the Business that are or were required to be filed by Seller
(including any predecessor) with the appropriate taxing authorities in all
jurisdictions in which such returns and reports are or were required to be
filed, and all such returns and reports are true, correct and complete in all
material respects, (ii) all Taxes (including interest, additions to tax and
penalties thereon together with interest on such additions to tax and penalties)
relating to the Assets or the Business that are due from or may be asserted
against Seller (including deferred taxes) in respect of or attributable to all
periods ending on or before the Closing Date have been fully paid, deposited or
adequately provided for on the books and financial statements of Seller or are
being contested in good faith by appropriate proceedings, (iii) no issues have
been raised (or are currently pending) by any taxing authority in connection
with any of the returns and reports referred to in clause (i) which might be
determined adversely to Seller and which would have a material adverse effect on
the Business, (iv) Seller has not given or been requested to give waivers or
extensions of any statute of limitations with respect to the payment of Taxes
relating to the Business, and (v) no tax liens which have not been satisfied or
discharged by payment or concession by the relevant taxing authority or as to
which sufficient reserves have not been established on the books and financial
statements of Seller and the Business are in force as of the date hereof with
respect to any of the assets of Seller and the Business.
(b) Schedule 5.24 describes all adjustments to the returns and
reports of Taxes relating to the Assets or the Business filed, or required to be
filed, by Seller and the resulting deficiencies proposed with respect thereto in
writing by the relevant taxing authorities which would have a material adverse
effect on the Business. To the best of Seller's knowledge, all deficiencies
proposed in writing by such taxing authorities which would have a material
adverse effect on the Business have been paid, reserved against, settled or are
being contested in good faith by appropriate proceedings.
(c) All Taxes relating to the Assets or the Business that Seller is
or was required by law to withhold, to deposit or to collect have been duly
withheld, deposited or collected and, to the extent required, have been paid to
the relevant taxing authority.
(d) Seller is not acting as nominee or trustee for any person,
corporation, partnership, trust or estate, but is acting solely in its
individual capacity.
Section 5.25. Suppliers and Customers. Schedule 5.25 lists all suppliers
and customers of the Business since June 1, 1995. Seller does not have any
information which might reasonably indicate that any of the customers or
suppliers of the Business listed on Schedule 5.25 intend to cease purchasing
from, selling to or dealing with the Business, nor has any information been
brought to its attention which might reasonably
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lead it to believe any such customer or supplier intends to alter in any
material respect the amount of such purchases, sales or the extent of dealings
with the Business or would alter in any material respect such purchases, sales
or dealings in the event of the consummation of the transactions contemplated
hereby. Seller does not have any information which might reasonably lead it to
believe that, (i) any supplier will not be able to fulfill outstanding or
currently anticipated purchase orders placed by the Business which, individually
or in the aggregate, exceed $25,000, or (ii) any customer will cancel
outstanding or currently anticipated purchase orders placed with the Business
which, individually or in the aggregate, exceed $50,000.
Section 5.26. Beaman Corporation. AMT owns all the issued and outstanding
capital stock of Beaman Corporation, free and clear of all liens, security
interests, pledges, restrictions on transfer and other encumbrances. Except as
set forth on Schedule 5.26 hereto, Beaman currently conducts no business, has no
assets other than the Real Property, and has no liabilities (direct or indirect,
matured or unmatured or absolute, contingent or otherwise).
Section 5.27. Disclosure. Seller has not failed to disclose to Purchaser
any material information adverse to the Assets, liabilities, business, financial
condition or results of operations of the Business, and no information furnished
by or on behalf of Seller to Purchaser, contains any untrue statement of a
material fact or omits to state a material fact necessary to make such
statement, in the light of the circumstances under which it was made, not
misleading. All such written information, in whatever form, furnished by Seller
to Purchaser was true and correct as of its date and, except as the accuracy
thereof is affected by the passage of time, remains true and correct as of the
date hereof.
VI. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 6.1. Organization. Purchaser is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to own or lease its
properties and carry on its business as presently conducted; and Purchaser has
all requisite corporate power and authority to enter into this Agreement, the
Bill of Sale and all other agreements contemplated hereby to which it is a party
and to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Purchaser is, or prior to the
Closing Date will be, licensed or qualified to transact business in the State of
North Carolina.
Section 6.2. Due Authorization. The execution and delivery by Purchaser of
this Agreement, the Bill of Sale and the other documents contemplated hereby,
the performance by Purchaser of its obligations hereunder and thereunder, and
the consummation of the transactions contemplated hereby and thereby have been
duly and
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validly authorized by all necessary corporate action on the part of Purchaser.
This Agreement has been duly and validly executed by Purchaser, and this
Agreement is, and each other document contemplated hereby, when executed and
delivered by Purchaser, will be, a legal, valid and binding obligation of
Purchaser enforceable against it in accordance with its terms (except as the
enforceability thereof may be limited by any applicable bankruptcy, insolvency
or other laws affecting creditors' rights generally or by general principles of
equity, regardless of whether such enforceability is considered in equity or at
law).
Section 6.3. No Conflict. Except as set forth on Schedule 6.3, neither the
execution and delivery by Purchaser of this Agreement or any of the other
documents contemplated hereby nor the consummation by Purchaser of the
transactions contemplated hereby or thereby, nor compliance by Purchaser with
any of the provisions hereof or thereof, will (a) conflict with, result in a
breach or violation of or constitute (or with notice or lapse of time or both
constitute) a default under, in any material respect, (i) the Certificate of
Incorporation or Bylaws of Purchaser, (ii) any law, statute, rule, regulation,
order, judgment, decree, writ or injunction applicable to Purchaser or (iii) any
of the terms, conditions or provisions of any note, bond, lease, mortgage,
indenture, license or other instrument, contract or agreement to which Purchaser
is a party or by which it (or any of its properties or assets) is subject or
bound and which is material; (b) result in the creation of, or give any party
the right to create, any lien, charge, option, security interest or other
encumbrance upon any property or asset of Purchaser or which would have a
material adverse effect on the business of Purchaser; (c) terminate or modify,
or give any third party the right to terminate or modify, the provisions or
terms of any material agreement or commitment to which Purchaser is a party or
by which it (or any of its properties or assets) is subject or bound; or (d)
require Purchaser to obtain any authorization, consent or approval by, or waiver
from, or notification of or filing with, any Governmental Entity, or the
approval or consent of any other Person, in connection with the execution,
delivery and performance by Purchaser of this Agreement or the other documents
contemplated hereby or thereby or the consummation by Purchaser of the
transactions contemplated hereby and thereby, except such authorizations,
consents, approvals, waivers, notifications or filings, the failure of which to
obtain or make will not have a material adverse effect on Purchaser's
obligations hereunder and under the other documents contemplated hereby.
Section 6.4. Disclosure. No representation or warranty by Purchaser in
this Agreement or set forth in any document, instrument, certificate or schedule
furnished pursuant hereto contains any untrue statement of a material fact or
omits to state a material fact necessary to make such statement, in the light of
the circumstances under which it was made, not misleading.
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VII. AGREEMENTS PENDING CLOSING
Section 7.1. Conduct and Preservation of Business. Except as contemplated
by this Agreement, during the period from the date of this Agreement to the
Closing Date, Seller will cause the Business to be carried on in the ordinary
course consistent with past practice. Seller shall not cause or allow to occur
any of the events or occurrences described in Section 5.10 hereof. Without
limiting the generality of the foregoing, (i) Seller shall use its reasonable
best efforts to keep available the services of the present Employees for the
Purchaser, to maintain the Business intact and to maintain the relations and
goodwill with the Seller's suppliers and customers; (ii) Seller shall comply in
all material respects with all laws, ordinances, rules, regulations and orders
applicable to the Business or the Assets; (iii) Seller shall not take any action
or omit to take any action which act or omission would result in the inaccuracy
in any material respect of any of its representations and warranties made in
Article V hereof if such representation or warranty were to be made immediately
after the occurrence of such act or omission; and (iv) Seller shall repair and
replace the Assets in accordance with the normal and customary requirements of
the Business.
Section 7.2. Access to Information. Between the date of this Agreement and
the Closing Date, Seller will (i) permit Purchaser's authorized representatives
and financing parties reasonable access, during normal business hours and upon
reasonable notice, to all of the books, records, tax returns, reports and other
tax related materials, offices and other facilities and properties of the
Business; (ii) permit free and full access, during normal business hours and
upon reasonable notice, to the work papers of the independent certified public
accountants of Seller; (iii) permit Purchaser to make such inspections and
copies thereof as Purchaser may reasonably request; and (iv) furnish Purchaser
with such additional financial and operating data and other information with
respect to the business, operations and properties of the Business as Purchaser
may from time to time reasonably request; provided, however, that any such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operations of the Business.
Section 7.3. Filings and Authorizations. Each of Seller and Purchaser, as
promptly as practicable, (i) will make, or cause to be made, all filings and
submissions under laws, rules and regulations applicable to it, or to the
Business, as may be required for it to consummate the transactions contemplated
hereby; (ii) will use its reasonable best efforts to obtain, or cause to be
obtained, all authorizations, approvals, consents and waivers from all Persons
and Governmental Entities necessary to be obtained by it in order for it so to
consummate such transactions; and (iii) will use its reasonable best efforts to
take, or cause to be taken, all other actions necessary, proper or advisable in
order for it to fulfill its obligations hereunder and to fulfill each closing
condition contained in Articles III and IV hereof. Seller and Purchaser will
coordinate and cooperate with one another in exchanging information and
supplying such reasonable assistance as may be reasonably requested by each in
connection with the foregoing. Purchaser shall use its reasonable efforts to
assist Seller in obtaining all
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consents required under the Assumed Contracts as a result of this Agreement
and the transactions contemplated hereby.
Section 7.4. Public Announcements. Each party hereto will agree in advance
prior to the issuance by either of any press release or the making of any public
statement (including, without limitation, statements to Employees, customers and
suppliers) with respect to this Agreement and the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed. In the event that either party is
required to issue a press release or make such a public statement by law, it
will notify the other party of the contents thereof in advance (at least two
days to the extent practicable) of the issuance or making thereof and will
reasonably consider any comments received thereon.
Section 7.5. Schedules. Seller shall have the continuing obligation to
promptly supplement or amend the Schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known at the date hereof,
would have been required to be set forth or described in the Schedules. No
supplement or amendment of the Schedules made pursuant to this Section shall be
deemed to cure any breach of, affect or otherwise diminish any representation or
warranty made in this Agreement unless Purchaser specifically agrees thereto in
writing. Notwithstanding anything in this Section 7.5 to the contrary, Purchaser
shall have the right, in accordance with Section 10.1 hereof, to terminate this
Agreement in the event that any amendment or supplement to any Schedule in
accordance with this Section 7.5 shall, individually or in the aggregate with
other amendments or supplements to the Schedules, constitute a material adverse
change in the condition or operations of the Assets or the Business after the
date hereof.
Section 7.6. Notice of Developments. Each of Purchaser and Seller shall
give prompt written notice to the other of any material adverse development
causing a breach of any of its own representations and warranties in Articles V
or VI above. No disclosure by any party pursuant to this Section 7.6., however,
shall be deemed to amend or supplement any Schedule or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
Section 7.7. Updated Financial Statements. As soon as available and in any
event within 30 days after the end of each month prior to the Closing Date,
commencing with October 31, 1996, Seller shall deliver to Purchaser a balance
sheet and related statements of operations and cash flows of Seller. All such
financial statements shall be covered by and conform to the representations and
warranties set forth in Section 5.8 hereof and shall be included in the term
"Financial Statements" for purposes of this Agreement.
Section 7.8. No Shopping. (a) From and after the date hereof until the
earlier of (i) November 30, 1996 or (ii) termination of this Agreement, without
the express written consent of Purchaser, Seller shall not, directly or
indirectly, (i) solicit,
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initiate discussions or engage in negotiations with any person (whether or not
such negotiations are initiated by Seller), other than Purchaser, relating to
the possible acquisition, whether by way of merger, reorganization, purchase of
capital stock, purchase of assets or otherwise of a majority interest in the
Business or the Assets (an "Acquisition Transaction"), (ii) provide information
with respect to the Business or any Asset to any person, other than Purchaser,
in connection with a possible Acquisition Transaction or (iii) enter into a
transaction with any person, other than Purchaser, concerning a possible
Acquisition Transaction.
(b) The parties hereto recognize and acknowledge that a breach by
Seller of this Section 7.8 will cause irreparable and material loss and damage
to Purchaser as to which it will not have an adequate remedy at law or in
damages. Accordingly, each party acknowledges and agrees that the issuance of an
injunction or other equitable remedy is an appropriate remedy for any such
breach. In addition, in the event of a breach of the foregoing which results in
the consummation of an Acquisition Transaction, Seller shall promptly pay to
Purchaser a breakup fee of $150,000.
Section 7.9. Rally Buildings. On or before the Closing Date, Seller
shall remove the Rally Buildings from the Real Property or Rally's Hamburgers,
Inc. shall have entered into an agreement with Purchaser, reasonably
satisfactory to Purchaser, regarding the continued storage of the Rally
Buildings on the Real Property.
VIII. POST-CLOSING MATTERS
Section 8.1. Hiring of Employees. As of the Closing Date, Purchaser shall
offer employment to, and Seller shall use its reasonable best efforts to assist
Purchaser in employing as new employees of Purchaser, all persons presently
engaged in the Business who are employed by Seller (the "Employees") as of the
Closing Date, on terms and conditions not substantially less favorable in
aggregate than those on which such Employees were employed by Seller immediately
prior to the Closing Date. Seller shall assign to Purchaser, and Purchaser shall
assume, effective as of the Closing Date, those employment agreements listed on
Schedule 5.17 that Seller has with any of the Employees and that Purchaser has
designated as Assumed Contracts. Nothing herein shall obligate Purchaser to
retain in its employ from and after the Closing any Employee who accepts
Purchaser's offer of employment, except to the extent of any such employment
agreements. From and after the date hereof until the Closing, Seller shall
continue to pay in the ordinary course of business the salaries and wages and
provide the same benefits to its Employees. Notwithstanding anything in this
Section 8.1 to the contrary, Purchaser shall not be obligated to offer
employment to any Employee, including any Employee who is party to an employment
agreement listed on Schedule 5.17, designated by Purchaser to Seller in writing
at least three business days prior to the Closing Date.
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Section 8.2. Use of Name. From and after the Closing Date, Seller will
sign such consents and take such other action as Purchaser shall reasonably
request in order to permit Purchaser to use the names "American Modular
Technologies," "Beaman Corporation" and variants thereof.
Section 8.3. Non-Competition/Non-Solicitation. Seller agrees that it will
not, for a period of three (3)Eyears from the Closing Date, directly or
indirectly, (i)Eown or operate any person, firm, corporation, business or other
organization or enterprise engaged, directly or indirectly, primarily in the
construction of modular buildings, (ii)Esolicit for employment any employee of
Purchaser, or (iii)Einterfere with, disrupt or attempt to disrupt the
relationship between the Purchaser and any of its respective licensors,
licensees, customers or suppliers with respect to the Business. Seller expressly
waives any right to assert inadequacy of consideration as a defense to
enforcement of the non-competition provisions of this SectionE8.3 should such
enforcement ever become necessary. Seller acknowledges that a remedy at law for
any breach or attempted breach of this Section 8.3 will be inadequate and
further agrees that any breach of this Section 8.3 will result in irreparable
harm to the business of Purchaser; and Seller covenants and agrees not to oppose
any demand for specific performance and injunctive and other equitable relief in
case of any such breach or attempted breach. Whenever possible, each provision
of this Section 8.3 shall be interpreted in such manner as to be effective and
valid under applicable law but if any provision of this Section 8.3 shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Section 8.3. If any provision of this Section 8.3 shall, for any reason, be
judged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Section 8.3 but shall be confined in its operation to the provision of this
Section 8.3 directly involved in the controversy in which such judgment shall
have been rendered. In the event that the provisions of this Section 8.3 should
ever be deemed to exceed the time or geographic limitations permitted by the
applicable laws, then such provision shall be reformed to the maximum time or
geographic limitations permitted by applicable law.
Section 8.4. Subrogation of Purchaser. In the event Purchaser shall become
liable for or suffer any damage with respect to any matter occurring on or
before the Closing Date which was covered by insurance maintained by Seller on
or prior to the Closing Date, Seller agrees that Purchaser shall be and hereby
is, to the extent permitted under such policies, subrogated to any rights of
Seller under such insurance coverage, and, in addition, Seller agrees to
promptly remit to Purchaser any insurance proceeds which they may receive on
account of any such liability or damage.
Section 8.5. Payments Received. Except as set forth herein, Seller and
Purchaser each agree that after the Closing they will hold and will promptly
transfer and deliver to the other, from time to time as and when received by
them, any cash, checks with appropriate endorsements (using their best efforts
not to convert such checks into cash), or other property that they may receive
on or after the Closing which
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properly belongs to the other party, including without limitation any insurance
proceeds, and will account to the other for all such receipts. Notwithstanding
anything herein to the contrary and without limiting the foregoing, effective
upon the Closing, Seller hereby constitutes and appoints Purchaser, its
successors and assigns, the true and lawful attorney of Seller with full power
of substitution, in the name of Purchaser, or the name of Seller, on behalf of
and for the benefit of Purchaser, to collect, at Seller's expense, (i) all items
being transferred, conveyed and assigned to Purchaser as provided herein, and
(ii) all Accounts Receivable, to endorse, without recourse, checks, notes and
other instruments in the name of Seller, to institute and prosecute, at Seller's
expense, all proceedings which Purchaser may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to the Assets and
the Accounts Receivable, although Purchaser shall have no obligation to do so,
to defend and compromise any and all actions, suits or proceedings in respect of
any of the Assets and the Accounts Receivable, and to do all such acts and
things in relation thereto as Purchaser may deem advisable. Seller agrees that
the foregoing powers are coupled with an interest and shall be irrevocable by
Seller, directly or indirectly, whether by the dissolution of Seller or in any
manner or for any reason.
Section 8.6. Collection of Accounts Receivable/Payment of Trade Payables.
Seller hereby constitutes and appoints Purchaser to collect the Accounts
Receivable and to use the proceeds thereof to pay the Trade Payables set forth
on Schedule 8.6. (the "Specified Trade Payables"). Any direct expenses incurred
by Purchaser which have been approved in advance by Seller shall be reimbursed
by Seller. All funds received by Purchaser or Seller in respect of the Accounts
Receivable shall immediately be transferred to the Account. From time to time
Purchaser shall use the proceeds from the Accounts Receivable to pay the
Specified Trade Payables. Purchaser shall, in collecting the Accounts
Receivable, use the same methods it uses to collect its own receivables. Seller
hereby agrees not to take any action to collect any Accounts Receivable without
the prior written consent of Purchaser. Following payment in full of the
Specified Trade Payables, Purchaser shall promptly deliver to Seller any
proceeds from the collection of Accounts Receivable.
Section 8.7. Payment of Warranty Liabilities. Purchaser shall
fulfill each Warranty Liability and be reimbursed from the Warranty Deposit as
follows:
(i) Purchaser shall use reasonable efforts (which shall not
require litigation) to first collect any amounts due under
warranties from third parties, provided, however, that
such amounts are collected by December 31, 1997; and
(ii) Purchaser shall then be entitled to reimbursement from the
Warranty Deposit at a rate equal Purchaser's cost of
repair plus 10%, less any amounts collected from third
parties.
If any portion of the Warranty Deposit shall remain on December 31, 1997 then
such portion of the Warranty Deposit shall be paid to Seller with interest
earned thereon on
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such date, provided, however, that Purchaser shall be entitled to retain in the
Account any outstanding claims against the Warranty Deposit on such date. In all
instances, funds may only be disbursed from the Warranty Deposit upon the
signature of one each of the Seller's Representatives and the Purchaser's
Representatives. Purchaser's claims for reimbursement from the Warranty Deposit
shall not be disputed by Seller unless Purchaser does not act in good faith. For
purposes hereof, the "Seller Representatives" shall be Joseph D. Vecchiolla or
Richard Carpenter and the "Purchaser's Representatives" shall be Joseph
Grigelevich, Jr. or R. Charles Blackmon, Jr.
Section 8.8. Payment of Liabilities. Following the Closing Date each of
Purchaser and Seller agrees to discharge in accordance with their terms the
Assumed Liabilities and the Excluded Liabilities, respectively.
Section 8.9. Sharing of Data. Purchaser shall have the right following the
Closing Date to have reasonable access to those corporate minute books, stock
books, tax returns and other corporate records and files of Seller that are
retained by Seller pursuant to the terms of this Agreement to the extent any of
the foregoing relates to the Business, is necessary in connection with the
conduct of the Business or is otherwise needed by Purchaser in order to comply
with its obligations under applicable securities, tax, environmental, employment
or other laws and regulations. Seller shall have the right following the Closing
Date to have reasonable access to those documents and records included in the
Assets to the extent any such documents or records are needed by Seller in order
to comply with its obligations under applicable securities, tax, environmental,
employment or other laws and regulations. Seller, its insurers and their
respective attorneys shall have the right following the Closing Date to have
reasonable access to, and upon request, Purchaser shall provide Seller with
copies of, medical records necessary to defend any litigation to which Seller
may become a party.
Section 8.10. Change in Name. Seller shall have delivered to Purchaser
prior to December 6, 1996 (i)Ea certified copy of a Certificate of Amendment to
the Certificate of Incorporation or Certificate of Formation, as the case may
be, of each of Beaman Corporation and Seller and such other appropriate
certifications, pursuant to which Seller has changed the name Beaman Corporation
and its name to another name bearing no similarity to the name Beaman
Corporation and "American Modular Technologies" and (ii)Ewritten evidence of
Seller's abandonment of any similar assumed name(s).
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IX. INDEMNIFICATION
Section 9.1. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive the
Closing and shall remain in full force and effect until March 31, 1998,
regardless of any investigation made by Purchaser or Seller or on their
respective behalf, except as to any matters with respect to which a bona fide
written claim shall have been made or an action at law or in equity shall have
commenced before such date, in which event survival shall continue (but only
with respect to, and to the extent of, such claim) until the final resolution of
such claim or action, including all applicable periods for appeal.
Section 9.2. Seller's Indemnity. Subject to the limitations set forth in
Section 9.4 hereof, Seller shall indemnify and hold harmless Purchaser and its
successors and assigns at all times after the Closing Date against and in
respect of:
(a) any damage, loss, cost, expense or liability (including
reasonable attorneys' fees) resulting to Purchaser from any false,
misleading or inaccurate representation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of Seller under
this Agreement or from any misrepresentation in or any omission from any
certificate, list, schedule or other instrument to be furnished to
Purchaser hereunder;
(b) all liabilities and obligations of Seller (other than the
Assumed Liabilities) of any kind or nature whatsoever, whether accrued,
absolute, fixed, contingent, known or unknown, including without
limitation the Excluded Liabilities;
(c) any and all liabilities arising out of or in connection with (i)
any violation of Environmental Laws existing on or in respect of the Real
Property on or prior to the Closing Date; (ii)Ethe operation or ownership
of the Business on or before the Closing Date; (iii) the handling,
storage, treatment or disposal of any Hazardous Materials generated by the
Business on or prior to the Closing Date; or (iv)Eany breach by Seller of
any representation or warranty contained in SectionE5.7 hereof;
(d) any loss, damage, cost or penalty incurred by Purchaser as a
result of non-compliance by Seller with any applicable bulk transfer or
similar law or by virtue of common law, statute or regulation imposing or
attempting to impose transferee liability on Purchaser other than with
respect to the Assumed Liabilities; and
(e) all claims, actions, suits, proceedings, demands, assessments,
judgments, costs and expenses incident to any of the foregoing.
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This indemnity agreement in this Section 9.2 shall be in addition to any
liability which Seller may incur to Purchaser and shall not foreclose any other
rights or remedies Purchaser may have to enforce the provisions of this
Agreement.
Section 9.3. Purchaser's Indemnity. Subject to the limitations set forth
in Section 9.4 hereof, Purchaser shall indemnify and hold harmless Seller and
its successors and assigns at all times after the Closing Date against and in
respect of:
(a) any damage, loss, cost, expense or liability (including
reasonable attorneys' fees) resulting to Seller from any false, misleading
or inaccurate representation, breach of warranty or nonfulfillment of any
agreement or covenant on the part of Purchaser under this Agreement or
from any misrepresentation in or any omission from any certificate, list,
schedule or other instrument to be furnished to Seller hereunder;
(b) all Assumed Liabilities;
(c) any liability or obligation arising out of the operation by
Purchaser of the Assets following the Closing Date; and
(d) all claims, actions, suits, proceedings, demands, assessments,
judgments, costs and expenses incident to any of the foregoing.
This indemnity agreement in this Section 9.3 shall be in addition to any
liability which Purchaser may incur to Seller and shall not foreclose any other
rights or remedies Seller may have to enforce the provisions of this Agreement.
Section 9.4. Limitations. Notwithstanding anything to the contrary
contained herein, no Indemnified Party shall be entitled to indemnification from
an Indemnifying Party for a breach of any representation or warranty until the
aggregate losses suffered by such Indemnified Party and for which
indemnification is available hereunder exceeds $50,000, whereupon the
Indemnified Party shall be entitled to claim indemnification for all losses
suffered by such Indemnified Party and for which indemnification is available
hereunder.
Section 9.5. Notice and Defense of Claims. Each party entitled to
indemnification under this ArticleEIX (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume, at the Indemnifying Party's expense, the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
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Indemnifying Party of its obligations under this Article IX. The Indemnifying
Party, in the defense of any such claim or litigation, shall not, except with
the consent of the Indemnified Party, consent to entry of any judgment or entry
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to the Indemnified Party of a release from
all liability in respect to such claim or litigation. The Indemnified Party
shall furnish such information regarding itself or the claim in question as the
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
Section 9.6. Payment/Reimbursement. At the time the amount of any
liability on the part of the Indemnifying Party under this ArticleEIX is
determined (which in the case of payment to third persons shall be the earlier
of (i)Ethe date of such payments or (ii)Ethe date that a court of competent
jurisdiction shall enter a final judgment, order or decree (after exhaustion of
appeal rights) establishing such liability) (such loss or amount being
hereinafter referred to as the "Indemnity Claim"), the Indemnifying Party shall
forthwith, upon notice from the Indemnified Party, pay to the Indemnified Party
the amount of the Indemnity Claim. If such amount is not paid forthwith, then
the Indemnified Party may, at its option, take legal action against the
Indemnifying Party for reimbursement in the amount of its Indemnity Claim. For
purposes hereof the Indemnity Claim shall include the amounts so paid, or
determined to be owing, by the Indemnified Party together with costs and
reasonable attorney's fees associated with collecting such Indemnity Claim and
interest on the foregoing items at the Prime Rate (as defined in the next
paragraph) from the date the Indemnity Claim is due from the Indemnifying Party
to the Indemnified Party as hereinabove provided, until the Indemnity Claim
shall be paid.
In addition to its other obligations under this Section 9.6, the
Indemnifying Party agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding for which
indemnification for attorney's fees and expenses may be required pursuant to
this Article IX, it will reimburse the Indemnified Party on a monthly basis for
all reasonable legal fees or other out-of-pocket expenses reasonably incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Indemnifying Party's obligation to indemnify the Indemnifying Party for such
expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Indemnified
Party shall promptly return it to the Indemnifying Party, together with interest
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by
Citibank, N.A. (the "Prime Rate"). Any such interim reimbursement payments which
are not made to the Indemnified Party within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request.
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X. TERMINATION
Section 10.1. Termination Events. Subject to the provisions of Section
10.2, this Agreement may, by written notice given at or prior to the Closing in
the manner hereinafter provided, be terminated and abandoned:
(a) By either Seller or Purchaser if a material default or breach
shall be made by the other party with respect to the due and timely performance
of any of its covenants and agreements contained herein, or with respect to the
due compliance with any of the representations and warranties contained in
Article V or VI, as the case may be, and such default cannot be cured and has
not been waived;
(b) By written mutual consent of Seller and Purchaser;
(c) By either Seller or Purchaser if the Closing shall not have
occurred, other than through failure of such party to fulfill its obligations
hereunder, on or before November 30, 1996 or such later date as may be agreed
upon by the parties;
(d) By Purchaser, if the conditions set forth in Article III hereof
shall not have been met (or shall not, in the reasonable judgment of Purchaser,
be capable of being met), and Seller, if the conditions set forth in Article IV
hereof shall not have been met (or shall not, in the reasonable judgment of
Seller, be capable of being met), in each case by November 30, 1996;
(e) By Purchaser if (i) Seller gives notice to Purchaser that it
will not or cannot remove any Title Exception and (ii) within ten (10) business
days after the date such notice is given Purchaser does not waive the
requirement that Seller remove such Title Exception; or
(f) By Purchaser if Seller amends or supplements any Schedule hereto
in accordance with Section 7.5 hereof and such amendment or supplement
constitutes, individually or in the aggregate with other amendments or
supplements to the Schedules, a material adverse change in the condition or
operations of the Assets or the Business after the date hereof.
Section 10.2. Effect of Termination. In the event this Agreement is
terminated pursuant to Section 10.1, all further obligations of the parties
hereunder shall terminate and no party shall have any right against the other
party hereto, except as set forth in this Section 10.2 and in Sections 3.13, 7.8
and 7.9, and each party shall bear its own costs and expenses, except that if
this Agreement is so terminated by one party because one or more of the
conditions to such party's obligations hereunder is not satisfied as a result of
the other party's failure to comply with its obligations under this Agreement,
it is expressly agreed and understood that the terminating party's right to
pursue all legal remedies for breach of contract or otherwise, including,
without limitation, damages relating thereto, shall survive such termination
unimpaired.
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XI. MISCELLANEOUS
Section 11.1. Expenses. Except as provided in Section 10.2, each party to
this Agreement shall pay its own costs and expenses (including all legal and
accounting fees incurred by it) relating to this Agreement, the negotiations
leading up to this Agreement and the transactions contemplated by this
Agreement, whether or not the transactions herein contemplated shall be
consummated.
Section 11.2. Risk of Loss. The risk of loss or damage to any of the
Assets, transfer of which is contemplated hereby, shall remain with Seller until
the Closing and the Seller shall maintain its insurance policies covering the
Assets through the Closing. With respect to the Assets:
(a) If, prior to the Closing, all or any part of the Assets are destroyed
or damaged by fire or the elements or by any other cause, Seller shall within
ten (10) days provide written notice thereof to Purchaser and shall also provide
Purchaser, together with such notice, copies of all insurance then in force
relating to such Assets, whereupon Purchaser may, by written notice to Seller
within twenty (20) days after receipt of notice of the occurrence, elect in
writing not to purchase such Assets if such damage exceeds $50,000 and if Seller
does not agree to repair, restore and replace such Assets to Purchaser's
reasonable satisfaction and in compliance with all state licensing requirements
and Laws within 60 days of the notice of the casualty delivered to Purchaser.
Purchaser's election to so terminate may be exercised, however, if after Seller
agrees to so repair, restore and replace, Seller fails to effect such repair,
restoration and replacement within such 60 day period. Upon such election, this
Agreement shall wholly cease and terminate. If all or any part of the Assets are
so destroyed and Seller has not made the required repairs or restoration but
this Agreement is not so terminated by Purchaser, this Agreement shall not be
affected, but Seller, at the Closing, shall assign, transfer and set over to
Purchaser all of Seller's right, title and interest in and to the policies of
insurance insuring against the loss and Seller's interest in sums payable
thereunder and Seller shall pay to Purchaser the amount of any deductibles under
such insurance policies and any payments theretofore made on account of the
destruction or damage.
(b) In the event of the institution of any proceeding involving the
proposed taking by eminent domain or a taking by eminent domain of all or any
portion of the Real Property, which Purchaser, in its reasonable discretion
deems relevant or which would materially alter the grade, or access to any
street or would, in the reasonable judgment of Purchaser, otherwise injure,
damage, or decrease the value of the Real Property or adversely affect the
ability of Purchaser to conduct the business contemplated by it following the
Closing, Purchaser shall have the right and option to elect to cancel and
terminate this Agreement by giving Seller notice to such effect within thirty
(30) days after its receipt of written notice of any such occurrence, whereupon
this Agreement shall be deemed to be terminated. Seller shall within ten (10)
days furnish Purchaser with written notice of any such occurrence and all
available
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data related thereto. Should Purchaser so terminate this Agreement, this
Agreement shall cease and terminate. If Purchaser does not so terminate this
Agreement, Purchaser shall accept conveyance of the Real Property subject to
such proceeding or without the portion of the Real Property taken, and Seller
shall thereupon, at the Closing, assign and transfer to Purchaser all of the
right, title and interest of Seller, as owner of the Real Property, in and to
such proceeding and the proceeds of the award to be made in such proceeding, and
turn over to Purchaser the proceeds of any award (or payment made pending the
making of the award) already received by Seller.
Section 11.3. Brokers' and Finders' Fees. Seller shall indemnify and hold
harmless Purchaser against any and all claims, losses, liabilities and expenses
which may be asserted against or incurred by Purchaser as a result of Seller's
dealings, arrangements or agreements with any Person who may be entitled to any
brokerage or finder's fee or other commission in respect of the transactions
contemplated hereby. Purchaser shall indemnify and hold harmless Seller against
any and all claims, losses, liabilities and expenses which may be asserted
against or incurred by Seller as a result of Purchaser's dealings, arrangements
or agreements with any Person who may be entitled to any brokerage or finder's
fee or other commission in respect of the transaction contemplated hereby.
Section 11.4. Amendment. This Agreement shall not be amended or
modified except by a writing duly executed by Seller and Purchaser.
Section 11.5. Entire Agreement; Assignment. This Agreement, including the
Exhibits and Schedules hereto and the other instruments, agreements and
documents delivered pursuant to this Agreement contain all of the terms,
conditions and representations and warranties agreed upon by the parties
relating to the subject matter of this Agreement and supersedes all prior
agreements, negotiations, correspondence, undertakings and communications of the
parties, oral or written, respecting such subject matter including, without
limitation, that certain letter agreement, dated September 19, 1996, between
American Building Company, parent company of the Purchaser, and Seller. This
Agreement and all of the provisions hereof will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor any of the rights, interests or obligations
of any party hereunder may be assigned by such party without the prior written
consent of the other party hereto; provided, however, that Purchaser may assign
its rights, interests and obligations hereunder to any Affiliate of Purchaser,
but no such assignment shall relieve Purchaser of its obligations hereunder if
such assignee does not perform such obligations.
Section 11.6. Headings. The headings contained in this Agreement are
intended solely for convenience and shall not affect the rights of the
parties to this Agreement.
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Section 11.7. Notices. All notices, requests, demands and other
communications made in connection with this Agreement shall be in writing and
shall be deemed to have been duly given (a) on the date of delivery, if
delivered to the persons identified below, (b) seven calendar days after mailing
if mailed, with proper postage, by certified or registered mail, return receipt
requested, (c) on the date of receipt if sent by telex or telecopy, and
confirmed in writing in the manner set forth in (b) on or before the next day
after the sending of the telex or telecopy, or (d) one business day after
delivered to a nationally recognized overnight courier service marked for
overnight delivery, in each case addressed as follows:
IF TO SELLER: American Modular Technologies, LLC
c/o S.N. Phelps & Co.
55 Railroad Avenue
Greenwich, Connecticut 06830
Attention: Executive Vice President
Telephone: 203-622-4880
Telecopy: 203-622-4058
WITH A COPY TO: Stutzman & Bromberg
2200 Allianz Financial Center
2323 Bryan
Dallas, Texas 75201
Attention: Richard Wallach, Esq.
Telephone: 214-969-4400
Telecopy: 214-969-4994
IF TO PURCHASER: AMT/Beaman Corporation
c/o American Buildings Company
State Docks Road
Eufaula, Alabama 36027
Attention: President
Telephone: 334-687-2000
Telecopy: 334-687-7156
WITH A COPY TO: Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Paul Jacobs, Esq.
Telephone: 212-318-3000
Telecopy: 212-752-5958
Such addresses and numbers may be changed, from time to time, by means of a
notice given in the manner provided in this Section.
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Section 11.8. Severability. If any provision of this Agreement is held to
be unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement shall be
deemed valid and enforceable to the full extent possible.
Section 11.9. Waiver. Waiver of any term or condition of this Agreement by
any party shall only be effective if in writing and shall not be construed as a
waiver of any subsequent breach or failure of the same term or condition, or a
waiver of any other term or condition of this Agreement.
Section 11.10. Counterparts. This Agreement may be signed in two or more
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument, and all such counterparts together shall be deemed an
original of this Agreement.
Section 11.11. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Alabama.
Section 11.12. Third Parties. Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person other than the parties hereto and their
successors or assigns any rights or remedies under or by reason of this
Agreement.
[Signature Page follows]
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the date set forth above.
PURCHASER: AMT/Beaman Corporation
By:_____________________________
Name: R. Charles Blackmon, Jr.
Title: Vice President
SELLER: AMERICAN MODULAR TECHNOLOGIES, LLC
By:______________________________
Name:____________________________
Title:___________________________
BEAMAN CORPORATION
By:______________________________
Name:____________________________
Title:___________________________
51
EXHIBIT 10.46
EMPLOYMENT AGREEMENT
AGREEMENT made as of November 27, 1996, between AMT/BEAMAN
CORPORATION, a Delaware corporation with an office at Old 421 Road, Liberty,
North Carolina 27298 (the "Company"), and Joseph M. Grigelevich, Jr., residing
at 19-F River Oaks Drive, Greensboro, North Carolina 27409 (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires that Executive be employed to serve in
a senior executive capacity with the Company, a wholly-owned subsidiary of
American Buildings Company ("ABC"), and Executive desires to be so employed upon
the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations and covenants herein contained, the parties hereto
agree as follows:
1. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts
such employment, subject to the terms and conditions herein set forth. Executive
shall hold the office of President of the Company reporting to the Chairman of
the Board of the Company.
2. TERM.
The initial term of employment under this Agreement shall begin on
the date hereof (the "Employment Date") and shall continue until January 1,
2000, subject to prior termination in accordance with the terms hereof.
Thereafter, this Agreement shall automatically be renewed for successive one
year terms unless either party shall give the other ninety (90) days prior
written notice of its intent not to renew this Agreement.
3. COMPENSATION.
As compensation for the employment services to be rendered by
Executive hereunder, including all services as an officer or director of the
Company and any of its subsidiaries, the Company agrees to pay, or cause to be
paid, to Executive, and Executive agrees to accept, payable in equal
installments in accordance with Company
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practice, an initial annual salary of $90,000. Executive's annual salary
hereunder for the remaining years of employment shall be determined by the Board
of Directors in its sole discretion, but shall not in any year be reduced below
the rate for the previous year. In addition, Executive shall be entitled to
bonuses from time to time in such amounts as may be determined by the Board of
Directors in its sole discretion.
4. EXPENSES.
The Company shall pay or reimburse Executive, upon presentment of
suitable vouchers, for all reasonable business and travel expenses which may be
incurred or paid by Executive in connection with his employment hereunder.
Executive shall comply with such restrictions and shall keep such records as the
Company may deem necessary to meet the requirements of the Internal Revenue Code
of 1986, as amended from time to time, and regulations promulgated thereunder.
5. OTHER BENEFITS.
Executive shall be entitled to such vacations and to participate in
and receive any other benefits customarily provided by the Company to its senior
management personnel (including any profit sharing, pension, short and long-term
disability insurance, hospital, major medical insurance and group life insurance
plans in accordance with the terms of such plans) and including stock option
and/or stock purchase plans, all as determined from time to time by the Board of
Directors of the Company and, in the case of stock options and/or stock purchase
plans, the Board of Directors of ABC.
6. DUTIES.
(a) Executive shall perform such duties and functions as the
Chairman of the Board of Directors shall from time to time determine and
Executive shall comply in the performance of his duties with the policies of the
Board of Directors, and be subject to the direction of the Chairman of the Board
of Directors. At the request of the Board of Directors, Executive shall serve as
an executive officer and director of any subsidiary of the Company and, in the
performance of such duties, Executive shall comply with the policies of the
Board of Directors of each such subsidiary.
(b) During the term of this Agreement, Executive shall devote
substantially all of his time and attention, reasonable vacation time and
absences for sickness excepted, to the business of the Company, as necessary to
fulfill his duties. Executive shall perform the duties assigned to him with
fidelity and to the best of his ability. Notwithstanding anything herein to the
contrary, Executive may engage in other activities so long as such activities do
not unreasonably interfere with Executive's performance of his duties hereunder
and do not violate Section 9 hereof.
(c) Nothing in this Section 6 or elsewhere in this Agreement shall
be construed to prevent Executive from investing or trading in nonconflicting
investments
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as he sees fit for his own account, including real estate, stocks, bonds,
securities, commodities or other forms of investments.
7. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.
(a) Executive's employment hereunder may be terminated at any time
upon written notice from the Company to Executive:
(i) upon the determination by the Board of Directors that
Executive's performance of his duties has not been fully satisfactory for
any reason which would not constitute justifiable cause (as hereinafter
defined) upon thirty (30) days' prior written notice to Executive; or
(ii) upon the determination by the Board of Directors that there is
justifiable cause (as hereinafter defined) for such termination upon ten
(10) days' prior written notice to Executive.
(b) Executive's employment shall terminate upon:
(i) the death of Executive; or
(ii) the "disability" of Executive (as hereinafter defined pursuant
to subsection (c) herein) pursuant to subsection (f) hereof.
(c) For the purposes of this Agreement, the term "disability" shall mean
the inability of Executive, due to illness, accident or any other physical or
mental incapacity, substantially to perform his duties for a period of three (3)
consecutive months or for a total of six (6) months (whether or not consecutive)
in any twelve (12) month period during the term of this Agreement, as reasonably
determined by the Board of Directors of the Company after examination of
Executive by an independent physician reasonably acceptable to Executive.
(d) For the purposes hereof, the term "justifiable cause" shall mean and
be limited to: any repeated wilful failure or refusal to perform any of his
duties pursuant to this Agreement where such conduct shall not have ceased
within 30 days following written warning from the Company; Executive's
conviction (which, through lapse of time or otherwise, is not subject to appeal)
of, pleading guilty to, or confession of any crime or offense involving money or
other property of the Company or its subsidiaries or affiliates or which
constitutes a felony in the jurisdiction involved; Executive's performance of
any act or his failure to act, for which if Executive were prosecuted and
convicted, a crime or offense involving money or property of the Company or its
subsidiaries or affiliates, or which would constitute a felony in the
jurisdiction involved, would have occurred; any unauthorized disclosure by
Executive to any person, firm or corporation other than the Company, its
subsidiaries or affiliates and its and their directors, officers and employees,
of any confidential information or trade secret of
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the Company, ABC or any of their respective subsidiaries or affiliates
(collectively, the "ABC Group"); any attempt by Executive to secure any personal
profit in connection with the business of any member of the ABC Group;
Executive's engagement in a fraudulent act to the material damage or prejudice
of any member of the ABC Group or in conduct or activities materially damaging
to the property, business or reputation of any member of the ABC Group, all as
determined by the Board of Directors in good faith; Executive's illegal use of
controlled substances; any material act or omission by Executive involving
malfeasance or negligence in the performance of Executive's duties to the
material detriment of any member of the ABC Group, as determined by the Board of
Directors of the Company or of ABC, as the case may be, in good faith, which has
not been corrected by Executive within thirty (30) days after written notice
from the Company of any such act or omission; the entry of an order of a court
that remains in effect and is not discharged for a period of at least sixty (60)
days, which enjoins or otherwise limits or restricts the performance by
Executive under this Agreement, relating to any contract, agreement or
commitment made by or applicable to Executive in favor of any former employer or
any other person; or the engaging by Executive in any business other than the
business of the ABC Group which unreasonably interferes with the performance of
his duties hereunder. Upon termination of Executive's employment for justifiable
cause, this Agreement shall terminate immediately and Executive shall not be
entitled to any amounts or benefits hereunder other than such portion of
Executive's annual salary and reimbursement of expenses pursuant to Section 4
hereof as has been accrued through the date of his termination of employment.
(e) If Executive shall die during the term of his employment hereunder,
this Agreement shall terminate immediately. In such event, the estate of
Executive shall thereupon be entitled to receive such portion of Executive's
annual salary and reimbursement of expenses pursuant to Section 4 as has been
accrued through the date of his death. If Executive's death shall occur while he
is on Company business, the estate of Executive shall be entitled to receive, in
addition to the other amounts set forth in this subsection (e), an amount equal
to one-half his then annual salary.
(f) Upon Executive's "disability", the Company shall have the right to
terminate Executive's employment. Notwithstanding any inability to perform his
duties, Executive shall be entitled to receive his compensation (including
bonus, if any) and reimbursement of expenses pursuant to Section 4 as provided
herein until he begins to receive long-term disability insurance benefits under
the policy provided by the Company pursuant to Section 5 hereof. Any termination
pursuant to this subsection (f) shall be effective on the later of (i) the date
30 days after which Executive shall have received written notice of the
Company's election to terminate or (ii) the date he begins to receive long-term
disability insurance benefits under the policy provided by the Company pursuant
to Section 5 hereof.
(g) Notwithstanding any provision to the contrary contained herein, in the
event that Executive's employment is terminated by the Company at any time for
any reason other than justifiable cause, disability or death, the Company shall
(i) pay
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Executive, for a period equal to the longer of (1) the remaining term of this
Agreement or (2) one year (such period being hereinafter referred to as the
"Severance Period"), a monthly payment equal to one-twelfth of his then annual
salary, which amount shall be in lieu of any and all other payments due and
owing to the Executive under the terms of this Agreement (other than any
payments constituting reimbursement of expenses pursuant to Section 4 hereof),
and (ii) continue to allow Executive to participate, at the Company's expense,
in the Company's health insurance and disability insurance programs, to the
extent permitted under such programs, during the Severance Period (collectively,
the "Severance Payments"); provided, however, that if such termination occurs
within one (1) year following the effective date of a Change in Control of ABC
(as hereinafter defined), the Company shall pay to Executive, in lieu of the
amounts set forth in clause (i) above, in one lump sum, a severance payment
equal to (i) two years' annual salary plus (ii) an amount equal to twice
Executive's most recently declared bonus, if any.
(h) For purposes of this Agreement, a "Change in Control of ABC" shall be
deemed to occur if (i) there shall be consummated (x) any consolidation or
merger of ABC in which ABC is not the continuing or surviving corporation or
pursuant to which shares of ABC's Common Stock would be converted into cash,
securities or other property, other than a merger of ABC in which the holders of
ABC's Common Stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger, or (y) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the assets
of ABC, or (ii) the stockholders of ABC shall approve any plan or proposal for
liquidation or dissolution of ABC, or (iii) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 40% or more of ABC's outstanding Common
Stock other than pursuant to a plan or arrangement entered into by such person
and ABC, or (iv) during any period of two consecutive years, individuals who at
the beginning of such period constitute the entire Board of Directors of ABC
shall cease for any reason to constitute a majority thereof unless the election,
or the nomination for election by ABC's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
(i) Notwithstanding any provision to the contrary contained herein, in the
event the Company elects not to renew this Agreement (other than within one year
following a Change in Control of ABC, which is covered in Section 7(g) above)
the Company will pay Executive a severance payment equal to one year's annual
salary.
(j) Executive may terminate his employment at any time upon 30 days' prior
written notice to the Company. Upon Executive's termination of his employment
hereunder or his election not to renew this Agreement, this Agreement (other
than Sections 4, 7, 9, 10, 11 and 12, which shall survive, if at all, in
accordance with their terms) shall terminate; provided, however, that Section 9
shall not survive such
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termination unless the Company pays to Executive during the Severance Period the
Severance Payments. In such event, Executive shall be entitled to receive such
portion of Executive's annual salary and bonus, if any, as has been accrued to
date. Executive shall be entitled to reimbursement of expenses pursuant to
Section 4 hereof and to participate in the Company's benefit plans to the extent
participation by former employees is required by law or permitted by such plans,
with the expense of such participation to be as specified in such plans for
former employees.
(k) If, in connection with a change of ownership or control of the Company
or a change in ownership of a substantial portion of the assets of the Company
(all within the meaning of Section 280G(b)(2) of the Internal Revenue Code of
1986, as amended (the "Code")), an excise tax is payable by Executive under
Section 4999 of the Code, then the Company will pay to the Executive additional
compensation which will be sufficient to enable Executive to pay such excise tax
as well as the income tax and excise tax on such additional compensation, such
that, after the payment of income and excise taxes, Executive is in the same
economic position in which he would have been if the provisions of Section 4999
of the Code had not been applicable. The additional compensation required by
this Section 7(k) will be paid to Executive promptly after the date or dates on
which the amount of such additional compensation is determinable, in whole or in
part.
8. REPRESENTATIONS AND AGREEMENTS OF EXECUTIVE.
(a) Executive represents and warrants that he is free to enter into this
Agreement and to perform the duties required hereunder, and that there are no
employment contracts or understandings, restrictive covenants or other
restrictions, whether written or oral, preventing the performance of his duties
hereunder.
(b) Executive agrees to submit to a medical examination and to cooperate
and supply such other information and documents as may be required by any
insurance company in connection with the Company's obtaining life insurance on
the life of Executive, and any other type of insurance or fringe benefit as the
Company shall determine from time to time to obtain.
9. NON-COMPETITION.
(a) Executive agrees that during his employment by the Company and during
the Severance Period following the termination of Executive's employment
hereunder (the "Non-Competitive Period"), Executive shall not, directly or
indirectly, as owner, partner, joint venturer, stockholder, employee, broker,
agent, principal, trustee, corporate officer, director, licensor, or in any
capacity whatsoever engage in, become financially interested in, be employed by,
render any consultation or business advice with respect to, or have any
connection with, (i)Eany business which is competitive with products or services
of the ABC Group in any geographic area in the United States of America, Central
and South America and Canada where, at the time of the termination of his
employment hereunder, the business of the ABC Group was being conducted or
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was proposed to be conducted in any manner whatsoever or (ii)Eany business
conducted under any corporate or trade name utilized by any member of the ABC
Group or any name similar thereto without the prior written consent of the
Company; provided, however, that Executive may own any securities of any
corporation which is engaged in such business and is publicly owned and traded
but in an amount not to exceed at any one time one percent (1%) of any class of
stock or securities of such corporation. In addition, Executive shall not,
directly or indirectly, during the Non-Competitive Period, request or cause any
suppliers or customers with whom any member of the ABC Group has a business
relationship to cancel or terminate any such business relationship with any
member of the ABC Group, or solicit, interfere with or entice from the Company
any employee (or former employee) of the ABC Group.
(b) If any portion of the restrictions set forth in this Section 9 should,
for any reason whatsoever, be declared invalid by a court of competent
jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
(c) Executive acknowledges that the ABC Group conducts business throughout
the United States, that its sales and marketing prospects are for continued
expansion throughout the United States, Central and South America and Canada and
that, therefore, the territorial and time limitations set forth in this Section
9 are reasonable and properly required for the adequate protection of the
business of the ABC Group. In the event any such territorial or time limitation
is deemed to be unreasonable by a court of competent jurisdiction, Executive
agrees to the reduction of the territorial or time limitation to the area or
period which such court shall deem reasonable.
(d) The existence of any claim or cause of action by Executive against any
member of the ABC Group shall not constitute a defense to the enforcement by the
Company or any subsidiary or affiliate of the foregoing restrictive covenants,
but such claim or cause of action shall be litigated separately.
(e) In the event Executive's employment with the Company terminates for
any reason other than termination by the Company within one year following a
Change in Control of the ABC, the Company and Executive agree that in
consideration of the payments being made to Executive during the Severance
Period, Executive shall be available during the Severance Period to advise and
consult with the Board of Directors, the President and other officers of the
Company and its subsidiaries with respect to the affairs of the Company and its
subsidiaries on a part-time basis, in response to requests for such advisory and
consulting services by the Board of Directors, or other officers of the Company
or its subsidiaries, subject to the conditions that (i) such services shall be
performed within the United States of America, (ii) Executive shall not be
required to devote a major portion of his time to such services, (iii) such
services shall not unreasonably interfere with the performance of other
employment or consulting duties Executive may have, (iv) Executive shall not be
required to perform such services during usual vacation periods and reasonable
periods of illness or other incapacitation, (v) such services shall be performed
at times and
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places as shall be chosen by Executive, and which will result in the least
inconvenience to Executive, and (vi) all other provisions of this Section 9
shall apply. The Company shall reimburse Executive for actual out-of-pocket
expenses incurred in rendering the services performed by Executive upon the
request of the Board of Directors, or other officers of the Company or its
subsidiaries, payable at the end of each month during such period.
Notwithstanding the foregoing, in the event that Executive seeks full-time
employment with a third party and such third party will not accept Executive's
services for as long as he is committed under this subsection (e) to provide
consulting services to the Company, then if the Board of Directors of the
Company determines in its reasonable discretion that Executive's employment with
the third party will not cause him to breach the provisions of Section 9 of this
Agreement (other than this subsection (e)) and Executive provides the Board of
Directors with a letter signed by the third party stating that such third party
will not accept Executive's services as described above, the provisions of this
subsection (e) shall immediately terminate and be of no further force or effect.
(f) Notwithstanding anything herein to the contrary, this Section 9 shall
automatically terminate if the Company terminates Executive's employment within
one year following the effective date of a Change in Control of ABC, or if the
Company fails to make any payments due to Executive under Sections 7(g), 7(i),
7(j) or 9(e).
10. INVENTIONS AND DISCOVERIES.
(a) Executive shall promptly and fully disclose to the Company, and with
all necessary detail for a complete understanding of the same, all developments,
know-how, discoveries, inventions, improvements, concepts, ideas, writings,
formulae, processes and methods (whether copyrightable, patentable or otherwise)
made, received, conceived, acquired or written during working hours, or
otherwise, by Executive (whether or not at the request or upon the suggestion of
the Company) during the period of his employment with, or rendering of advisory
or consulting services to, any member of the ABC Group, solely or jointly with
others in or relating to any activities of the ABC Group known to him as a
consequence of his employment or the rendering of advisory and consulting
services hereunder (collectively the "Subject Matter").
(b) Executive hereby assigns and transfers, and agrees to assign and
transfer, to the Company, all his rights, title and interest in and to the
Subject Matter, and Executive further agrees to deliver to the Company any and
all drawings, notes, specifications and data relating to the Subject Matter, and
to execute, acknowledge and deliver all such further papers, including
applications for copyrights or patents, as may be necessary to obtain copyrights
and patents for any thereof in any and all countries and to vest title thereto
to the Company. Executive shall assist the Company in obtaining such copyrights
or patents during the term of this Agreement, and any time thereafter on
reasonable notice and at mutually convenient times, and Executive agrees to
testify in any prosecution or litigation involving any of the Subject Matter;
provided, however, that Executive shall be compensated in a timely manner at the
rate of $500.00 per day (or portion thereof), plus out-of-pocket expenses
incurred in rendering such
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assistance or giving or preparing to give such testimony if it is required after
the Severance Period.
11. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Executive shall not, during the term of this Agreement, or at any time
following termination of this Agreement, directly or indirectly, disclose or
permit to be known (other than as is required in the regular course of his
duties (including without limitation disclosures to the Company's advisors and
consultants) or is required by law (in which case Executive shall give the
Company prior written notice of such required disclosure) or with the prior
written consent of the Board of Directors of the Company), to any person, firm
or corporation, any confidential information acquired by him during the course
of, or as an incident to, his employment or the rendering of his advisory or
consulting services hereunder, relating to the ABC Group, the directors of any
member of the ABC Group, any client of the ABC Group, or any corporation,
partnership or other entity owned or controlled, directly or indirectly, by any
of the foregoing, or in which any of the foregoing has a beneficial interest,
including, but not limited to, the business affairs of each of the foregoing.
Such confidential information shall include, but shall not be limited to,
proprietary technology, trade secrets, patented processes, research and
development data, know-how, market studies and forecasts, competitive analyses,
pricing policies, employee lists, personnel policies, the substance of
agreements with customers, suppliers and others, marketing or dealership
arrangements, servicing and training programs and arrangements, customer lists
and any other documents embodying such confidential information. This
confidentiality obligation shall not apply to any confidential information which
thereafter becomes publicly available other than pursuant to a breach of this
Section 11(a) by Executive.
(b) All information and documents relating to the ABC Group as hereinabove
described (or other business affairs) shall be the exclusive property of the ABC
Group, and Executive shall use commercially reasonable best efforts to prevent
any publication or disclosure thereof. Upon termination of Executive's
employment with the Company, all documents, records, reports, writings and other
similar documents containing confidential information, including copies thereof,
then in Executive's possession or control shall be returned and left with the
Company.
12. SPECIFIC PERFORMANCE
Executive agrees that if he breaches, or threatens to commit a breach of,
any of the provisions of Sections 9, 10 or 11 (the "Restrictive Covenants"), the
Company shall have, in addition to, and not in lieu of, any other rights and
remedies available to the Company under law and in equity, the right to
injunctive relief and/or to have the Restrictive Covenants specifically enforced
by an court of competent jurisdiction, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause irreparable injury to
the Company and that money damages would not provide an adequate remedy to the
Company. Notwithstanding the foregoing, nothing herein
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shall constitute a waiver by Executive of his right to contest whether a breach
or threatened breach of any Restrictive Covenant has occurred.
13. AMENDMENT OR ALTERATION.
No amendment or alteration of the terms of this Agreement shall be valid
unless made in writing and signed by both of the parties hereto.
14. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina applicable to agreements made and to be
performed therein.
15. SEVERABILITY.
The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
16. NOTICES.
Any notices required or permitted to be given hereunder shall be
sufficient if in writing, and if delivered by hand or courier, or sent by
certified mail, return receipt requested, to the addresses set forth above or
such other address as either party may from time to time designate in writing to
the other, and shall be deemed given as of the date of the delivery or at the
expiration of three days in the event of a mailing.
17. WAIVER OR BREACH.
It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
18. ENTIRE AGREEMENT AND BINDING EFFECT.
This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof, supersedes all prior agreements, both
written and oral, between the parties with respect to the subject matter hereof,
and may be modified only by a written instrument signed by each of the parties
hereto. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives, heirs, distributors,
successors and assigns, provided, however, that Executive shall not be entitled
to assign or delegate any of his or her rights or obligations hereunder without
the prior written consent of the Company.
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19. SURVIVAL.
Except as otherwise expressly provided herein, the termination of
Executive's employment hereunder or the expiration of this Agreement shall not
affect the enforceability of Sections 4, 7, 9, 10, 11 and 12 hereof.
20. FURTHER ASSURANCES.
The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
21. CONSTRUCTION OF AGREEMENT.
No provision of this Agreement or any related document shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured or drafted such provision.
22. HEADINGS.
The Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, demand or affect its provisions.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
AMT/BEAMAN CORPORATION
[CORPORATE SEAL]
By:___________________________
Name:
Title:
ATTEST:
By:________________________
Name:
Title:
---------------------------
Joseph M. Grigelevich, Jr.
-11-
Exhibit 10.47
Description of Shareholder Value Added Plan
In 1996, the Company adopted a Shareholder Value Added Plan that
entitles participants to receive cash bonuses based on an annual aggregate award
plus any deferred award balance from the award bank. Contributions to the annual
aggregate award and the award bank are based on a fixed percentage of the
Shareholder Value Added ("SVA") plus a fixed percentage of the annual change in
SVA. SVA is defined as the amount that Net Operating Profit After Taxes exceeds
a capital charge, which is calculated as Capital Employed multiplied by the
associated Cost of Capital. Each participant's share is based on a specified
percentage of their salary in relation to the other participants.
EXHIBIT 11.0
AMERICAN BUILDINGS COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Income before extraordinary item and
cumulative effect of change in accounting principle $12,447 $17,590 $10,455
Extraordinary loss on early extinguishment
of long-term debt -- -- (2,425)
Cumulative effective of change in accounting for
income taxes -- -- --
------- ------- -------
Net Income $12,447 $17,590 $ 8,030
======= ======= =======
Weighted average common and common equivalent
shares outstanding 5,699 6,231 5,600
Add - Dilutive effect of outstanding options (as
determined by the application of the treasury
stock method) 341 323 180
------- ------- -------
Weighted average common and common equivalent
shares outstanding 6,040 6,554 5,780
======= ======= =======
Primary earnings per share:
Income before extraordinary item and
cumulative effect of change in accounting principle $ 2.06 $ 2.68 $ 1.81
Extraordinary loss on early extinguishment
of long-term debt -- -- (0.42)
Cumulative effect of change in accounting for
income taxes -- -- --
------- ------- -------
Net income $ 2.06 $ 2.68 $ 1.39
======= ======= =======
FULLY DILUTED EARNINGS PER SHARE:
Weighted average common and common equivalent
shares outstanding 5,699 6,231 5,600
Add - Dilutive effect of outstanding options (as
determined by the application of the treasury
stock method) 355 343 260
------- ------- -------
Weighted average common and common equivalent
shares outstanding 6,054 6,574 5,860
======= ======= =======
Primary earnings per share:
Income before extraordinary item and
cumulative effect of change in accounting principle $ 2.06 $ 2.68 $ 1.78
Extraordinary loss on early extinguishment
of long-term debt -- -- (0.41)
Cumulative effect of change in accounting for
income taxes -- -- --
------- ------- -------
Net income $ 2.06 $ 2.68 $ 1.37
======= ======= =======
</TABLE>
Page 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 10-K into the Company's previously filed
Registration Statements on Form S-8, File No. 33-86556, File No. 33-86558, and
File No. 33-86560.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 24, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND THE CONDENSED CONSOLIDATED STATEMENTS
OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY RERERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 39,677
<ALLOWANCES> 3,345
<INVENTORY> 19,823
<CURRENT-ASSETS> 60,572
<PP&E> 71,880
<DEPRECIATION> 38,686
<TOTAL-ASSETS> 101,970
<CURRENT-LIABILITIES> 46,862
<BONDS> 10,872
0
0
<COMMON> 63
<OTHER-SE> 41,403
<TOTAL-LIABILITY-AND-EQUITY> 101,970
<SALES> 273,953
<TOTAL-REVENUES> 273,953
<CGS> 229,260
<TOTAL-COSTS> 253,571
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,067
<INTEREST-EXPENSE> 143
<INCOME-PRETAX> 20,239
<INCOME-TAX> 7,792
<INCOME-CONTINUING> 12,447
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,447
<EPS-PRIMARY> 2.06
<EPS-DILUTED> 0
</TABLE>
