SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number
April 30, 1996 1-10555
POLYVISION CORPORATION
(FORMERLY INFORMATION DISPLAY TECHNOLOGY, INC.)
(Exact name of registrant as specified in its charter)
New York 13-3482597
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
866 North Main Street Extension
Wallingford, Connecticut 06492
---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 294-6906
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, par value American Stock Exchange
$.001 per share
Securities registered pursuant to Section 12(g) of the Act:
None
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 the
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. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of July 18, 1996:
$6,637,677
The number of shares outstanding of the registrant's class of common stock as of
July 18, 1996:
8,530,073 shares
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant intends to file a definitive Proxy Statement (the
"PolyVision Proxy Statement") pursuant to Regulation 14A within 120 days of the
end of the fiscal year ended April 30, 1996. Certain information required in
response to Items 10, 11, 12 and 13 of Part III of this Form 10-K is hereby
incorporated by reference to the PolyVision Proxy Statement.
Page 1 of ___ Pages
Exhibit Index Appears on Page ___
<PAGE>
POLYVISION CORPORATION
(FORMERLY INFORMATION DISPLAY TECHNOLOGY, INC.)
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED APRIL 30, 1996
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . 12
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
12
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 13
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation . . . . . . . . . . . . . . . . . . . . . . . 14
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . 18
Item 9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . 18
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . 18
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . 18
Item 12. Security Ownership of Certain Beneficial Owners and Management . . 18
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . 18
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . 19
2
<PAGE>
ITEM 1. BUSINESS
- ------- --------
General
PolyVision Corporation, through its three wholly-owned subsidiaries (the
"Company" or "PolyVision"), is engaged in the development, manufacture and sale
of information display products.
Greensteel, Inc. ("Greensteel"), which constituted the Company's entire
business prior to the Merger (as more fully described below) under its former
name Information Display Technology, Inc. ("IDT"), is engaged in the manufacture
and sale of custom-designed and engineered writing, projection and other visual
display surfaces (such as porcelain chalkboards and markerboards), custom
cabinets, and work station and conference center casework primarily for schools
and offices. Posterloid Corporation ("Posterloid"), which became a wholly-owned
subsidiary of the Company on May 24, 1995 as a result of the Merger, is engaged
in the manufacture and sale of indoor and outdoor menuboard display systems to
the fast food and convenience store industries, and changeable magnetic signs
used principally by banks to display interest rates, currency exchange rates and
other information. APV, Inc. ("APV"), which also became a wholly-owned
subsidiary of the Company as a result of the Merger, is engaged in the research,
development, licensing and testing of a proprietary technology known as
PolyVision(TM), a materials technology with electrochemical and physical
characteristics that allow it to address applications in a number of display
product markets.
Recent Developments
Union Agreement
On February 28, 1996, Greensteel entered into a new three-year labor
agreement with the local bargaining unit of the Carpenters Union at its
Dixonville, Pennsylvania facility (the "Union"), whose members voted on that
date to accept the new labor agreement. The labor agreement provides for a
"working partnership" between Greensteel management and the Union whereby
bargaining unit members received an aggregate of 229,000 shares of the Company's
common stock and will share in 50% of the excess of "targeted gross profit"
generated at the Dixonville facility. In exchange for such equity participation
and the understanding of the importance of reducing Greensteel's cost structure
to the future growth of the business, Union members agreed to an approximate 14%
reduction in direct wages and a 6% reduction in benefits. The labor agreement
further provides for the termination of the bargaining employees' defined
benefit pension plan with any excess funding to be distributed to its
participants. Although the Company believes this agreement will substantially
enhance its competitive position and allow it to aggressively pursue increased
market share, the issuance of common stock and the termination of the pension
plan resulted in a fourth quarter charge of approximately $700,000.
Bank Financing
On April 25, 1996, the Company and Greensteel entered into a Master Credit
Agreement with the Bank of Boston Connecticut to provide various credit
facilities totaling, in the aggregate, $5,000,000 for Greensteel. The credit
agreement provides for the refinancing of Greensteel's working capital facility
with The Alpine Group, Inc. ("Alpine") which was repaid in the amount of
$2,453,000, including accrued interest, on April 30, 1996. The credit agreement
further provides for a maturity of August 31, 1997, an interest rate equal to
the prime rate plus one percent, a first lien on all tangible and intangible
personal property of Greensteel and a guaranty by the Company of such bank
indebtedness, and is subject to customary loan covenants and other financial
coverage ratios including restrictions on dividends from Greensteel to the
Company.
Greensteel Incorporation
On January 12, 1996 the Board of Directors of the Company approved the
incorporation of its then Greensteel Division. Pursuant to an Agreement of
Transfer, all of the inventory, supplies, fixtures, equipment and
3
<PAGE>
other personal property held by the Company relating to its Greensteel Division
was transferred to Greensteel in exchange for 100% of the capital stock of such
subsidiary. Greensteel was incorporated in January 1996 to facilitate the
separate financing of Greensteel's working capital requirements.
Background
On December 21, 1994, Alpine purchased from certain stockholders of
Adience, Inc. ("Adience") a total of 82.3% of the outstanding shares of Adience
common stock (the "Adience Acquisition"), which, together with 4.9% of such
shares previously owned by Alpine, increased its ownership to 87.2% of the
outstanding shares of Adience common stock. At the time of the Adience
Acquisition, Adience owned 80.3% of the outstanding shares of IDT common stock,
and the remainder was publicly owned. As a result of such transaction, control
of IDT passed from Adience to Alpine.
On May 24, 1995, APV (a then 98% owned subsidiary of Alpine) and Posterloid
(a then wholly-owned subsidiary of Alpine) were merged with and into two
separate wholly-owned subsidiaries of IDT pursuant to an Agreement and Plan of
Merger, dated as of December 21, 1994, as amended, among Alpine, IDT, APV and
Posterloid (the "Merger Agreement"), with each subsidiary being the surviving
corporation and remaining a wholly-owned subsidiary of the Company. APV and
Posterloid had comprised Alpine's information display group ("IDG"), a business
segment of Alpine. The Merger was completed on May 24, 1995, following the
approval and adoption of the Merger Agreement by IDT shareholders at the 1995
Annual Meeting of Shareholders of IDT. Because Alpine controlled both IDG and
IDT, the Merger was accounted for as a reorganization of entities under common
control and the merged entity adopted IDG's April 30 fiscal year end. IDT has
been included in the merged entity's financial statements from the date Alpine
acquired control of IDT, which was December 21, 1994.
On June 14, 1995, Alpine distributed to its stockholders approximately 73%
of the outstanding shares of PolyVision Common Stock, which were acquired by it
in the Merger (the "Distribution"). At the time of the Distribution, the
Company comprised all of Alpine's information display operations and assets.
The Distribution, when combined with shares of the Company common stock used as
partial consideration in connection with the Adience Acquisition and the
purchase of Adience's senior notes, resulted in the ownership by Alpine of
approximately 17% of the outstanding shares of Common Stock, and Alpine remains
the Company 's largest single shareholder. Alpine also owns 98% of the
preferred stock of the Company.
Business Operations
Greensteel
Greensteel manufactures and sells custom-designed and engineered writing,
projection and other visual display surfaces (such as porcelain chalkboards and
markerboards), custom cabinets, and work station and conference center casework.
Greensteel has its own nationwide marketing network that enables it to market
its products to schools, health care facilities, offices and other institutions
throughout the country. Greensteel's products are marketed under the trade name
"Greensteel."
Greensteel has achieved its current position in the specialized markets it
serves due largely to its integrated approach to customer needs. In many cases,
Greensteel performs a full range of services, including the custom design,
production, installation and maintenance of its products. Greensteel believes
that this integrated approach, which many of its competitors do not provide,
enhances its responsiveness to customer needs. This approach, which allows the
customer to obtain a full line of products and services from a single source,
better enables Greensteel to establish an ongoing relationship with its
customers to provide for their future requirements. Competition in Greensteel's
markets is based largely on price, product quality, responsiveness and
reliability.
4
<PAGE>
Most of Greensteel's products are sold in connection with new facility
construction or renovation. Such products are generally sold as part of a bid
process conducted through architects and general contractors working with
Greensteel's sales staff, and are custom-made to specifications. Successful
marketing of these products is dependent upon the maintenance of strong
relationships with architects and general contractors, particularly in the
education and health care construction fields. Greensteel has been advised by
its customers that its products have achieved general recognition as quality
products.
Products
Greensteel manufactures custom-made systems incorporating chalkboards,
markerboards, tackboards and bulletin boards. Greensteel manufactures porcelain
enameled chalkboards and markerboards which are sold in new construction or as
replacements for traditional slate or glass blackboards. Porcelain products are
manufactured at Greensteel's Alliance, Ohio plant, where porcelain is fused to
sheet steel in electric furnaces. The porcelain-enameled product is then
shipped to one of four other Greensteel production facilities for fabrication
into chalkboards.
Porcelain chalkboards, which are available in a range of colors, are
virtually unbreakable and maintenance free, and are warranted by Greensteel to
retain their original writing and erasing qualities under normal usage and wear.
As a result of these product qualities and the reduced availability of slate for
chalkboard production, Greensteel believes that porcelain chalkboards currently
account for approximately 75% of all chalkboard sales in the United States.
Greensteel's chalkboards, markerboards and cabinetry are typically sold
together as a package to finish wall surfaces in school rooms and offices.
These products are generally manufactured at one or more of Greensteel's five
production and fabrication facilities and are generally sold together as part of
a package to end-users through a sales force operating out of Greensteel's
regional sales offices and through independent distributors. Greensteel's
writing surface products are generally priced from $100 to $900 per unit,
depending on the surface's core material, dimension, gauge and trim, and whether
the products are being sold through its own sales staff or through independent
distributors.
In addition to chalkboards, Greensteel manufactures dry-marker boards,
which are high-gloss porcelain-enameled boards on which the user writes with a
dry erase felt-tip marker. Greensteel also manufactures a variety of other
information display surfaces for educational and health care facilities, such as
tackboards.
Unlike most of its competitors, Greensteel installs as well as manufactures
its information display surfaces. Greensteel designs, engineers and installs
manual and motorized information display systems for educational and office use,
using combinations of chalkboards, markerboards and other surfaces.
Greensteel manufactures and installs wood and plastic laminate cabinetry
for schools, hospitals, laboratories and industry. In addition, Greensteel
manufactures and installs indoor and outdoor display and bulletin board cases.
Sales and Markets
Most of Greensteel's products are sold by a bid process conducted through
architects and general contractors working with Greensteel's sales staff.
Warranties made by Greensteel with respect to its products and services are
consistent with industry standards, except for a 50 year warranty on the writing
surface of its porcelain chalkboards, which is in excess of industry standards.
Greensteel markets its products through a sales staff of 17 persons, most of
whom work on a commission basis, and maintains 12 sales offices in a number of
states. Approximately 30% and 28% of Greensteel's sales during the year ended
April 30, 1996 and the four months ended April 30, 1995, respectively, were made
through independent distributors. As stated above, Greensteel's products are
generally sold as part of a package to finish wall surfaces in school rooms and
offices. While most of the products incorporated into such packages are
manufactured by Greensteel, some components are purchased from
5
<PAGE>
other suppliers and distributed by Greensteel as part of the package. In this
way, Greensteel acts as a distributor for certain related products which it does
not manufacture to the extent necessary to complement the sale and installation
of its own products. Pass-through sales of non-manufactured products accounted
for approximately 9% and 8% of the revenues of Greensteel for the year ended
April 30, 1996 and the four months ended April 30, 1995, respectively.
For the year ended April 30, 1996, sales to educational institutions and
health care facilities accounted for a majority of Greensteel's revenues. Most
of Greensteel's business is concentrated in the eastern half of the United
States and Greensteel believes that it is the dominant supplier of visual
display products in the Northeast.
Raw Materials
The glass frit material used by Greensteel to produce its porcelain writing
surfaces is currently produced to its specifications by a single supplier, Ferro
Corp., so as to maintain consistent color and quality standards. Management of
Greensteel believes that alternative sources of supply of the glass frit
material used by Greensteel to produce its porcelain writing surfaces are
readily available. Greensteel has never experienced any difficulty with the
quantity or quality of product from its glass frit supplier. All other raw
materials are readily available from a variety of sources.
Competition
Greensteel competes with a variety of companies which manufacture or
distribute chalkboards and institutional cabinetry. Greensteel is one of only
three manufacturers in the United States of porcelain-enameled steel facings,
along with Claridge Products and Equipment Inc. and Alliance America (which are
privately-owned companies), and is the only one with its own sales force.
Claridge Products and Equipment Inc. sells its products through a network of
independent distributors and Alliance America sells the porcelain facings only
to laminators for further fabrication. As a result, Greensteel competes only
indirectly with such manufacturers, and more directly with independent
distributors which are typically small, local and regional companies.
Greensteel has attained its competitive position primarily as a result of design
quality and reliability, both with respect to its products and installation.
Seasonality
Greensteel's business is seasonal and much of its revenues and most of its
operating profits occur in the third quarter of the calendar year. This occurs
primarily as a result of increased business activity in the summer months when
schools are closed and construction activity increases. Greensteel typically
incurs a loss in the winter months.
Backlog
At April 30, 1996, Greensteel's contract backlog was approximately
$11,310,000, as compared with approximately $15,989,000 at April 30, 1995.
Management expects that all of the backlog will be filled in its next fiscal
year. Revenues from sales of specific products are recorded when title
transfers, which is typically upon shipment. Revenues from construction of
custom installations under contracts are recorded on the percentage-of-
completion method of accounting, measured on the basis of costs incurred to
estimated total costs, which approximates contract performance to date. See
Note 2, "Revenue Recognition." to the Notes to Consolidated Financial Statements
included herein.
Employees
Greensteel currently employs approximately 294 people. Approximately 103
employees at Greensteel's Dixonville, Pennsylvania plant are members of the
Carpenters Union, with the current labor contract expiring in
6
<PAGE>
February 1999. Of Greensteel's remaining employees, approximately 50 persons
are union members not covered by collective bargaining agreements.
Greensteel considers relations with its employees to be good.
Patents and Trademarks
Greensteel holds a number of patents and trademarks covering various
products and processes relating to its business. Greensteel believes that its
"Greensteel" trademark is important as the name "Greensteel" is highly
recognized by customers, general contractors and architects in the education and
health care markets as providers of quality products used in construction
projects. Greensteel periodically monitors for infringing uses of this mark and
has never encountered any such infringement. Management of Greensteel believes
that such infringement is unlikely. None of Greensteel's patents or other
trademarks are considered to be material to Greensteel's ongoing business.
Insurance
Greensteel maintains insurance with respect to its properties and
operations in such form, in such amounts and with such insurers as is customary
in the businesses in which Greensteel is engaged. Greensteel believes that the
amount and form of its insurance coverage are adequate at the present time.
Environmental Matters
Greensteel's manufacturing operations are subject to numerous federal,
state and local laws and regulations relating to the storage, handling,
emission, transportation and discharge of hazardous materials and waste
products. Compliance with these laws, as a result of the Adience
indemnification described below, has not been a material cost to Greensteel and
has not had a material effect upon its capital expenditures, earnings or
competitive position.
In February 1992, the Company was cited by the Ohio Environmental
Protection Agency (the "Ohio EPA") for violations of Ohio's hazardous waste
regulations, including speculative accumulation of waste (holding waste on-site
beyond the legal time limit) and illegal disposal of hazardous waste on the site
of Greensteel's Alliance, Ohio manufacturing facility.
In December 1993, the Company and Adience signed a consent order with the
Ohio EPA and Ohio Attorney General that required the Company and Adience to pay
to the State of Ohio a civil penalty of $200,000 of which the Company paid
$175,000 and Adience paid $25,000. In addition, the consent order required the
payment of stipulated penalties of up to $1,000 per day for failure to satisfy
certain requirements of the consent order, including milestones in the closure
plan. Removal and remediation activities as contemplated under the consent
order have been completed.
The Company has submitted risk assessment reports which demonstrate, in
management's opinion, that no further cleanup actions will be required on the
remaining property area not addressed under the closure plan. Based on
administrative precedent, the Company believes that it is likely that the Ohio
EPA will agree with the risk assessment reports. The Company is currently
waiting for a determination from the Ohio EPA as to whether the submitted
reports are approved. If such an agreement is not reached, additional costs may
have to be incurred to complete additional remediation efforts. Although there
are no assurances that additional costs will not have to be incurred, the
Company believes that such costs will not need to be incurred. At April 30,
1996, environmental accruals amounted to $20,000, which represents management's
reasonable estimate of the amounts to be incurred in the resolution of this
matter. Since 1991, the Company and Adience have together paid $1,423,000
(excluding the $200,000 civil penalty) for the environmental cleanup related to
the Alliance facility.
7
<PAGE>
Under the acquisition agreement pursuant to which the Company acquired the
Alliance facility from Adience, Adience represented and warranted that, except
as otherwise disclosed to the Company, no hazardous material has been stored or
disposed of on the property and agreed to indemnify the Company for any losses
in excess of $250,000. The Company has notified Adience that it is claiming the
right to indemnification for all costs in excess of $250,000 incurred by the
Company in this matter, and has received assurance that Adience will honor such
claim. Adience has reimbursed the Company $1,428,000 through June 30, 1996.
Posterloid and APV
Posterloid manufactures and sells indoor and outdoor menuboard display
systems to the fast food and convenience store industries, and changeable
magnetic signs used primarily by banks to display interest rates, currency
exchange rates and other information. APV is engaged in the research,
development, licensing and testing of a proprietary materials technology, known
as PolyVision, with potential commercial applications in a range of consumer,
industrial, office and other host product applications that utilize or
incorporate flat-panel display components and systems.
Posterloid
Posterloid is engaged in the manufacture and sale of indoor and outdoor
menuboard display systems to the fast food and convenience store industries, and
changeable magnetic display signage used primarily by banks to display interest
rates, currency exchange rates and other information. Posterloid's displays are
custom manufactured in arrays of screen printed plastic strips for ceiling
hanging or for window or counter displays. During fiscal 1996, Posterloid had
approximately 2,000 customers. Posterloid's marketing activities are conducted
through both a direct sales force and sales representatives. Generally,
Posterloid's products are priced at less than $1,000 per unit. Raw materials
used in Posterloid's operations are widely available but are purchased from a
limited number of sources in order to obtain favorable prices and terms.
Posterloid competes with three other significant national menuboard
manufacturers and a large number of local manufacturers. Menuboard products
compete on the basis of design capability, price, quality and ability to meet
delivery requirements.
APV and PolyVision Technology
APV's proprietary technology, known as PolyVision(TM), is a materials
technology with electrochemical and physical characteristics that allow it to
address applications in a number of product markets, including flat-panel
displays and variable light transmission. The nature of the technology revolves
around the specific materials utilized and the dynamics of the electrochemical
reactions created within the materials. The proprietary aspects of the
technology include the combination of materials utilized, cell structures for
specific applications, cell internal processes and certain manufacturing
techniques. When creating a flat-panel display, PolyVision(TM) materials are
layered and sandwiched between a transparent electrode supported by a glass or
plastic substrate and a second counter electrode. When a low voltage is applied
between the electrodes, rapid chemical reactions occur and a high contrast image
is displayed. Reversal of the voltage clears or erases the displayed image.
The PolyVisionTM technology is characterized by wide viewing angles and
extremely high contrast, as compared with many other currently available flat-
panel display technologies which, at their present stage of development, exhibit
various technical and operating limitations (e.g., viewing angle, sunlight
readability and contrast) resulting in sub-optimal performance in many product
applications (e.g., electronic outdoor displays).
After acquiring the PolyVision(TM) technology, Alpine conducted a
significant internal research and development program to determine feasibility
across various product markets and to define the manufacturing and process
technology to be employed in the commercial production of PolyVision(TM)
displays. As a result of this work, APV is now producing at its facility in
Wallingford, Connecticut, low-information content displays principally for
test and evaluation purposes. Electrical, optical and environmental
characterization of these displays has been conducted since 1994 and initial
samples have been distributed to potential customers for third party
evaluation.
8
<PAGE>
Such evaluations have indicated the need for further development primarily with
respect to consistency and duration of cell life. In this regard the technical
staff is focusing its efforts on the homogeneity of the electrolyte and other
constituent materials as well as fabrication processing, and the control and
maintenance of electrochemical balance. In addition APV is currently exploring
display applications in the point of purchasing market where the temporary
nature of many promotions do not require extended cell life.
APV's internal programs have also been augmented by third-party license and
development programs with, among others, COGIDEV (for certain specific military
applications including European military applications), Ralston Purina Co. (for
certain consumer product merchandising applications), and Monsanto Corporation
(for specific display applications).
APV currently obtains all of its outside funding from Alpine and expects
that this will continue through the remainder of fiscal 1997. APV's third party
agreements involve licensing its proprietary technology to commercial customers,
such as manufacturers of electronic and information display products, that may
incorporate the technology into their own specific products or applications in
exchange for license fees plus royalty payments based on unit product sales.
Certain of these manufacturers have established in-house prototype manufacturing
capabilities. The third-party agreements generally have a term co-extensive
with the underlying patent rights being licensed by APV. From APV's
incorporation in May 1986 through April 30, 1994, APV received approximately
$2,500,000 from license and development fees.
Flat-Panel Display Industry
Flat-panel displays are compact, thin, electronically driven information
displays (or viewing screens) which generate characters, numbers and images for
utilization in a wide range of applications from watches and calculators to
laptop computers and televisions. The flat-panel display market can be
segmented in a variety of ways, the most common of which is by the number of
distinct segments or picture elements ("pixels") that can be addressed and
consequently the amount of "information" that can be displayed. Displays
containing less than 100,000 pixels can be referred to as low-information
content displays and displays with more than 100,000 pixels can be referred to
as high-information content displays. Low-information content displays would
include the common seven-segment digital numeric displays used, for instance, in
clocks and radios and matrix addressed multiline displays used, for instance, in
data collection terminals, electronic book readers and organizers. High-
information content displays would include computer and television screens.
Another manner in which the market is segmented is by writing speed, or the rate
at which an individual segment or pixel can be switched from the on to the off
state and vice versa. Many applications, such as television, require "video"
speed capabilities (up to 60 frames per second) while other applications require
significantly less speed.
The first uses of flat-panel displays were for relatively low-information
content applications beginning with LED watches introduced in the early 1970's.
Since that time, digital flat-panel, low-information content displays have been
introduced and utilized for thousands of product applications ranging from
watches and clocks to appliances, stereos, calculators and games. The market
for analog gauges and dials continues to be replaced by this technology. Low -
information content flat-panel displays have also become increasingly
sophisticated and now include a large number of dot matrix applications with
greater flexibility such as indicator and status displays on fax machines,
copiers and automobile dashboards.
Research and Development
APV's PolyVision research and development activities are focused at the
present time on the optimization of performance and design for manufacturing and
the characterization of the initial displays being produced. APV is also
engaged in accelerated life testing of various displays in order to determine
with a high degree of predictability the actual lifespans of the displays. APV
employs a group of six engineers and technicians engaged in the development of
low-information content segmented displays and large pixel displays for signage
and point
9
<PAGE>
of purchase applications. In addition, APV collaborates with third parties,
with whom license and/or development agreements have been executed.
Currently, APV is operating as a development stage company and is
evaluating materials technology to construct its anticipated products. To date,
APV has not experienced any supply shortages for the components it utilizes.
Management believes that the components which APV may ultimately use in its
products will be available from a variety of outside vendors, although there can
be no assurance thereof. APV cannot currently predict with certainty when or if
a commercially viable product will be introduced.
Intellectual Property and Proprietary Technology
PolyVision is protected by a number of patents granted and/or filed in the
United States, Canada, Europe and Japan. APV holds nine patents in the United
States with corresponding patents issued or pending in France, Germany, Great
Britain and Japan that expire at various dates from 2002 to 2010. APV has three
patent applications pending in the United States, Canada, Japan, France and
other European countries. In addition to patent protection, APV's proprietary
rights are protected through the execution of confidentiality and non-disclosure
agreements by APV employees, licensees and other third parties with whom APV
shares information.
Competition
Flat-panel display research and development is substantial and continuing
on a worldwide basis, dominated by large vertically integrated manufacturers in
the Far East, primarily in Japan, which possess far greater financial and
technical resources than APV. The cost and performance of the display component
in a host product is, in many cases, a critical factor in market penetration,
acceptance and pricing of the host product. As a result, the further
development and enhancement of display technology is a major priority for all
leading worldwide manufacturers of electronic and information display products.
APV does not currently intend to enter the high-volume commodity display
market. APV's initial products are anticipated to focus on dynamic sign
applications where PolyVision's wide viewing angle and contrast ratio,
especially in high ambient light environments, are expected to provide a
competitive edge. Competing technologies in the dynamic sign market include
numerous manufacturers of mechanical flip-dot, light bulb, LCD, LED and, in the
cases where existing technologies exhibit significant shortcomings, stationary
or static displays.
ITEM 2. PROPERTIES
- ------- ----------
Greensteel owns three of its facilities. Real estate owned by Greensteel
is subject to mortgages. Greensteel believes that all of its facilities are
well-maintained, in good condition and adequate for its present business.
Greensteel's production facilities are currently utilized to the extent of one
production shift per day. At such level of utilization, Greensteel's production
facilities have sufficient capacity to meet demand for Greensteel's products.
Certain information concerning the principal facilities of Greensteel is
set forth below:
Approximate
Owned or Floor Area Lease
Location Leased (Square Feet) Expiration
-------- ------ ------------- ----------
Dixonville, Pennsylvania . . Owned 199,226 --
Landis, North Carolina . . . Owned 46,800 --
10
<PAGE>
Approximate
Owned or Floor Area Lease
Location Leased (Square Feet) Expiration
-------- ------ ------------- ----------
Alliance, Ohio . . . . . . . Owned 28,032 --
Corona, California . . . . . Leased 26,000 1997
The principal facilities used by APV and Posterloid, both of which are leased,
are as follows:
Approximate
Floor Area Lease
Location (Square Feet) Annual Rent Expiration
-------- ------------- ----------- ----------
Wallingford, Connecticut . 32,000 $205,000 1996
Long Island City, New York 25,000 162,000 1997
The principal executive offices of the Company and the development and
prototype facility of APV is located in Wallingford, Connecticut, at which it
has 24 employees. The manufacturing facility and administrative office of
Posterloid is located in Long Island City, New York, at which it has 52
employees. APV and Posterloid consider their employee relations to be good.
The Company is currently negotiating to lease new space which would provide for
the facility requirements of both APV and Posterloid.
ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------
In 1994, Reliance Insurance Company of New York (the "Plaintiff") commenced
an action in the Supreme Court of the State of New York, County of Suffolk,
against several defendants including PolyVision seeking money damages based on
the purported sale and delivery by defendants of some 860 insulated metal
curtain wall panels manufactured by the Company. Plaintiff has alleged that
such panels were defective in their design and manufacture. In its original
complaint, Plaintiff seeks damages of $385,454 allegedly already incurred and
unspecified future damages. The alleged sales fall into two categories, an
original sale in 1987 and two or more sales in 1991 and 1992 of so-called
replacement panels. Among the theories of liability advanced by Plaintiff are
breach of contract, breach of express warranty and implied warranty. Pursuant
to orders of the Court, the causes of action based on the 1987 transaction were
dismissed on statute of limitation grounds. However, Plaintiff has been granted
leave to serve an amended complaint to allege, among other things, a claim under
the New Jersey Consumer Fraud Act (which might permit treble damages), while
preserving the right of the defendants, including PolyVision to challenge the
applicability of such Act. Since an amended complaint has not yet been served,
Plaintiff's theories of liability and damages are as yet not completely certain.
Moreover, since an answer to the amended complaint, if served, remains to be
served, and, as well, discovery has yet to commence, it is premature to render
an estimate of the outcome of this litigation.
For a description of certain environmental matters, see "Business --
Greensteel; Environmental Matters."
Neither APV nor Posterloid is involved in any pending or threatened
litigation.
11
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended April 30, 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
-------------------------------------------------------------
MATTERS
-------
The Company's common stock is traded on the American Stock Exchange
("AMEX") under the symbol PLI. As of April 30, 1996, there were approximately
2,409 holders of record of the Company's Common Stock.
The following table sets forth, for the fiscal periods shown (PolyVision
Corporation changed its fiscal year to April 30 from December 31 in connection
with the Merger), the high and low sales prices for PolyVision Common Stock as
reported on the AMEX. The amounts set forth below through the May 24, 1995 date
of the Merger have not been adjusted to reflect the 1-for-15 Reverse Stock
-------------
Split.
Low High
--- ----
Calendar 1994
First Quarter . . . . . . . . . . . . . . . $ 7/8 $ 5/8
Second Quarter . . . . . . . . . . . . . . 3/4 1/2
Third Quarter . . . . . . . . . . . . . . . 7/8 3/8
Fourth Quarter . . . . . . . . . . . . . . 13/16 1/2
Calendar 1995
First Quarter . . . . . . . . . . . . . . . $ 11/16 $ 1/2
Second Quarter . . . . . . . . . . . . . . 3/4 1/2
Third Quarter . . . . . . . . . . . . . . . 7/8 3/8
Fourth Quarter . . . . . . . . . . . . . . 13/16 1/2
Calendar 1996
First Quarter . . . . . . . . . . . . . . . $ 11/16 $ 1/2
Second Quarter (through May 24, 1995) . . . 11/16 1/2
Fiscal 1996
First Quarter (since May 25, 1995) . . . . $ 7-1/2 $3-1/16
Second Quarter . . . . . . . . . . . . . . 3-15/16 2-1/4
Third Quarter . . . . . . . . . . . . . . . 2-9/16 1-3/4
Fourth Quarter . . . . . . . . . . . . . . 2-5/8 1-7/8
Fiscal 1997
First Quarter (through July 19, 1996) . . . $ 2-1/4 $ 7/8
The Company has never declared or paid dividends on its common stock and
does not anticipate paying dividends at any time in the foreseeable future. The
terms of the Company's Series A Preferred Stock prohibits the Company from
paying dividends on all classes of stock junior to such stock (including its
common stock) while shares of the Company's Series A Preferred Stock remain
outstanding.
12
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------
The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements of the Company and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included herein.
<TABLE><CAPTION>
Fiscal Year Ended April 30,
------------------------------------------------------------
1996 1995(1) 1994 1993 1992
---- ------- ---- ---- ----
(in thousands, except per share data) (unaudited)
<S> <C> <C> <C> <C> <C>
Net sales from operations . . $35,627 $13,572 $5,108 $4,211 $3,507
======= ======= ====== ====== ======
(Loss) from operations . . . ($5,245) ($5,644) ($25,692) ($8,564) ($3,644)
======== ======== ========= ======== ========
Net (loss) . . . . . . . . . ($5,769) ($5,728) ($25,732) ($9,638) ($4,009)
======== ======== ========= ======== ========
Preferred stock dividends . . $2,040 $448 $448 $358 $27
====== ==== ==== ==== ===
(Loss) applicable to
common stock . . . . . . . ($7,809) ($6,176) ($26,180) ($9,996) ($4,036)
======== ======== ========= ======== ========
Loss per share (2) . . . . . ($0.94) ($0.67) ($2.56) ($1.14) ($0.56)
======= ======= ======= ======= =======
Total assets . . . . . . . . ($18,983) $22,153 $8,187 $9,496 $8,666
========= ======= ====== ====== ======
Long-term obligations . . . . $5,285 $1,865 $4,927 $9,430 $8,805
====== ====== ====== ====== ======
Preferred stock . . . . . . . $25,731 $25,502 $6,933 $5,485 $4,027
======= ======= ====== ====== ======
Total stockholders' equity
(deficit) . . . . . . . . $4,084 $11,090 $1,472 ($1,350) ($3,553)
====== ======= ====== ======== ========
</TABLE>
- ------------------------
(1) Includes the results of the Greensteel Division of the Company for
the four months ended April 30, 1995. See Note 3 to Notes to
Consolidated Financial Statements for pro forma financial information.
(2) Restated for all periods to reflect the 1-for-15 reverse stock split.
13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATION
--------------------
Results of Operations
The following table summarizes, for the periods presented, the respective
amounts of Greensteel, APV and Posterloid:
Fiscal Year Ended April 30,
--------------------------------------------
1996 1995 1994
---- ---- ----
(in thousands, except percentages)
Net sales
Posterloid . . . . . . . . . . $ 5,557 $4,918 $5,108
Greensteel . . . . . . . . . . 30,070 8,654 --
------- ------- ---------
35,627 13,572 5,108
Gross Profit
Posterloid . . . . . . . . . . 1,635 1,484 1,930
Greensteel . . . . . . . . . . 6,129 1,453 --
------- ------- ---------
7,764 2,937 1,930
Gross Margin . . . . . . . . . . 21.8% 21.6% 37.8%
Selling, general and
administrative expenses 1,766 1,514 1,780
Posterloid . . . . . . . . . .
Greensteel . . . . . . . . . . 6,356 2,364 --
APV and Corporate . . . . . . 1,856 1,334 751
------- ------- --------
9,978 5,212 2,531
Research and development
APV . . . . . . . . . . . . . 2,886 3,224 3,259
Purchased R&D and related charges
APV . . . . . . . . . . . . . -- -- 21,687
Amortization of goodwill
Posterloid . . . . . . . . . . 145 145 145
Operating income (loss)
Posterloid . . . . . . . . . . (276) (175) 5
Greensteel . . . . . . . . . . (227) (911) --
APV and Corporate . . . . . . (4,742) (4,558) 25,697
-------- ------- --------
(5,245) (5,664) (25,692)
Net interest expense . . . . . . 516 64 383
Other (income) expense . . . . . 8 20 (343)
Fiscal Year Ended April 30, 1996 Compared with Fiscal Year Ended April
30, 1995
The fiscal 1996 comparative increase in net sales of approximately
$22,055,000, or 162%, was primarily attributable to a full year of Greensteel's
operations as compared to the four month period subsequent to its effective
purchase by Alpine on December 21, 1994 for the fiscal year ended April 30,
1995. Greensteel's comparable revenues for the year ended April 30, 1995 were
$32,611,000. The decrease in Greensteel's comparable revenues is primarily due
to comparably lower sales of third party provided casework in accordance with
Greensteel's decision in 1993 to discontinue reliance on third parties which
had led in the past to substantial cost overruns and
14
<PAGE>
late deliveries. In addition, Posterloid's fiscal 1996 revenues increased
approximately $639,000 or 13% with increases in both the menuboard and Viscon
banking product lines. Greensteel's business is seasonal and a disproportionate
amount of its sales and operating profits occur in the third calendar quarter of
the year. This occurs as a result of increased business activity in the summer
months when schools are closed and construction activity increases.
Gross profit in fiscal 1996 increased on a comparative basis by $4,827,000,
while the gross margin percentage increased slightly to approximately 21.8% in
fiscal 1996 from 21.6% in fiscal 1995. The increase in the gross profit as well
as the increase in the gross margin percentage were primarily attributable to
Greensteel's operations. Greensteel's gross margin increased to 20.4% for
fiscal 1996 from 16.8% for the four months ended April 30, 1995, primarily due
to comparing full year results with a four month period of historically lower
production volumes and related margins. Greensteel's fiscal 1996 gross margin
was negatively affected by a non-cash charge of approximately $700,000 relating
to a new three year union agreement at its Dixonville, Pennsylvania location.
In connection with the new union agreement the Company anticipates cost savings
of approximately $1,000,000 in each of the next three years. Posterloid's
comparative 1996 gross profit increased by approximately $151,000 while gross
margin declined to 29.4% from 30.2%. Posterloid's comparative decline in gross
margin was primarily attributable to costs associated with the move of the
Viscon product line to Connecticut.
Research and development expenses, excluding depreciation and amortization
charges, decreased $780,000 on a comparative basis from fiscal 1995. The
Company has determined that the most cost effective method in the event of full
scale production of PolyVisionTM displays is through third party subcontractors.
In this regard the Company will not exercise its option to renew the lease at
its Wallingford Connecticut facility which expires in December 1996 and the
Company is currently exploring alternate sites. In connection with this
decision, depreciation and amortization expenses have been accelerated while
other PolyVisionTM technology manufacturing-related costs have been reduced,
such that research and development expenses for fiscal 1997 are anticipated to
be approximately $1,200,000.
The comparative fiscal 1996 increase in selling, general and administrative
expense of $4,766,000 was primarily attributable to the inclusion of Greensteel
for the entire fiscal year ended April 30, 1996 and a comparative increase of
$522,000 of corporate expenses relating to the new management and public company
structure implemented in connection with the May 1995 Merger.
Since the Merger in May 1995, management of the Company has focused on
deployment of its asset base and its cost structure with a near-term goal of
achieving a break-even level on operating profit for fiscal 1997. At
Greensteel, the Company consolidated its Portland, Oregon manufacturing facility
with its Corona, California facility in September 1995. An expansion of
Greensteel's Alliance, Ohio facility was completed in February 1996 to provide
more efficient laminating and distribution of its porcelain enameled chalkboards
and marker boards. In June 1996, the consolidation of Greensteel's Landis,
North Carolina manufacturing facility with its Dixonville, Pennsylvania facility
was completed. In addition to the efficiencies expected from the foregoing,
cost savings under the new labor agreement and adoption of a new health care
plan will further enhance Greensteel's competitive position. In this regard,
management of the Company intends to focus its resources on aggressively
increasing it market share in fiscal 1997 for both its Greensteel and Posterloid
subsidiaries.
Fiscal Year Ended April 30, 1995 Compared with Fiscal Year Ended April 30,
1994
The fiscal 1995 comparative increase in net sales of approximately
$8,464,000, or 166%, was attributable to the inclusion of $8,654,000 in revenues
from Greensteel's operations for the four month period subsequent to its
effective purchase by Alpine on December 21, 1994. Greensteel's comparable
revenues for the four months ended April 30, 1994 were $8,408,000. Partially
offsetting the revenue increase attributable to Greensteel was a decline in
Posterloid's fiscal 1995 revenue's of approximately $190,000 or 4%.
Greensteel's business is seasonal and a disproportionate amount of its sales and
operating profits occur in the third calendar quarter of the year. This
15
<PAGE>
occurs as a result of increased business activity in the summer months when
schools are closed and construction activity increases.
Gross profit in fiscal 1995 increased on a comparative basis by $1,007,000,
while the gross margin percentage declined from approximately 37.8% in fiscal
1994 to 21.6% in fiscal 1995. The increase in the gross profit as well as the
decline in the gross margin percentage were primarily attributable to the
inclusion of Greensteel's operations in fiscal 1995. Greensteel, which
historically has operated at gross margins below 19%, contributed a gross profit
during the period of its inclusion of approximately $1,453,000, representing a
gross margin percentage of approximately 16.8%. Posterloid's comparative 1995
gross profit decreased by approximately $446,000 while gross margin declined to
30.2% from 37.8%. Posterloid's comparative declines in gross profit and gross
margin represent a reduction in business from the higher margin banking sector.
The comparative fiscal 1995 increase in selling, general and administrative
expense of $2,681,000 was primarily attributable to the inclusion of Greensteel
for the four months ended April 30, 1995 and approximately $632,000 of Merger-
related professional fees and other administrative overhead expenses charged by
Alpine.
Fiscal Year Ended April 30, 1994 Compared with Fiscal Year Ended April 30,
1993
Net sales for the fiscal year ended April 30, 1994 increased by
approximately $897,000, or 21.3%, from the fiscal year ended April 30, 1993.
This increase resulted primarily from an increase of approximately $820,000 in
sales to the banking sector which benefitted from a change in federal "truth in
savings" regulations which mandate the disclosures banks are required to make to
customers. The change in regulations resulted in banks being required to update
certain of the information displayed on rate boards. This requirement resulted
in a number of banks upgrading and/or replacing existing rateboards.
Gross profit in fiscal 1994 increased by approximately $895,000, while the
gross margin increased to 37.8% as compared to 24.6% for the year ended April
30, 1993. The increase in gross profit and gross margin reflected improved cost
controls, costs related to the consolidation of the operations of Posterloid,
American Menu Display, Inc. ("AMD") (substantially all of the assets of which
were acquired in January 1993) and VISCON in fiscal 1993, and the inclusion of
higher margin banking sector sales.
S,G&A declined by approximately $852,000 during fiscal 1994 due primarily
to a decrease at APV of $1,000,000. The decrease in APV-related expenses
resulted from the consolidation of administrative functions and costs associated
with the termination of employees in connection with the transfer of the product
development activities from PolyVision France's Massy, Paris facility to APV's
product development facility in Wallingford, Connecticut and a reduction in non-
cash compensation expenses related to stock option grants.
During fiscal 1994, APV incurred a non-cash charge of approximately
$21,687,000 related to the acquisition by Alpine of substantially all of APV's
minority equity ownership interest. Approximately $19,500,000 of the total
charge related to the market value of Alpine common stock issued in the stock-
for-stock exchange which, in accordance with generally accepted accounting
principles, was recorded as an expense for purchased research and development,
offset by a credit to stockholders' equity. The remainder of the charge related
to expenses associated with the transaction, and closedown costs related
principally to PolyVision France's development operations which were
significantly reduced.
During fiscal 1993, APV recorded a similar charge of approximately
$2,800,000 for the purchase of assets and know-how of a research and development
partnership between APV and Kirkbi Projekt A/S, a Danish company.
Operating loss for the year ended April 30, 1994 increased to $25,700,000
from $8,600,000 for the year ended April 30, 1993. The increase resulted
primarily from the substantial non-recurring non-cash charges resulting from the
acquisition by Alpine of the minority interest in APV, referred to above. On a
comparative basis, the fiscal 1993 operating loss of $8,600,000 included an
approximate $2,800,000 charge for purchased R&D.
16
<PAGE>
The changes in interest expense in fiscal 1994 and 1993 resulted from
changes in corporate allocations. Other income in fiscal 1994 consisted
primarily of R&D credits associated with PolyVision France.
Liquidity and Capital Resources
During fiscal 1996, the principal uses of cash included approximately
$3,641,000 used for operating activities and approximately $774,000 for
investing activities. Approximately $1,675,000 of such uses were attributable
to ongoing PolyVisionTM technology development efforts at APV, $1,772,000 of
corporate expenses and approximately $1,242,000 was used to repay indebtedness.
Sources of cash included approximately $3,335,000 of long term borrowings from
Alpine, $1,200,000 of new long term borrowings by Greensteel and $1,532,000 of
net repayments by Adience on amounts owed to Greensteel.
During the year ended April 30, 1996, Greensteel provided approximately
$171,000 from its operating activities while Posterloid used approximately
$355,000 for its operating activities.
On April 25, 1996, Greensteel as borrower and the Company as Guarantor,
entered into a $5,000,000 Master Credit Agreement (the "Agreement") with the
Bank of Boston Connecticut to provide financing for Greensteel's general working
capital requirements. In connection with such financing, Greensteel repaid
$2,453,000 to Alpine on April 30, 1996 pursuant to a $2,500,000 temporary credit
facility provided by Alpine (see Note 16 to Notes to Consolidated Financial
Statements included herein). The Agreement provides for a revolving credit
facility of up to $3,800,000 based upon eligible accounts receivable and
inventory as defined (unused and available borrowings after repayment to Alpine
were $1,611,000 at April 30, 1996) at the Bank's prime rate plus 1% (9.25% at
April 30, 1996) and a $1,200,000 term loan payable in equal monthly installments
of $20,000 with interest at the Bank's prime rate plus 1-1/2% (9.75% at April
30, 1996) beginning June 1, 1996 through August 1, 1997, with the remaining
unpaid principal amount of $900,000 due on August 31, 1997. The Agreement
terminates August 31, 1997 and provides for renewal at the Bank's sole and
absolute discretion.
Substantially all of Greensteel's assets are pledged as collateral for the
credit facility. The Agreement requires Greensteel's compliance with certain
financial covenants including maintenance of a minimum tangible net worth and
minimum debt service coverage, as defined, and a restriction on dividends
to the Company, which requires maintenance of a modified debt service coverage
after taking into account any such dividends, and on other transfers of funds
to the Company or its other subsidiaries. The Company is a guarantor of the
Agreement and has pledged Greensteel's common stock in connection therewith.
Greensteel was in compliance with all such financial covenants at April 30,
1996.
On May 24, 1995, the Company entered into an agreement with Alpine,
pursuant to which the Company may borrow from time to time, until May 24, 1997,
up to $5,000,000 from Alpine to be used by the Company to fund its working
capital needs, including research, development and commercialization activities
in connection with APV's PolyVision display technology. Borrowings under the
agreement are unsecured and bear interest at a market rate reflecting Alpine's
cost of borrowing such funds (13% at April 30, 1996), with interest payable
semiannually in cash (but added to the outstanding principal amount for the
first 18 months). For the year ended April 30, 1996 Alpine agreed with the
Company to a modification of terms whereby the Company issued 9,177 shares of
the Company's Series A Preferred Stock to Alpine in lieu of the addition
approximately $229,000 of interest to the outstanding principal amount of
$3,335,000 at April 30, 1996. The principal balance outstanding will be due on
May 24, 2005, subject to mandatory prepayment of principal and interest, in
whole or in part, from the net cash proceeds of any public or private, equity
or debt financing made by the Company at any time before maturity. Alpine's
obligation to lend such funds to the Company is subject to a number of
conditions, including review by Alpine of the proposed use of such funds by the
Company. Alpine's revolving credit facility provides the funds for it to extend
the Alpine Financing to the Company. While no assurance can be given,
management believes that such financing availability which includes $1,665,000
of remaining funding commitment at April 30, 1996, together with anticipated
support from Posterloid's operations, will be sufficient to meet the needs of
APV and its PolyVision(TM) development efforts for the next 12 months, which are
anticipated to require approximately $1,000,000.
17
<PAGE>
In the long term, the successful introduction of commercially viable
products will be required for APV to continue to support a sustained research
and development effort at its current level. APV will continue to explore
development and licensing opportunities that further broaden the applications of
its PolyVisionTM technology and provide additional funding. In addition,
management will also consider the private and/or public equity markets as
potential capital sources in connection with the goal of commercializing its
PolyVisionTM technology and reducing its dependence upon Alpine. There can be
no assurance, however, that commercially viable products will be introduced or
that such additional sources of funding will be available on reasonable terms.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
The financial statements and supplementary data of the Company appear on
pages F-2 through F-20 of this Form 10-K, are indexed herein under Item
14(a)(1), and are incorporated herein by reference. See also the financial
statement schedule appearing herein under Item 14(a)(2).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
- ------- ------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
The information required by this Item is incorporated herein by reference
to the Company's definitive Proxy Statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A within 120 days after the end of
the fiscal year covered by this report (the "PolyVision Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
The information required by this Item is incorporated herein by reference
to the PolyVision Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
The information required by this Item is incorporated herein by reference
to the PolyVision Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The information required by this Item is incorporated herein by reference
to the PolyVision Proxy Statement.
18
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- -------- ----------------------------------------------------------------
(a)(1) Financial Statements.
The following financial statements of PolyVision Corporation are submitted
in a separate section beginning on page F-1 pursuant to the requirements of Form
10-K, part II, Item 8 and Part IV, Items 14(a) and 14(d):
Page
----
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . F-1
Consolidated Balance Sheets as of April 30, 1996 and 1995 . . . . . . . . . F-2
Consolidated Statements of Operations for the Years ended
April 30, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Stockholders' Equity (Deficit) for
the Years ended April 30, 1996, 1995 and 1994 . . . . . . . . . . . . . . . F-4
Consolidated Statements of Cash Flows for the Years ended
April 30, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . F-7
(a)(2) Financial Statement Schedules.
The following schedules of PolyVision Corporation are submitted for the
years ended April 30, 1996, 1995 and 1994:
Page
----
Schedule I - Condensed Financial Information of Registrant . . . . . . . . S-1
Schedule II - Valuation and Qualifying Accounts . . . . . . . . . . . . . . S-6
All other schedules are omitted because they are not applicable or are not
required, or because required information is included in the financial
statements or the notes thereto.
(a)(3) Exhibits.
Exhibit No. Document
- ----------- --------
2.1 Agreement and Plan of Merger, dated as of December 21, 1994, as
amended, among IDT, The Alpine Group, Inc., Alpine PolyVision,
Inc. and Posterloid Corporation.(1)
3.1 Restated Certificate of Incorporation of the Company.(1)
3.2 By-laws of the Company. (2)
19
<PAGE>
Exhibit No. Document
- ----------- --------
4.4 Specimen form of Common Stock Certificate of the Company.(3)
10.1 Asset Acquisition Agreement, dated as of April 24, 1990, relating
to the purchase of the Information Display Division of Adience,
Inc. by IDT.(4)
10.2 Management and Administrative Services Agreement, dated as of
April 24, 1990, between IDT and Adience, Inc.(5)
10.3 Employment Agreement, dated as of October 8, 1990, between IDT
and N. Roy Anderson.(2)
10.4 Tax Sharing Agreement, dated as of April 24, 1990, between IDT
and Adience, Inc.(5)
10.7 1990 Stock Incentive Plan of IDT.(2)
10.8 Nonstatutory Stock Option Agreement, dated November 12, 1990,
between IDT and N. Roy Anderson.(2)
10.15 1994 Stock Option Plan of the Company.(1)
10.16 Credit Commitment Letter Agreements, dated May 24, 1995, between
the Company and The Alpine Group, Inc.(3)
10.17 Registration Rights Agreement, dated May 24, 1995, between the
Company and The Alpine Group, Inc.(3)
10.18 Form of Indemnification Agreement for Directors of the Company.
(3)
10.19 1996 Union Stock Grant Plan of the Company.(6)
10.20 1995 Directors Stock Grant Plan of the Company.
10.21 1995 Directors Stock Option Plan of the Company.
10.22 Amended and Restated Employment Agreement, dated as of May 1,
1995, between the Company and Ivan Berkowitz.
10.23 Amended and Restated Employment Agreement, dated as of May 1,
1995, between the Company and Joseph A. Menniti.
10.24 Employment Agreement, dated as of May 1, 1995, between the
Company and Mel Schrieberg.
10.25 Articles of Agreement, dated February 28, 1996, between
Greensteel and The Carpenters' District Council of Western
Pennsylvania.
10.26 Master Credit Agreement, dated as of April 25, 1996, among Bank
of Boston Connecticut (the "Bank"), Greensteel and the Company.
10.27 Security Agreement, dated as of April 25, 1996, between the Bank
and Greensteel.
10.28 Pledge Agreement, dated as of April 25, 1996, between the Bank
and Greensteel.
20
<PAGE>
Exhibit No. Document
- ----------- --------
10.29 Unlimited Continuing Guaranty Agreement, dated as of April 25,
1996, between the Bank and the Company.
10.30 Stock Pledge Agreement, dated as of April 25, 1996, between the
Bank and the Company.
10.31 Agreement of Transfer, dated as of January 31, 1996, between the
Company and Greensteel.
22.1 Subsidiaries of the Company.
- ---------------------------------
(1) Incorporated herein by reference from Proxy Statement for the Annual
Meeting of Shareholders, dated May 1, 1995.
(2) Incorporated herein by reference from Current Report on Form 8-K, dated
April 24, 1990.
(3) Incorporated herein by reference to Registration Statement on Form S-2
(No. 33-93010), effective June 9, 1995.
(4) Incorporated herein by reference from Annual Report on Form 10-K for the
fiscal year ended December 31, 1990.
(5) Incorporated herein by reference from Post-Effective Amendment No. 1 to
Registration Statement No. 33-22701 NY.
(6) Incorporated herein by reference to Registration Statement on Form S-8
(No. 333-3897), effective May 16, 1996.
(b) Reports on Form 8-K.
None.
21
<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.
POLYVISION CORPORATION
Date: July 26, 1996 By: /s/ Alan J. Nickerson
----------------------
Alan J. Nickerson
Chief Financial
Officer and
Secretary
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 and in the capacities and on the dates indicated:
/s/ Steven S. Elbaum Chairman of the Board July 26, 1996
- --------------------
Steven S. Elbaum and Director
/s/ Ivan Berkowitz Chief Executive Officer July 26, 1996
- --------------------
Ivan Berkowitz and Director (Principal
Executive Officer)
/s/ Alan J. Nickerson Chief Financial Officer July 26, 1996
- -------------------------
Alan J. Nickerson and Secretary (Principal
Financial and Accounting
Officer)
/s/ Lyman C. Hamilton, Jr. Director July 26, 1996
- --------------------------
Lyman C. Hamilton, Jr.
/s/ Stephen C. Knup Director July 26, 1996
- --------------------
Stephen C. Knup
/s/ Robert J. Levenson Director July 24, 1996
- -------------------------
Robert J. Levenson
Director July ___, 1996
- -------------------------
Thomas M. Ramseur
/s/ Bragi F. Schut Director July 26, 1996
- --------------------
Bragi F. Schut
22
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To PolyVision Corporation:
We have audited the accompanying consolidated balance sheets of PolyVision
Corporation (a New York corporation, formerly known as Information Display
Technology, Inc.) and subsidiaries as of April 30, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for each of the three years in the period ended April 30, 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 PolyVision Corporation and
subsidiaries as of April 30, 1996 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended April 30,
1996, in conformity with generally accepted accounting principles.
As discussed in Note 1, previously issued consolidated financial statements of
Alpine PolyVision, Inc. and subsidiary as of April 30, 1994 and for the year
then ended have been retroactively restated to reflect "push down" accounting
for the acquisition of a minority interest.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedules listed in the
index to the consolidated financial statements are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not a
required part of the basic consolidated financial statements. These schedules
have been subjected to the auditing procedures applied in our audits of the
basic consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New Haven, Connecticut
June 28, 1996
F-1
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
CONSOLIDATED BALANCE SHEETS
April 30, 1996 and 1995
(amounts in thousands, except share amounts)
1996 1995
---- ----
ASSETS
- ------
Current Assets:
Cash $ 670 $ 260
Accounts receivable, net of allowance for
doubtful accounts of $575 and $521 8,027 8,358
Receivable from affiliates -- 1,532
Inventories 3,735 5,029
Costs and estimated earnings in excess of billings
on uncompleted contracts 823 823
Prepaid expenses and other current assets 345 329
-------- ----------
Total current assets 13,600 16,331
Property and equipment, net 1,402 1,649
Goodwill, net 3,981 4,126
Other assets -- 47
---------- -----------
TOTAL ASSETS $18,983 $ 22,153
======= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Short-term borrowings $ 1,252 $ 1,379
Current maturities of long-term debt 220 1,115
Accounts payable 2,877 2,957
Accrued expenses 2,667 3,305
Accrued dividends 2,040 --
Billings in excess of costs and estimated earnings
on uncompleted contracts 503 522
-------- ---------
Total current liabilities 9,559 9,278
Long-term debt, less current maturities 980 --
Indebtedness to The Alpine Group, Inc. 3,335 --
Royalties payable 750 750
Excess of net assets over purchase price of acquisition 275 1,035
Commitments and contingencies
Stockholders' Equity:
Series A Preferred Stock, $.01 par value, at $25 per
share liquidation value;
authorized 1,500,000 shares, issued 1,029,253
and 1,020,076 shares 25,731 25,502
Common stock, $.001 par value; authorized 25,000,000
shares, issued 8,530,073 and 8,301,073 shares 9 8
Capital in excess of par value 38,524 37,951
Accumulated deficit (60,180) (52,371)
-------- --------
Total stockholders' equity 4,084 11,090
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 18,983 $ 22,153
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended April 30, 1996, 1995, and 1994
(amounts in thousands, except per share amounts)
1996 1995 1994
---- ---- ----
Net sales $35,627 $13,572 $ 5,108
Cost of goods sold 27,863 10,635 3,178
-------- -------- ---------
Gross profit 7,764 2,937 1,930
Selling, general and administrative
9,978 5,212 2,531
Research and development 2,886 3,224 3,259
Purchased R&D and related charges -- -- 21,687
Amortization of goodwill 145 145 145
--------- --------- ----------
Operating loss (5,245) (5,644) (25,692)
Interest income 71 120 1
Interest expense (587) (184) (384)
Other income (expense), net (8) (20) 343
---------- --------- ----------
Loss before income taxes (5,769) (5,728) (25,732)
Income tax expense -- -- --
----------- ----------- -----------
Net loss (5,769) (5,728) (25,732)
Preferred stock dividends 2,040 448 448
--------- ---------- ----------
Loss applicable to common stock ($7,809) ($ 6,176) ($26,180)
======== ========= =========
Loss per share of common stock ($ 0.94) ($ 0.67) ($ 2.56)
========= ========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
<TABLE><CAPTION>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the years ended April 30, 1996, 1995, and 1994
(Amounts in thousands, except share amounts)
8% Cumulative Series A
Common Stock Preferred Stock Preferred Stock
------------ --------------- ---------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance at May 1, 1993 10,234,784 $ 10 5,100 $5,485
Dividends on Preferred Stock 448
Shares Issued 7,138
Contribution of Capital by
The Alpine Group, Inc.
Issuance of Preferred Stock 1,000 1,000
Purchased research and development expense
contributed by The Alpine Group, Inc.
Net (Loss) for the year ended April 30, 1994
------------- -------- --------- ---------
Balance at April 30, 1994 10,241,922 10 6,100 6,933
Dividends on Preferred Stock 448
Recapitalization (3,005,124) (3) 1,020,076 $25,502
Contribution of capital by
The Alpine Group, Inc.
Acquisition of Greensteel 1,064,275 1 (6,100) (7,381)
Net (Loss) for the year ended April 30, 1995
---------- -------- --------- --------- ---------- ---------
Balance at April 30, 1995 8,301,073 8 0 0 1,020,076 25,502
Dividends on Preferred Stock
Shares Issued in Connection with Union 229,000 1
Agreement
Issuance of Preferred Stock in Lieu of
Deferred Interest 9,177 229
Compensation Expense Related to Stock Grants
Net (Loss) for the year ended April 30, 1996
------------- --------- --------- --------- ------------ ---------
Balance at April 30, 1996 8,530,073 $ 9 0 $ 0 1,029,253 $25,731
=========== ======== ========= ======== ========== =======
<CAPTION>
Capital In
Excess of Par Accumulated
Value Deficit Total
-------------- -------------- ------------
<S> <C> <C> <C>
Balance at May 1, 1993 $13,170 ($20,015) ($1,350)
Dividends on Preferred Stock (448)
Shares Issued 28 28
Contribution of Capital by
The Alpine Group, Inc. 6,881 6,881
Issuance of Preferred Stock
Purchased research and development expense 1,000
contributed by The Alpine Group, Inc. 20,645 20,645
Net (Loss) for the year ended April 30, 1994
(25,732) (25,732)
----------- ----------- -----------
Balance at April 30, 1994
Dividends on Preferred Stock 40,724 (46,195) 1,472
Recapitalization (448)
Contribution of capital by (25,499)
The Alpine Group, Inc. 5,346 5,346
Acquisition of Greensteel
Net (Loss) for the year ended April 30, 1995 17,380 10,000
(5,728) (5,728)
----------- ---------- ----------
Balance at April 30, 1995
Dividends on Preferred Stock 37,951 (52,371) 11,090
Shares Issued in Connection with Union (2,040) (2,040)
Agreement 486 487
Issuance of Preferred Stock in Lieu of
Deferred Interest
Compensation Expense Related to Stock Grants 229
Net (Loss) for the year ended April 30, 1996 (5,769) (5,769)
----------- ---------- ---------
Balance at April 30, 1996 $ 38,524 ($60,180) $4,084
======== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended April 30, 1996, 1995, and 1994
(amounts in thousands)
<TABLE><CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
(Loss) from operations ($5,769) ($5,728) ($25,732)
Adjustments to reconcile (loss) from operations
to net cash (used for) operations:
Depreciation and amortization 1,156 647 1,619
Compensation expense for stock grants 574 -- --
Deferred interest 229 -- --
Purchased R&D and related charges -- -- 20,645
Change in assets and liabilities:
Accounts receivable 331 1,506 (115)
Inventories 1,294 (897) 20
Other current assets 31 (260) (405)
Other assets -- -- 132
Accounts payable and accrued expenses (1,468) (98) 375
Other (19) (149) 127
--------- -------- --------
Cash (used for) operating activities (3,641) (4,979) (3,334)
--------- -------- --------
Cash flows from investing activities:
Capital expenditures (774) (432) (397)
Net cash received in acquisition -- 315 --
--------- -------- --------
Cash (used for) investing activities (774) (117) (397)
--------- -------- --------
Cash flows from financing activities:
Net short-term borrowings (repayments) (127) 579 --
Long-term borrowings 1,200 -- 690
Repayments of long-term borrowings (1,115) (70) (62)
Advances from The Alpine Group, Inc. -- 4,590 2,820
Promissory note borrowings 3,335 -- --
Net repayments of receivable from affiliates 1,532 234 --
Net proceeds from the sale of stock -- -- 28
--------- -------- --------
Cash provided by financing activities 4,825 5,333 3,476
--------- -------- --------
Net increase (decrease) in cash 410 237 (255)
Cash at beginning of period 260 23 278
--------- -------- --------
Cash at end of period $ 670 $ 260 $ 23
========= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended April 30, 1996, 1995 and 1994
(Continued)
1996 1995 1994
---- ---- ----
(in thousands)
Supplemental disclosures:
Interest paid $358 $ 196 $ 139
==== ======== =========
Non-cash investing and financing activities:
Conversion of The Alpine Group, Inc.
indebtedness:
Preferred stock $229 $ 5,346 $ 1,000
==== ======== ========
Paid in Capital $ 6,881
========
Purchased research and development
expense contributed by The Alpine Group, Inc. $20,645
=======
Common stock issued in connection with
Union Agreement $487
====
Acquisition (net of cash acquired):
Assets acquired $17,686
Liabilities assumed 8,001
--------
Common stock issued $ 9,685
========
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
1. Basis of Presentation and Nature of Business
--------------------------------------------
PolyVision Corporation (formerly Information Display Technology, Inc. or
"IDT") (the "Company"), through its wholly-owned subsidiaries, Greensteel,
Inc. ("Greensteel"), APV, Inc. ("APV") and Posterloid Corporation
("Posterloid"), is engaged in the development, manufacture and sale of
information display products. Greensteel is engaged in the manufacture and
sale of custom-designed and engineered writing, projection and other visual
display surfaces (such as porcelain chalkboards and marker boards), custom
cabinets, and work station and conference center casework. APV, which
became a wholly-owned subsidiary of the Company as a result of the Merger
(see below), is engaged in the research, development, licensing and initial
manufacturing and testing of a proprietary technology known as
PolyVision(TM), a materials technology with electrochemical and physical
characteristics that allow it to address applications in a number of
product markets, including flat-panel displays and variable light
transmission. Posterloid, which also became a wholly-owned subsidiary as
a result of the Merger, is engaged in the manufacture and sale of indoor
and outdoor menuboard display systems to the fast food and convenience
store industries, and changeable magnetic signs used principally by banks
to display interest rates, currency exchange rates and other information.
On December 21, 1994, The Alpine Group, Inc. ("Alpine"), acquired an
additional 82% of the outstanding common stock of Adience, Inc. ("Adience")
to increase its ownership in Adience to approximately 87 percent, resulting
in an indirect ownership in IDT of approximately 70%. Also on December 21,
1994, the Company entered into a Merger Agreement with Alpine and two of
its subsidiaries, APV and Posterloid (together, "IDG"), whereby the Company
would merge with IDG and the Company would be named PolyVision Corporation.
Because Alpine controlled both IDG and IDT, the Merger, which was completed
on May 24, 1995, resulted in a new reporting entity which is being
accounted for as a reorganization of entities under common control. The
merged entity has adopted IDG's April 30 fiscal year end and, in order to
provide timely meaningful information, the accompanying financial
statements are presented as if the merger occurred on April 30, 1995. The
accompanying financial statements give effect to push-down accounting to
adjust IDT's accounting basis to fair value related to the December 21,
1994 acquisition of Adience by Alpine. Accordingly, the accompanying
financial statements for the year ended April 30, 1994 represent the
historical financial statements of IDG and for the year ended April 30,
1995 consist of the historical financial statements of IDG adjusted to
include the results of operations of IDT from the December 21, 1994
acquisition date. All significant intercompany transactions and accounts
have been eliminated in the accompanying consolidated financial statements.
In connection with the Merger, APV transferred its previously wholly-owned
subsidiary, PolyVision France S.A., to Alpine at its book value resulting
in an increase of amounts due to Alpine by APV of $702,000. Also in
connection with the Merger, Alpine distributed to its shareholders 76% of
its ownership in the Company resulting in Alpine retaining an approximate
17% ownership of the Company's common stock.
In connection with the Merger, APV's previously issued financial statements
have been retroactively restated to adopt accounting principles required to
be used in filings with the Securities and Exchange Commission.
Accordingly, in the accompanying consolidated financial statements,
Alpine's fiscal 1994 purchase of a minority interest in APV has been
reflected on a "push down" basis (see Note 14) pursuant to the provisions
of Staff Accounting Bulletins Nos. 54 and 73. In APV's previously issued
financial statements, parent company transactions were not pushed down to
APV. The effect of this change in
F-7
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
accounting principle was to increase APV's capital surplus by $20,645,000
and to record a purchased research and development charge of $20,645,000,
thereby increasing APV's previously reported fiscal 1994 net loss by the
same amount.
2. Summary of Significant Accounting Policies
------------------------------------------
Cash flow reporting
The Company considers all highly liquid investments with an original
maturity of 3 months or less to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market, with cost determined
on the first-in, first-out basis.
Revenue recognition
Greensteel's revenues are from sales of specific products and construction
of custom installations under contracts. Revenues from sales of specific
products are recorded when title transfers, which is typically when
shipment occurs. Revenues from contracts are recorded on the percentage-
of-completion method of accounting, measured on the basis of costs incurred
to estimated total costs, which approximates contract performance to date.
Approximately 70% of Greensteel's revenues for the year ended April 30,
1996 were from contracts, and approximately 75% of the related costs of
revenues were from contracts. Provisions for losses on uncompleted
contracts are made if it is determined that a contract will ultimately
result in a loss.
Posterloid recognizes revenues from sales of products when title transfers,
which is typically when shipment occurs.
Warranty claims
Warranty claims are accounted for on an accrual basis based on historical
experience. There have been no significant warranty claims to date.
Loss per common share
Loss per common share is computed by dividing net loss applicable to common
shares by the weighted average number of common shares outstanding. Common
equivalent shares are excluded from the computation as their effect is
anti-dilutive. For the years ended April 30, 1996, 1995 and 1994 the
weighted average number of shares used in computing loss per share was
8,339,200, 9,240,214 and 10,238,353, respectively.
Property and equipment
Plant and equipment are stated at cost less accumulated depreciation.
Depreciation and amortization are provided over the estimated useful lives
of the assets using the straight-line method. The estimated lives are as
follows:
F-8
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
Furniture and fixture 5-10 years
Machinery and equipment 2-10 years
Leasehold improvements The lesser of the lease term or estimated useful
life
Maintenance and repairs are charged to expense as incurred. Long-term
improvements are capitalized as additions to plant and equipment. Upon
retirement, or other disposal, the asset cost and related accumulated
depreciation are removed from the accounts and the net amount, less any
proceeds, is charged or credited to income.
Goodwill
Goodwill in the accompanying consolidated balance sheets represents the
excess of cost over the fair value of net assets acquired related to the
previous acquisition of Posterloid and is being amortized on a straight-
line basis over forty years. The Company reviews goodwill to assess
recoverability whenever events or changes in circumstances indicate that
its carrying value may not be recoverable. In performing such reviews the
Company estimates the future cash flows expected to result from
Posterloid's product line. If the sum of the expected future cash flows
(undiscounted and without interest charges) were to be less than the
carrying amount, an impairment loss would be recognized. As a result of
such reviews no impairment loss has been recognized. Accumulated
amortization of goodwill was $1,251,000 and $1,106,000 at April 30, 1996
and 1995, respectively.
Excess of net assets over purchase price of acquisition
Negative goodwill in the accompanying 1996 consolidated balance sheet
represents the excess of the fair value of net assets acquired over the
cost of IDT and is being amortized on a straight-line basis over forty
years (see Note 3).
Research and development
Research and development costs are expensed as incurred.
Workers' compensation
Greensteel was partially self-insured for workers' compensation claims.
The Company has accrued for its workers' compensation claims based on an
assessment of claims outstanding, as well as an estimate, based on
experience, of incurred workers' compensation claims which have not yet
been reported.
Stockholders' equity
Effective April 30, 1995, the Company effected a 1-for-15 reverse stock
split. The accompanying consolidated financial statements and notes
thereto have been retroactively restated to reflect this reverse stock
split.
Fair value of financial instruments
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate that value:
Cash, accounts receivable and payable, accrued obligations and
--------------------------------------------------------------
royalties payable - Management believes that the carrying amount
-----------------
approximates fair value because of the short maturity of those
instruments.
F-9
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
Line of credit and long-term debt - Management believes that the
---------------------------------
carrying amounts are a reasonable estimate of fair value as the debt
is frequently repriced based on the prime rate, and there has been no
significant change in credit risk since the financing was obtained.
Indebtedness to Alpine - The indebtedness is held by a related party
----------------------
and is not traded. Management believes that the carrying amount is a
reasonable estimate of fair value as there has been no significant
change in credit risk since the financing was obtained.
Recent accounting pronouncements
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for Impairment of Long-
Lived Assets" (SFAS 121). SFAS 121 requires a company to review long-lived
assets impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. The Company is
required to adopt the new standard during its fiscal year ending April 30,
1997. Management does not believe the adoption of the new standard will
have a significant impact on the Company's future results of operations or
financial position.
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). SFAS 123 defines a fair value based method of
accounting for an employee stock option or similar equity instrument.
However, it also allows an entity to continue to measure compensation cost
for those plans using the intrinsic value based method of accounting
prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees". Entities electing to remain with the accounting in Opinion 25
must make pro forma disclosures of net income, as if the fair value based
method of accounting defined in the statement had been applied. The
Company is required to adopt the new standard during its fiscal year ending
April 30, 1997. Based upon the Company's initial evaluation, adoption is
not expected to have a material impact on the Company's financial position
or results of operations because the Company intends to make pro forma
disclosures to comply with this statement.
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 and
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 reclassifications have been made to the 1995 consolidated financial
statements in order to present them in a manner consistent with 1996.
3. Acquisitions
------------
On December 21, 1994, Alpine acquired an additional 82 percent of the
outstanding common stock of Adience, resulting in an indirect ownership of
IDT of approximately 70 percent. The completion of the Merger Agreement
resulted in Alpine's direct and indirect ownership of 92.4% of the Company.
F-10
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
The acquisition of IDT was accounted for as a purchase and, accordingly,
the results of operations of IDT have been included in the consolidated
statements of operations from the December 21, 1994 acquisition date. The
preliminary allocation of IDT's fair market value of $10,000,000 to IDT's
assets resulted in the recording of $1,035,000 of negative goodwill after
the elimination of IDT's non-current assets. In accordance with APB No.
16, the Company has adjusted the carrying values of certain liabilities on
IDT's opening balance sheet resulting in a $750,000 reduction of the
preliminary allocation of negative goodwill. The unaudited pro forma
results of operations which give effect to the IDT acquisition and Merger
as if they occurred on May 1, 1994 and 1993 are presented below. The pro
forma amounts reflect purchase accounting adjustments under APB Opinion No.
16 and the elimination of $587,000 of professional fees directly related to
the Merger which were included in IDT's historical operating results prior
to the acquisition. The pro forma financial information does not purport
to be indicative of either the results of operations that would have
occurred had the acquisition taken place at the beginning of the periods
presented or of future results of the operations.
Pro forma (unaudited)
---------------------
1995 1994
---- ----
(in thousands)
Net sales $37,529 $48,557
Net loss (7,779) (25,099)
Preferred dividends 2,040 2,040
Net loss for common stock (9,819) (27,139)
Loss per common share ($1.06) ($2.65)
4. Inventories
-----------
The components of inventories are as follows at April 30, 1996 and 1995 (in
thousands):
1996 1995
---- ----
Raw materials $3,206 $4,415
Work in process 365 433
Finished goods 164 181
------- -------
$3,735 $5,029
====== ======
F-11
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
5. Contracts-in-Progress
---------------------
The status of contract costs on uncompleted construction contracts was as
follows at April 30, 1996 (in thousands):
<TABLE><CAPTION>
Costs and estimated Billings in excess
earnings in excess of costs and
of billings estimated earnings Total
----------- ------------------ -----
<S> <C> <C> <C>
Costs and estimated $5,132 $6,551 $11,683
earnings of $1,425
Billings 4,309 7,054 11,363
------- ------- --------
$ 823 $ (503) $ 320
======= ======== ========
</TABLE>
The status of contract costs on uncompleted construction contracts was as
follows at April 30, 1995 (in thousands):
<TABLE><CAPTION>
Costs and estimated Billings in excess
earnings in excess of costs and
of billings estimated earnings Total
----------- ------------------ -----
<S> <C> <C> <C>
Costs and estimated $5,029 $8,035 $13,064
earnings of $1,425
Billings 4,206 8,557 12,763
------- ------- --------
$ 823 $ (522) $ 301
======= ======== ========
</TABLE>
Accounts receivable at April 30, 1996 and 1995 included amounts billed but
not yet paid by customers under retainage provisions of approximately
$1,754,000 and $2,366,000, respectively. Such amounts are generally due
within 1 year.
6. Property and Equipment
----------------------
Property and equipment are as follows at April 30, 1996 and 1995 (in
thousands):
1996 1995
---- ----
Furniture and fixtures $ 142 $ 84
Machinery and equipment 2,080 1,937
Buildings & leasehold improvements 1,320 1,098
------- -------
3,542 3,119
Less accumulated depreciation
and amortization 2,140 1,470
------- -------
$1,402 $1,649
====== =======
F-12
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
Depreciation and amortization expense for the years ended April 30, 1996,
1995 and 1994 was $1,016, $502 and $1,475, respectively.
7. Debt
----
Debt consists of the following at April 30, 1996 and 1995 (in thousands):
1996 1995
---- ----
Industrial Development Loan (a) $ -- $1,115
Revolving credit loans (b) & (c) 1,252 1,379
Term loan (c) 1,200 --
Indebtedness to The Alpine
Group, Inc.(d) 3,335 --
------ ------
Total 5,787 2,494
Less short-term borrowings, current maturities
and Indebtedness to The Alpine
Group, Inc. 4,807 2,494
------ ------
Long term bank debt $ 980 $ --
====== ======
(a) The Industrial Development Loan was made by the Connecticut Development
Authority ("CDA") to APV and was collateralized by substantially all of
APV's assets. The loan was subject to a 15 year amortization schedule with
all remaining unpaid amounts due in December 2002 with interest at 7.8%.
The loan agreement provided for, among other things, restrictions on cash
dividends.
The Loan, with an outstanding principal and interest amount due of
$1,101,000, was repaid by Alpine on behalf of the Company on July 21, 1995
in connection with satisfying certain conditions of the CDA related to the
Merger (see Note 16).
(b) As of April 30, 1995, IDT had a $5,000,000 credit line under a short-term
credit facility with Congress Financial Corporation (Congress). The credit
facility was collateralized by accounts receivable, inventory and
equipment. The interest rate on loans under the credit facility was 2.5%
over the prime rate (9% at April 30, 1995) and IDT paid a commitment fee of
.5% on the unused portion of the credit facility. As of April 30, 1995,
$1,379,000 had been borrowed under this credit facility. In addition, at
April 30, 1995, IDT had an outstanding irrevocable standby letter of credit
totaling $700,000, which reduced the availability under such credit
facility in a like amount. The outstanding borrowings under this financing
agreement were repaid in full by Alpine on behalf of the Company on July
21, 1995 and the line of credit agreement was terminated. In addition,
Alpine provided Congress with cash collateral of $770,000 to continue the
$700,000 letter of credit. Payments by Alpine to Congress on behalf of the
Company aggregated approximately $1,517,000 and were comprised of the
outstanding borrowings under the credit line of $1,431,000 and $86,000 of
accrued interest, fees and expenses (see Note 16).
IDT was also a guarantor of Adience's credit facility with Congress and had
pledged its own accounts receivable, inventory and equipment to secure the
guarantee. On July 21, 1995, Adience also repaid their outstanding
borrowings and terminated their financing agreement. Accordingly, the
Company is no longer a guarantor of the Adience credit facility.
(c) On April 25, 1996, Greensteel as borrower and the Company as Guarantor
entered into a $5,000,000 Master Credit Agreement (the "Agreement") with
the Bank of Boston Connecticut to provide financing for Greensteel's
general working capital requirements. In connection with obtaining such
financing, Greensteel
F-13
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
repaid $2,453,000 to Alpine on April 30, 1996 pursuant to a $2,500,000
temporary credit facility provided by Alpine (see Note 16). The Agreement
further provides for a revolving credit facility of up to $3,800,000 based
upon eligible accounts receivable and inventory as defined (unused and
available borrowings after repayment to Alpine were $1,611,000 at April 30,
1996) at the Bank's prime rate plus 1% (9.25% at April 30, 1996) and a
$1,200,000 term loan payable in equal monthly installments of $20,000 with
interest at the Bank's prime rate plus 1-1/2% (9.75% at April 30, 1996)
beginning June 1, 1996 through August 1, 1997 with the remaining unpaid
principal amount of $900,000 due on August 31, 1997. The Agreement
terminates August 31, 1997 and provides for renewal at the Bank's sole and
absolute discretion.
Substantially all of Greensteel's assets are pledged as collateral for the
credit facility. The Agreement requires Greensteel's compliance with
certain financial covenants including maintenance of a minimum tangible net
worth and minimum debt service coverage, as defined, and a restriction on
dividends to the Company, which requires maintenance of a modified debt
service coverage after taking into account any such dividends, and on
other transfers of funds to the Company or its other subsidiaries. The
Company is a guarantor of the Agreement and has pledged Greensteel's common
stock in connection therewith. Greensteel is in compliance with all
covenants at April 30, 1996.
(d) On May 24, 1995, the Company entered into an agreement with Alpine,
pursuant to which the Company may borrow from time to time, until May 24,
1997, up to $5,000,000 from Alpine to be used by the Company to fund its
working capital needs, including research, development and
commercialization activities in connection with APV's PolyVisionTM display
technology. Borrowings under the agreement are unsecured and bear interest
at a market rate reflecting Alpine's cost of borrowing such funds (13% at
April 30, 1996), with interest payable semiannually in cash (but added to
the outstanding principal amount for the first 18 months). For the year
ended April 30, 1996, Alpine agreed with the Company to a modification of
terms whereby the Company issued 9,177 shares of the Company's Series A
Preferred Stock to Alpine in lieu of the addition of approximately $229,000
of interest to the outstanding principal amount at April 30, 1996 (see Note
16).
The aggregate amounts of minimum maturities relating to the long-term bank
debt for the five years subsequent to April 30, 1996 are as follows (in
thousands):
Fiscal Year Amount
----------- ------
1997 $220
1998 980
F-14
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
8. Accrued Expenses
----------------
Accrued expenses are as follows at April 30, 1996 and 1995 (in thousands):
1996 1995
---- ----
Accrued wages, salaries and employee
benefits $1,064 $ 495
Accrued workers' compensation 450 568
Other accrued expenses 1,153 2,242
------ ------
$2,667 $3,305
====== ======
9. Employee Benefits
-----------------
401(k) savings plan
-------------------
This plan covers substantially all nonbargaining employees who meet minimum
age and service requirements. The Company matches employee contributions
of up to 6 percent of compensation at a rate of 50 %. Amounts charged
against income totaled approximately $179,000, $95,000 and $11,000 in 1996,
1995 and 1994, respectively.
Union Agreement
---------------
On February 28, 1996, Greensteel entered into a new three-year labor
agreement with the local bargaining unit of the Carpenters Union at its
Dixonville, Pennsylvania facility (the "Union"), whose members voted on
that date to accept the new labor agreement. The labor agreement provides
for a "working partnership" between Greensteel management and the Union
whereby bargaining unit members received an aggregate of 229,000 shares of
the Company's common stock and will share in 50% of the excess of "targeted
gross profit" generated at the Dixonville facility. In exchange for such
equity participation and the understanding of the importance of reducing
Greensteel's cost structure to the future growth of the business, Union
members agreed to an approximate 14% reduction in direct wages and a 6%
reduction in benefits. The labor agreement further provided for the
termination of the bargaining employees' defined benefit pension plan with
any excess funding to be distributed to its participants. The issuance of
common stock and the termination of the pension plan resulted in a fourth
quarter charge of approximately $700,000.
Defined benefit pension plan
----------------------------
Greensteel maintained a defined benefit pension plan covering substantially
all hourly employees. The plan provided pension benefits based on the
employee's years of service. Greensteel's funding policy was to make
annual contributions to the extent deductible for federal income tax
purposes. In connection with the Union agreement noted above, and after
required notice to the participants, benefits under the plan were curtailed
and ceased to accrue on March 31, 1996. Benefits will be provided for in
the form of a lump sum distribution of each participant's accrued benefit.
The final termination settlement of the plan and distribution of benefits
is subject to approval of the termination of the plan by the Pension
Benefit Guarantee Corporation and the Internal Revenue Service. Greensteel
has undertaken the process to seek such approvals and will distribute all
plan assets, including any excess funding in the plan to plan participants
in the bargaining unit.
F-15
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
Greensteel's pension plan benefit obligations and assets were valued as of
December 31, 1994. Net pension cost for the eleven months ended March 31,
1996 and the four months ended April 30, 1995 was as follows (in
thousands):
1996 1995
---- ----
Service cost - Benefits earned during
the period $ 51 $ 17
Interest cost on projected
benefit obligations 35 10
Return on plan assets (54) (18)
Amortization of net asset existing at date
of adoption (8) (2)
Amortization of actuarial gain -- (1)
Loss on curtailment 186 --
----- ------
Net pension cost $ 210 $ 6
===== =====
The following table sets forth the funding status of the plan and amounts
recognized in the accompanying balance sheets at April 30, 1996 and 1995 as
follows (in thousands):
1996 1995
---- ----
Actual present value of benefit obligations:
Vested benefits $(810) $(391)
Nonvested benefit (21)
--
------- ------
Accumulated benefit obligations $(810) $(412)
====== ======
Projected benefit obligations $(810) $(412)
Assets available for benefits -
Funded assets at fair value 872 690
Funded status 62 278
Unrecognized transition amount -- (157)
Unrecognized net gain -- (62)
Excess funding to be distributed (62) --
------ ------
Prepaid pension costs $ 0 $ 59
====== ======
The plan assets are invested in cash, treasury bonds and listed stocks and
bonds.
Assumptions used to develop the net pension costs for the March 31, 1996
and December 31, 1994 valuations were as follows:
Discount rate 7.5%
Expected long-term rate of return on assets 7.5%
Plan curtailment (March 31, 1996) 6.6%
F-16
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
Certain union employees of Greensteel are covered by multiemployer defined
benefit retirement plans. Expenses relating to these plans amounted to
approximately $97,000 and $47,000 for the year and four months ended 1996
and 1995, respectively.
10. Stock Option and Stock Grant Plans
----------------------------------
On November 12, 1990, the Board of Directors of IDT approved an incentive
stock option plan, pursuant to which a maximum aggregate of 300,000 shares
were reserved for grants to key personnel. Generally, options became
exercisable 6 months following the date of grant and expire 10 years from
the date of grant. The plan provides for the option price to be paid in
cash, in shares of Company common stock owned by the option holder, or in a
combination of such shares and cash. As of April 30, 1996 and 1995, 11,833
options were outstanding at an exercise price of $37.50, which was
above market value at the date of the grant. At December 21, 1994, the
stock option plan was terminated without any effect on any outstanding
options under such plan and a new stock option plan was adopted, which was
approved by shareholders on May 24, 1995. Under the new stock option plan,
6,000,000 shares are reserved for grants to key personnel. During the year
ended April 30, 1996, options to purchase and aggregate of 250,000 shares
were granted to key employees at an exercise price of $3.86 per share which
was above market value at the date of grant.
During the year ended April 30, 1996, the Board of Directors adopted the
1995 Directors Stock Option Plan and the 1995 Directors Stock Grant Plan.
The Company reserved for issuance 300,000 and 200,000 shares of the
Company's common stock for the stock option and stock grant plans,
respectively. Options to purchase an aggregate of 150,000 shares were
granted during fiscal 1996 by the Board of Directors at an exercise price
of $3.86 per share which was above market value at the date of grant. In
addition, the Board of Directors approved stock grants of an aggregate of
100,000 shares for directors and key employees. The options and grants are
generally subject to 3 to 5 year vesting requirements with all unexercised
options expiring 10 years after the date of grant. The fiscal 1996 charge
relating to the current year vesting of these grants was $87,000. No
options expired, were exercised or canceled during fiscal 1996.
11. Royalties Payable
-----------------
Connecticut Innovations, Inc. ("CII") has advanced amounts to APV pursuant
to a Development Agreement to finance a portion of APV's product
development costs. The Development Agreement provides for a minimum annual
royalty of $75,000 per annum or 5% of sponsored product sales up to a
cumulative royalty of $3,250,000. Thereafter a royalty of 1/2% on
sponsored product sales is payable. The Development Agreement contains
covenants relating to technology licensing of the sponsored product. In
addition, the Development Agreement provides for an assignment of and
collateral interest in the technology, including all patents and know-how.
Included in the accompanying consolidated balance sheets is a $750,000
liability representing the aggregate amount advanced by CII under the terms
of the agreement.
F-17
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
12. Series A Preferred Stock
------------------------
On January 6, 1995, Alpine and the APV minority shareholder exchanged
3,005,124 shares of APV common stock for 1,020,076 shares of APV Series A
Preferred Stock. In connection with the Merger, the APV Series A Preferred
Stock was exchanged for an equal number of PolyVision Series A Preferred
Stock (Series A Preferred).
The Company is authorized to issue up to 1,500,000 shares of Series A
Preferred. The Series A Preferred earns quarterly cash dividends at an
annual rate of $2.00 per share and has priority as to dividends over the
common stock. In the case of the voluntary or involuntary liquidation or
dissolution of the Company, the holders of the Series A Preferred will be
entitled to receive a liquidation price of $25.00 per share ($25,731,000
aggregate liquidation value at April 30, 1996) plus any accrued and unpaid
dividends. The holders of the Series A Preferred have no voting rights
except as required by New York law as noted below.
Effective April 30, 1996, the Company agreed to issue an additional 9,177
shares of Series A Preferred Stock to The Alpine Group, Inc. in lieu of
payment of deferred interest in the amount of $229,425 (see Note 7).
The Company may at any time, at its option and subject to certain
restrictions and conditions, redeem all or part of the outstanding shares
of the Series A Preferred at a redemption price of $25.00 per share plus
accrued and unpaid dividends. In addition, so long as any shares of Series
A Preferred are outstanding and for a period of ten years from date of
issuance, not less than 30% of the net proceeds received by the Company in
a public offering (as defined) must be used to redeem an equivalent amount
of Series A Preferred Stock at $25.00 per share.
So long as any shares of Series A Preferred are outstanding, the Company
will not, without the affirmative vote of at least a majority of the
outstanding shares of Series A Preferred voting, (i) amend the Certificate
of Incorporation or By-laws if such change will adversely affect the rights
of the Series A Preferred, (ii) merge or consolidate with or into another
corporation, (iii) permit a sale of substantially all of the assets of the
Company, (iv) permit any liquidation or dissolution of the Company or (v)
declare or make any dividends or distributions on, or redemptions or
purchases of, any stock other than the Series A Preferred Stock.
13. Income Taxes
------------
The Company recognizes income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS 109). SFAS 109 utilizes the liability method and deferred
taxes are determined based on the estimated future tax effects of
differences between the financial statement and tax basis of assets and
liabilities given the provisions of enacted tax laws. The Company and its
subsidiaries will file a consolidated Federal income tax return from the
effective date of the Merger.
APV and Posterloid were included in Alpine's consolidated Federal return
through the effective date of the Merger. State tax returns for APV and
Posterloid are filed as separate companies.
F-18
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
Until November 10, 1993, APV filed Federal and state income tax returns as
a separate company. On November 10, 1993, Alpine acquired an additional
27% of APV's outstanding common stock from minority shareholders resulting
in Alpine increasing its equity interest from 71% to 98%. At November 10,
1993, APV had unused Federal net operating loss carryforwards of
approximately $8,500,000, that may be used to offset future taxable income.
Such carryforwards expire in various amounts from fiscal 2003 to 2009. The
use of these carryforwards may be restricted as a result of ownership
changes under Section 382 of the Internal Revenue Code and other
limitations.
At April 30, 1996, APV and Posterloid had additional unused Federal net
operating loss carryforwards of approximately $8,129,000 and $2,992,000,
respectively, that may be used to offset future taxable income. These
carryforwards expire in various amounts from fiscal 2009 through 2011. The
use of these carryforwards may also be restricted as a result of ownership
changes under Section 382 of the Internal Revenue Code and other
limitations.
As of December 31, 1994, IDT, on a separate-company basis, had net
operating loss carryforwards for Federal income tax purposes of
approximately $1,648,000 which will expire in 2008 and 2009. Under
Internal Revenue Code Section 382 and other limitations, the use of the
loss carry forwards will be limited as a result of the December 21, 1994,
ownership change. Subsequent to December 21, 1994, IDT incurred tax losses
resulting in additional federal net operating loss carry forwards of
$2,479,000 which expire in various amounts from fiscal 2010 through 2011.
As a result of the transaction described further in Note 1, Posterloid's
and APV's loss carryforwards may not be available to Posterloid, APV or
Greensteel. Based on APV's history of prior operating losses and the
expenditures associated with current research, development and engineering
programs, no assurance can be given that sufficient taxable income will be
generated for utilization of any net operating loss carryforwards and
reversal of temporary differences.
Income taxes have been accounted for in the accompanying consolidated
financial statements as if the consolidated entity of APV, Greensteel and
Posterloid filed its own consolidated return. The Company did not record
any current or deferred income tax expense during the fiscal years ended
April 30, 1996, 1995 and 1994 due to losses incurred during such periods
and the availability of net operating loss carryforwards.
F-19
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
The differences between the Company's Federal effective tax rate and the
statutory tax rate for the years ended April 30, 1996, 1995 and 1994
arises from the following:
1996 1995 1994
---- ---- ----
Federal statutory rate (35)% (35)% (34)%
Increase resulting from:
Goodwill amortization not deductible 1 1 --
Purchased R & D -- -- 27
Net loss of foreign subsidiary -- -- 1
Increase in valuation allowance 34 34 6
---- ---- ----
-- -- --
===== ===== =====
The tax effect of the primary temporary differences giving rise to the
Company's consolidated deferred tax assets and liabilities at April 30,
1996 and 1995 are as follows (in thousands):
<TABLE><CAPTION>
1996 1995
-------------------- -------------------
Current Long-Term Current Long-Term
Asset Asset Asset Asset
----- ----- ----- -----
<S> <C> <C> <C> <C>
Bad debt reserve $ 242 $ -- $ 219 --
Inventory related 113 -- 168 --
Accrued commissions
and payroll costs 188 -- 280 --
Reserve for future losses 53 -- 137 --
Reserve for merger fees -- -- 182 --
Fixed assets -- 1,060 -- 979
NOL carryforwards -- 9,974 -- 7,451
Other 220 296 501 --
Valuation allowance (816) (11,330) (1,487) (8,430)
------ ------- ------- -------
$ -- $ -- $ -- $ --
======= ========= ======== ========
</TABLE>
A valuation allowance has been recorded for the net deferred assets as a
result of uncertainties regarding the realization of the assets, including
the lack of profitability to date and the variability of operating results.
14. Purchased Research and Development
----------------------------------
On November 9, 1993, Alpine merged with Superior TeleTec Inc. ("STI"). As
a condition precedent to consummation of the merger with STI, Alpine
concluded on November 10, 1993, an exchange transaction with certain
minority stockholders of APV. Pursuant to the agreement, certain minority
stockholders of APV exchanged a 27% equity interest in APV for a total of
2,164,099 shares of Alpine resulting in Alpine owning approximately 98% of
APV's outstanding common stock.
F-20
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
In accordance with generally accepted accounting principles, this
transaction has been accounted for as purchased research and development.
Accordingly, the excess of the market value of the APV and Alpine common
stock issued plus expenses and other related non-cash charges over the fair
value of the tangible assets acquired has been expensed resulting in a
charge to operations of $21,687,000 in fiscal 1994.
APV has entered into certain royalty license, distribution and technical
assistance agreements with unrelated third parties to commercialize the
PolyVision technology for certain applications, subject to certain minimum
royalty payments and other conditions. During fiscal 1994, APV received
$410,000 for technical assistance to such third parties. Such amounts have
been reflected as a reduction of research and development costs. During
fiscal 1996 and 1995, no payments for technical assistance were received.
15. Development Stage Company
-------------------------
APV is a development stage enterprise. Since its inception, APV has
generated no revenue from the sale of commercially viable products and
there is no assurance that a commercially successful product will be
developed. A commercially viable product is dependent not only on the
success of future product research and development but also on developing a
product and related manufacturing technique such that the product can be
manufactured at a commercially acceptable cost. However, a risk exists
that even if a viable product is developed, manufacturing in commercial
quantities at viable costs will be unsuccessful. In addition to the
development of a successful product and related production techniques,
significant additional financing will be required in order for APV to
manufacture the product in commercial quantities. Since inception, the
majority of APV's financing has been contributed by Alpine. However, there
is no assurance that sufficient financing will continue to be available in
the future (see Notes 7 and 16).
Summary information relating to APV as a development stage enterprise is as
follows (in thousands):
April 30, 1996
--------------
Balance Sheet Data
------------------
Current assets $ 5
Property and equipment, net 481
Total assets 762
Long-term borrowing 750
Deficit accumulated during the
development stage 51,457
Total stockholders' deficit 783
F-21
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
<TABLE><CAPTION>
For the Period
from May 27, 1986
For the Year (inception)
ended April 30, 1996 through April 30, 1996
-------------------- ----------------------
<S> <C> <C>
Income Statement Data
---------------------
Development and license fees received $ -- $ 2,454
Research and development expense,
excluding purchased research and development 2,886 28,679
Purchased research and development -- 24,534
Net (loss) (2,980) (50,177)
Cash Flow Statement Data
------------------------
Cash used for operating expenses $ 1,677 $ 21,415
Capital expenditures -- 4,640
Advances from The Alpine Group, Inc. -- 19,672
Investment from PolyVision Corporation 5,070 5,070
Proceeds from sale of stock -- 1,918
</TABLE>
16. Related-Party Transactions
--------------------------
On May 24, 1995, PolyVision entered into an agreement with Alpine pursuant
to which PolyVision may borrow from time to time, prior to May 24, 1997,
up to $5,000,000 from Alpine to be used by PolyVision to fund its working
capital needs, including research, development and commercialization
activities in connection with APV's PolyVision(TM) display technology (see
Note 7). Alpine further agreed to fund working capital deficiencies on a
temporary basis and in an amount not to exceed $2,500,000. As of April
30, 1995, the Company had an outstanding receivable of $3,584,000 from
Adience and an APV intercompany account due to Alpine of $2,052,000,
resulting in a net receivable from affiliates of $1,532,000. In
connection with Alpine's payoff of Greensteel's indebtedness with Congress
and APV indebtedness with the Connecticut Development Authority,
Greensteel's receivable from Adience and APV's payable to Alpine were
offset and the excess of the aggregate of $2,618,000 paid by Alpine on
behalf of the Company over the net receivable and payable at July 21, 1995
was advanced pursuant to the foregoing agreements. The net amount of
interest income recognized by the Company from Adience for fiscal 1996 was
$71,000 through July 21, 1995 and $118,000 for the four months ended April
30, 1995. In addition, Adience performs certain financial and
administrative services for the Company for an annual fee of $300,000.
F-22
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
17. Commitments and Contingencies
-----------------------------
In 1994, Reliance Insurance Company of New York (the "Plaintiff") commenced
an action in the Supreme Court of the State of New York, County of Suffolk,
against several defendants including PolyVision seeking money damages based
on the purported sale and delivery by defendants of some 860 insulated
metal curtain wall panels manufactured by the Company. Plaintiff has
alleged that such panels were defective in their design and manufacture.
In its original complaint, Plaintiff seeks damages of $385,000 allegedly
already incurred and unspecified future damages. The alleged sales fall
into two categories, an original sale in 1987 and two or more sales in 1991
and 1992 of so-called replacement panels. Among the theories of liability
advanced by Plaintiff are breach of contract, breach of express warranty
and implied warranty. Pursuant to orders of the Court, the causes of
action based on the 1987 transaction were dismissed on statute of
limitation grounds. However, Plaintiff has been granted leave to serve an
amended complaint to allege, among other things, a claim under the New
Jersey Consumer Fraud Act (which might permit treble damages), while
preserving the right of the defendants, including PolyVision to challenge
the applicability of such Act. Since an amended complaint has not yet been
served, Plaintiff's theories of liability and damages are as yet not
completely certain. Moreover, since an answer to the amended complaint, if
served, remains to be served, and, as well, discovery has yet to commence,
it is premature to render an estimate of the outcome of this litigation.
In February 1992, the Company was cited by the Ohio Environmental
Protection Agency (the Ohio EPA) for violations of Ohio's hazardous waste
regulations, including speculative accumulation of waste and illegal
disposal of hazardous waste on the site of its Alliance, Ohio, facility.
In December 1993, the Company and Adience signed a consent order with the
Ohio EPA and Ohio Attorney General that required the Company and Adience to
pay to the State of Ohio a civil penalty of $200,000 of which the Company
paid $175,000 and Adience paid $25,000. In addition, the consent order
required the payment of stipulated penalties of up to $1,000 per day for
failure to satisfy certain requirements of the consent order, including
milestones in the closure plan. Removal and remediation activities as
contemplated under the consent order have been completed.
The Company has submitted risk assessment reports which demonstrate, in
management's opinion, that no further cleanup actions will be required on
the remaining property area not addressed under the closure plan. Based on
administrative precedent, the Company believes that it is likely that the
Ohio EPA will agree with the risk assessment reports. The Company is
currently waiting for a determination from the Ohio EPA as to whether the
submitted reports are approved. If such an agreement is not reached,
additional costs may have to be incurred to complete additional remediation
efforts. Although there are no assurances that additional costs will not
have to be incurred, the Company believes that such costs will not need to
be incurred. At April 30, 1996, environmental accruals amounted to
$20,000, which represents management's reasonable estimate of the amounts
to be incurred in the resolution of this matter. Since 1991, the Company
and Adience have together paid $1,423,000 (excluding the $200,000 civil
penalty) for the environmental cleanup related to the Alliance facility.
Under the acquisition agreement pursuant to which the Company acquired the
Alliance facility from Adience, Adience represented and warranted that,
except as otherwise disclosed to the Company, no hazardous material had
been stored or disposed of on such property and agreed to indemnify the
Company
F-23
<PAGE>
POLYVISION CORPORATION AND SUBSIDIARIES
(formerly known as Information Display Technology, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1996, 1995, and 1994
(CONTINUED)
for any losses in excess of $250,000. The Company has notified Adience
that it is claiming the right to indemnification for all costs in excess of
$250,000 incurred by the Company in this matter, and has received assurance
from Alpine that Adience will honor such claim. Adience has reimbursed the
Company $1,373,000 through April 30, 1996. If Adience is financially
unable to honor its remaining obligation, such costs would be borne by the
Company.
The Company is involved in other various matters of litigation incidental
to the normal conduct of its business. In management's opinion, the
disposition of that litigation will not have a material adverse impact on
the Company.
18. Lease Commitments
-----------------
The Company and its subsidiaries lease property, plant and equipment under
a number of leases extending for varying periods of time. Operating lease
rental expense amounted to approximately $664,000, $398,000 and $545,000
for the years ended April 30, 1996, 1995, and 1994, respectively.
Minimum rental commitments as of April 30, 1996, under non-cancelable
leases with terms of more than one year, are as follows:
Year ending
April 30, Amount
----------- ------
(in thousands)
1997 $451
1998 79
19. Concentration of Credit Risk
----------------------------
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of trade receivables.
Greensteel's concentration of credit risk within the construction industry
is somewhat mitigated by the large number of customers comprising
Greensteel's customer base. In addition, a majority of Greensteel's
revenues are derived from educational institutions in the eastern half of
the United States. Most public school projects require performance bonds
from general contractors which allow Greensteel to make bond claims or file
liens in the event of nonpayment for bonafide contract work performed by
Greensteel. Ultimately the taxing authority of municipalities and public
school districts provides much of the funding for Greensteel's business.
Posterloid's revenues are derived from a large customer base of fast food
restaurant chains and outfitters of municipal arenas throughout the United
States. Retrofits of large chains can result in significant customer
concentrations of credit risk to Posterloid from time to time.
F-24
<PAGE>
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
POLYVISION CORPORATION
(formerly know as Information Display Technology, Inc.)
CONDENSED BALANCE SHEETS
April 30, 1996 and 1995
(amounts in thousands, except share amounts)
1996 1995
---- ----
ASSETS
- ------
Current Assets:
Cash $ -- $ --
Accounts receivable, net of allowance for
doubtful accounts of $476 in 1995 -- 7,708
Receivable from affiliate -- 3,584
Inventories -- 4,704
Costs and estimated earnings in excess of billings
on uncompleted contracts -- 823
Prepaid expenses and other current assets -- 282
-------- ---------
Total current assets -- 17,101
Property and equipment, net -- 66
Investment in subsidiaries 9,459 1,917
-------- ---------
TOTAL ASSETS $ 9,459 $ 19,084
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Note payable $ -- $ 1,379
Accounts payable -- 2,122
Accrued expenses 2,936
Accrued dividends 2,040 --
Billings in excess of costs and estimated earnings
on uncompleted contracts -- 522
-------- ---------
Total current liabilities 2,040 6,959
Indebtedness to The Alpine Group, Inc. 3,335 --
Excess of net assets over purchase price of acquisition -- 1,035
Commitments and contingencies
Stockholders' Equity:
Series A Preferred Stock, $.01 par value, at
$25 per share liquidation value;
authorized 1,500,000 shares, issued
1,029,253 and 1,020,076 shares 25,731 25,502
Common stock, $.001 par value; authorized 25,000,000
shares, issued 8,530,073 and 8,301,073 shares 9 8
Capital in excess of par value 38,524 37,951
Accumulated deficit (60,180) (52,371)
-------- --------
Total stockholders' equity 4,084 11,090
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,459 $ 19,084
======== ========
The accompanying notes are an integral part of these condensed financial
statements.
S-1
<PAGE>
SCHEDULE I - (CONTINUED)
POLYVISION CORPORATION
(formerly known as Information Display Technology, Inc.)
CONDENSED STATEMENTS OF OPERATIONS
For the years ended April 30, 1996, 1995, and 1994
(amounts in thousands, except per share amounts)
1996 1995 1994
---- ---- ----
Net sales $ 24,203 $ 8,654 $ --
Cost of goods sold 18,606 7,201 --
--------- -------- ---------
Gross profit 5,597 1,453 --
Selling, general and administrative 6,428 2,364 --
--------- -------- ---------
Operating (loss) (831) (911) --
Equity in loss of subsidiaries (4,594) (4,901) (25,732)
Interest income 71 118 --
Interest expense (416) (19) --
Other income (expense), net 1 (15) --
--------- -------- ---------
Loss before income taxes (5,769) (5,728) (25,732)
Income tax expense -- -- --
--------- -------- ---------
Net loss (5,769) (5,728) (25,732)
Preferred stock dividends 2,040 448 448
--------- -------- ---------
Loss applicable to common stock ($ 7,809) ($ 6,176) ($26,180)
========= ========= =========
Loss per share of common stock ($ 0.94) ($ 0.67) ($ 2.56)
========= ========= =========
The accompanying notes are an integral part of these condensed financial
statements.
S-2
<PAGE>
SCHEDULE I - (CONTINUED)
POLYVISION CORPORATION
(formerly known as Information Display Technology, Inc.)
CONDENSED STATEMENTS OF OPERATIONS
For the years ended April 30, 1996, 1995, and 1994
(amounts in thousands, except per share amounts)
<TABLE><CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
(Loss) from operations ($5,769) ($5,728) ($25,732)
Adjustments to reconcile (loss) from operations
to net cash (used for) operations:
Equity in loss of subsidiaries 4,594 4,901 25,732
Depreciation and amortization 6 6 --
Deferred interest 229 -- --
Compensation expense for stock grants 87 -- --
Change in assets and liabilities:
Accounts receivable (352) 1,550 --
Inventories 1,489 (892) --
Other current assets 273 (307) --
Accounts payable and accrued expenses (2,514) (437) --
Other -- (149) --
-------- -------- --------
Cash (used for) operating activities (1,957) (1,056) --
-------- -------- --------
Cash flows from investing activities:
Capital expenditures (525) (72) --
Net cash received in acquisition -- 315 --
-------- -------- --------
Cash provided by (used for) investing activities (525) 243
--
-------- -------- --------
Cash flows from financing activities:
Net short-term borrowings 1,121 579 --
Long term borrowings from The Alpine Group, Inc. 3,335 -- --
Net repayments of affiliate receivables 76 234 --
Additional investment in subsidiaries (2,050) -- --
-------- -------- --------
Cash provided by financing activities 2,482 813 --
-------- -------- --------
Net increase (decrease) in cash -- -- --
Cash at beginning of period -- -- --
-------- -------- --------
Cash at end of period $ -- $ -- $ --
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
S-3
<PAGE>
SCHEDULE I - (CONTINUED)
POLYVISION CORPORATION
(formerly known as Information Display Technology, Inc.)
CONDENSED STATEMENTS OF OPERATIONS
For the years ended April 30, 1996, 1995, and 1994
(amounts in thousands, except per share amounts)
Years Ended April 30
---------------------------
1996 1995 1994
---- ---- ----
(in thousands)
Supplemental disclosures:
Interest paid $ 182 $ 19
====== ======
Non-cash investing and financing activities:
Conversion of The Alpine Group, Inc.
indebtedness to Preferred stock $ 229
========
Common stock issued in connection with
Union Agreement $ 487
========
Acquisition (net of cash acquired):
Assets acquired $17,686
Liabilities assumed 8,001
--------
Common stock issued $ 9,685
========
The accompanying notes are an integral part of these condensed financial
statements.
S-4
<PAGE>
SCHEDULE I - (CONTINUED)
POLYVISION CORPORATION
(formerly known as Information Display Technology, Inc.)
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
On April 25, 1996, the Company and Greensteel entered into a $5,000,000
Master Credit Agreement (the "Agreement") with the Bank of Boston
Connecticut. Among other things, the Agreement restricts the ability of
the Company to declare dividends or transfer funds from Greensteel to the
Company or the Company's other subsidiaries. As Greensteel's restricted
net assets of $5,728,000 are in excess of the Company's consolidated equity
of $4,084,000 at April 30, 1996, separate presentation of parent company
financial statements is required. Prior to December 21, 1994 the Company
consisted only of APV and Posterloid with Greensteel's operations included
in the accompanying financial statements since that date. In addition, the
former Greensteel division was separately incorporated to facilitate the
above financing and has operated as a wholly-owned subsidiary of the
Company since February 1, 1996. Accordingly, the accompanying presentation
of parent company financial statements includes the net assets of the
former Greensteel division at April 30, 1995 and its results of operations
for the nine months ended January 31, 1996 and for the four months ended
April 30, 1995.
2. Indebtedness to The Alpine Group Inc.
-------------------------------------
On May 24, 1995, the Company entered into an agreement with Alpine,
pursuant to which the Company may borrow from time to time, until May 24,
1997, up to $5,000,000 from Alpine to be used by the Company to fund its
working capital needs, including research, development and
commercialization activities in connection with APV's PolyVision display
technology. Borrowings under the agreement are unsecured and bear interest
at a market rate reflecting Alpine's cost of borrowing such funds (13% at
April 30, 1996), with interest payable semiannually in cash (but added to
the outstanding principal amount for the first 18 months). For the year
ended April 30, 1996, Alpine agreed with the Company to a modification of
terms whereby the Company issued 9,177 shares of the Company's Series A
Preferred Stock to Alpine in lieu of the addition of approximately $229,000
of interest to the outstanding principal amount at April 30, 1996 (see Note
7).
S-5
<PAGE>
<TABLE><CAPTION>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
POLYVISION CORPORATION
(Dollars in thousands)
Charged to Balance
Balance at Charged to Other Deduction at
Beginning Costs and Accounts- End of
of Period Expenses Describe Describe Period
---------- ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C>
Year ended April 30, 1996:
Deducted from asset accounts:
Allowance for doubtful accounts $521 $289 $235(1) $575
Inventory obsolescence reserve 400 20 150(2) 270
----- ----- ---- ----
Totals $921 $309 $385 $845
==== ==== ==== ====
Environmental Liability $179 $159(3) $ 20
==== ==== ====
Year ended April 30, 1995:
Deducted from asset columns:
Allowance for doubtful accounts $ 8 $ 75 $462(4) $ 24(1) $521
Inventory obsolescence reserve 150 125 125(4) 400
----- ----- ---- ----- ----
Totals $158 $ 200 $587 $ 24 $921
==== ===== ==== ===== ====
Environmental Liability $750(4) $571(3) $179
==== ==== ====
Year ended April 30, 1994:
Deducted from asset accounts:
Allowance for doubtful accounts $ 19 $ 8 $ 19(1) $ 8
Inventory obsolescence reserve 150 150
------- ----- ------- ====
Totals $ 19 $ 158 $ 19 $158
===== ===== ===== ====
</TABLE>
(1) Uncollectible accounts written off, net of recoveries.
(2) Disposal of obsolete inventory in connection with plant consolidations.
(3) Payments made related to the Ohio EPA Consent Order (See Note 17).
(4) Accounts of Greensteel at the December 21, 1994 acquisition date.
S-6
<PAGE>
POLYVISION CORPORATION
LIST OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- --------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of December 21,
1994, as amended, among IDT, The Alpine Group, Inc., Alpine
PolyVision, Inc. and Posterloid Corporation.(1)
3.1 Restated Certificate of Incorporation of the Company.(1)
3.2 By-laws of the Company.(2)
4.4 Specimen form of Common Stock Certificate of the Company.(3)
10.1 Asset Acquisition Agreement, dated as of April 21, 1990, relating to the purchase of
the Information Display Division of Adience, Inc. by IDT.(4)
10.2 Management and Administrative Services Agreement, dated as of April 24, 1990,
between IDT and Adience, Inc.(5)
10.3 Employment Agreement, dated as of October 8, 1990, between IDT and N. Roy
Anderson.(2)
10.4 Tax Sharing Agreement, dated as of April 24, 1990, between IDT and Adience,
Inc.(5)
10.7 1990 Stock Incentive Plan of IDT.(2)
10.8 Nonstatutory Stock Option Agreement, dated November 12, 1990, between IDT and
N. Roy Anderson.(2)
10.15 1994 Stock Option Plan of the Company.(1)
10.16 Credit Commitment Letter Agreements, dated May 24, 1995, between the Company
and The Alpine Group, Inc.(3)
10.17 Registration Rights Agreement, dated May 24, 1995, between the Company and The
Alpine Group, Inc.(3)
10.18 Form of Indemnification Agreement for Directors of the Company.(3)
10.19 1996 Union Stock Grant Plan of the Company.(6)
10.20 1995 Directors Stock Grant Plan of the Company.
10.21 1995 Directors Stock Option Plan of the Company.
</TABLE>
<PAGE>
<TABLE>
<C> <C>
10.22 Amended and Restated Employment Agreement, dated as of May 1, 1995, between
the Company and Ivan Berkowitz.
10.23 Amended and Restated Employment Agreement, dated as of May 1, 1995, between
the Company and Joseph A. Menniti.
10.24 Employment Agreement, dated as of May 1, 1995, between the Company and Mel
Schrieberg.
10.25 Articles of Agreement, dated February 28, 1996, between Greensteel and The
Carpenters' District Council of Western Pennsylvania.
10.26 Master Credit Agreement, dated as of April 25, 1996, among
Bank of Boston Connecticut (the "Bank"), Greensteel and the
Company.
10.27 Security Agreement, dated as of April 25, 1996, between the Bank and Greensteel.
10.28 Pledge Agreement, dated as of April 25, 1996, between the Bank and Greensteel.
10.29 Unlimited Continuing Guaranty Agreement, dated as of April 25, 1996, between the
Bank and the Company.
10.30 Stock Pledge Agreement, dated as of April 25, 1996, between the Bank and the
Company.
10.31 Agreement of Transfer, dated as of January 31, 1996, between the Company and
Greensteel.
22.1 Subsidiaries of the Company.
</TABLE>
- -------------
(1) Incorporated herein by reference from Proxy Statement for the Annual
Meeting of Shareholders, dated May 1, 1995.
(2) Incorporated herein by reference from Annual Report on Form 10-K for the
fiscal year ended December 31, 1990.
(3) Incorporated herein by reference to Registration Statement on From S-2 (No.
33-93010), effective June 9, 1995.
(4) Incorporated herein by reference from Current Report on Form 8-K, dated
April 24, 1990.
(5) Incorporated herein by reference from Post-Effective Amendment No. 1 to
Registration Statement No. 33-22701 NY.
(6) Incorporated herein by reference to Registration Statement on Form S-8 (No.
333-3897), effective May 16, 1996.
Exhibit 10.20
POLYVISION CORPORATION
---------------------------
1995 DIRECTORS STOCK GRANT PLAN
---------------------------
1. Purpose. This Plan is intended to provide incentive to directors of the
Corporation, to encourage proprietary interest in the Corporation, and to
attract new directors with outstanding qualifications.
2. Definitions. Whenever the following terms are used in this Plan, they
shall have the meaning specified below unless the context indicates otherwise:
(a) "Act" shall mean the Securities Act of 1933, as amended.
(b) "Administrator" shall mean the Board or the Committee, whichever
shall be administering the Plan from time to time in the discretion of the
Board, as described in Section 4(a) of the Plan.
(c) "Annual Meeting Date" shall have the meaning assigned to it in
Section 6(e) hereof.
(d) "Board" shall mean the Board of Directors of the Corporation.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean the committee appointed by the Board in
accordance with Section 4(a) of the Plan.
(g) "Common Stock" shall mean the Common Stock, par value $.001 per
share, of the Corporation.
(h) "Corporation" shall mean PolyVision Corporation, a New York
corporation.
(i) "Directors" shall mean, collectively, all directors, duly elected
to the Board by the Corporation's shareholders or otherwise in accordance
with the Corporation's By-laws, and all directors appointed to fill a
vacancy or a newly-created directorship position of the Board.
<PAGE>
(j) "Disability" shall mean the condition of a Director who is unable
to substantially fulfill his responsibilities as a member of the Board by
reason of any medically determinable physical or mental impairment which
can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(l) "Fair Market Value" shall mean the value of one (1) Share of
Common Stock, determined as follows, without regard to any restriction
other than a restriction which, by its terms, will never lapse:
(i) If the Shares are traded on the New York or American Stock
Exchange (or other exchange) or the National Market System (the "NMS")
of the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"), the last sale price as reported for
composite transactions on the date of valuation or, if no sales
occurred on that date, then the average of the highest bid and lowest
asked prices on such exchange or the NMS at the end of the day on such
date;
(ii) If the Shares are not traded on the New York or American
Stock Exchange (or other exchange) or the NMS but are otherwise traded
over-the- counter, the average of the highest bid and lowest asked
prices quoted in the NASDAQ system as of the close of business on the
date of valuation, or, if on such day such security is not quoted in
the NASDAQ system, the average of the representative bid and asked
prices on such date in the domestic over-the-counter market as
reported by the National Quotation Bureau, Inc., or any similar
successor organization; and
(iii) If neither (i) nor (ii) applies, the fair market value as
determined by the Administrator in good faith. Such determination
shall be conclusive and binding on all persons.
(m) "Grant" shall mean any stock award granted pursuant to the Plan.
(n) "Grantee" shall mean a Director who has received a Grant pursuant
to Section 4(b) hereof.
(o) "Plan" shall mean this PolyVision Corporation 1995 Directors Stock
Grant Plan, as it may be amended from time to time.
(p) "Share" shall mean one (1) share of Common Stock, adjusted in
accordance with Section 8 of the Plan (if applicable).
(q) "Term of Directorship" shall have the meaning assigned to it in
Section 6(b) hereof.
- 2 -
<PAGE>
(r) "Transition Grants" shall have the meaning assigned to it in
Section 6(c) hereof.
(s) "Valuation Date" shall have the meaning assigned to it in Section
6(c) hereof.
(t) "Vested Shares" and "Non-Vested Shares" shall have the meanings
assigned to such terms in Section 6(e) hereof.
3. Effective Date. This Plan was adopted by the Board effective October 2,
1995, subject to the approval of the Corporation's shareholders pursuant to
Section 12 hereof.
4. Administration and Eligibility.
(a) Administrator. The Plan shall be administered, in the discretion
of the Board from time to time, by the Board or by the Committee. The Committee
shall be appointed by the Board and shall consist of not less than two (2)
members of the Board. The Board may from time to time remove members from, or
add members to, the Committee. Vacancies on the Committee, however caused, shall
be filled by the Board. The Board shall appoint one of the members of the
Committee as Chairman. The Administrator shall hold meetings at such times and
places as it may determine. Acts of a majority of the Administrator at a meeting
at which a quorum is present, or acts reduced to or approved in writing by
unanimous consent of the members of the Administrator, shall be the valid acts
of the Administrator.
The Administrator shall maintain a list of the Directors who have been
awarded Grants, and determine the number of Shares granted to each Director in
accordance with Section 6(b) hereof. Subject to the express provisions of the
Plan, the Administrator shall have the authority to construe and interpret the
Plan and to define the terms used in the Plan, to prescribe, amend and rescind
rules and regulations relating to the administration of the Plan and to make all
other determinations necessary or advisable for the administration of the Plan.
The interpretation and construction by the Administrator of any provisions of
the Plan or of any Grant awarded thereunder shall be final. No member of the
Administrator shall be liable for any action or determination made in good faith
with respect to the Plan or any Grant awarded thereunder.
(b) Participation. The Grantees shall consist exclusively of Directors
of the Corporation; provided, however, that no Director shall be eligible to be
a Grantee if and to the extent that such Director is prohibited from personally
accepting or benefiting from a Grant hereunder due to such Director's
affiliation with a business organization; provided, further, that if at any time
a Director who has not been eligible under the Plan due to the immediately
preceding proviso becomes eligible to participate, such Director shall be
treated as having been elected to a term of less than three years at the time
such Director becomes so
-3-
<PAGE>
eligible, and at such time shall receive a Grant as though such Director had
been elected at such time, pursuant to Section 6(b) of the Plan.
5. Stock. The stock subject to Grants awarded under the Plan shall be
Shares of the Corporation's authorized but unissued or reacquired Common Stock.
The aggregate number of Shares which may be issued upon exercise of Grants under
the Plan shall not exceed Two Hundred Thousand (200,000), subject to the
occurrence of any of the events specified in Section 8 hereof. The number of
Shares subject to additional Grants at any time shall not exceed the number of
Shares remaining available for issuance under the Plan. In the event that any
Shares subject to any outstanding grants for any reason are forfeited and
returned to the Corporation in accordance with Section 6(f) of the Plan, the
Shares so forfeited may again be subject to Grants.
6. Terms and Conditions of Grants.
(a) Stock Grant Agreements. Grants shall be evidenced by written stock
grant agreements in such form as the Administrator shall from time to time
determine. Such agreements need not be identical but shall comply with and be
subject to the terms and conditions set forth below.
(b) Award of Grants. A Grant shall be awarded to each Director as of
the day that such Director takes office following the election of such Director
by the shareholders or by the Board, as permitted in the Corporation's By-laws,
in partial consideration for the fulfillment by such Director of such Director's
duties as a director of the Corporation. Subject to the availability of Shares
as specified in Section 5 of the Plan, each Grant shall be for 10,000 Shares.
(c) Grants upon Adoption of Plan. Notwithstanding any provision to the
contrary herein, upon the final ratification of the Plan by the Board, and
subject to the approval by shareholders as contemplated by Section 12 of the
Plan, each person who was a Director upon the adoption by the Board of the Plan
(October 2, 1995) will receive a Grant (collectively, the "Transition Grants")
effective upon May 24, 1995, the date of the Corporation's 1995 Annual Meeting
of Shareholders.
(d) Number of Shares. Each Grant shall state the number of Shares to
which it pertains and shall provide for the adjustment thereof in accordance
with the provisions of Section 8 hereof.
(e) Vesting. Shares included in Grants shall be subject to the vesting
provisions herein set forth. Shares which have vested according to the schedule
set forth below shall be considered "Vested Shares" and Shares which have not so
vested shall be considered "Non-Vested Shares." The Shares included in each
Grant shall vest ratably on the date of each of the three successive Annual
Meetings of Shareholders of the Corporation (each, an "Annual Meeting Date")
following the effective date of the Grant. The number of Shares subject to a
-4-
<PAGE>
Grant which shall become Vested Shares as of each Annual Meeting Date shall be
one-third of the total number of Shares included in the Grant (e.g., 3,333
Shares in the first year, 3,333 Shares in the second year and 3,334 Shares in
the third year); provided, however, in the case of Transition Grants, Directors
shall be deemed to have completed twelve (12) months of service as a Director on
the 1996 Annual Meeting Date. If no Annual Meeting of Shareholders shall have
occurred in any fiscal year on or before October 31 of such fiscal year, then
unless the Board shall have adopted a resolution adopting an alternative date,
October 31 shall be considered to be the Annual Meeting Date.
(f) Restrictions on Non-Vested Shares. A Grantee may not assign, sell,
pledge, hypothecate or otherwise transfer any Grant or any Non-Vested Shares. If
a Grantee ceases to be a Director for any reason or no reason, including upon
death or Disability, removal (with or without cause) or resignation, the Grant
shall be automatically terminated immediately upon the effective date of such
cessation and all Shares included in Grants which are Non-Vested Shares as of
the effective date of such cessation, shall be forfeited automatically and
shall, effective immediately upon such cessation, be returned to the status of
authorized to be issued pursuant to Grants under the Plan. In the discretion of
the Administrator, the Corporation may devise any mechanism reasonable for the
purpose of enforcing the restrictions and limitations on Non-Vested Shares. In
the absence of any other such mechanism, the Corporation may retain possession
of any certificates representing Non-Vested Shares, but shall cause certificates
representing Shares which have become Vested Shares registered in the name of
the Grantee to be delivered to the Grantee entitled to the same promptly
following the time at which such Shares become Vested Shares as herein
described.
(g) Rights as a Shareholder. Except as provided in Section 6(f) of the
Plan, a Grantee shall have and enjoy all rights as a shareholder with respect to
all Shares included in the Grant, regardless of whether the Shares awarded are
Vested or Non-Vested, including, without limitation, the right to vote any such
Shares, the right to receive all communications addressed by the Corporation to
its shareholders, and the right to receive dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other rights as
provided in the Certificate of Incorporation or By-laws of the Corporation.
Notwithstanding any provision hereof, a Director may not transfer any Shares
received pursuant to a Grant for a period of six (6) months immediately
following the effective date of the Grant.
(h) Payment of Taxes; Related Matters. In the event the Corporation
determines it is required to withhold state, local or Federal income tax as a
result of the award of a Grant or the vesting of any Shares subject to a Grant,
the Corporation may require a Grantee to make arrangements satisfactory to the
Corporation to enable it to satisfy such withholding requirements. Payment of
such withholding requirements may be made, in the discretion of the
Administrator, (i) in cash, (ii) by delivery of Shares registered in the name of
the Grantee, or by the Corporation not issuing such number of Shares subject to
the Grant having a Fair Market Value at the effective date of the Grant or the
date of such vesting equal to the amount to be withheld, or (iii) any
combination of (i) and (ii) above. An election under the preceding sentence may
only be made during the period beginning on the third business day
-5-
<PAGE>
following the date of release of quarterly and annual summary statements of
sales and earnings as provided by Rule 16b-3(e)(3)(iii) (or Rule 16b-3(e)(3)
following the scheduled amendment of Rule 16b-3) of the Securities and Exchange
Commission and ending on the twelfth business day following such date and only
if such period occurs before the date the Corporation requires payment of the
withholding tax. The election need not be made during the ten-day window if (a)
it is made at least six (6) months prior to the date of the Grant or (b) counsel
to the Corporation determines that compliance with such requirement is
unnecessary.
THE STOCK GRANT AGREEMENT SHALL APPRISE THE GRANTEE OF THE TAX CONSEQUENCES
TO THE GRANTEE OF SECTION 83 OF THE CODE (INCLUDING THE TAX CONSEQUENCES TO THE
GRANTEE OF FILING OF AN ELECTION PURSUANT TO SECTION 83(b) OF THE CODE), AND
SHALL ALLOCATE THE RESPONSIBILITY FOR RECEIVING APPROPRIATE ADVICE WITH RESPECT
THERETO TO THE GRANTEE.
(i) Other Provisions. The stock grant agreements authorized under the Plan
may contain such other provisions not inconsistent with the terms of the Plan
(including, without limitation, restrictions upon the transfer of Shares of
stock following the award of the Grant) as the Administrator shall deem
advisable.
7. Term of Plan. Grants may be awarded pursuant to the Plan until the
expiration of the Plan on October 2, 2005.
8. Recapitalizations and Other Transactions. Subject to any required action
by shareholders, the aggregate number of Shares covered by the Plan as provided
in Section 5 hereof and the number of Shares covered by each Grant shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, stock dividend (but only of Common Stock),
combination of shares or any other change, by reclassification, reorganization,
redesignation, recapitalization or otherwise, or any other increase or decrease
in the number of issued Shares effected without receipt of consideration by the
Corporation. If any such adjustment results in a fractional share, such fraction
shall be disregarded.
Subject to any required action by shareholders, if the Corporation shall
merge with another corporation and the Corporation is the surviving corporation
in such merger and under the terms of such merger the shares of Common Stock
outstanding immediately prior to the merger remain outstanding and unchanged,
each outstanding Grant shall continue to apply to the Shares subject thereto,
and any Shares awarded pursuant to a Grant prior to a merger, which have yet to
fully vest in accordance with the schedule set forth in Section 6(e) of the
Plan, shall continue to be subject to the same vesting schedule. In addition, in
the event of a merger where the Corporation is the surviving corporation, each
outstanding Grant shall also pertain and apply to any additional securities and
other property, if any, to which a holder of the number of Shares subject to the
Grant would have been entitled as a result of the merger. If the Corporation or
The Alpine Group, Inc. ("Alpine") sells all, or substantially all, of its
assets, or the Corporation or Alpine merges (other than a merger of the type
described in the immediately
-6-
<PAGE>
preceding sentence) or consolidates with another corporation, this Plan shall
terminate and each Non-Vested Share awarded hereunder pursuant to a Grant shall
be Vested. A dissolution or liquidation of the Corporation or Alpine, other than
a dissolution or liquidation immediately following a sale of all or
substantially all of the assets of the Corporation or Alpine, which shall be
governed by the immediately preceding sentence, shall cause this Plan to
terminate and each Non-Vested Share under any Grant to be Vested.
To the extent that the foregoing adjustments relate to securities of the
Corporation, such adjustments shall be made by the Administrator, whose
determination shall be conclusive and binding on all persons.
Except as expressly provided in this Section 8, the Grantee shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or stock of another
corporation, and any issue by the Corporation of shares of stock of any class,
or securities convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number of
Shares subject to a Grant.
The award of a Grant pursuant to the Plan shall not affect in any way the
right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
9. Securities Law Requirements.
(a) Legality of Issuance. No Shares shall be issued upon the award of
any Grant unless and until the Corporation has determined that:
(i) it and the Grantee have taken all actions required to
register the award of the Shares under the Act, or to perfect an
exemption from the registration requirements thereof;
(ii) any applicable listing requirement of any stock exchange on
which the Common Stock is listed has been satisfied; and
(iii) any other applicable provision of state or Federal law has
been satisfied.
(b) Restrictions on Transfer; Representations of Grantee; Legends.
Regardless if whether the award of Shares under the Plan has been registered
under the Act or has been registered or qualified under the securities laws of
any state, the Corporation may impose restrictions upon the sale, pledge or
other transfer of such Shares (including the placement of appropriate legends on
stock certificates) if, in the judgment of the Corporation and
-7-
<PAGE>
its counsel, such restrictions are necessary or desirable in order to achieve
compliance with the provisions of the Act, the securities laws of any state or
any other law. In the event that the award of Shares under the Plan is not
registered under the Act but an exemption is available which requires an
investment representation or other representation, each Grantee shall be
required to represent that such Shares are being acquired for investment, and
not with a view to the sale or distribution thereof, and to make such other
representations as are deemed necessary or appropriate by the Corporation and
its counsel. Stock certificates evidencing Shares acquired under the Plan
pursuant to an unregistered transaction shall bear the following restrictive
legend (or similar legend in the discretion of the Administrator) and such other
restrictive legends as are required or deemed advisable under the provisions of
any applicable law:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO DISTRIBUTION AND MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER
THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY IN FORM AND CONTENT TO THE ISSUER
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."
Any determination by the Corporation and its counsel in connection with any
of the matters set forth in this Section 9 shall be conclusive and binding on
all persons.
(c) Registration or Qualification of Securities. The Corporation may, but
shall not be obligated to, register or qualify the award of Shares pursuant to
the Plan under the Act or any other applicable law. The Corporation shall not be
obligated to take any affirmative action in order to cause the award of Shares
under the Plan to comply with any law.
(d) Exchange of Certificates. If, in the opinion of the Corporation and its
counsel, any legend placed on a stock certificate representing Shares awarded
under the Plan is no longer required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.
10. Information to Grantees. The Corporation shall provide each Grantee on
an annual or other periodic basis financial and other information regarding the
Corporation. The Corporation may provide this information to each Grantee in any
manner reasonably calculated to ensure receipt of the information by each
Grantee.
-8-
<PAGE>
11. Amendment of the Plan. The Board may, from time to time, with respect
to any Shares at the time not subject to Grants suspend or discontinue the Plan
or revise or amend it in any respect whatsoever, provided that the Board shall
not revise or amend the Plan more than once every six (6) months (other than to
comport with changes in the Code or the Employee Retirement Income Security Act,
or the rules or regulations thereunder), and provided, further, that no
amendment or revision shall adversely affect, without the affected Grantee's
written consent, the rights of an Grantee to whom the Shares have been issued
pursuant to the Plan. In addition, without the approval of the Corporation's
shareholders, no such revision or amendment shall:
(a) materially increase the benefits accruing to the Grantees under
the Plan;
(b) increase the number of Shares which may be issued under the Plan;
(c) change the designation in Section 4 hereof with respect to the
classes of persons eligible to receive Grants;
(d) modify the Plan such that it fails to meet the requirement of Rule
16b-3 of the Securities and Exchange Commission for the exemption of the
acquisition, cancellation, expiration or surrender of Grants from the
operation of Section 16(b) of the Exchange Act; or
(e) amend this Section 11 to defeat its purpose.
12. Approval of Shareholders. The Plan shall be subject to approval by the
affirmative vote of the holders of a majority of the outstanding shares present
or represented and entitled to vote at the first annual meeting of shareholders
of the Corporation following the adoption of the Plan, and in no event later
than October 31, 1996. Following the adoption of the Plan by the Board on
October 2, 1995, but prior to shareholder approval, Grants may be awarded to
Directors duly elected or appointed to serve on the Board of the Corporation,
pending shareholder approval, and upon such approval by the shareholders, the
actions of the Administrator by which the Grants were awarded shall be ratified.
Any amendment described in Section 11 shall also be subject to approval by the
Corporation's shareholders.
13. Execution. To record the adoption of the Plan by the Board on October
2, 1995, the Corporation has caused its authorized officer to affix its
corporate name and seal hereto.
POLYVISION CORPORATION
By: /s/ Steven S. Elbaum
-------------------------------------
Steven S. Elbaum, Chairman of the
Board of Directors
-9-
Exhibit 10.21
POLYVISION CORPORATION
--------------------------
1995 DIRECTORS STOCK OPTION PLAN
--------------------------
1. Purpose. The purpose of this Plan is to advance the interests of
PolyVision Corporation, a New York corporation, by providing an additional
incentive to attract and retain directors through the encouragement of stock
ownership in the Company by such persons.
2. Definitions. As used herein, the following terms shall have the meaning
indicated:
(a) "Annual Meeting Date" shall mean the date of the annual meeting of
the Company's shareholders at which the Directors are elected.
(b) "Board" shall mean the Company's Board of Directors.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" shall mean the Common Stock, par value $.001 per
share, of the Company.
(e) "Company" shall mean Polyvision Corporation, a New York
corporation.
(f) "Director" shall mean a member of the Board.
(g) "Fair Market Value" of the Common Stock on any date of reference
shall be the Closing Price on the business day immediately preceding such
date of the Common Stock; provided that for purposes of grants made on the
Initial Grant Date to persons who are Directors on the Effective Date, the
term "Fair Market Value" shall mean the exercise price per Share of an
Option equal to $3.86, which is 110% of the average trading price of a
Share over a 30 trading day period following the spin-off of the Company.
For this purpose, the Closing Price of the Common Stock on any business day
shall be (i) if such Common Stock is listed or admitted for trading on any
United States national securities exchange, or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of Common Stock on such exchange or reporting system,
as reported in any newspaper of general circulation, (ii) if the Common
Stock is quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system of automated dissemination of
quotations of securities prices in common use, the mean between the closing
high bid and low
<PAGE>
asked quotations for such day of the Common Stock on such system, or (iii)
if neither clause (i) or (ii) is applicable, the mean between the high bid
and low asked quotations for the Common Stock as reported by the National
Quotation Bureau, Incorporated if at least two securities dealers have
inserted both bid and asked quotations for the Common Stock on at least
five of the ten preceding days.
(h) "Initial Grant Date" means (i) in the case of persons who are
Directors of the Company on the Annual Meeting Date (including the 1995
Annual Meeting of Shareholders) and (ii) in all other cases, the date on
which a person is elected as a member of the Board.
(i) "Option" (when capitalized) shall mean any option granted under
this Plan.
(j) "Option Agreement" means the agreement between the Company and the
Optionee for the grant of an option.
(k) "Optionee" shall mean a person to whom a stock option is granted
under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.
(l) "Parent" means a "parent corporation" as defined in Section 425(e)
and (g) of the Code.
(m) "Plan" shall mean this 1995 Directors Stock Option Plan for the
Company.
(n) "Share(s)" shall mean a share or shares of the Common Stock.
(o) "Subsidiary" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. Shares and Options. Subject to Section 9 of this Plan, the Company may
grant to Optionees from time to time Options to purchase an aggregate of up to
Three Hundred Thousand (300,000) Shares from authorized and unissued Shares. If
any Option granted under the Plan shall terminate, expire, or be canceled or
surrendered as to any Shares, new Options may thereafter be granted covering
such Shares.
4. Grants of Options.
(a) On the Initial Grant Date, each Optionee shall receive the grant
of an Option to purchase 25,000 Shares.
-2-
<PAGE>
(b) Upon the grant of each Option, the Company and the Optionee shall
enter into an Option Agreement, which shall specify the grant date and the
exercise price and shall include or incorporate by reference the substance of
this Plan and such other provisions consistent with this Plan as the Board may
determine.
5. Exercise Price. The exercise price per Share of any Option shall be the
Fair Market Value of the Shares underlying such Option on the date such Option
is granted.
6. Exercise of Options. An Option shall be deemed exercised when (i) the
Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate exercise price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Board in its sole discretion have been made for the
Optionee's payment to the Company of the amount that is necessary for the
Company or Subsidiary employing the Optionee to withhold in accordance with
applicable Federal or state tax withholding requirements. The exercise price of
any Shares purchased shall be paid in cash, by certified or official bank
check or personal check, by money order, with Shares or by a combination of the
above. If the exercise price is paid in whole or in part with Shares, the value
of the Shares surrendered shall be their Fair Market Value on the date the
Option is exercised. No Optionee shall be deemed to be a holder of any Shares
subject to an Option unless and until a stock certificate or certificates for
such Shares are issued to such person(s) under the terms of the Plan. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
expressly provided in Section 9 hereof.
7. Exercisability of Options. (a) Each Option granted hereunder shall not
be exercisable until after six months following its grant to an Optionee.
Thereafter, such option shall be exercisable over a four-year period, vesting as
to one-fourth of the total number of Options granted per year. The expiration
date of an Option shall be ten (10) years after the date of grant of the Option.
(b) Unless otherwise provided in any Option, each outstanding Option
shall become immediately fully exercisable:
(i) if there occurs any transaction (which shall include a series
of transactions occurring within 60 days or occurring pursuant to a
plan), that has the result that shareholders of the Company or The
Alpine Group, Inc. ("Alpine") immediately before such transaction
cease to own at least 51% of the voting stock of the Company or
Alpine, as the case may be, or of any entity that results from the
participation of the Company or Alpine, as the case may be, in a
reorganization, consolidation, merger, liquidation or any other form
of corporate transaction;
(ii) if the shareholders of the Company or Alpine shall approve a
plan of merger, consolidation, reorganization, liquidation or
dissolution in which the Company or
-3-
<PAGE>
Alpine, as the case may be, does not survive (unless the approved
merger, consolidation, reorganization, liquidation or dissolution is
subsequently abandoned); or
(iii) if the shareholders of the Company or Alpine shall approve
a plan for the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company or Alpine, as
the case may be, (unless such plan is subsequently abandoned).
8. Termination of Option Period.
(a) The unexercised portion of any Option shall automatically and
without notice terminate and become null and void at the time of the earliest to
occur of the following:
(i) three months after the date on which the Optionee ceases to
be a Director for any reason other than by reason of "Cause" (which,
for purposes of this Plan, shall mean the removal of the Optionee as a
Director by reason of any act of (a) fraud or intentional
misrepresentation, or (b) embezzlement, misappropriation, or
conversion of assets or opportunities of the Company or any
Subsidiary);
(ii) immediately upon the removal of the Optionee as a Director
for Cause; and
(iii) one year after the date the Optionee ceases to be a
Director by reason of death of the Optionee.
(b) The Board in its sole discretion may, by giving written notice
("Cancellation Notice"), cancel any Option that remains unexercised on the date
of the consummation of any corporate transaction:
(i) if the shareholders of the Company shall approve a plan of
merger, consolidation, reorganization, liquidation or dissolution in
which the Company does not survive (unless the approved merger,
consolidation, reorganization, liquidation or dissolution is
subsequently abandoned); or
(ii) if the shareholders of the Company shall approve a plan for
the sale, lease, exchange or other disposition of all or substantially
all the property and assets of the Company (unless such plan is
subsequently abandoned). Any Cancellation Notice shall be given a
reasonable period of time prior to the proposed date of such
cancellation and may be given either before or after shareholder
approval of such corporate transaction.
-4-
<PAGE>
9. Adjustment of Shares.
(a) If at any time while the Plan is in effect or unexercised Options
are outstanding, there shall be any increase or decrease in the number of issued
and outstanding Shares through the declaration of a stock dividend or through
any recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number of
Shares available for grant under the Plan, so that the same percentage
of the Company's issued and outstanding Shares shall continue to be
subject to being so optioned; and
(ii) appropriate adjustment shall be made in the number of Shares
and the exercise price per Share thereof then subject to any
outstanding Option, so that the same percentage of the Company's
issued and outstanding Shares shall remain subject to purchase at the
same aggregate exercise price.
(b) Subject to the specific terms of any Option, the Board may change
the terms of Options outstanding under this Plan, with respect to the exercise
price or the number of Shares subject to the Options, or both, when, in the
Board's sole discretion, such adjustments become appropriate by reason of a
corporate transaction described in Subsections 8(b)(i) or (ii) hereof.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or exercise price of the Shares then subject
to outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
10. Transferability of Options. Each Option shall provide that such Option
shall not be transferable by the Optionee otherwise than by will or the laws of
descent and distribution, and each Option shall be exercisable during the
Optionee's lifetime only by the Optionee.
- 5 -
<PAGE>
11. Issuance of Shares. As a condition of any sale or issuance of Shares
upon exercise of any Option, the Board may require such agreements or
undertakings, if any, as the Board may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(a) a representation and warranty by the Optionee to the Company, at
the time any Option is exercised, that he is acquiring the Shares to be
issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(b) a representation, warranty and/or agreement to be bound by any
legends that are, in the opinion of the Board, necessary or appropriate to
comply with the provisions of any securities law deemed by the Board to be
applicable to the issuance of the Shares and are endorsed upon the Share
certificates.
12. Administration of the Plan. The Plan shall be administered by the
Board, which shall have the authority to adopt such rules and regulations and to
make such determinations as are not inconsistent with the Plan and as are
necessary or desirable for the implementation and administration of the Plan.
13. Interpretation. If any provision of the Plan should be held invalid or
illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan. The determinations and the
interpretation and construction of any provision of the Plan by the Board shall
be final and conclusive. This Plan shall be governed by and construed in
accordance with the laws of the State of New York. Headings contained in this
Plan are for convenience only and shall in no manner be construed as part of
this Plan. Any reference to the masculine, feminine, or neuter gender shall be a
reference to such other gender as is appropriate.
14. Term of Plan; Amendment and Termination of the Plan.
(a) This Plan shall become effective upon its adoption by the Board,
and shall continue in effect until all Options granted hereunder have expired or
been exercised, unless sooner terminated under the provisions relating thereto.
No Option shall be granted after 10 years from the date of the Board's adoption
of this Plan.
(b) The Board may from time to time amend the Plan or any Option;
provided, however, that, without approval by the Company's shareholders, no such
amendment shall (i) materially increase the benefits accruing to participants
under the Plan, (ii) materially increase the number of Shares or other
securities reserved for issuance upon the exercise of Options, (iii) materially
modify the requirements as to eligibility for participation under the Plan or
(iv) otherwise involve any other change or modification requiring shareholder
approval under Rule 16b-3 of the Securities Act of 1933, as amended; and,
provided, further, that, except to the extent otherwise specifically provided in
Section 8, no amendment or suspension of the Plan or
-6-
<PAGE>
any Option issued hereunder shall substantially impair any Option previously
granted to any Optionee without the consent of such Optionee.
(c) Notwithstanding anything else contained herein, the provisions of
this Plan which govern the number of Options to be awarded to nonemployee
directors, the exercise price per share under each such Option, when and under
what circumstances an Option will be granted and the period within which each
Option may be exercised, shall not be amended more than once every six months
(even with shareholder approval), other than to conform to changes to the Code,
or the rules promulgated thereunder, and under the Employee Retirement Income
Security Act of 1974, as amended, or the rules promulgated thereunder, or with
rules promulgated by the Securities and Exchange Commission.
(d) The Board, without further approval of the Company's shareholders,
may at any time terminate or suspend this Plan. Any such termination or
suspension of the Plan shall not affect Options already granted and such Options
shall remain in full force and effect as if this Plan had not been terminated or
suspended. No Option may be granted while the Plan is suspended or after it is
terminated. The rights and obligations under any Option granted to any Optionee
while this Plan is in effect shall not be altered or impaired by the suspension
or termination of this Plan without the consent of such Optionee.
15. Reservation of Shares. The Company, during the term of the Plan, will
at all times reserve and keep available a number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
16. Execution. To record the adoption of the Plan by the Board on October
2, 1995, the Corporation has caused its authorized officer to affix its
corporate name and seal hereto.
POLYVISION CORPORATION
By: /s/ Steven S. Elbaum
-----------------------------------------------
Steven S. Elbaum, Chairman of the
Board of Directors
- 7 -
Exhibit 10.22
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into as
of May 1, 1995, between PolyVision Corporation, a New York corporation (the
"Company"), and Ivan Berkowitz (the "Executive").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Executive's contribution to the future growth and success of the
Company is expected to be substantial;
WHEREAS, the Board has determined that an employment agreement will
reinforce and encourage the continued attention and dedication of the Executive
to the Company and its shareholders, and the Executive is willing to commit
himself to serve the Company, on the terms and conditions herein provided; and
WHEREAS, in order to effect the foregoing, the Company and the Executive
wish to enter into an employment agreement on the terms and conditions set forth
below.
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve the Company, on the terms and conditions set
forth herein.
2. Term. The employment of the Executive by the Company hereunder and as
provided in Section 1 will commence as of May 1, 1995 (the "Commencement Date")
and will continue in effect (a) until either party gives notice to the other, as
provided in Section 6(e) that it does not wish to continue the Executive's
employment hereunder or (b) unless terminated as provided in Sections 6(a), (b),
(c) and (d).
3. Position and Duties. The Executive shall serve as Chief Executive
Officer of the Company with such responsibilities, duties and authority as are
customary for such a position and office and as may from time to time be
assigned to the Executive by the Company's Board, provided that the same is
consistent with the Executive's office as Chief Executive Officer. The Executive
shall devote substantially all of his working time and efforts to the business
and affairs of the Company, provided that the Executive may be involved in
charitable and trade association activities and make passive investments that do
not materially detract from the discharge of his responsibilities hereunder.
<PAGE>
4. Compensation and Related Matters.
(a) Salary. During the term of the Executive's employment hereunder,
the Company shall pay to the Executive an annual base salary at a rate of not
less than $200,000 or such higher rate as may from time to time be determined by
the Board, such salary to be paid in substantially equal periodic installments
in accordance with the normal payroll practice of the Company. The Executive's
salary will be reviewed at least annually.
(b) Annual Bonus. The Company will pay the Executive an annual bonus
(the "Annual Bonus") within sixty (60) days following the last day of the
Company's fiscal year in an amount, if any, of not less than 35% of the
Executive's annual base salary then in effect, as determined by the Board of
Directors and further provided the Company achieves its targeted performance
objectives for such year based upon that year's operating or performance related
incentive plans (as approved by the Company's Board of Directors), it being
understood that if the Company exceeds such objectives, the Company may pay the
Executive an additional bonus which shall be reasonable, in the Company's sole
discretion, in relation to such performance. The Executive shall be entitled to
a pro-rata portion of the Annual Bonus and additional bonus for any period less
than a full fiscal year for which he is entitled to his salary.
(c) Stock Options. On the Commencement Date, the Company will grant
the Executive stock options (the "Stock Options") to purchase 175,000 shares of
Common Stock, par value $.001 per share, of the Company (the "Company Stock") at
an exercise price equal to $3.86 per share, which is 110% of the average of the
high and low price of the Company Stock on the American Stock Exchange during
the thirty (30) trading days following the spin-off of the Company by The Alpine
Group, Inc., vesting in four (4) equal installments on the first, second, third
and fourth annual anniversary of the Commencement Date.
In the event of termination of employment (i) by the Executive, under
Section 6(e)(ii) or without Good Reason, prior to the fourth anniversary of the
Commencement Date or (ii) pursuant to Section 6(c), all Stock Options not
theretofore exercisable will lapse and be forfeited. In the event the
Executive's employment is terminated for any other reason prior to the fourth
anniversary of the Commencement Date all Stock Options not theretofore
exercisable will thereupon become exercisable. Except as otherwise provided
herein or in Section 9, each Stock Option will expire 10 years after it is
granted.
(d) Restricted Stock Grant. On the Commencement Date, the Company will
grant to the Executive 25,000 shares of the Company Stock pursuant to a
Restricted Stock Grant Plan or other plan, which restricted shares shall be set
aside in the custody, control and possession of the Company and released to the
Executive at the rate of 5,000 shares on each anniversary of the Commencement
Date (after an initial grant of 10,000 shares effective at the Company's 1996
Annual Meeting of Shareholders), provided that in the event Executive's
employment is terminated under Sections 6(a) or (b) prior to the second
anniversary of the Commencement Date or under Section 6(c) or by Executive
without Good Reason, prior to the fifth anniversary of the Commencement Date,
then the scheduled releases on any subsequent
-2-
<PAGE>
anniversary of the Commencement Date shall be canceled and forfeited. Any shares
not released shall be canceled and retired by the Company.
(e) "Gross-Up" Payment. Not less than 10 days prior to the due date of
the Executive's federal income tax return for every taxable year of the
Executive in which his income tax liability is affected by the matters contained
in Section 4(d) or in which he may be liable for an excise tax under Section
280G of the Internal Revenue Code of 1986, as amended, the Company will pay to
the Executive an amount necessary to indemnify and hold harmless the Executive
from (i) any and all federal, state or local income tax, excise taxes or other
liability or payment shown to be due or arising from or related to the matters
contained in Section 4(d) and (ii) any additional income or excise taxes arising
from or related to the reimbursement provided for in the preceding clause (i).
The Executive will timely furnish the Company with a written statement prepared
by the Executive's certified public accountant setting forth the amount of the
required payment and the due date or dates of such tax liability.
(f) Expenses. During the term of the Executive's employment hereunder,
the Executive shall be entitled to receive prompt reimbursement for all
reasonable and customary expenses incurred by the Executive in performing
services hereunder, including (i) all expenses of travel and living expenses
while away from home or business or at the request of and in the service of the
Company and (ii) an automobile, plus all expenses of parking, maintaining and
operating the automobile, provided that all such expenses are accounted for in
accordance with the policies and procedures established by the Company.
(g) Other Benefits. The Company shall maintain in full force and
effect and the Executive shall be entitled to participate in all of the fringe
benefit plans and arrangements of the Company in effect on the date hereof
(including, without limitation, each group life insurance and accident plan,
medical and dental insurance plans, and disability plan).
(h) Annual Physical Examination. During the term of this Agreement,
the Company shall reimburse the Executive for the reasonable expenses incurred
by the Executive in undergoing an annual physical examination by a licensed
physician.
(i) Tax and Financial Planning. During the term of this Agreement, the
Company shall reimburse the Executive for the reasonable expenses incurred by
the Executive in connection with obtaining professional tax and financial
planning advice.
5. Additional Offices. Subject to Section 3, the Executive agrees to serve
without additional compensation, if elected or appointed thereto, as a director
of the Company and/or any of its subsidiaries and in one or more executive
offices of any of the Company's subsidiaries, provided that the Executive is
indemnified (to the same extent as indemnified by the Company) for serving in
any and all such capacities.
-3-
<PAGE>
6. Termination. The Executive's employment hereunder may be terminated
without any breach of this Agreement only under the following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. The Company may terminate the Executive's employment
hereunder if, as a result of the Executive's incapacity due to physical or
mental illness, the Executive shall have been absent from his duties
hereunder on a full-time basis for the entire period of six consecutive
months, and within thirty (30) days after written notice of termination is
given (which may occur before or after the end of such six month period)
the Executive shall not have returned to the performance of his duties
hereunder on a full-time basis.
(c) Cause. The Company may terminate the Executive's employment
hereunder for "Cause." For purposes of this Agreement, the Company shall
have "Cause" to terminate the Executive's employment hereunder upon (i) the
willful and continued failure by the Executive to substantially perform his
duties hereunder (other than any such failure resulting from the
Executive's disability) after written notice is delivered by the Company
that specifically identifies the manner in which the Company believes the
Executive has not substantially performed his duties, which is not cured
within 30 days after such written notice, or (ii) the willful engaging by
the Executive in misconduct which is materially injurious to the Company,
monetarily or otherwise (including, but not limited to, conduct that
constitutes competitive activity pursuant to Section 12 hereof), without
prior notice. For purposes of this paragraph, an act, or failure to act, on
the Executive's part shall not be considered "willful" if done, or omitted
to be done, by him in good faith and with reasonable belief that his action
or omission was in the best interests of the Company.
(d) Termination by the Executive for Good Reason. The Executive may
terminate his employment hereunder for "Good Reason." For purposes of this
Agreement, "Good Reason" shall mean:
(i) a failure by the Company to comply with any material
provision of this Agreement which has not been cured within ten (10)
days after notice of such noncompliance has been given by the
Executive to the Company;
(ii) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirement of Section 6(f) hereof (and for purposes of this
Agreement no such purported termination shall be effective);
(iii) a person or business organization, or affiliated group of
persons or business organizations who, or which, do not now own or
control 20% or more of the voting stock of the Company, acquire
ownership or control of 20% or more of the voting stock of the Company
or its successor;
-4-
<PAGE>
(iv) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement;
(v) Executive's primary work location is other than the New York
City metropolitan area; or
(vi) the assignment to Executive of any duties materially
inconsistent with his status as Chief Executive Officer of the
Company.
(e) Termination Election.
(i) A notice to Executive by the Company will constitute an
election by the Company to terminate the Executive's employment 180
days following the date of delivery of the notice if such notice is
given prior to the third anniversary of the Commencement Date and
thereafter 30 days following the date of delivery of the notice.
(ii) A notice to the Company by the Executive will constitute an
election by the Executive to terminate Executive's employment 60 days
following the date of delivery of the notice.
(iii) In no event, however, shall the Term of the Executive's
employment hereunder extend beyond the end of the month in which the
Executive's sixty-fifth (65th) birthday occurs.
(f) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than termination
pursuant to subsection (a) hereof) shall be communicated by written Notice
of Termination to the other party hereto in accordance with Section 14
hereof. For purposes of this Agreement, a "Notice of Termination" shall
mean only a notice which is based upon, and shall indicate, the specific
termination provision in this Agreement relied upon and, except for a
termination under Section 6(d) hereof, shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
(g) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated pursuant to Section 6(b)
above, thirty (30) days after Notice of Termination is given (provided that
the Executive shall not have returned to the performance of his duties on a
full-time basis during such thirty (30) day period and not earlier than the
end of the consecutive six month disability period), (iii) if the
Executive's employment is terminated pursuant to Section 6(c) above, the
date specified in the Notice of Termination, (iv) if the Executive's
employment is terminated by either of the elections pursuant to Section
6(e) above, the applicable date of termination determined under Section
6(e) above, and (v) if the Executive's employment is terminated for any
other reason, the date on which a Notice of Termination is given; provided,
however, that, if within thirty (30) days after any Notice of
-5-
<PAGE>
Termination is given the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected).
7. Compensation Upon Termination or During Disability.
(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period"), the Executive shall continue to receive, or receive the
benefit of (as the case may be), all items described in Section 4 hereinabove at
the rate then in effect for such period until his employment is terminated
pursuant to Section 6(b) hereof or such longer period required to effectuate the
gross up payments under Section 4(e) hereof, provided that payments so made to
the Executive during the first 180 days of the disability period shall be
reduced by the sum of the amounts, if any, payable to the Executive at or prior
to the time of any such payment under disability benefit plans of the Company or
under the Social Security disability insurance program, and which amounts were
not previously applied to reduce any such payment.
(b) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for twelve (12) months following the Date of
Termination due to Disability, all employee welfare benefit plans and programs
in which the Executive was entitled to participate immediately prior to the Date
of Termination provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Company shall arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been entitled to
receive under such plans and programs from which his continued participation is
barred.
(c) If the Executive's employment is terminated by his death, the
Company shall pay any amounts due to, or for the benefit of, or which would
otherwise have been paid to the Executive under Section 4 hereof for a period
ending twelve (12) months after the date of his death or such longer period
required to effectuate the gross up payments under Section 4(e) hereof.
(d) If the Executive's employment shall be terminated by the Company
for Cause, the Company shall pay all amounts under Section 4 hereof due to, or
for the benefit of, the Executive through the Date of Termination at the rate in
effect at the time Notice of Termination is given and the Company shall have no
further obligations to the Executive under this Agreement.
6
<PAGE>
(e) (i) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof after the second but prior to the fourth
anniversary of the Commencement Date, the Company shall pay to the Executive an
amount equal to one times the annual base salary in effect immediately prior to
termination plus an amount due or estimated to be due in respect of all payments
to be made under Sections 4(b) and (e);
(ii) If the Executive's employment is terminated by the Company under
Section 6(e)(i) hereof after the fourth anniversary of the Commencement Date,
the Company shall pay to the Executive an amount equal to one-half times the
annual base salary in effect immediately prior to termination plus an amount due
or estimated to be due in respect of all payments to be made under Sections 4(b)
and (e);
(iii) If the Executive's employment is terminated by the Executive
under Section 6(e)(ii) hereof prior to the fifth anniversary but after the
fourth anniversary of the Commencement Date, the Company shall pay to the
Executive an amount equal to one times the annual base salary in effect
immediately prior to termination plus an amount due or estimated to be due in
respect of all payments to be made under Sections 4(b) and (e);
(iv) If the Executive's employment is terminated by the Executive
under Section 6(e)(ii) hereof after the fifth anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one and one half
times the annual base salary in effect immediately prior to termination plus an
amount due or estimated to be due in respect of all payments to be made under
Sections 4(b) and (e); and
(v) The amounts payable to Executive as a multiple of base salary, as
described in Sections 7(e)(i) and (ii) shall be paid to Executive on the Date of
Termination, and as described in Sections 7(e)(iii) and (iv) above, shall be
paid to Executive in 12 equal monthly installments beginning in the month
following the Date of Termination.
(f) If the Executive shall terminate his employment for Good Reason,
then
(i) The Company shall pay all amounts due to, or for the benefit
of, the Executive under Section 4 through the Date of Termination at the rate in
effect at the time Notice of Termination is given and all other unpaid amounts,
if any, to which the Executive is entitled as of the Date of Termination under
Section 4(e) or any compensation plan or program of the Company at the time such
payments are due;
(ii) In lieu of any further salary or bonus payments to the Executive
for periods subsequent to the date of the termination of his employment, the
Company shall pay as severance pay to the Executive a salary and bonus severance
payment equal to two times the prior year bonus and annual base salary in effect
immediately prior to the Executive's termination, provided, however, that in the
event the termination of the Executive's employment occurs after the third
anniversary of the Commencement Date, the salary and bonus severance
-7-
<PAGE>
payment will equal one and one-half times the prior year bonus and annual base
salary in effect immediately prior to the Executive's termination;
(iii) The Company shall pay to the Executive any deferred
compensation, including, but not limited to deferred bonuses, allocated or
credited to the Executive or his account as of the Date of Termination; and
(iv) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for 24 months following the Date of
Termination of the Executive's employment if such date is prior to the third
anniversary of the Commencement Date, and if such date is on or after the third
anniversary of the Commencement Date, for 18 months following the date of the
termination of the Executive's employment, all employee welfare benefit plans
and programs in which the Executive was entitled to participate immediately
prior to the Date of Termination provided that the Executive's continued
participation is possible under the general terms and provisions of such plans
and programs. In the event that the Executive's participation in any such plan
or program is barred, the Company shall arrange to provide the Executive with
benefits substantially similar to those which the Executive would otherwise have
been entitled to receive under such plans and programs from which his continued
participation is barred.
8. Death/Assignment of Stock Options. In the event of the Executive's
death, whether his death occurs during or after the term of this Agreement, all
unexercised and exercisable Stock Options will be assigned to his estate.
9. Termination/Unexercised Stock Options. In the event of the termination
of the employment of the Executive for any reason, all unexercised and
exercisable stock options granted to him hereunder must be exercised by him, or
his estate (or heir(s)), as the case may be, before the second anniversary of
the termination of his employment, but in no event after the tenth anniversary
of the date of grant thereof, any such options not exercised by that date will
lapse immediately thereafter.
10. Mitigation. In the event that the Executive receives benefits from
other employment after the Date of Termination, the benefits to be provided by
the Company under the provisions of Section 7(b) shall be correspondingly
reduced.
11. Anti-Dilution/Recapitalization of the Company. In the event of any
change in the number of issued shares of Company Stock resulting from a
subdivision or consolidation of shares or other capital adjustment, or the
payment of a stock dividend, or other increase or decrease in such shares, then
appropriate adjustments shall be made by the Company with respect to outstanding
unexercised Stock Options and/or the aggregate number of shares of Company Stock
of the Company in respect of which Stock Options may be exercised
8
<PAGE>
12. Noncompetition.
(a) So long as the Executive is employed by the Company under this
Agreement and, unless this Agreement is terminated by the Company, for a period
of two (2) years thereafter, the Executive agrees not to enter into employment
or any business which is competitive with the business of the Company.
(b) During the term of this Agreement plus 48 months and any period
thereafter during which or in respect of which the Executive receives payments
from the Company under Section 7, the Executive will retain in confidence any
and all confidential information known to him concerning the Company and its
business and shall not use or disclose such information without the approval of
the Company except to the extent such information has previously become public
or as may be required by law.
13. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of the Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in the Agreement, "Company" shall mean
the Company as previously defined and any successor to its business and/or
assets as aforesaid which executes and delivers the Agreement provided for in
this Section 13 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee or, if there be
no such designee, to the Executive's estate.
14. Notices. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
9
<PAGE>
If to the Executive: Mr. Ivan Berkowitz
322 West 72nd Street
Apt. #5A
New York, New York 10023
If to the Company PolyVision Corporation
866 North Main Street Extension
Wallingford, Connecticut 06492
Attn: Chairman of the Board
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer of the Company as may be
specifically designed by the Board. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions as the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by and construed in accordance with the laws of New York, without regard to its
conflicts of law principles.
16. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. Entire Agreement. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral
-10-
<PAGE>
or written, by any officer, employee or representative of any party hereto; and
any prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and canceled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
POLYVISION CORPORATION
By: /s/ Steven S. Elbaum
----------------------------------
Steven S. Elbaum
Chairman of the Board
/s/ Ivan Berkowitz
----------------------------------
Ivan Berkowitz
Exhibit 10.23
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into as
of May 1, 1995, between PolyVision Corporation, a New York corporation (the
"Company"), and Joseph A. Menniti (the "Executive").
W I T N E S S E T H:
--------------------
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Executive's contribution to the future growth and success of the
Company is expected to be substantial;
WHEREAS, the Executive has substantial experience in operations and general
management, including as President and Chief Executive Officer of DNE
Technologies, Inc.;
WHEREAS, the Board has determined that an employment agreement will
reinforce and encourage the continued attention and dedication of the Executive
to the Company and its shareholders, and the Executive is willing to commit
himself to serve the Company, on the terms and conditions herein provided; and
WHEREAS, in order to effect the foregoing, the Company and the Executive
wish to enter into an employment agreement on the terms and conditions set forth
below.
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve the Company, on the terms and conditions set
forth herein.
2. Term. The employment of the Executive by the Company hereunder and as
provided in Section 1 will commence as of May 1, 1995 (the "Commencement Date")
and will continue in effect (a) until either party gives notice to the other, as
provided in Section 6(e) that it does not wish to continue the Executive's
employment hereunder or (b) unless terminated as provided in Sections 6(a), (b),
(c) and (d).
3. Position and Duties. The Executive shall serve as President and Chief
Operating Officer of the Company with such responsibilities, duties and
authority as are customary for such a position and office and as may from time
to time be assigned to the Executive by the Company's Board, provided that the
same is consistent with the Executive's office as President and Chief Operating
Officer. The Executive shall devote substantially all of his working time
<PAGE>
and efforts to the business and affairs of the Company, provided that the
Executive may be involved in charitable and trade association activities and
make passive investments that do not materially detract from the discharge of
his responsibilities hereunder.
4. Compensation and Related Matters.
(a) Salary. During the term of the Executive's employment hereunder,
the Company shall pay to the Executive an annual base salary at a rate of not
less than $185,000 or such higher rate as may from time to time be determined by
the Board, such salary to be paid in substantially equal periodic installments
in accordance with the normal payroll practice of the Company. The Executive's
salary will be reviewed at least annually. As further inducement and in
consideration of Executive's acceptance of the position hereunder at a base
compensation below that received from his previous employer, the Company shall
pay to Executive a signing bonus of $32,000 upon the execution of this
Agreement.
(b) Annual Bonus. The Company will pay the Executive an annual bonus
(the "Annual Bonus") within sixty (60) days following the last day of the
Company's fiscal year in an amount, if any, of not less than 30% of the
Executive's annual base salary then in effect, as determined by the Board of
Directors and further provided the Company achieves its targeted performance
objectives for such year based upon that year's operating or performance related
incentive plans (as approved by the Company's Board of Directors), it being
understood that if the Company exceeds such objectives, the Company may pay the
Executive an additional bonus which shall be reasonable, in the Company's sole
discretion, in relation to such performance. The Executive shall be entitled to
a pro-rata portion of the Annual Bonus and additional bonus for any period less
than a full fiscal year for which he is entitled to his salary.
(c) Stock Options. On the Commencement Date, the Company will grant
the Executive stock options (the "Stock Options") to purchase 75,000 shares of
Common Stock, par value $.001 per share, of the Company (the "Company Stock") at
an exercise price equal to $3.86 per share, which is 110% of the average of the
high and low price of the Company Stock on the American Stock Exchange during
the thirty (30) trading days following the spin-off of the Company by The Alpine
Group, Inc., vesting in four (4) equal installments on the first, second, third
and fourth annual anniversary of the Commencement Date.
In the event of termination of employment (i) by the Executive, under
Section 6(e)(ii) or without Good Reason, prior to the fourth anniversary of the
Commencement Date or (ii) pursuant to Section 6(c), all Stock Options not
theretofore exercisable will lapse and be forfeited. In the event the
Executive's employment is terminated for any other reason prior to the fourth
anniversary of the Commencement Date all Stock Options not theretofore
exercisable will thereupon become exercisable. Except as otherwise provided
herein or in Section 9, each Stock Option will expire ten (10) years after it is
granted.
(d) Restricted Stock Grant. On the Commencement Date, the Company will
grant to the Executive 15,000 shares of the Company Stock pursuant to a
Restricted Stock Grant
2
<PAGE>
Plan or other plan, which restricted shares shall be set aside in the custody,
control and possession of the Company and released to the Executive at the rate
of 3,000 shares on each anniversary of the Commencement Date, provided that in
the event Executive's employment is terminated under Sections 6(a) or (b) prior
to the second anniversary of the Commencement Date or under Section 6(c) or by
Executive without Good Reason, prior to the fifth anniversary of the
Commencement Date, then the scheduled releases on any subsequent anniversary of
the Commencement Date shall be canceled and forfeited. Any shares not released
shall be canceled and retired by the Company.
(e) "Gross-Up" Payment. Not less than 10 days prior to the due date of
the Executive's federal income tax return for every taxable year of the
Executive in which his income tax liability is affected by the matters contained
in Section 4(d) or in which he may be liable for an excise tax under Section
280G of the Internal Revenue Code of 1986, as amended, the Company will pay to
the Executive an amount necessary to indemnify and hold harmless the Executive
from (i) any and all federal, state or local income tax, excise taxes or other
liability or payment shown to be due or arising from or related to the matters
contained in Section 4(d) and (ii) any additional income or excise taxes arising
from or related to the reimbursement provided for in the preceding clause (i).
The Executive will timely furnish the Company with a written statement prepared
by the Executive's certified public accountant setting forth the amount of the
required payment and the due date or dates of such tax liability.
(f) Expenses. During the term of the Executive's employment hereunder,
the Executive shall be entitled to receive prompt reimbursement for all
reasonable and customary expenses incurred by the Executive in performing
services hereunder, including (i) all expenses of travel and living expenses
while away from home or business or at the request of and in the service of the
Company and (ii) an automobile, plus all expenses of parking, maintaining and
operating the automobile, provided that all such expenses are accounted for in
accordance with the policies and procedures established by the Company.
(g) Other Benefits. The Company shall maintain in full force and
effect and the Executive shall be entitled to participate in all of the fringe
benefit plans and arrangements of the Company in effect on the date hereof
(including, without limitation, each group life insurance and accident plan,
medical and dental insurance plans, and disability plan).
(h) Annual Physical Examination. During the term of this Agreement,
the Company shall reimburse the Executive for the reasonable expenses incurred
by the Executive in undergoing an annual physical examination by a licensed
physician.
(i) Tax and Financial Planning. During the term of this Agreement, the
Company shall reimburse the Executive for the reasonable expenses incurred by
the Executive in connection with obtaining professional tax and financial
planning advice.
5. Additional Offices. Subject to Section 3, the Executive agrees to serve
without additional compensation, if elected or appointed thereto, as a director
of the Company and/or
3
<PAGE>
any of its subsidiaries and in one or more executive offices of any of the
Company's subsidiaries, provided that the Executive is indemnified (to the same
extent as indemnified by the Company) for serving in any and all such
capacities.
6. Termination. The Executive's employment hereunder may be terminated
without any breach of this Agreement only under the following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. The Company may terminate the Executive's employment
hereunder if, as a result of the Executive's incapacity due to physical or
mental illness, the Executive shall have been absent from his duties
hereunder on a full-time basis for the entire period of six consecutive
months, and within thirty (30) days after written notice of termination is
given (which may occur before or after the end of such six month period)
the Executive shall not have returned to the performance of his duties
hereunder on a full-time basis.
(c) Cause. The Company may terminate the Executive's employment
hereunder for "Cause." For purposes of this Agreement, the Company shall
have "Cause" to terminate the Executive's employment hereunder upon (i) the
willful and continued failure by the Executive to substantially perform his
duties hereunder (other than any such failure resulting from the
Executive's disability) after written notice is delivered by the Company
that specifically identifies the manner in which the Company believes the
Executive has not substantially performed his duties, which is not cured
within 30 days after such written notice, or (ii) the willful engaging by
the Executive in misconduct which is materially injurious to the Company,
monetarily or otherwise (including, but not limited to, conduct that
constitutes competitive activity pursuant to Section 12 hereof), without
prior notice. For purposes of this paragraph, an act, or failure to act, on
the Executive's part shall not be considered "willful" if done, or omitted
to be done, by him in good faith and with reasonable belief that his action
or omission was in the best interests of the Company.
(d) Termination by the Executive for Good Reason. The Executive may
terminate his employment hereunder for "Good Reason." For purposes of this
Agreement, "Good Reason" shall mean:
(i) a failure by the Company to comply with any material
provision of this Agreement which has not been cured within ten (10)
days after notice of such noncompliance has been given by the
Executive to the Company;
(ii) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirement of Section 6(f) hereof (and for purposes of this
Agreement no such purported termination shall be effective);
4
<PAGE>
(iii) a person or business organization, or affiliated group of
persons or business organizations who, or which, do not now own or
control 20% or more of the voting stock of the Company, acquire
ownership or control of 20% or more of the voting stock of the Company
or its successor;
(iv) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement;
(v) Executive's primary work location is other than the
Wallingford, Connecticut area; or
(vi) the assignment to Executive of any duties materially
inconsistent with his status as President and Chief Operating Officer
of the Company.
(e) Termination Election.
(i) A notice to Executive by the Company will constitute an
election by the Company to terminate the Executive's employment 180
days following the date of delivery of the notice if such notice is
given prior to the third anniversary of the Commencement Date and
thereafter 30 days following the date of delivery of the notice.
(ii) A notice to the Company by the Executive will constitute an
election by the Executive to terminate Executive's employment 60 days
following the date of delivery of the notice.
(iii) In no event, however, shall the Term of the Executive's
employment hereunder extend beyond the end of the month in which the
Executive's sixty-fifth (65th) birthday occurs.
(f) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than termination
pursuant to subsection (a) hereof) shall be communicated by written Notice
of Termination to the other party hereto in accordance with Section 14
hereof. For purposes of this Agreement, a "Notice of Termination" shall
mean only a notice which is based upon, and shall indicate, the specific
termination provision in this Agreement relied upon and, except for a
termination under Section 6(d) hereof, shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
(g) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated pursuant to Section 6(b)
above, thirty (30) days after Notice of Termination is given (provided that
the Executive shall not have returned to the performance of his duties on a
full-time basis during such thirty (30) day period and not earlier than the
end of the consecutive six month disability period), (iii) if the
Executive's employment is terminated
5
<PAGE>
pursuant to Section 6(c) above, the date specified in the Notice of
Termination, (iv) if the Executive's employment is terminated by either of
the elections pursuant to Section 6(e) above, the applicable date of
termination determined under Section 6(e) above, and (v) if the Executive's
employment is terminated for any other reason, the date on which a Notice
of Termination is given; provided, however, that, if within thirty (30)
days after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written agreement
of the parties, by a binding and final arbitration award or by a final
judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected).
7. Compensation Upon Termination or During Disability.
(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period"), the Executive shall continue to receive, or receive the
benefit of (as the case may be), all items described in Section 4 hereinabove at
the rate then in effect for such period until his employment is terminated
pursuant to Section 6(b) hereof or such longer period required to effectuate the
gross up payments under Section 4(e) hereof, provided that payments so made to
the Executive during the first 180 days of the disability period shall be
reduced by the sum of the amounts, if any, payable to the Executive at or prior
to the time of any such payment under disability benefit plans of the Company or
under the Social Security disability insurance program, and which amounts were
not previously applied to reduce any such payment.
(b) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for twelve (12) months following the Date of
Termination due to Disability, all employee welfare benefit plans and programs
in which the Executive was entitled to participate immediately prior to the Date
of Termination provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Company shall arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been entitled to
receive under such plans and programs from which his continued participation is
barred.
(c) If the Executive's employment is terminated by his death, the
Company shall pay any amounts due to, or for the benefit of, or which would
otherwise have been paid to the Executive under Section 4 hereof for a period
ending twelve (12) months after the date of his death or such longer period
required to effectuate the gross up payments under Section 4(e) hereof.
(d) If the Executive's employment shall be terminated by the Company
for Cause, the Company shall pay all amounts under Section 4 hereof due to, or
for the benefit of, the Executive through the Date of Termination at the rate in
effect at the time Notice of
6
<PAGE>
Termination is given and the Company shall have no further obligations to the
Executive under this Agreement.
(e) (i) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof after the second but prior to the fourth
anniversary of the Commencement Date, the Company shall pay to the Executive an
amount equal to one times the annual base salary in effect immediately prior to
termination plus an amount due or estimated to be due in respect of all payments
to be made under Sections 4(b) and (e);
(ii) If the Executive's employment is terminated by the Company
under Section 6(e)(i) hereof after the fourth anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one-half times
the annual base salary in effect immediately prior to termination plus an amount
due or estimated to be due in respect of all payments to be made under Sections
4(b) and (e);
(iii) If the Executive's employment is terminated by the
Executive under Section 6(e)(ii) hereof prior to the fifth anniversary but after
the fourth anniversary of the Commencement Date, the Company shall pay to the
Executive an amount equal to one times the annual base salary in effect
immediately prior to termination plus an amount due or estimated to be due in
respect of all payments to be made under Sections 4(b) and (e);
(iv) If the Executive's employment is terminated by the Executive
under Section 6(e)(ii) hereof after the fifth anniversary of the Commencement
Date, the Company shall pay to the Executive an amount equal to one and one half
times the annual base salary in effect immediately prior to termination plus an
amount due or estimated to be due in respect of all payments to be made under
Sections 4(b) and (e); and
(v) The amounts payable to Executive as a multiple of base
salary, as described in Sections 7(e)(i) and (ii) shall be paid to Executive on
the Date of Termination, and as described in Sections 7(e)(iii) and (iv) above,
shall be paid to Executive in 12 equal monthly installments beginning in the
month following the Date of Termination.
(f) If the Executive shall terminate his employment for Good Reason,
then
(i) The Company shall pay all amounts due to, or for the benefit
of, the Executive under Section 4 through the Date of Termination at the rate in
effect at the time Notice of Termination is given and all other unpaid amounts,
if any, to which the Executive is entitled as of the Date of Termination under
Section 4(e) or any compensation plan or program of the Company at the time such
payments are due;
(ii) In lieu of any further salary or bonus payments to the
Executive for periods subsequent to the date of the termination of his
employment, the Company shall pay as severance pay to the Executive a salary and
bonus severance payment equal to two times the prior year bonus and annual base
salary in effect immediately prior to the Executive's termination, provided,
however, that in the event the termination of the Executive's
7
<PAGE>
employment occurs after the third anniversary of the Commencement Date, the
salary and bonus severance payment will equal one and one-half times the prior
year bonus and annual base salary in effect immediately prior to the Executive's
termination;
(iii) The Company shall pay to the Executive any deferred
compensation, including, but not limited to deferred bonuses, allocated or
credited to the Executive or his account as of the Date of Termination; and
(iv) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for 24 months following the Date of
Termination of the Executive's employment if such date is prior to the third
anniversary of the Commencement Date, and if such date is on or after the third
anniversary of the Commencement Date, for 18 months following the date of the
termination of the Executive's employment, all employee welfare benefit plans
and programs in which the Executive was entitled to participate immediately
prior to the Date of Termination provided that the Executive's continued
participation is possible under the general terms and provisions of such plans
and programs. In the event that the Executive's participation in any such plan
or program is barred, the Company shall arrange to provide the Executive with
benefits substantially similar to those which the Executive would otherwise have
been entitled to receive under such plans and programs from which his continued
participation is barred.
8. Death/Assignment of Stock Options. In the event of the Executive's
death, whether his death occurs during or after the term of this Agreement, all
unexercised and exercisable Stock Options will be assigned to his estate.
9. Termination/Unexercised Stock Options. In the event of the termination
of the employment of the Executive for any reason, all unexercised and
exercisable stock options granted to him hereunder must be exercised by him, or
his estate (or heir(s)), as the case may be, before the second anniversary of
the termination of his employment, but in no event after the tenth anniversary
of the date of grant thereof, any such options not exercised by that date will
lapse immediately thereafter.
10. Mitigation. In the event that the Executive receives benefits from
other employment after the Date of Termination, the benefits to be provided by
the Company under the provisions of Section 7(b) shall be correspondingly
reduced.
11. Anti-Dilution/Recapitalization of the Company. In the event of any
change in the number of issued shares of Company Stock resulting from a
subdivision or consolidation of shares or other capital adjustment, or the
payment of a stock dividend, or other increase or decrease in such shares, then
appropriate adjustments shall be made by the Company with respect to outstanding
unexercised Stock Options and/or the aggregate number of shares of Company Stock
of the Company in respect of which Stock Options may be exercised
8
<PAGE>
12. Noncompetition.
(a) So long as the Executive is employed by the Company under this
Agreement and, unless this Agreement is terminated by the Company, for a period
of two (2) years thereafter, the Executive agrees not to enter into employment
or any business which is competitive with the business of the Company.
(b) During the term of this Agreement plus 48 months and any period
thereafter during which or in respect of which the Executive receives payments
from the Company under Section 7, the Executive will retain in confidence any
and all confidential information known to him concerning the Company and its
business and shall not use or disclose such information without the approval of
the Company except to the extent such information has previously become public
or as may be required by law.
13. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of the Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in the Agreement, "Company" shall mean
the Company as previously defined and any successor to its business and/or
assets as aforesaid which executes and delivers the Agreement provided for in
this Section 13 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee or, if there be
no such designee, to the Executive's estate.
14. Notices. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
9
<PAGE>
If to the Executive: Mr. Joseph A. Menniti
131 Hull Road
Madison, Connecticut 06443
If to the Company: PolyVision Corporation
866 North Main Street Extension
Wallingford, Connecticut 06492
Attn: Chief Executive Officer
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and such officer of the Company as may be
specifically designed by the Board. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions as the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by and construed in accordance with the laws of New York, without regard to its
conflicts of law principles.
16. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral
10
<PAGE>
or written, by any officer, employee or representative of any party hereto; and
any prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and canceled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
POLYVISION CORPORATION
By: /s/ Ivan Berkowitz
----------------------------------
Ivan Berkowitz
Chief Executive Officer
/s/ Joseph A. Menniti
----------------------------------
Joseph A. Menniti
Exhibit 10.24
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is made and entered into as of May 1, 1995,
between PolyVision Corporation, a New York corporation (the "Company"), and Mel
Schrieberg (the "Executive").
W I T N E S S E T H:
--------------------
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Executive's contribution to the future growth and success of the
Company is expected to be substantial;
WHEREAS, the Executive has substantial experience in marketing and sales;
WHEREAS, the Board has determined that an employment agreement will
reinforce and encourage the continued attention and dedication of the Executive
to the Company and its shareholders, and the Executive is willing to commit
himself to serve the Company, on the terms and conditions herein provided; and
WHEREAS, in order to effect the foregoing, the Company and the Executive
wish to enter into an employment agreement on the terms and conditions set forth
below.
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve the Company, on the terms and conditions set
forth herein.
2. Term. The employment of the Executive by the Company hereunder and as
provided in Section 1 will commence as of May 1, 1995 (the "Commencement Date")
and will continue in effect (a) until either party gives notice to the other, as
provided in Section 6(e) that such party does not wish to continue the
Executive's employment hereunder, or (b) unless terminated as provided in
Sections 6(a), (b), (c) and (d).
3. Position and Duties. The Executive shall serve as Executive Vice
President of the Company with such responsibilities, duties and authority as are
customary for such a position and office and as may from time to time be
assigned to the Executive by the Company's Board or other senior executive
officers, provided that the same is consistent with the Executive's office as
Executive Vice President, including, without limitation, to conduct the
marketing and sales activities of the Company's subsidiary, Greensteel, Inc. The
Executive shall devote
<PAGE>
substantially all of his working time and efforts to the business and affairs of
the Company, provided that the Executive may be involved in charitable and trade
association activities and make passive investments that do not materially
detract from the discharge of his responsibilities hereunder.
4. Compensation and Related Matters.
(a) Salary. During the term of the Executive's employment hereunder,
the Company shall pay to the Executive an annual base salary at a rate of
$90,000. In addition, the Executive will draw an additional $12,000 per year as
an advance on his incentive compensation, as described in Section 4(b) below.
Such salary and incentive compensation advance shall be paid together in
substantially equal periodic installments in accordance with the normal payroll
practice of the Company.
(b) Incentive Compensation.
(i) The Executive shall be entitled to receive incentive
compensation of up to $45,000 for the Company's fiscal year ending April 30,
1997 ("Fiscal Year 1997") for achieving up to 100% of the Company's planned
"order book" for such year. In the event the Executive achieves less than 70% of
the order book in Fiscal Year 1997, no incentive compensation will be earned or
paid. In the event the Executive achieves 70% or more up to 100% of the order
book in Fiscal Year 1997, he will be entitled to a pro-rata amount of the
$45,000 incentive compensation based on the percentage of the order book
achieved between 70% and 100% (for example, the incentive compensation would be
$22,500 if 85% of the order book is achieved).
(ii) The Executive shall be entitled to receive incentive
compensation of $90,000 in Fiscal Year 1997 for achieving 150% of the Company's
planned order book for such year. In the event the Executive achieves 200% or
more of the order book in Fiscal Year 1997, the Executive may receive an
additional discretionary amount determined by the President or the Chief
Executive Officer of the Company and approved by the Company's Board of
Directors or the Compensation Committee thereof.
(iii) The Company will pay the Executive the incentive
compensation referred to above, if any, within 60 days following the last day of
the Company's 1997 Fiscal Year. In the event the incentive compensation advance
paid to the Executive referred to in Section 4(a) exceeds the total incentive
compensation that would be payable under Section 4(b)(i) or (ii) when calculated
as therein provided, the Executive shall be required to repay the Company such
excess amount within 60 days following the last day of the Company's 1997 Fiscal
Year.
(c) Stock Options. On the Commencement Date, the Company will grant
the Executive incentive stock options (the "Stock Options") to purchase 20,000
shares of Common Stock, par value $.001 per share, of the Company (the "Company
Stock") at an exercise price
2
<PAGE>
equal to $3.86 per share, which is 110% of the average high and low price of the
Company Stock on the American Stock Exchange during the thirty (30) trading days
following the spin-off of the Company by The Alpine Group, Inc., vesting in four
(4) equal installments on the first, second, third and fourth annual anniversary
of the Commencement Date.
In the event of termination of employment (i) by the Executive, under
Section 6(e)(ii), prior to the fourth anniversary of the Commencement Date or
(ii) pursuant to Section 6(c), all Stock Options not theretofore exercisable
will lapse and be forfeited. In the event the Executive's employment is
terminated for any other reason prior to the fourth anniversary of the
Commencement Date all Stock Options not theretofore exercisable will thereupon
become exercisable. Except as otherwise provided herein or in Section 9, each
Stock Option will expire 10 years after it is granted.
(d) Restricted Stock Grant. On the Commencement Date, subject to
approval by the Company's Compensation Committee, the Company will grant to the
Executive 6,000 shares of Common Stock, par value $.001 per share, of the
Company (the "Company Stock") pursuant to a Restricted Stock Grant Plan or other
plan, which restricted shares shall be set aside in the custody, control and
possession of the Company and released to the Executive at the rate of 1,500
shares on each anniversary of the Commencement Date, provided that in the event
Executive's employment is terminated under Section 6(a), (b) or (c) or by
Executive without Good Reason, then the scheduled releases on any subsequent
anniversary of the Commencement Date shall be canceled and forfeited. Any shares
not released shall be canceled and retired by the Company. For purposes of this
Section 4(c) only, the Commencement Date shall be May 1, 1995.
(e) Expenses. During the term of the Executive's employment hereunder,
the Executive shall be entitled to receive reimbursement for all reasonable and
customary expenses incurred by the Executive in performing services hereunder,
including (i) all expenses of travel and living expenses while away from home or
business or at the request of and in the service of the Company and (ii) leasing
an automobile, plus all expenses of parking, maintaining, operating and insuring
the automobile, provided that all such expenses are accounted for in accordance
with the policies and procedures established by the Company as of January 1,
1996.
(f) Other Benefits. The Company shall maintain in full force and
effect and the Executive shall be entitled to participate in all of the fringe
benefit plans and arrangements of the Company in effect on the date hereof
(including, without limitation, each group life insurance and accident plan,
medical and dental insurance plans, and disability plan) as are presently
provided to other executives of the Company.
(g) Office and Support Staff. During the term of this Agreement, the
Executive shall be entitled to administrative support as determined and assigned
by the Company's senior executive officers.
3
<PAGE>
5. Performance Review. On or before December 31, 1996, the Executive shall
be given a performance and salary review by the President of the Company.
6. Termination. The Executive's employment hereunder may be terminated
without any breach of this Agreement only under the following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon his
death.
(b) Disability. The Company may terminate the Executive's employment
hereunder if, as a result of the Executive's incapacity due to physical or
mental illness, the Executive shall have been absent from his duties hereunder
on a full-time basis for the entire period of six consecutive months, and within
thirty (30) days after written notice of termination is given (which may occur
before or after the end of such six month period) the Executive shall not have
returned to the performance of his duties hereunder on a full-time basis.
(c) Cause. The Company may terminate the Executive's employment
hereunder for "Cause." For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon (i) the willful
and continued failure by the Executive to substantially perform his duties
hereunder (other than any such failure resulting from the Executive's
disability) after written notice is delivered by the Company that specifically
identifies the manner in which the Company believes the Executive has not
substantially performed his duties, which is not cured within thirty (30) days
after such written notice, or (ii) the willful engaging by the Executive in
misconduct which is materially injurious to the Company, monetarily or otherwise
(including, but not limited to, conduct that constitutes competitive activity
pursuant to Section 10 hereof), without prior notice. For purposes of this
paragraph, an act, or failure to act, on the Executive's part shall not be
considered "willful" if done, or omitted to be done, by him in good faith and
with reasonable belief that his action or omission was in the best interests of
the Company.
(d) Termination by the Executive for Good Reason. The Executive may
terminate his employment hereunder for "Good Reason." For purposes of this
Agreement, "Good Reason" shall mean:
(i) a failure by the Company to comply with any material
provision of this Agreement which has not been cured within ten (10) days after
notice of such noncompliance has been given by the Executive to the Company; and
(ii) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirement of Section 6(f) hereof (and for purposes of this Agreement no such
purported termination shall be effective).
(e) Termination Election.
4
<PAGE>
(i) A notice to the Executive by the Company will constitute an
election by the Company to terminate the Executive's employment (A) without
Cause thirty (30) days following the date of delivery of the notice or (B) with
Cause on the date specified in such notice, which may be the date such notice is
given.
(ii) A notice to the Company by the Executive will constitute an
election by the Executive to terminate Executive's employment without Good
Reason sixty (60) days following the date of delivery of the notice.
(iii) In no event, however, shall the term of the Executive's
employment hereunder extend beyond the end of the month in which the Executive's
sixty-fifth (65th) birthday occurs.
(f) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than termination pursuant
to subsection (a) hereof) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 11 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean only a notice which is
based upon, and shall indicate, the specific termination provision in this
Agreement relied upon and, except for a termination under Section 6(d) hereof,
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
(g) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death, (ii)
if the Executive's employment is terminated pursuant to Section 6(b) or (c)
above, the date specified in the Notice of Termination, (iii) if the Executive's
employment is terminated by either of the elections pursuant to Section 6(e)
above, the applicable date of termination determined under Section 6(e) above,
and (iv) if the Executive's employment is terminated for any other reason, the
date on which a Notice of Termination is given; provided, however, that, if
within 30 days after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
7. Compensation Upon Termination or During Disability.
(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period"), the Executive shall continue to receive, or receive the
benefit of (as the case may be), all items described in Section 4 hereinabove at
the rate then in effect for such period until his employment is terminated
pursuant to Section 6(b) hereof, provided that payments so made to the Executive
during the first 180 days of the disability period shall be reduced by the sum
of the amounts,
5
<PAGE>
if any, payable to the Executive at or prior to the time of any such payment
under disability benefit plans of the Company or under the Social Security
disability insurance program, and which amounts were not previously applied to
reduce any such payment.
(b) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for six (6) months following the Date of
Termination due to Disability, all employee welfare benefit plans and programs
in which the Executive was entitled to participate immediately prior to the Date
of Termination provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Company shall arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been entitled to
receive under such plans and programs from which his continued participation is
barred.
(c) If the Executive's employment is terminated by his death, the
Company shall pay any amounts due to, or for the benefit of, or which would
otherwise have been paid to the Executive under Section 4 hereof for a period
ending six (6) months after the date of his death.
(d) If the Executive's employment shall be terminated by the Company
for Cause, the Company shall pay all amounts under Section 4 hereof due to, or
for the benefit of, the Executive through the Date of Termination at the rate in
effect at the time Notice of Termination is given and the Company shall have no
further obligations to the Executive under this Agreement.
(e) If the Executive's employment is terminated by the Company under
Section 6(e)(i)(A) hereof or by the Executive for Good Reason, the Company shall
pay to the Executive as severance in one lump sum an amount equal to one-half
the annual base salary in effect immediately prior to such termination.
(f) The Company shall maintain in full force and effect, for the
continued benefit of the Executive for six (6) months following the Date of
Termination of the Executive's employment all employee welfare benefit plans and
programs in which the Executive was entitled to participate immediately prior to
the Date of Termination provided that the Executive's continued participation is
possible under the general terms and provisions of such plans and programs. In
the event that the Executive's participation in any such plan or program is
barred, the Company shall arrange to provide the Executive with benefits
substantially similar to those which the Executive would otherwise have been
entitled to receive under such plans and programs from which his continued
participation is barred.
8. Mitigation. In the event that the Executive receives benefits from other
employment after the Date of Termination, the benefits to be provided by the
Company under the provisions of Section 7(b) shall be correspondingly reduced.
6
<PAGE>
9. Termination/Unexercised Stock Options. In the event of the termination
of the employment of the Executive for any reason, all unexercised and
exercisable stock options granted to him hereunder must be exercised by him, or
his estate (or heir(s)), as the case may be, before the second anniversary of
the termination of his employments, but in no event after the tenth anniversary
of the date of grant thereof, any such options not exercised by that date will
lapse immediately thereafter.
10. Confidentiality, Non-Solicitation, Non-Competition.
(a) The Executive agrees that he will not, either directly or
indirectly, use or divulge to any person, firm, corporation, partnership or
other legal entity, either during the term of this Agreement or thereafter, or
make known to any person, firm, corporation, partnership or other legal entity,
any Confidential Information (as hereinafter defined) of the Company. Executive
shall keep secret and confidential all matters entrusted to Executive and shall
not use or attempt to use any such Confidential Information in any manner which
may injure or cause loss or may be calculated to injure or cause loss, whether
directly or indirectly, to the Company. For purposes of this Agreement,
"Confidential Information" shall mean and include, without limitation, any
patents, patent applications, copyrights, trademarks, trade names, service
marks, service names, "know-how," trade secrets, technology, custom computer
hardware or software, customer or client lists, details of client contracts,
pricing policies, operational methods, marketing plans or strategies, product
development techniques or plans, procurement and sales activities, promotion and
pricing techniques, credit and financial data concerning customers or suppliers,
business acquisition plans or any portion or phase of any scientific or
technical information, ideas, discoveries, designs, computer programs,
processes, procedures, formulas or improvements of the Company, whether or not
in written or tangible form, and whether or not registered, and including all
memoranda, notes, plans, reports, records, documents and other evidence thereof.
(b) The Executive further agrees that he will not, at any time during
the term of this Agreement or within two (2) years after the termination of his
employment hereunder, however caused, solicit, interfere with or endeavor to
entice away from the Company any customer or employee of the Company.
(c) The Executive agrees that during the term of this Agreement and
for a period of two (2) years after the termination of his employment with the
Company, however caused, he will not within the United States of America,
directly or indirectly, engage in any business or own or control any interest
in, or act as a shareholder, director, officer, partner, trustee, employee,
independent contractor, consultant or other agent of any person, firm,
corporation, partnership or other legal entity, directly or indirectly engaged
in the business conducted by the Company. The Executive acknowledges that the
business of the Company extends beyond the geographic area of the State of New
York (and is intended to extend nationwide) and that, accordingly, it is
reasonable that the restrictive covenants set forth above are not limited by
specific geographic areas but throughout the United States of America.
7
<PAGE>
(d) The Executive acknowledges that the foregoing provisions are an
essential part of such transaction, and Executive agrees to be bound by the
provisions hereof to the maximum extent permitted by law, it being the intent
and spirit of the parties that the foregoing shall be enforceable. If any court
of competent jurisdiction should determine that the duration, reach and/or scope
(geographic or otherwise) of the agreements contained herein are unreasonable,
then to the fullest extent permitted by law, the court may prescribe a
reasonable duration, reach and/or scope (geographic or otherwise).
11. Successors; Binding Agreement.
(e) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of the Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in the Agreement, "Company" shall mean
the Company as previously defined and any successor to its business and/or
assets as aforesaid which executes and delivers the Agreement provided for in
this Section 11 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.
(f) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee or, if there be
no such designee, to the Executive's estate.
12. Notices. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Mr. Mel Schrieberg
2077 Center Avenue - #18A
Fort Lee, New Jersey 07024
8
<PAGE>
If to the Company: PolyVision Corporation
866 North Main Street Extension
Wallingford, Connecticut 06492
Attn: Chief Executive Officer
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and such officer of the Company as may be
specifically designed by the Board. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions as the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by and construed in accordance with the laws of New York, without regard to its
conflicts of law principles.
14. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements,promises, covenants, arrangements, communications,
representations or warranties,
9
<PAGE>
whether oral or written, by any officer, employee or representative of any party
hereto; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and canceled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
POLYVISION CORPORATION
By: /s/ Ivan Berkowitz
-----------------------------------
Ivan Berkowitz
Chief Executive Officer
/s/ Mel Schrieberg
----------------------------------------
Mel Schrieberg
10
Exhibit 10.25
ARTICLES OF AGREEMENT
between
GREENSTEEL, INC.
and
THE CARPENTERS' DISTRICT COUNCIL
OF WESTERN PENNSYLVANIA
of the
UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA
AFL-CIO
on behalf of
LOCAL UNION 2240
February 29, 1996 to and including February 28, 1999
<PAGE>
TABLE OF CONTENTS
Preamble..................................................................Page 3
Article 1. Union Security.................................................Page 4
Article 2. Recognition....................................................Page 5
Article 3. Probation Period...............................................Page 6
Article 4. Check Off......................................................Page 7
Article 5. Management Clause..............................................Page 8
Article 6. Declaration of Principles......................................Page 9
Article 7. Wage Rates.................................................Page 10/11
Article 8. General Provisions............................................Page 12
Article 9. Holidays......................................................Page 13
Article 10. Vacations..............................................Page 14/15/16
Article 11. Hospital/Insurance...........................................Page 17
Article 12. Pension......................................................Page 18
Article 13. Death Leave..................................................Page 19
Article 14. Jury Duty....................................................Page 20
Article 15. Armed Services...............................................Page 21
Article 16. Leave of Absence.............................................Page 22
Article 17. Hours of Employment..........................................Page 23
Article 18. Shifts....................................................Page 24/25
Article 19. Overtime.....................................................Page 26
Article 20. Repair Work..................................................Page 27
Page 2
<PAGE>
Article 21. Pay Period...................................................Page 28
Article 22. Safety and Health............................................Page 29
Article 23. Seniority and Transfers................................Page 30/31/32
Article 24. Grievance and Arbitration.................................Page 33/34
Article 25. Truck Drivers................................................Page 35
Article 26. Union Representative.........................................Page 36
Article 27. Work Rules...................................................Page 37
Article 28. Union Label..................................................Page 38
Article 29. Stewards.....................................................Page 39
Article 30. Termination Clause...........................................Page 40
Article 31. Profit Sharing Program....................................Page 41/42
Article 32. Business Review Council......................................Page 43
Signature Page...........................................................Page 44
EXHIBIT A - CHECK OFF....................................................Page 45
EXHIBIT B - HOSPITALIZATION..................................Page 46/47/48/49/50
EXHIBIT C - PENSION......................................................Page 51
EXHIBIT D - WORK RULES..........................................Page 52/53/54/55
Memorandum of Understanding..............................................Page 56
Page 3
<PAGE>
PREAMBLE
This contract made this 29th day of February, 1996 by and between the
CARPENTERS' DISTRICT COUNCIL OF WESTERN PENNSYLVANIA, OF THE UNITED BROTHERHOOD
OF CARPENTERS AND JOINERS OF AMERICA, AFL-CIO, or its successors and assigns,
(hereinafter referred to as the "Union"), and GREENSTEEL, INC., or its
successors and assigns, (hereinafter referred to as the "Company"), for the
purpose of establishing wages and other conditions of employment to govern both
parties at the Dixonville Plant.
If the ownership and/or management of the employer should change, this agreement
will be recognized in its present form by the new party.
Page 4
<PAGE>
ARTICLE 1.
UNION SECURITY
1.1. The employer agrees that in the hiring of employees, there shall be no
discrimination against applicants because of membership or non-membership in the
Union and each employee shall become and remain a paid-up member in good
standing of the said Union on or after the 31st working day after the effective
date of this agreement as specified in the Federal Labor Management Relations
Act of 1947, as amended, or after completion of the probationary period as
outlined in Article 3 of this agreement.
1.2. For the purpose of this Article, all production employees employed at
the Dixonville Plant, Greensteel, Inc., shall be considered a member of the
Union in good standing by payment of all monthly dues, initiation fees and
assessments uniformly required of all members.
1.3. An employee who fails to tender the regular dues and initiation fees
to the Union shall, upon written notice from the Union, be discharged as an
employee, providing the employee has been given at least thirty (30) calendar
days to correct the situation.
Page 5
<PAGE>
ARTICLE 2.
RECOGNITION
2.1. The employer recognizes the Union as the sole collective bargaining
agent for hours, wages and other conditions of employment for all production and
truck drivers and further agrees that the employees shall perform all the work
coming under the Union's jurisdiction.
Page 6
<PAGE>
ARTICLE 3.
PROBATIONARY PERIOD
3.1. New employees shall be hired on probation for a period of thirty (30)
working days plus an additional period of thirty (30) working days, if the same
is requested by the Company. The Company will notify the Shop Steward, in
writing, when the additional thirty (30) days are needed. During this period,
the Employer shall have the right to terminate his/her employment for any
reason. When a probationary employee is laid off before completion of his/her
probationary period and later recalled, the employee will be given credit for
previous hours worked. If retained, said employee shall be paid in accordance
with this Contract and receive all other benefits, rights and privileges
contained within this Contract with seniority commencing with the original date
of hire.
3.2. In the event the Company hires students or teachers for temporary
work, said employees may work on a permit issued by the Local Union for a period
not to exceed four (4) months and the Company agrees to deduct the amount
specified by the Local Union for said permit out of each employee's pay upon
written authorization and turn over said deductions to the Financial Secretary
of the Local Union.
3.3. For Saturday and Sunday work, bargaining unit employees shall first be
given the option to work before temporary (as outlined in 3.2) or probationary
employees. The term bargaining unit employee as used in this agreement shall
exclude probationary and temporary employees.
Page 7
<PAGE>
ARTICLE 4.
CHECK-OFF
4.1. The Company shall check-off monthly dues, assessments and initiation
fees as designated by the Union as membership dues in the Union, only on the
basis of individually signed, voluntary check-off authorization forms, agreed to
by the Company and the Union.
4.2. Deductions on the basis of authorization forms submitted to the
Company shall commence with respect to dues for the month in which the Company
receives such authorization forms. Dues for a given month shall be deducted from
the first pay closed and calculated in the succeeding month.
4.3. The Company shall turn over all of said deductions to the Financial
Secretary of Local Union 2240 on or about the 15th day following the date the
deductions were made.
4.4. Such remittance shall be accompanied by an itemized statement showing
the name of such employees and the amount checked-off for monthly dues or
initiation fees. The Company will continue to notify the Local of changes in
employee status which may affect the collectability of dues. Authorization forms
are to be furnished by the Union. The Union will be responsible for dues
collection from members off of work due to extended illness or lack of work.
4.5. In cases of vacation, sickness or earnings insufficient to cover
deduction of dues, the dues shall be deducted from the next pay in which there
are sufficient earnings, or a double deduction may be made from the first pay of
the following month, provided however, that the accumulation of dues shall be
limited to two (2) months.
4.6. It is understood that the words "dues, assessments and initiation
fees" shall be limited to regular union dues, regular Union initiation fees and
Unionwide assessments adopted in accordance with the Union Constitution.
4.7. The Union shall indemnify and save the Company harmless against any
and all claims, demands, suits or other forms of liability that shall arise out
of, or by reason of, action taken or not taken by the Company for the purpose of
complying with any of the provisions of this Article, or in reliance of any
list, notice or assignment furnished under any such provisions.
4.8. The foregoing provisions shall be effective in accordance and
consistent with applicable provisions of Federal and Pennsylvania Laws.
Page 8
<PAGE>
ARTICLE 5.
MANAGEMENT CLAUSE
5.1. The Company retains the sole and exclusive right to manage the
business and all operations and to direct the working forces.
5.2. The right to manage the business and all operations and to direct the
working forces shall include the right to hire, promote, assign, schedule,
suspend or discharge for just cause, or to transfer, modify, add to, or
discontinue use of equipment and facilities or any of the operations and the
manufacture of any products as economic conditions warrant, provided that any
action by the Company under this provision shall not be used for the purpose of
discrimination against any member of the Union.
Page 9
<PAGE>
ARTICLE 6.
DECLARATION OF PRINCIPLES
6.1. The Employer and the Union hereby adopt the following principles as an
absolute basis for this Contract:
(a) There shall be no limitation as to the amount of work an employee shall
perform during the working day.
(b) There shall be no restriction of the use of any approved machinery or
tools when furnished by the Company.
(c) Employees can be discharged for just cause only and shall not be
discriminated against because of age, race, sex, color, creed, national origin
and/or union activities.
(d) The parties hereto agree to comply with TITLE VII of the Civil Rights
Act of 1964, and all other applicable Federal and State Laws pertaining to
non-discriminatory practice in employment.
(e) Both parties hereby agree to take affirmative action to provide equal
employment opportunity without regard to race, creed, color or national origin.
This obligation includes, but is not limited to the following: hiring,
placement, up-grading, transfer, or demotion, recruitment, advertising, or
solicitation for employment, or other forms of compensation, selection for
training including apprenticeship, layoff or termination.
(f) The Union and Employer agree to make any changes required as a
reasonable accommodation to employ or continue to employ an otherwise qualified
individual with a disability pursuant to the Americans with Disabilities Act
(ADA). The Employer agrees on a case by case basis, to notify the Union by
writing in advance so that a meeting can be held for a discussion on each case.
Items that are identified as confidential by law will not be discussed.
Page 10
<PAGE>
ARTICLE 7.
WAGE RATES
7.1. It is mutually agreed the following wage rates be established as to
the dates indicated for employees hired prior to February 29, 1996:
2/29/96 5/1/96
------- ------
Group I Assistant Foreperson $11.80 $10.00
Group II Group Leader
Group III Leadperson $11.30 $10.00
Group IV Fabricator $11.00 $10.00
Group V Truck Driver $12.60 $10.00
Employees may be paid over negotiated rate because of merit increases.
7.2. It is also agreed the following wage rates shall be paid for full time
employees hired on or after February 29, 1996:
GROUP IV GROUP V
-------- -------
$7.08 $9.68
Wage rates for permit issued employees: The applicable minimum wage.
7.3. All employees not covered by Section 1 of Article 7, listed above,
shall be included in the rates established for new employees governed by length
of service.
7.4. Employees assigned to a higher rate classification, shall receive the
rate established for that classification while assigned.
7.5. It is agreed at least fifteen (15%) per cent of the permanent
employees be classified as Leadpersons and that Management shall use discretion
to maintain a sufficient number of Assistant Forepersons to insure an efficient
operation of the business.
Page 11
<PAGE>
ARTICLE 7 WAGE RATES Continued.
7.6. Currently there exists the following departments in the plant:
1. Casework
2. Ready Frame
3. Cork Room
4. Saw Room
5. Shear Room
6. Lamination
7. Special Items
8. Paint Shop
9. Shipping/Crating/Trim Room
10. Millwork
The list of departments shall not limit the company's right to add, combine
or eliminate departments as the Company determines necessary.
Page 12
<PAGE>
ARTICLE 8.
GENERAL PROVISIONS
8.1. All reference to employees in this agreement designates both sexes and
whenever the male gender is used, it shall be construed to mean male and female
employees.
8.2. There shall be no set limitation as to the amount of work an
individual shall perform during his work day.
8.3. There shall be no restriction of the use of any approved machinery or
tools when furnished by the Employer.
8.4. No unauthorized person shall have the right to interfere with working
employees during working hours.
8.5. The Foreperson shall be selected by, and be the Agent of, the Employer
and shall comply with terms and conditions of this agreement.
8.6. All employees, including supervisors, shall refrain from using abusive
language toward other employees.
8.7. During the life of this contract or any extension thereof, the Union
shall not cause nor participate in, nor permit any slow-down or any interference
or any similar interference with production. Nor shall it cause nor participate
in or permit any strike, work stoppage or other cessation of the work. The
Company agrees that it will not, at any time, participate in any lockouts.
8.8. The Union and Company recognize that all issues cannot be addressed in
any agreement. In the event that issues arise during this agreement, not covered
by the contract language, discussion to address and resolve these issues will be
held upon the request of either party.
Page 13
<PAGE>
ARTICLE 9.
HOLIDAYS
9.1. Holidays that come under the scope of this agreement are:
New Year's Day Fourth of July Day After Thanksgiving
Good Friday Labor Day First Day of PA Antlered Deer
Memorial Day Thanksgiving Day Christmas Day
(2) Personal Days
All bargaining employees covered by this Agreement for the above listed
holidays, shall receive time off unpaid for holiday leave.
9.2. Holidays falling on Saturday will be celebrated on the Friday before
the holiday. Holidays falling on Sunday shall be celebrated on the Monday after
the holiday.
9.3. Employees who work on any of the above listed holidays shall be
compensated for time worked at two (2) times his/her regular straight time
hourly rate.
9.4. If an unpaid holiday occurs during an employee's vacation period, the
employees may elect to take an additional unpaid vacation day.
9.5. All unpaid holiday hours shall be considered as time worked for the
purpose of computing overtime pay.
9.6. An employee will not be required to work after the end of his/her
normal work day prior to the holiday.
9.7. An employee will not be required to report prior to the normal work
day period after the holiday.
Page 14
<PAGE>
ARTICLE 10.
VACATIONS
10.1. New employees hired shall not be entitled to vacation time in the
calendar year in which they were hired. January first of the year following
their date of hire, the employees shall receive a pro-rated vacation as set
forth in Section 10.4 below.
10.2. All employees on the seniority roll each January 1 of this agreement
shall be eligible for unpaid vacation in that calendar year, based on Section
10.4 below.
10.3 January first of the calendar year in which hired shall be the
employees anniversary date for the purpose of measuring the employees length of
service for vacation time eligibility.
10.4. Vacation eligibility:
(a) Years of Continuous Service Work Days of
as of January First Unpaid Vacation
------------------- ---------------
After one (1) year Five (5) unpaid days
After five (5) years Ten (10) unpaid days
After ten (10) years Fifteen (15) unpaid days
(b) For vacation earned as of January 1, 1996, which are to be paid during
the calendar year 1996, shall be computed as follows:
Percentage of pay periods Percentage of
paid during the twelve (12) vacation pay
months of the prior year to be paid
--------------------------- -----------------
64% 100%
50% to 63% 75%
33% to 49% 50%
Under 33% 0%
10.5. For vacation earned as of January 1, 1996, which are to be paid
during the calendar year 1996, shall be computed as follows: Employees off work
due to an industrial accident and drawing Workers' Compensation shall receive
credit toward percentage of pay periods for each week off work up to a maximum
of ten (10) weeks per each respective year.
10.6. During the month of January, employees entitled to more than one (1)
week of vacation may request in writing to the Plant Superintendent, periods
they wish to take vacation. The requests will be posted on a chart by
department. Employees may not take vacation time off
Page 15
<PAGE>
unless approved in advance by the employees immediate supervisor.
ARTICLE 10 VACATIONS Continued.
In case of a conflict in scheduling vacation chosen during the January
period, the employee with the greater seniority will be given preference. Any
vacation period requested after the close of business on the last working day in
January, will be allowed on a first come, first served basis, provided the
Company is given sufficient notice prior to the beginning of the vacation
period.
Efficient operation of the plant shall be taken into consideration in the
granting of ALL vacations.
This clause shall not forfeit the right of the Employer to close the plant
for vacation periods of up to five (5) working days per calendar year. If the
Company chooses to close the plant for a vacation period, they will post by
March 1, of that year of their intent to do so.
Vacations to be taken each year allotted and not to be accumulated from
year to year.
10.7. For vacation earned as of January 1, 1996, which are to be paid
during the calendar year 1996, employees who resign or are discharged for cause
shall forfeit any right to vacation pay, but any employee who shall resign after
giving his/her immediate assistant foreperson written notice of at least two (2)
weeks, ten (10) working days, prior to the effective date of his/her resignation
or shall be laid off for lack of work, shall be entitled to receive vacation pay
Pro Rata to the portion of his/her respective current year in which he/she
worked.
10.8. For vacation earned as of January 1, 1996, which are to be paid
during the calendar year 1996, employees eligible for additional vacation time
over the plant closing time will receive payment for these additional days,
subject to seniority and also taking into consideration the efficient operation
of the plant as follows:
1. If five (5) days are taken during one (1) weekly pay period, payment for
the entire five (5) days to be made the following pay period or if an employee
should desire his/her vacation pay (for the complete additional five (5) days)
to be paid on the pay period prior to going on vacation, he/she must put this in
writing to his/her assistant foreperson no less than two (2) weeks before going
on vacation.
2. If five (5) days are split into one (1), two (2), three (3) or four (4)
day periods, payment for these days taken will be paid in the regular pay week
in which the day or days are taken.
Page 16
<PAGE>
ARTICLE 10 VACATIONS Continued
3. All unused vacation days not taken up to the last pay period of November
in each current year, the entire vacation pay will be included in the last pay
period of November in each contract year.
4. Up to five (5) employees per month may elect to take pay in lieu of
vacation of their second (2nd) week of vacation or third (3rd) week of vacation,
if eligible. If more than five (5) employees request pay in lieu of time off
from work in any month, the requests of the five (5) senior employees shall be
honored.
10.9. It is recognized the employer may within the superintendent's
discretion, grant a vacation day to any employee who is absent for good and
sufficient reason beyond the employee's control.
10.10. An employee will not be required to work after the end of his/her
normal work day prior to the vacation day.
10.11. An employee will not be required to report prior to the normal work
day period after the vacation day.
Page 17
<PAGE>
ARTICLE 11.
HOSPITALIZATION AND INSURANCE
11.1. The Company agrees to continue the present non-contributing Life,
Sickness and Accident Insurance Plan in effect throughout the term of this
contract for each permanent employee who has passed the probation period. The
Company agrees to provide benefits of $120.00 per week. The life insurance will
be in the amount of $10,000.00 for the life of the agreement.
11.2. A. From February 29, 1996 through March 31, 1996, the current Blue
Cross/Blue Shield Plan as in effect on February 28, 1996, shall remain in effect
and paid by the Company and the employees as under the prior labor agreement
B. Effective April 1, 1996, the Company agrees to provide Blue Cross/Blue
Shield SelectBlue Point-of-Service (without Dental) Group Hospitalization "Plan"
to be paid for by the Company, for each permanent employee who has passed
his/her probationary period. It is also agreed that a copy of the said Plan
shall be attached hereto to this agreement (a description of the benefits
provided under said Plan) (Exhibit "B") and made a part of this Agreement. The
Company reserves the right to change the insurance carrier as long as benefits
are not reduced.
11.3. If an employee ceases to be an active employee of the Company,
his/her group insurance benefits shall cease when an employee:
(a) Quits, is discharged for cause or retires;
(b) Is laid off for more than 30 calendar days;
(c) Is absent for more than twelve (12) weeks under the provision of the
Family Medical Leave Act;
(d) Is absent with leave for any other reason.
Employees whose benefits are discontinued, may continue those benefits in
accordance with their COBRA rights.
11.4. In a situation where an employee is disabled beyond the twelve (12)
week period stated above and such disability is covered by the Family Medical
Leave Act, the employee will continue to have coverage for an additional three
(3) months consecutively following the extension period above, and the
dependents of that employee may continue to have coverage for the same period of
time, provided they pay the premium which is equal to the difference between the
COBRA premium the employee and dependents are currently enrolled in and the
Individual COBRA premium.
Page 18
<PAGE>
ARTICLE 12.
PENSION
12.1. The Company agrees to institute a pension program. All full time
permanent employees, who have not attained the age of 65 will be eligible for
the Plan on January 1, 1970 (the effective date of this Plan). Subsequent to
January 1, 1970 (the effective date of this Plan) any employee who shall
complete one (1) continuous year of service with the Company shall become
eligible to participate in this Plan on the next successive anniversary date of
January 1.
(a) The Company will contribute the amounts necessary to provide the
benefits developed under the Plan.
(b) Normal retirement date will occur the first day of the month coinciding
with or next following the employee's 65th birthday or after one (1) year of
plan participation for those entering the Plan after age 64.
(c) The benefit shall be a monthly annuity payable for the lifetime of the
employee equal to $3.00 for each year of continuous service. Past service
liability up to and including 1976.
(d) The Pension Plan shall provide employee contribution at the option of
the employee to increase his/her Pension benefits.
(e) Pension increase: Refer to Exhibit C attached to present agreement.
It is agreed the intent of this article is to provide benefits to eligible
permanent employees who have been consistently employed.
12.2. It is understood and agreed that Greensteel, Inc. is bound by the
obligations of the Greensteel Bargaining Employees Pension Plan ("Pension
Plan").
12.3. The Greensteel Bargaining Employees Pension Plan ("Pension Plan")
will be terminated effective February 28, 1996, after which date no benefits
will accrue under the Pension Plan. Benefits will be provided for in the form of
a lump sum distribution of each Pension Plan participant's accrued benefit. Said
lump sum to be calculated in accordance with the Pension Plan documents and
applicable federal rules and regulations, including Section 417 of the Internal
Revenue Code. The distribution of vested benefits under the Pension Plan will be
made as soon as practicable following the approval of the termination of the
Pension Plan by the Pension Benefit Guaranty Corporation and the Internal
Revenue Service and will be subject to spousal consent and other applicable
legal requirements. The Company promptly shall undertake to obtain said
approvals. Should there be any overfunding in the plan, such amount shall be
distributed to plan participants who are in the bargaining unit.
Page 19
<PAGE>
ARTICLE 13.
DEATH LEAVE
13.1. In the event of a death in the employee's family, the employee shall
be paid for time lost from work in the following manner:
(A) Five (5) days on the death of an employee's spouse.
(B) Three (3) days on the death of an employee's mother, father, brother,
sister, mother-in-law, father-in-law or legal children.
(C) Employees shall be paid for this time off on the basis of their hourly
rate.
(D) Death leave in (B) of this section shall include the day of the
funeral. Days after the funeral are not considered as part of the death leave
benefits.
(E) Employees who because of a death in the employee's immediate family
needs additional time for travel, assist surviving members of the family, or
other related reasons may take a leave without pay for up to one (1) additional
week following the date of the funeral, providing the employee first notifies
the Plant Superintendent.
Page 20
<PAGE>
ARTICLE 14.
JURY DUTY
14.1. An employee who is called for jury service shall be excused from work
for the days on which he/she serves. The employee shall receive for each day of
jury duty on which he/she otherwise would have worked the difference between
eight (8) times his/her average straight time hourly earnings in the pay period
preceding the pay period of jury duty including applicable shift differential
and the payment he/she received for jury service. The employee will present
proof of service and the amount of pay received therefore.
Page 21
<PAGE>
ARTICLE 15.
ARMED SERVICE CLAUSE
15.1. The Company will abide by the reinstatement and employee benefit
provisions of the Uniformed Services Employment and Reemployment Rights Act of
1994 or any amendments thereto.
15.2. Any employee who is scheduled to enter the Armed Services shall
receive all vacation pay or any other benefits that he/she is entitled to before
leaving.
Page 22
<PAGE>
ARTICLE 16.
LEAVE OF ABSENCE
16.1. The Company agrees to abide by the provisions of the Family and
Medical Leave Act of 1993 (FMLA), and any amendments thereto. If a request for a
leave of absence does not fall under the FMLA, the Company agrees to discuss the
request with the Grievance Committee. No employee shall lose any seniority
during a leave of absence. However, such employee shall not receive or
accumulate any benefits during such period of leave of absence except as
provided for under the Uniformed Services Employment and Reemployment Rights Act
of 1994 or the Family and Medical Leave Act of 1993.
16.2. All eligible vacation time must be used prior to a leave of absence.
Page 23
<PAGE>
ARTICLE 17.
HOURS OF EMPLOYMENT
17.1. Eight (8) hours per day shall constitute the normal work day
excluding a one-half hour unpaid lunch period, and forty (40) hours per week
shall constitute the normal work week, which week shall be Monday through Friday
inclusive.
17.2. All hours worked over eight (8) hours per day shall be paid for at
the rate of time and one-half (1 1/2) the regular rate of pay.
17.3. All hours worked on Saturday shall be paid at the rate of time and
one-half the regular rate of pay, providing the employee works the scheduled
hours during the week. The employee who is absent due to illness with a doctor's
written certification of the illness or an employee who was absent because
he/she was excused only by the Company in advance, shall nonetheless receive one
and one-half (1 1/2) times the regular rate of pay for all hours worked on
Saturday.
17.4. Any time worked in addition to forty (40) hours at regular time shall
be considered overtime and shall be paid for at the rate of time and one-half (1
1/2) time. Vacation days shall not be counted as hours worked to determine
overtime pay.
17.5. All hours worked on Sunday shall be paid at the rate of double the
regular rate of pay, excluding truck drivers and repair workers, and with the
understanding that Section 17.6 and Section 17.7 shall not prevail for this
Section.
17.6. When employees are regularly employed and report for work, or when
employees are hired and are not placed at work, they shall receive a minimum of
four (4) hours pay at straight time. The above shall not apply to conditions
over which the Employer has no control.
17.7. When an employee is called back to work before or after, but not
continuous with his/her regular shift, he/she will be paid a minimum of four (4)
hours at the appropriate rate.
17.8. Should the Company be forced to work less than five (5) days per week
because of governmental action, utility company regulations or for other causes
beyond the Company's control, the overtime rate shall not be paid for the first
forty (40) hours worked in that week. The company will notify the Local Union
and the Carpenters' District Council of change.
Page 24
<PAGE>
ARTICLE 18.
SHIFTS
18.1. Eight (8) hour shift. First shift: 7:00 A.M. to 3:30 P.M. with
one-half (1/2) hour for lunch; Second Shift: 3:30 P.M. to 12:00 Midnight with
one-half (1/2) hour for lunch; Third Shift: 12:00 A.M. to 8:30 A.M. with
one-half (1/2) hour for lunch. One (1) ten (10) minute rest period during the
first half of the employee's shift; one (1) ten (10) minute rest period during
the second half of the employee's shift.
18.2. Ten (10) hour shift. 6:00 A.M. to 4:30 P.M. with one-half (1/2) hour
for lunch; Second Shift: 4:30 P.M. to 3:00 A.M. with one-half (1/2) hour for
lunch; Third Shift: 11:00 P.M. to 9:30 A.M. with one-half hour for lunch. Two
(2) ten (10) minute rest periods during the first half of the employee's shift;
one (1) ten (10) minute rest period during the second half of the employee's
shift.
It will be the option of the third shift to work an eight (8) hour shift when a
ten (10) hour shift is scheduled, after a discussion with the Company.
18.3. Twelve (12) hour shifts: First shift: 6:00 A.M. to 6:00 P.M.
Employees shall receive a total of twelve (12) hours of pay. Employees shall
receive during the first half of their shift, two (2) ten minute rest periods
and one (l) ten (10) minute rest period during the second half of their shift.
Employees shall receive during mid-hours, a twenty (20) minute paid lunch
period.
Second Shift: 6:00 P.M. to 6:00 A.M. Employees shall receive a total of twelve
(12) hours of pay. Employees shall receive during the first half of their shift
two (2) ten minute rest periods and one (1) ten minute rest period during the
second half of their shift. Employees shall receive during mid-hours a twenty
(20) minute lunch period.
18.4. Any shift of work beginning after 12:30 P.M. shall be considered
night shift. Management reserves the right to change time of any shift starts.
Any proposed changes in shifts for three (3) consecutive days will be reported
to the grievance committee three (3) days in advance.
18.5. In the event the Employer should decide to work a second or third
shift in any department with present employees, the Employer will use volunteers
from the department to transfer to either shift. Lacking sufficient volunteers,
the least senior employee in the department will be assigned first to the
established shift, and then the most senior employee in the department and so
forth, until a full rotation of employees in the department is completed. The
remaining weeks of the shifts will be on a rotation of the remaining employees
in the department. Shift assignment will be in one week increments. Assistant
Forepersons shall not be required to rotate. This clause shall not forfeit the
right of an employee to work more than one (1) week on the swing shift if the
said employee requests.
Page 25
<PAGE>
ARTICLE 18 SHIFTS Continued.
18.6. Employees transferred from one department to another department after
completion of a two (2) day period, the transferred employee will be assigned
into the shift rotation of that department by his plant seniority, when the
employee is transferred back to his original department, the employee will be
assigned the regular seniority rotation of the shift of the department.
18.7. In the event that the second or third shift is eliminated prior to
the full rotation of a department and is re-establishing within a four (4) week
period, the rotation of employees will continue in seniority order. If the shift
is re-established after the four (4) week period, the rotation procedure will
continue as outlined in 18.5.
18.8. A premium of eighteen ($.18) cents per hour shall be paid for second
shift work, and a premium of twenty-one ($.21) cents per hour shall be paid for
third shift work.
18.9. For the purpose of training, new employees may be assigned to the day
shift for a reasonable amount of time to learn the assignment. If the employee
was scheduled to work second shift during his training, but due to the training
was not assigned to second shift, that employee will be required to work second
shift to make up the second shift missed while in training.
Probationary employees may be required, for the purpose of evaluation, to work
day shift during the probationary period.
18.10. Employees may switch shifts upon approval from their supervisors.
Page 26
<PAGE>
ARTICLE 19.
OVERTIME
19.1. The Employer shall notify the steward of intentions to work overtime
eight (8) working hours in advance (when possible).
19.2. All overtime shall be equitably distributed as far as practicable.
Overtime work shall be offered first to the employee doing the particular job on
regular hours. If the employee doing the particular job on regular hours is not
available for overtime work, the next employee with the most seniority working
in the same department will be given the opportunity for the overtime work
provided they have the skill and ability to perform the available work as
determined by the Company. Includes truck drivers.
19.3. If, for any reason, employees are needed to work overtime in a
department other than their own, these employees shall be so selected on a
seniority basis from those individuals who signed the overtime roster sheet
provided they have the skill and ability to perform the available work as
determined by the Company. The Company will post the Monday through Friday
weekly overtime roster sheet during the prior week. The Saturday overtime roster
sheet shall be posted on Monday, the start of the work week, for all Saturday
work. All employees will sign the sheet by quitting time Wednesday. The Company
will post by Friday, 12:00 Noon, the names of the employees scheduled to work.
19.4. If an employee is inadvertently overlooked for overtime work, for
which he/she is eligible, he/she shall receive wages at his/her rate of pay for
all lost overtime hours in his/her department or overtime roster sheet for which
he/she is qualified.
19.5. An employee shall be required to work a five (5) day work week - ten
(10) hours per day - Monday through Friday for a fourteen (14) week total time
period within a one (1) calendar year as determined by the Company and may not
be consecutive days or weeks. Employees may be excused by his/her supervisor.
Any overtime outside this period will be on a voluntary basis as in Section 3.
This is not to be construed as a guarantee of any overtime.
19.6. The payment of overtime shall not be pyramided by the paying of
overtime on overtime rates. In any work week where there is daily and weekly
overtime, only the higher of the two shall be paid.
Page 27
<PAGE>
ARTICLE 20.
REPAIR WORK
20.1. In the event that an employee is requested to perform repair work
away from the plant on products that were fabricated at the plant, the Employer
hereby agrees that the employee will be paid at one ($1.00) dollar per hour
above his/her plant rate for hours actually worked at the jobsite plus travel
expense one way to the job site for a maximum of four (4) hours.
20.2. Employees on repair work will be compensated for any lost scheduled
plant work hours due to the repair work with combination of paid repair hours
and paid plant hours. The employee will be paid $.20 per mile for use of his/her
personal vehicle, if required. Should the employee be required to spend the
night at the job location, he/she shall be reimbursed for reasonable out-of-town
living expenses as approved by the Employer prior to departing.
20.3. In the event an employee is requested to perform work away from the
plant (other than repair work as stated above), the Employer hereby agrees the
employee will be paid all prevailing rates of pay as in the current Carpenters'
collective bargaining agreement for that particular area.
Page 28
<PAGE>
ARTICLE 21.
PAY PERIOD
21.1. The weekly pay period shall terminate at the end of the shift
Saturday. All members shall be paid at the end of the shift on the following
Friday. Notwithstanding, the Company will endeavor to pay on Thursday.
21.2. Those who are discharged shall be paid immediately or else be
compensated for waiting time; however, those who quit of their own volition
shall wait until the next regular pay day for their pay.
Page 29
<PAGE>
ARTICLE 22.
SAFETY AND HEALTH
22.1. The Company agrees to make reasonable provisions for safety and
health of their employees at the plant during the hours of their employment.
22.2. A Safety and Health Committee shall be comprised of one (1) Union
employee and one (1) Safety Director from the Employer, and shall jointly make
one (1) inspection of the plant during the last week of each month. There shall
be a reasonable time allowed to inspect the plant and if any violation exists,
the problem shall be corrected as soon as possible.
22.3. In the event employees sustain an injury performing their working
duties during the course of the work day and are advised by management or the
doctor to go home, they shall be compensated for the time lost for the remainder
of said eight (8) hour day at their regular hourly wage rate. If an employee is
advised by the attending physician to return for additional treatment for their
work sustained injury, the company will, whenever possible, permit the employee
to change to another scheduled shift that day or to return that day to work a
total of his/her scheduled hours to avoid any lost time.
22.4. In the event of an accident, there shall be an immediate inspection
of the scene of the accident by the Safety Committee. One member of the Union
and one member of the Company on the Safety Committee shall inspect the scene of
the accident. The Safety Committee shall receive a copy of all accident reports.
22.5. Safety devices and other equipment necessary to properly protect
employees from injury shall be provided by the Company. Goggles, face masks and
respirators shall be provided by the Company without assessment to the
employees, except the Company may assess a charge to cover loss or willful
destruction by the employees.
22.6. Employees shall be notified before quitting time of the previous day
if they are required to work outside so they can be properly dressed or the
Company shall provide proper clothing.
Page 30
<PAGE>
ARTICLE 23.
SENIORITY AND TRANSFERS
23.1. Seniority shall be adhered to relative to layoffs, recall and/or
furloughs in all cases except employees who are essential to the efficient
operation of the business because of special training or ability.
The Company will furnish to the Grievance Committee an outline of the
special training or ability of each employee they propose to keep out of
seniority, two (2) days before the lay-off or recall. The Grievance Committee
and the Company will meet and discuss those employees to be retained. In the
event of failing to agree, the grievance procedure may be used to determine the
issue of qualification.
23.2. Employees shall not lose seniority due to layoffs. No new employees
will be hired while there are regular full-time employees on layoff or working
less than a regular work week. In increasing the work forces, employees shall be
notified in person or by telegram or certified letter, at their last known
address, and shall be given seven (7) calendar days in which to return to work.
Upon written request by any such employee during such seven (7) calendar day
period, an additional seven (7) days will be granted for return to work. If
these conditions are not met, all seniority rights and all other rights under
this Agreement shall be lost.
23.3. The Employer agrees to schedule lay-offs during slow periods so all
remaining employees work the maximum number of hours per week. Seniority will be
followed when calling back employees on layoff, except in cases where special
skills are needed; in those cases, the employee with the needed skill may be
called back first. Prior to this, the Company will meet with the Grievance
Committee.
23.4. In the event of a transfer to a higher rated job intended to be
permanent, and where physical fitness, knowledge, training, ability and
efficiency are equal between the employees, seniority shall prevail. The Company
agrees to discuss a transfer to a higher rated job intended to be permanent with
the Grievance Committee at least forty-eight (48) hours prior to filling the job
opening.
23.5. It is agreed that the Company shall assign employees a basic job to
be established as their primary job with the understanding that all employees
shall accept temporary jobs other than their basic jobs including assignment to
second and third shift for the purpose of maintaining efficiency in the
operation of the plant and the company agrees they shall not discriminate
against any employee in the assigning of these temporary jobs. The Company
agrees to select employees with the least seniority, whenever possible, for
termporary jobs outside of their basic job assignment. When an employee is
temporarily assigned, the employee will remain eligible for this primary job. If
a controversy should arise, the said employee shall have recourse to the
Grievance Procedure.
Page 31
<PAGE>
ARTICLE 23 SENIORITY AND TRANSFERS Continued
After an employee has been assigned a basic job as his/her primary job and
he/she feel he/she would like to transfer to another basic job, the employee
shall request a transfer in writing to his/her supervisor and in the event a job
opening occurs, the Company agrees said jobs are to be awarded according to
seniority, ability and overall efficiency of the plant operation. After an
employee has made his/her request, a copy of the written request will be given
to the Shop Steward, the employee and the Superintendent.
All requests for transfers will remain active for one (1) month.
The Company agrees to discuss a transfer to a job opening to another basic
job intended to be permanent with the Shop Committee at least forty-eight (48)
hours prior to filling the job opening.
23.6. If an employee temporarily (four (4) hours or more) is assigned the
duties of a leadperson or of an assistant foreperson, the said employee shall
receive additional compensation during this period of the temporary assigned
job. Where physical fitness, knowledge, training, ability and efficiency equal
between the employees, seniority shall prevail.
23.7. Seniority is defined as length of an employee's continuous service
with the Company dated from (a) the date of first employment at the plant or (b)
subsequent date of employment following a break in continuous service.
Seniority shall be terminated by:
(a) Quit
(b) Discharge
(c) Lay-off of more than one (1) year.
(d) Failure to report to work after layoff after proper notification
as stated in Section 2 of Article 23.
(e) Exceeding leave of absence or engaging in gainful occupation
during leave of absence, except when such leave is expressly granted for
such purpose shall be considered as voluntary quitting.
(f) Physical disability over two (2) years; however, a compensable
disability incurred during course of employment, employee shall not lose
seniority provided such employee returns to work within thirty (30) days
after final payment of statutory compensation for such disability.
(g) Death of an employee.
Page 32
<PAGE>
ARTICLE 23 SENIORITY AND TRANSFERS Continued
23.8. On the first of each month, the Company shall submit the names and
addresses of all new employees to the Local Union.
23.9. On the first day of the month, after an addition or subtraction to
the seniority list occurred in the previous month, the Company will submit a
revised seniority list of employees in the bargaining unit to the local union.
23.10. Should an employee leave the bargaining unit to accept a job with
management, said employee shall retain all rights negotiated for under the
current working Agreement for a period of ninety (90) working days. The employee
may return to his/her former bargaining unit job prior to the end of the ninety
(90) day period at his/her former rate of pay. However, after the ninety (90)
day period, no such employee shall be able to replace or take the job of any
full time bargaining unit employee; and the employee's seniority shall be frozen
from the time he/she has left the bargaining unit until the time he/she returns.
Any employee who should fill an opening caused by an employee leaving the
bargaining unit to take a job with management shall do so with the understanding
that he/she may be replaced under the provisions of this section.
It is understood that for an employee to remain eligible under the terms
and conditions of this section, he/she must remain a member in good standing of
the Local Union.
Page 33
<PAGE>
ARTICLE 24.
GRIEVANCE AND ARBITRATION PROCEDURES
24.1. There shall be a Shop Steward elected by the members of the Local
Union, whose duty shall be to refer any grievance which may arise over the
carrying out of this Contract to the undersigned representative of the Union,
who shall take the same up with the Employer for adjustment.
24.2. There shall be a Grievance Committee consisting of the Business
Representative of the District Council, the Steward and two (2) other employees,
to be elected by the members of the Local Union, whose duties will be to meet
with the Employer to settle any dispute which may arise in the carrying out of
this Contract.
24.3. A Grievance is any controversy between the Employer and the employees
covered by this Contract with respect to the application, interpretation and/or
compliance with any term or provisions of this Contract.
24.4. Grievances shall be processed in the following steps:
STEP 1: The Grievant shall reduce the grievance to writing on an
appropriate standard form within five (5) working days of the occurrence
giving rise to the grievance and discuss the grievance with the Shop
Steward and the Assistant Foreperson. The Assistant Foreperson shall submit
a written decision of the grievance to the Shop Steward within five (5)
working days after the grievance is received.
STEP 2: If the Grievance is not settled at Step 1, within five (5)
days after the Assistant Foreperson's decision, the Shop Steward shall
submit the grievance to a Representative of management. Management shall
submit a written decision of the grievance to the Shop Steward within seven
(7) working days after the grievance is received.
STEP 3: If the grievance is not settled at Step 2, within five (5)
days after the Management decision, the grievance shall be submitted to a
Representative of Management and a Representative of the Union. A written
decision shall be submitted within seven (7) working days after the
grievance is received. If either party is dissatisfied with the decision at
Step 3, the grievance may then be submitted to Arbitration as hereinafter
provided.
24.5. Any grievance which is not processed to the next step as provided
herein shall be considered as being settled on the basis of the last written
decision of the Employer.
Page 34
<PAGE>
ARTICLE 24 GRIEVANCE AND ARBITRATION Continued
24.6. Arbitration:
A. Any grievance submitted to arbitration shall be decided by an Arbitrator
who shall be selected from a list of five (5) names submitted by the Federal
Mediation and Conciliation Service. The Company and the Union shall each strike
two (2) names from the list and the remaining name shall be the Arbitrator.
B. The Arbitrator shall have jurisdiction and authority only to interpret,
apply or determine compliance with the provisions of this Contract insofar as
shall be necessary to the determination of grievance appealed to arbitration.
The Arbitrator shall not have jurisdiction or authority to add to, subtract from
or alter in any way the provisions of this Contract.
C. The Arbitrator shall afford to the Company and the Union a reasonable
opportunity to present evidence and to be heard in support of their respective
positions.
D. The written decision of the Arbitrator on any appeal properly before
him/her in accordance with the provisions of this Contract shall be final and
binding upon the Company, the Union, and all employees. All expenses of the
Arbitrator shall be shared equally by the Company and the Union.
E. It is understood that the Company and the Union are authorized to settle
grievances at any time during the grievance procedure and at any time prior to
the final decision of a grievance by an Arbitrator as herein set forth;
provided, however, that any such settlement shall be accepted by both parties as
a settlement of the particular grievance only, and shall not constitute a
precedent of any other grievance that may be filed.
24.7. In the event the Company determines that any employee shall be
suspended or discharged, depending upon the circumstances of each case, the
Company shall have the right to suspend or discharge for just cause. The Union,
through any of its Representatives, shall be so notified in writing within
forty-eight (48) hours of the action taken by the Company. Any grievance which
may result from this action, must be presented to the Company in writing within
five (5) working days from the date notice of the suspension or discharge was
given to the Union or the Company's decision shall be final. If a written
grievance is filed, it shall be processed promptly through the grievance
procedure.
24.8. No grievance matter under this Contract shall be processed during
working hours and the Union agrees that no working time shall be lost by any
employee on any grievance matter except in case of an emergency.
Page 35
<PAGE>
ARTICLE 25.
TRUCK DRIVERS
25.1. All expenses are to be paid to the truck drivers no later than two
(2) working days following the drivers turning in an approved expense report.
25.2. The Company agrees to make provisions to have a helper available to
assist the truck driver in unloading items not feasibly possible for the driver
to unload by himself.
25.3. The Company agrees when the plant is scheduled to work at least a
forty (40) hour week, that the drivers shall have the opportunity to work in the
plant in order to make up a forty (40) hour week.
25.4. Any employee scheduled to pick up or deliver material away from the
plant with a truck of no less than a 14,000 lb. gross weight limit, shall
receive the truck driver's rate of pay. Any truck driver scheduled to work
inside the plant shall receive no less than Group IV wages.
Page 36
<PAGE>
ARTICLE 26.
UNION REPRESENTATIVE
26.1 The Representative of Local Union 2240 shall be permitted to enter the
Employer's facility and Employee's work area accompanied by the Superintendent.
The Union Representative shall notify the Superintendent prior to each
visit to arrange the visit to insure the availability of the Superintendent. It
is understood that production shall not be interrupted during the visit.
Page 37
<PAGE>
ARTICLE 27.
WORK RULES
27.1. WORK RULES: The right of the Company to make such reasonable rules
and regulations, not in conflict with this Agreement, as it may from time to
time deem best for the purposes of maintaining order, safety and/or effective
operation of the Company's plant, and after advance notice thereof to the Union
and the employees, to require compliance therewith by the employees, is
recognized.
There is attached to this Agreement, as Exhibit D thereto, STANDARD COMPANY
RULES, violations of which will subject to the employee or employees to
discipline or discharge. Verbal and written warnings shall remain effective for
six (6) months subsequent to the date of issuance.
27.2. The Employer shall notify the Union two (2) weeks in advance of the
institution of new rules or of changes in the existing rules so that the parties
can meet to discuss the rules. The Union shall have the right to question the
reasonableness of the Company's rules or regulations through the grievance
procedure.
Page 38
<PAGE>
ARTICLE 28.
UNION LABEL CLAUSE
28.1. It is hereby understood and agreed by the Employer and the Union that
an application shall be made for the Union label to the First General Vice
President of the United Brotherhood of Carpenters and Joiners of America to be
placed upon the Employer's product. It is understood and agreed that the label
shall remain the property of the United Brotherhood of Carpenters and Joiners of
America, and shall be at all times in the possession of a member of the United
Brotherhood of Carpenters and Joiners of America; and that said Union Label
shall at no time be used in any manner that will be detrimental to the interest
and welfare of the members of the United Brotherhood. Use of said Label may be
withdrawn from the mill, shop, factory or manufacturing establishment of the
Employer at any time at the discretion of the International Union.
Page 39
<PAGE>
ARTICLE 29.
STEWARDS
29.1. The Union shall advise the Plant Superintendent, in writing, the name
of the Carpenters' Representative, Local Union Officials, Stewards, Assistant
Stewards, and Grievance Committee and shall notify the Plant Superintendent of
any changes in the above.
29.2. The Employer agrees to notify the Steward and employees involved
eight (8) working hours in advance of any lay-offs due to lack of work and if
said employees are not notified, they shall be paid for such hours lost.
29.3. Employees shall have the right to request that a Steward be present
at any time a formal warning or disciplinary action is given or when the Company
wishes to meet with an employee to investigate an incident that is likely to
result in disciplinary action.
Page 40
<PAGE>
ARTICLE 30.
TERMINATION CLAUSE
30.1. This Contract shall be binding on both parties from February 29, 1996
to and including February 28, 1999, unless otherwise provided herein. Should
either party to this Contract desire to terminate the same on said date, notice
in writing shall be given prior to December 31, 1998 otherwise this Contract
shall automatically remain in force for an additional year and continue
thereafter from year to year until written notice is given by either party prior
to December 31st of any year.
30.2. Should any clause or part of this Contract be found contrary to
present or future laws, it shall not invalidate the other portions thereof, it
being the sole intent and purpose to promote peace and harmony along legal
lines.
Page 41
<PAGE>
ARTICLE 31.
PROFIT SHARING PROGRAM
31.1. Effective May 1, 1996, the Company will institute a profit sharing
program for all eligible permanent employees.
The profit sharing program will be based on the Dixonville Plants' budgeted
Gross Profit. The Company shall have the sole and exclusive right to establish
the budget, which shall not be subject to the grievance arbitration procedure of
this Agreement.
A. QUARTERLY PAYMENTS
The first quarter consists of May 1 thru July 31 of each year.
The second quarter consists of August 1 thru October 31 of each year.
The third quarter consists of November 1 thru January 31 of each year.
The fourth quarter consists of February 1 thru April 30 of each year.
The company will post each month the Dixonville plants' actual performance for
the previous month compared to the monthly budget.
At the end of each quarter, the actual cumulative results for the fiscal year to
date, will be compared to the cumulative budgeted numbers for the fiscal year to
date. If the cumulative gross profit meets or exceeds the cumulative budgeted
gross profit to date, a quarterly bonus will be paid. If the cumulative gross
profit does not equal or exceed the cumulative budgeted gross profit, no bonus
will be paid in that quarter.
Quarterly payments will be made after the quarterly results are posted.
Payments for the quarterly results shall be calculated by multiplying the
employees W-2 earnings since the last quarter of the same fiscal year in which a
quarterly payment was made by the percentage increase in the annual cost of
living for the calendar year immediately preceding the commencement of the
fiscal year. The percentage increase in the annual cost of living for the
preceding year shall be based on the percentage change in the Consumer Price
Index* from December of one year to December of the following year.
*Consumer Price Index means the United States Department of Labor Consumer
Price Index for Urban Wage Earners and Clerical Workers (CPI-W), U.S. [greater
than] all cities (1982-84=100).
EXAMPLE: The Consumer Price Index for Urban Wage Earners and Clerical
Workers for December 1994 was 147.2 and for December 1995 was 150.9, an increase
of 2.5%. If in the first quarter, the plant meets or exceeds the budget, all
eligible employees will receive a 2.5% bonus (i.e., 2.5% of employees W-2
earnings for the period of May 1, 1996 through July 31, 1996).
Page 42
<PAGE>
ARTICLE 31 PROFIT SHARING PROGRAM Continued.
B. ANNUAL PAYMENTS
If the actual gross profit for the fiscal year exceeds the budget for the fiscal
year, the Company will split the amount of the excess in the yearly budget
fifty/fifty (50/50) with the employees. That amount(that is the 50% of the
excess) will be paid to employees based on the following formula: The amount to
be distributed to the employees shall be divided by the W-2 earnings for all
eligible bargaining unit employees for the fiscal year involved and multiplied
by the employees actual W-2 earnings. Example: The Gross Profit Budget for
fiscal year 19XX is two million ($2,000,000) dollars. The actual Gross Profit is
three million ($3,000,000) dollars. One-half of the excess, i.e., $500,000 will
be distributed to the employees. Assuming the total W-2 earnings for all
employees for the fiscal year is $2,475,000, the amount paid to each employee
would be 20.2% ($500,000 divided by $2,475,000) of the employees W-2 earnings.
If an employees W-2 earnings are $18,304, the employees bonus would be
$3,697.40. For purposes of computing employees W-2 earnings, the 52 week period
ending on the pay period ending on or immediately before April 30 will be used.
Page 43
<PAGE>
ARTICLE 32
BUSINESS REVIEW COUNCIL
32.1. A Business Review Council consisting of three (3) members selected by
the Company and two (2) members selected by the bargaining unit will meet
monthly to enable the bargaining unit to have a voice in the continued growth of
the company.
32.2. The Council will review the following:
1. Monthly business issues
2. New product ideas
3. Cost reduction programs
4. Quality improvement programs
5. System improvement ideas
32.3. Employee members of the committee shall be paid at their appropriate
rate for all hours while meeting.
Page 44
<PAGE>
GREENSTEEL, INC. CARPENTERS' DISTRICT COUNCIL
29 Laing Avenue OF WESTERN PENNSYLVANIA
Dixonville, PA 15734 495 Mansfield Avenue
(412) 254-4321 Pittsburgh, PA 15205
(412) 922-6200
/s/ Joseph Menniti /s/ John A. Brooks
- ------------------------------------- -------------------------------------
Joseph Menniti, COO, PolyVision Corp. John A. Brooks
President Executive Business Manager
/s/ N. Roy Anderson /s/ Ray W. Vogel, Jr.
- ------------------------------------- -------------------------------------
N. Roy Anderson Ray W. Vogel, Jr.
President Assistant Secretary
/s/ Thomas E. Julock /s/ Earl J. Reith
- ------------------------------------- -------------------------------------
Thomas E. Julock Earl J. Reith
Plant Manager Special Representative
/s/ John Gaydosh /s/ George R. Deabenderfer
- ------------------------------------- -------------------------------------
John Gaydosh George R. Deabenderfer
Superintendent President
/s/ Rudy Yandrick /s/ Edward J. Smego
- ------------------------------------- -------------------------------------
Rudy Yandrick Edward J. Smego
Industrial Engineer Recording Secretary
/s/ Michael Keith /s/ Robert Benko
- ------------------------------------- -------------------------------------
R. Michael Keith Robert Benko
Casework Supervisor Steward
/s/ Mona C. Irwin /s/ Rodney Goodlin
- ------------------------------------- -------------------------------------
Mona C. Irwin Rodney Goodlin
Employee Relations Manager Financial Secretary
/s/ Vaughn Goodlin
-------------------------------------
Vaughn Goodlin
Page 45
<PAGE>
/s/ David Yachisko
-------------------------------------
David Yachisko
/s/ Leonard McCracken
-------------------------------------
Leonard McCracken
Assistant Steward
Page 46
<PAGE>
EXHIBIT "A"
CHECK-OFF AUTHORIZATION FORM
United Brotherhood of Carpenters
and Joiners of America
I, ________________________, now employed by _________________ do hereby
authorize and direct my Employer or his successors or any other Employer for
whom I work under a collective agreement between the Employer and the Union to
deduct from my wages and pay promptly to the Local Union of the United
Brotherhood of Carpenters and Joiners of America, the membership dues,
initiation fees and assessments which I am obligated to pay to the Union, and I
hereby assign the same to the Union pursuant to the provisions of the current or
future collective bargaining agreements.
The authorization shall remain in effect until revoked by me and shall be
irrevocable for a period of one (1) year from the date hereof, or until the
termination date of any applicable collective bargaining agreement, whichever
occurs sooner; and unless I revoke this authorization by sending written notices
to my Employer and the Union not more than twenty (20) days and not less than
ten (10) days prior to the expiration of each period of one (1) year or of each
applicable collective bargaining agreement between by Employer and the Union,
whichever occurs sooner, this authorization shall automatically be renewed from
year to year.
Date: __________________________________
Social Security No.: ___________________
Name (Print) ___________________________
Signature ______________________________
Address ________________________________
________________________________________
This card shall be signed in duplicate.
Page 47
<PAGE>
EXHIBIT B.
MEDICAL BENEFITS
February 29, 1996 through March 31, 1996
Employee Cost:
- --------------
High Option Plan $75.00 per month
Standard Plan $ 9.20 per month
April 1, 1996 through February 28, 1999, Blue Cross/Blue Shield, SelectBlue
Point-of-Service (without dental).
No cost to eligible employees and their eligible dependents.
Page 48
<PAGE>
EXHIBIT C.
1977: Pension Benefit for the year of 1977 shall be $4.00
1978: Pension Benefit for the year of 1978 shall be $4.50
1979: Pension Benefit for the year of 1979 shall be $5.00
1980: Pension Benefit for the year of 1980 shall be $6.00
1981: Pension Benefit for the year of 1981 shall be $6.50
1982: Pension Benefit for the year of 1982 shall be $7.00
1983: Pension Benefit for the year of 1983 shall be $7.75
1984: Pension Benefit for the year of 1984 shall be $8.50
1985: Pension Benefit for the year of 1985 shall be $9.25
1986: Pension Benefit for the year of 1986 shall be $10.00
1987: Pension Benefit for the year of 1987 shall be $10.00
1988: Pension Benefit for the year of 1988 shall be $11.00
1989: Pension Benefit for the year of 1989 shall be $12.00
1990: Pension Benefit for the year of 1990 shall be $13.50
1991: Pension Benefit for the year of 1991 shall be $14.00
1992: Pension Benefit for the year of 1992 shall be $16.00
1993: Pension Benefit for the year of 1993 shall be $16.50
1994: Pension Benefit for the year of 1994 shall be $17.00
1995: Pension Benefit for the year of 1995 shall be $17.00
The above increases shall not be used to compute past services. The $3.00 figure
in Article 12 Section 1.C will be used to compute service prior to 1977.
Page 49
<PAGE>
EXHIBIT D.
GREENSTEEL'S WORK RULES AS OF APRIL 3, 1989
GROUP I:
Committing any of the following violations will be sufficient reason for
disciplinary action in the form of:
(1) Written reprimand for any first violation.
(2) Written reprimand for any second violation.
(3) Suspension of one (1) day for any third violation.
(4) Discharge for any fourth violation.
1. Failure to ring time card when entering and leaving plant, except when on
company business.
2. Remaining on or re-entering the plant after working hours without permission
from the superintendent.
3. Posting or removing notices (or writing in any form) on bulletin boards or
company property without permission from the Company, except official Union
notices.
4. Tardiness (over one (1) per month).
5. Gambling on company property.
6. Engaging in horseplay or playing practical jokes while on company property.
7. Wasting time, inefficiency, loafing or loitering on company property.
8. Violation of, or disregard for, safety rules and common safety practices.
9. Making false, vicious, or malicious statements concerning any employee, the
company, or its products, whether this occurs on or off company property.
10. Doing personal work or business on company time.
11. Interfering or hindering in any way with other employees on the job.
12. Violating health and sanitation rules.
13. Disregard of common good housekeeping practices.
14. Repeated negligence or inferior work resulting in excessive scrap, breakage
of tools, or wasting of materials or supplies.
15. Leaving your assigned work area.
Page 50
<PAGE>
GROUP I WORK RULES Continued
16. On continuous operation, leaving the job before being properly relieved or
released from the job.
17. Campaigning, soliciting, selling tickets or any other articles, or engaging
in any similar activity on company premises without the approval of management.
18. Failure to observe the proper starting and quitting time. Rules concerning
working time are as follows:
a. Employees will not start work prior to their scheduled starting time
without specific instructions from their assistant foreperson or the
superintendent.
b. All employees will proceed to their jobs to be ready to start to work at
the starting time buzzer.
c. No employees will leave their work station prior to the sounding of the
break, lunch or quitting time buzzers.
d. Employees must be back at their work stations ready to work at the
sounding of the starting buzzers, including after each break and lunch.
e. Employees may wash up, dust off, sweep, or straighten up around their
work areas, five (5) minutes before scheduled quitting time as authorized
by their assistant foreperson. However, after cleaning up, etc., employees
must return to their work stations and wait for the quitting buzzer.
f. For your protection, no one is permitted to run or rush to the time
clock.
Page 51
<PAGE>
GROUP II.
Committing any of the following violations will be sufficient reason for
disciplinary action in the form of:
(1) Written warning for any first violation.
(2) Suspension of one (1) day for any second violation.
(3) Discharge for any third violation.
1. Threatening another employee on company premises at any time.
2. Refusing to perform or carry out reasonable instructions from your
foreperson or the superintendent.
3. Sleeping during working hours.
4. Absence from work for one (1) day without notifying your foreperson or
the superintendent at least fifteen (15) minutes after your scheduled starting
time.
5. Absenteeism (over one (1) per month). Not to exceed three (3) per any
six (6) month period. Partial days adding up to eight (8) hours is equal to one
(1) day absenteeism.
6. Knowingly ringing or tampering with the time card of another.
7. Disorderly conduct including profanity or abusive language.
8. Leaving company premises during working hours without permission from
your foreperson.
9. Smoking in prohibited areas.
10. Unacceptable record of chargeable accident and/or driving violations by
truck drivers (insurance records are to be used to substantiate).
11. Driving in a reckless or other unsafe manner on company property.
Page 52
<PAGE>
GROUP III.
Committing any of the following violations will be sufficient reason for
disciplinary action in the form of:
(1) Discharge for the first offense.
1. Being obviously under the influence of alcohol or narcotics, or
consuming alcohol or narcotics during working hours, including consuming alcohol
or narcotics off the premises and returning to work, possession of narcotics
and/or alcohol on company premises, excluding unopened containers of alcohol in
private vehicles.
2. Willfully damaging machinery, property, equipment, or materials.
3. Stealing. This includes the taking of any company tools, supplies,
materials, or scrap from company property without written permission from the
management.
4. Possession of weapons, loaded or unloaded (excluding private vehicles)
on company premises at any time.
5. Deliberately restricting production.
6. Falsification of any company records, including time cards, production
reports, etc.
7. Illegal, immoral or indecent conduct.
8. Insubordination.
9. Fighting or attempting bodily injury to another employee on company
property.
10. Falsifying application for employment regardless of employee's length
of service whenever the Company discovers the falsification.
11. Participating in a wildcat strike.
Page 53
<PAGE>
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding entered into this 28th day of February,
1996, by and between the Greensteel, Inc. ("Company") and Carpenter's District
Council of Western Pennsylvania ("Union").
All bargaining unit employees on the seniority roster on February 29, 1996,
will receive 2,000 shares of the common stock of PolyVision Corporation. The
stock will be distributed to all eligible as soon as possible. Employees may
elect to take such stock in joint name.
The employee shall be responsible for all employee income and payroll taxes
that may be due on such transfer and the Company shall be responsible for all
employee payroll taxes that may be due on such transfer.
The Company shall not be obligated to pay overtime pay base on the value of
the stock.
Intending to be legally bound the parties have signed their names on the
date and year first above written.
FOR THE COMPANY: FOR THE UNION:
- -------------------------------- --------------------------------
February 28, 1996
ATTENTION: MR. EARL REITH
CARPENTER'S DISTRICT COUNCIL OF WESTERN PA
495 Mansfield Avenue
Pittsburgh, Pennsylvania 15205
ATTENTION: MR. JACK BROOKS
CARPENTER'S DISTRICT COUNCIL OF WESTERN PA
495 Mansfield Avenue
Pittsburgh, Pennsylvania 15205
ATTENTION: MR. JOHN PINTO, JR.
WILLIAM S. MOORHEAD FEDERAL BUILDING
ROOM 2015
Page 54
<PAGE>
1000 LIBERTY AVENUE
PITTSBURGH, Pennsylvania 15222
MR. JOSEPH MENNITI
POLYVISION CORPORATION
866 N. Main Street
Wallingford, Connecticut 06492
SUBJECT: 1996 Negotiations
Gentlemen:
This is to confirm that in the settlement of the contract, the following
was understood and agreed to by Joe Menniti, Jack Brooks, Earl Reith and the
Federal Mediator, John Pinto.
1. Effective May 1, 1996, the general wage rate for all bargaining
unit employees would be $10.00 per hour.
2. The contract will be for three (3) years.
3. Employees may not contribute or participate in any way in the
PolyVision 401(k) plan.
March 1, 1996
1996 Negotiations
Page 55
<PAGE>
4. The present Greensteel Pension Plan, upon termination, shall be
distributed to the Plan Participants at the "GATT" rates" if lawful to do
so. If not, the Employer will use the PBGC rates.
Sincerely yours,
GREENSTEEL DIV. OF POLYVISION CORPORATION
Thomas E. Julock
Plant Manager
CC: N.Roy Anderson
Donald O'Connor
TEJ:mci
Page 56
Exhibit 10.26
MASTER CREDIT AGREEMENT
by and among
BANK OF BOSTON CONNECTICUT, as Bank
GREENSTEEL, INC., as Borrower,
POLYVISION CORPORATION, as Guarantor
April 25, 1996
<PAGE>
MASTER CREDIT AGREEMENT
This MASTER CREDIT AGREEMENT (the "Agreement") is made as of this 25th day
of April, 1996 by and among BANK OF BOSTON CONNECTICUT, a Connecticut savings
bank with its head office located at 31 Pratt Street, Hartford, Connecticut
06123 ("Bank") and GREENSTEEL, INC., a Delaware corporation, with its chief
executive office located at 866 North Main Street Extension, Wallingford,
Connecticut 06492 ("Borrower") and, to the extent of Section 4 hereof,
POLYVISION CORPORATION, a New York corporation, having its chief executive
office located at 866 North Main Street Extension, Wallingford, Connecticut
06492 ("Guarantor").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Bank provide Borrower with certain
credit facilities pursuant to which Bank would make loans and advances and
otherwise extend credit to Borrower; and
WHEREAS, Bank is willing to provide such credit facilities; and
WHEREAS, Bank and Borrower wish to document the terms and conditions on
which Bank will provide said credit facilities; and
WHEREAS, Borrower is a wholly-owned subsidiary of Guarantor; and
WHEREAS, Guarantor will derive substantial benefits from the loans,
advances and other extensions of credit to be made by Bank to Borrower; and
WHEREAS, in consideration of such benefits, Guarantor has agreed to
guarantee the payment and performance of Borrower's obligations to Bank in
respect of such credit facilities;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, Bank, Borrower and Guarantor hereby agree as follows:
SECTION 1. DEFINITIONS
All capitalized terms used in this Agreement, the Notes or the Other
Documents, or in any certificate, report or other document, instrument or
agreement executed or delivered pursuant hereto and thereto (unless otherwise
indicated therein) shall have the meanings ascribed to such terms below.
Section 1.1. "Account Debtors" means any Person obligated to Borrower with
respect to an Account Receivable.
-1-
<PAGE>
Section 1.2. "Account Receivable" or "Accounts Receivable" means the unpaid
portion of obligations as stated on the respective invoices issued to a customer
of Borrower or any of its Subsidiaries with respect to Inventory sold and
shipped or services performed or rendered in the ordinary course of business.
Section 1.3. "Affiliate" means any Person (i) which directly or indirectly
controls, or is controlled by, or is under common control with, Borrower,
Guarantor or any Subsidiary of Borrower or Guarantor; (ii) which directly or
indirectly beneficially owns or holds ten percent (10%) or more of any class of
voting stock of Borrower, Guarantor or any Subsidiary of Borrower or Guarantor;
or (iii) ten percent (10%) or more of the voting stock of which is directly or
indirectly beneficially owned or held by Borrower, Guarantor or any Subsidiary
of Borrower or Guarantor. The term "control" (and its correlative meanings
"controlled by" and "under common control with") as used in this Section 1.3.
means the possession, directly or indirectly, of the power to direct, or cause
the direction of, the management and policies of a Person, whether through
ownership of voting stock, by contract or otherwise.
Section 1.4. "Agreement" means this Master Credit Agreement, including all
schedules and exhibits attached hereto, and any and all amendments,
modifications and supplements hereto.
Section 1.5. "Bank" has the meaning set forth in the Preamble hereof.
Section 1.6. "Bank Affiliate" or "Bank Affiliates" means any Affiliate of
Bank or its parent bank holding company.
Section 1.7. "Bank Agents" has the meaning set forth in Section 13.2.5.
hereof.
Section 1.8. "Bankruptcy Code" means Title 11 of the United States Code,
entitled "Bankruptcy", as amended from time to time and all rules and
regulations promulgated thereunder.
Section 1.9. Base Rate" means the greater of (i) the rate of interest
announced from time to time by The First National Bank of Boston at its head
office located at 100 Federal Street, Boston, Massachusetts 02110 as its "Base
Rate", and (ii) the Federal Funds Effective Rate plus 1/2 of 1% per annum
(rounded upwards, if necessary, to the next 1/8 of 1%).
Section 1.10. "Beneficiary" means the beneficiary of any Letter of Credit
or Letter of Credit Guaranty issued by Bank for the account of Borrower or any
Subsidiary of Borrower.
Section 1.11. "Borrower" has the meaning set forth in the Preamble hereof.
-2-
<PAGE>
Section 1.12.Borrowing Base" means, as of any date as of which the amount
thereof shall be determined, an amount equal to the sum of (i) the Security
Value of Accounts Receivable as of such date and (ii) the Security Value of
Inventory as of such date.
Section 1.13. "Borrowing Base Certificate" has the meaning set forth in
Section 7.1.4. hereof.
Section 1.14. "Business Day" means any day other than a Saturday, Sunday,
legal holiday or other day on which banks in the State of Connecticut or
Commonwealth of Massachusetts are required or permitted by law to close.
Section 1.15. "Cash Management Agreements" shall have the meaning set forth
in Section 2.1.3. hereof and shall include any and all schedules and exhibits
thereto.
Section 1.16. "Capital Expenditures" means, without duplication, for any
period, the aggregate of all expenditures on a consolidated basis including
deposits (whether paid in cash or property or accrued as liabilities and
including the aggregate amount of all principal payments due for the entire term
of all Capital Leases that are required to be capitalized on the balance sheet)
made by Borrower and its Subsidiaries that, in conformity with GAAP, are
required to be included in the property, plant, equipment, or similar fixed
asset account.
Section 1.17. "Capital Lease" means any lease of any property (whether
real, personal or mixed) that, in conformity with GAAP, should be accounted for
as a capital lease.
Section 1.18. "Closing Date" means the date hereof.
Section 1.19. "Code" means the Internal Revenue Code of 1986 and the rules
and regulations promulgated thereunder, collectively, as the same may from time
to time be supplemented or amended and remain in effect.
Section 1.20. "Collateral" means all collateral received or delivered as
security for the Obligations by the Borrower pursuant to, and as more
particularly described in, the Security Agreement, the Pledge Agreement, the
Mortgage, the Letter of Credit Applications and the Collateral Disclosure List
and any property or interest provided in addition to or in substitution for any
of the foregoing.
Section 1.21. "Collateral Disclosure List" has the meaning set forth in
Section 3.1. hereof.
Section 1.22. "Commitment Amount" means the aggregate principal amount of
THREE MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($3,800,000.00) or any
lesser amount, including zero (0), resulting from (i) a reduction or termination
of such amount in accordance with Section 2.1.5. or Section 13.1. or (ii) a
reserve
-3-
<PAGE>
against such amount in accordance with Section 2.2.1. (b) in respect of the
Stand-by Letter of Credit.
Section 1.23. "Contractual Obligation" means, as applied to any Person, any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.
Section 1.24. "Controlled Group" means all trades or businesses (whether or
not incorporated) under common control that, together with Borrower, are treated
as a single employer under Section 414(b) or 414(c) of the Code or Section 4001
of ERISA.
Section 1.25. "Credits Outstanding" means, as of any date as of which the
amount thereof shall be determined, the aggregate undrawn amount of all issued
and outstanding Letters of Credit and Letter of Credit Guaranties but excluding
(i) any amounts which constitute unpaid Reimbursement Obligations as of such
date and (ii), as long as no Default or Event of Default shall have occurred and
be outstanding as of such date, the face amount of the Stand-by Letter of
Credit.
Section 1.26. "Credit Parties" means Borrower and Guarantor, collectively.
Section 1.27. "Credit Party" means Borrower or Guarantor, individually.
Section 1.28. "Default" means an event or condition that, but for the lapse
of time, the giving of notice, or both, would constitute an Event of Default if
that event or condition was not cured or removed within any applicable grace or
cure period.
Section 1.29. "Default Rate" means the rate of interest determined by
increasing the rate of interest otherwise chargeable under this Agreement to a
rate which shall be the lower of (i) the highest rate allowed by law or (ii)
four percentage points (4%) above the rate of interest which would otherwise be
in effect under this Agreement.
Section 1.30. "Disqualified Accounts Receivable" means:
a. An Account Receivable which does not arise out of a bona fide sale
of goods or rendering of services of the kind sold or rendered by Borrower
in the ordinary course of its business; or
b. An Account Receivable which remains unpaid for more than ninety
(90) days after the invoice date or sixty (60) days after the due date; or
c. An Account Receivable owing by an Account Debtor if twenty percent
(20%) or more of the dollar value of all Accounts Receivable owed by such
Account Debtor remain unpaid for more than sixty (60) days after the due
date; or
-4-
<PAGE>
d. An Account Receivable with respect to which the Account Debtor is a
director, officer, employee or agent of Borrower or is a Subsidiary or an
Affiliate of Borrower; or
e. An Account Receivable with respect to which any covenant,
representation or warranty set forth in this Agreement has been breached;
or
f. An Account Receivable with respect to which the Account Debtor has
commenced a voluntary case in bankruptcy, or made an assignment for the
benefit of creditors, or if a decree or order for relief has been entered
by a court having jurisdiction over the Account Debtor in an involuntary
case in bankruptcy, or if any petition or other application for relief in
bankruptcy has been filed against the Account Debtor, or if the Account
Debtor has failed, ceased business operations, become insolvent or
consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or all or substantially all of its properties or assets;
or
g. An Account Receivable with respect to which the goods giving rise
thereto have not been shipped and delivered to and accepted by the Account
Debtor or the services giving rise thereto have not been performed by
Borrower and accepted by the Account Debtor or if the Account Receivable
does not otherwise represent a final sale; or
h. An Account Receivable owing by a single Account Debtor located
outside of the United States of America, Canada or Puerto Rico unless such
Account Receivable is a Secured Foreign Receivable or an Insured Foreign
Receivable; or
i. An Account Receivable with respect to which the sale giving rise
thereto is on a bill-and-hold, sale-and-return, sale on approval,
consignment or other repurchase or return basis; or
j. An Account Receivable with respect to which the Account Debtor is
the United States of America or any department, agency or office thereof
unless Borrower assigns its right to payment of such Account Receivable to
Bank in accordance with the Federal Assignment of Claims Act of 1940; or
k. An Account Receivable to the extent that the Account Debtor has
paid or advanced to Borrower any deposit or other advance in respect of the
payment thereof; or
l. An Account Receivable to the extent that the Account Debtor has
earned or accrued, or is due, any rebate, credit or other allowance by
Borrower; or
m. An Account Receivable to the extent of any amounts owed by Borrower
to such Account Debtor; or
-5-
<PAGE>
n. An Account Receivable in which Bank does not possess a valid and
perfected first priority security interest; or
o. An Account Receivable owing by an Account Debtor located in a
jurisdiction in which Borrower has not complied with any laws which might
restrict Borrower's ability to collect such Account Receivable; or
p. An Account Receivable which Bank, in its reasonable credit
judgment, excludes from the calculation of the Borrowing Base under Section
2.1.4. hereof.
Section 1.31. "Disqualified Inventory" means:
a. Inventory in which Bank does not possess a valid and perfected
first priority security interest; or
b. Inventory which is not in good, saleable and readily usable
condition or is obsolete, slow moving or unmerchantable; or
c. Inventory which is located outside of, or in transit to, the United
States of America, Canada or Puerto Rico; or
d. Inventory which has been produced in violation of the Fair Labor
Standards Act and subject to the so-called "hot goods" provisions contained
in 29 U.S.C. 215 (a); or
e. Inventory with respect to which any covenant, representation or
warranty set forth in this Agreement has been breached; or
f. Inventory which Bank, in its reasonable credit judgment, excludes
from the calculation of the Borrowing Base under Section 2.1.4. hereof; or
g. Inventory which consists of Work In Process.
Section 1.32. "Dividend" or "Dividends" means the payment of any dividend
or other distribution in respect of the capital stock of a corporation in cash
or other property (excepting distribution in the form of such stock) or the
redemption or acquisition of any capital stock or security of a corporation.
Section 1.33. "Drawing" or "Drawings" means any payment(s) or
disbursement(s) made by Bank under any Letter of Credit or any Letter of Credit
Guaranty issued by Bank for the account of Borrower honoring any demand for
payment presented by the Beneficiary of such Letter of Credit or such Letter of
Credit Guaranty in accordance with the terms thereof.
-6-
<PAGE>
Section 1.34. "Eligible Account Receivable" means an Account Receivable
which is NOT a Disqualified Account Receivable.
Section 1.35. "Eligible Inventory" means that portion of Borrower's
Inventory which is NOT Disqualified Inventory.
Section 1.36. "Encumbrance or "Encumbrances" means any security interest,
mortgage, pledge, lien, claim, charge, encumbrance, title retention agreement,
lessor's interest under a financing lease or any analogous arrangements in any
of Borrower's properties or assets, intended as, or having the effect of,
security.
Section 1.37. "Environmental Certificate" has the meaning set forth in
Section 5.2.11. hereof.
Section 1.38. "Environmental Laws" means any and all laws, statutes,
ordinances, rules, regulations, orders, or determinations of any Federal, state
or local governmental body, instrumentality or agency pertaining to the
environment, including without limitation, the Clean Water Act, the Clean Air
Act, as amended, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), and as may be further amended (all
together herein called "CERCLA"), the Federal Water Pollution Control
Amendments, the Resource Conservation and Recovery Act of 1976, as amended
("RCRA"), the Hazardous Materials Transportation Act of 1975, as amended, the
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, and any comparable or similar environmental laws of the State of
Connecticut and any other state in which Borrower maintains manufacturing
facilities or operations or other business premises at which Hazardous Materials
are located or stored. Likewise, the terms "hazardous substance," "release," and
"threatened release" herein referenced in connection with Environmental Laws
shall have the meanings specified in CERCLA and the terms "solid waste" and
"dispose" (or "disposed") shall have the meanings specified in RCRA; provided,
however, in the event either CERCLA or RCRA is amended so as to broaden the
meaning of any term defined therein, such broader meaning shall apply subsequent
to the effective date of such amendment, and provided further that, to the
extent the laws of any state which establish a meaning for "hazardous
substance," "release," "solid waste" or "disposal" which is broader than that
specified in either CERCLA or RCRA, such broader meaning shall apply.
Section 1.39. "Equipment" means all of Borrower's machinery, equipment,
office machinery, furniture, trade fixtures, conveyors, tools, materials,
storage and handling equipment, computer equipment and hardware, including
central processing units, terminals, drives, memory units, printers, keyboards,
screens, peripherals and input or output devices, automotive equipment, trucks,
molds, dies, stamps, motor vehicles and other equipment of every kind and
nature.
-7-
<PAGE>
Section 1.40. "ERISA" means the Employee Retirement Income Security Act of
1974 and the rules and regulations promulgated thereunder; collectively, as the
same may from time to time be supplemented or amended and remain in effect.
Section 1.41. "Event of Default" has the meaning set forth in Section 11.
hereof.
Section 1.42. "Exchange Act" means a the Securities Exchange Act of 1934,
as amended.
Section 1.43. "Extension of Credit" means any Loan, Letter of Credit,
Letter of Credit Guaranty or any other loan, advance or extension of credit by
Bank to Borrower under this Agreement or the Other Documents.
Section 1.44. "Facility Fee" has the meaning set forth in Section 5.5.
hereof.
Section 1.45. "Federal Funds Effective Rate" means for any day, a
fluctuating interest rate per annum equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by The First National Bank of Boston from three (3)
Federal funds brokers of recognized standing selected by The First National Bank
of Boston.
Section 1.46. "FIFO" means the first in, first out method of valuing
inventory.
Section 1.47. "Financial Statement" or "Financial Statements" means, as of
any date, or with respect to any period, as applicable, a financial report or
reports consisting of (i) a balance sheet; (ii) an income statement; (iii) a
statement of cash flow; and (iv) a statement of changes in stockholders' equity.
Section 1.48. "Fiscal Quarter" means the fiscal period ending on April 30,
July 31, September 30 and January 31 in each Fiscal Year.
Section 1.49. "Fiscal Year" means the twelve (12) month fiscal period
ending on April 30 in each year.
Section 1.50. "Fixed Assets" means, as of any date, the Mortgaged Property
and the Equipment to the extent that Borrower is the record owner of any of the
foregoing as of any date.
Section 1.51. "Fixed Asset Value" means, as of any date, the sum of (i) 70%
of the forced liquidation value of Borrower's Equipment as of such date plus
(ii) 75% of the fair market value of that portion of Borrower's Fixed Assets
which consist of real property as of
-8-
<PAGE>
such date, all of the foregoing as determined by reference to the most recent
appraisals of the Fixed Assets obtained by Bank.
Section 1.52. "Forecasts" has the meaning set forth in Section 4.7. hereof.
Section 1.53. "Foreign Credit Insurer" means either (i) collectively, the
Foreign Credit Insurance Association and the Export-Import Bank of the United
States of America or (ii) Lloyd's of London, or any private insurer approved in
writing by Bank.
Section 1.54. "GAAP" means generally accepted accounting principles as set
forth in Statement on Auditing Standards No. 69 entitled "The Meaning of
`Present Fairly in Conformity with Generally Accepted Accounting Principles' in
the Independent Auditor's Report" issued by the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board that are applicable to the circumstances as of the date of
determination.
Section 1.55. "Governmental Authority" means any Federal, state, local or
foreign court, commission or tribunal, or governmental, administrative or
regulatory agency, department, authority, instrumentality or other body.
Section 1.56. "Government Obligations" means securities which are general
obligations of the United States of America or which are unconditionally
guaranteed by the United States of America as to timely payment of principal and
interest.
Section 1.57. "Government Contract" means any contract for the purchase of
goods or services by the United States of America or any department, agency or
office thereof.
Section 1.58. "Guarantees" means, as applied to Borrower and its
Subsidiaries, all guarantees, endorsements or other contingent or surety
obligations with respect to obligations of any other Person, whether or not
reflected on the consolidated balance sheet of Borrower and its Subsidiaries,
including any obligation to furnish funds, directly or indirectly (whether by
virtue of partnership arrangements, by agreement to keep-well or otherwise),
through the purchase of goods, supplies or services, or by way of stock
purchase, capital contribution, advance or loan, or to enter into a contract for
any of the foregoing, for the purpose of payment of obligations of any other
Person.
Section 1.59. "Guarantor" means Polyvision Corporation, a New York
corporation, having its chief executive office located at 866 North Main Street
Extension, Wallingford, Connecticut 06492.
Section 1.60. "Guarantor Dividends" means, for any period for which the
amount thereof shall be determined, the aggregate amount of Dividends paid by
Borrower to Guarantor as permitted by Section 8.7. hereof.
-9-
<PAGE>
Section 1.61. "Guaranty" has the meaning set forth in Section 3.2.2.
hereof.
Section 1.62. "Hazardous Materials" means (i) any chemical, compound,
material, mixture or substance that is now or hereafter defined as or included
in the definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous waste", "restricted hazardous waste", or "toxic
substances" or terms of similar import under any applicable Federal, state or
local law or under the regulations adopted or promulgated pursuant thereto,
including, without limitation, Environmental Laws; (ii) any oil, petroleum or
petroleum derived substance, any drilling fluids, produced waters and other
wastes associated with the exploration, development or production of crude oil,
any flammable substances or explosives, any radioactive materials, any hazardous
wastes or substances, any toxic wastes or substances or any other materials or
pollutants which could cause any of Borrower's properties or assets to be in
violation of any Environmental Laws; (iii) asbestos in any form, urea
formaldehyde foam insulation, electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty (50) parts per million; and (iv) any other chemical, material or
substance, exposure to, or disposal of, which is now or hereafter prohibited,
limited or regulated by any Federal, state or local governmental body,
instrumentality or agency.
Section 1.63. "Indebtedness" means, as applied to any Person, without
duplication: (a) all indebtedness for borrowed money; (b) that portion of
obligations with respect to Capital Leases that is properly classified as a
liability on a balance sheet in conformity with GAAP; (c) notes payable and
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more than six months from the date the obligation is incurred or is evidenced by
a note or similar written instrument; and (e) all indebtedness secured by any
Encumbrance on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is nonrecourse to the credit of that Person.
Section 1.64. "Insured Foreign Receivable" means an Account Receivable
(other than a Secured Foreign Receivable) that arises from a sale of goods to an
Account Debtor having its principal assets or place of business outside of the
United States of America, Canada or Puerto Rico, so long as a Foreign Credit
Insurer has assumed the risk of nonpayment due to the Account Debtor's financial
inability to pay and due to foreign currency restrictions and political matters
in the country of such Account Debtor, and Borrower has promptly and properly
submitted to the Foreign Credit Insurer proof of loss with respect to all
Accounts Receivable of such Account Debtor for which a claim could be submitted
under the foreign credit insurance policy insuring Borrower's sales to such
Account Debtor.
Section 1.65. "Inventory" means all goods, merchandise, raw materials,
supplies, work in process, finished goods and other tangible personal property
held by Borrower for processing, sale or lease or furnished or to be furnished
by Borrower under contracts of service or to be used or consumed in Borrower's
business.
-10-
<PAGE>
Section 1.66. "Inventory Cap" has the meaning set forth in Section 1.107.
hereof.
Section 1.67. "Investment" means, as applied to Borrower and its
Subsidiaries, the purchase or acquisition of (i) any share of capital stock,
partnership interest, evidence of indebtedness or other equity security of any
other Person, or (ii) all or any material portion of the properties and assets
of any Person, any loan, advance or extension of credit to, or contribution to
the capital of, any other Person, any real estate held for sale or investment,
any commodities futures contracts held other than in connection with bona fide
hedging transactions, any other investment in any other Person, and the making
of any commitment or acquisition of any option to make an Investment.
Section 1.68. "Letter of Credit" or "Letters of Credit" means any letter(s)
of credit issued by Bank for the account of Borrower, including the Stand-by
Letter of Credit, and shall include any Letter of Credit as it may be amended,
modified or extended from time to time.
Section 1.69. "Letter of Credit Application" has the meaning set forth in
Section 2.2.2. hereof.
Section 1.70. "Letter of Credit Guaranty" means a guaranty issued by Bank
or a Bank Affiliate to guaranty the payment of a letter of credit to a Bank
which has issued such letter of credit for the account of Borrower or a
Subsidiary of Borrower.
Section 1.71. "Line of Credit" has the meaning set forth in Section 2.1.1.
hereof.
Section 1.72. "Loan" means any Revolving Loan or the Term Loan.
Section 1.73. "Loans" means each Revolving Loan and the Term Loan.
Section 1.74. "Loan Account" means the account established by Borrower with
Bank or a Bank Affiliate for purposes of administering the Line of Credit.
Section 1.75. "Lockbox Account" has the meaning set forth in Section
10.1.1. hereof.
Section 1.76. "Material Adverse Effect" means (i) a material adverse effect
upon the business, operations, properties, assets or condition (financial or
otherwise) of Borrower and its Subsidiaries, taken as a whole, or (ii) a
material adverse effect on the ability of Borrower to perform its obligations
under this Agreement, the Notes or the Other Documents or the ability of Bank to
enforce or collect any of the Obligations including the obligations of Guarantor
to perform or of Bank to enforce the Guaranty. In determining whether any
individual event would result in a Material Adverse Effect, notwithstanding that
such event does not of itself have such an effect, a Material Adverse Effect
shall be deemed to have occurred if the cumulative effect of such event and all
other then existing events would result in a Material Adverse Effect.
-11-
<PAGE>
Section 1.77. "Maturity Date" has the meaning set forth in Section 2.3.3.
hereof.
Section 1.78. "Minimum Availability" means, as of any date as of which the
amount thereof shall be determined, an amount equal to the difference between
the Borrowing Base as of such date and the aggregate amount of all Extensions of
Credit under the Line of Credit as of such date (calculated after taking into
account any Extensions of Credit requested by Borrower as of such date).
Section 1.79. "Mortgage" means each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deed of trust, collateral assignments of leases
or other real estate security documents delivered by Borrower to Bank with
respect to the Mortgaged Property, as it may be amended, modified or
supplemented from time to time.
Section 1.80. "Mortgaged Property" means the real property, together with
all improvements thereon, owned by Borrower and listed on Schedule 1.80.
attached hereto.
Section 1.81. "Note" means the Revolving Credit Note or the Term Note.
Section 1.82. "Notes" means the Revolving Credit Note and the Term Note.
Section 1.83. "Notice of Borrowing" has the meaning set forth in Section
2.1.2. hereof.
Section 1.84. "Obligations" means any and all loans, advances,
indebtedness, liabilities, obligations, covenants or duties of Borrower to Bank
of any kind or nature, including obligations to pay money and to perform acts or
refrain from taking action, whether arising under a loan, lease, credit card,
line of credit, letter of credit, guaranty, indemnity, confirmation, acceptance,
currency exchange, interest rate protection, overdraft or other type of
financing arrangement, and any and all extensions and renewals thereof, and
modifications and amendments thereto, whether in whole or in part, whether
created directly by Bank or acquired by assignment, purchase, discount or
otherwise, whether any of the foregoing are direct or indirect, joint or
several, absolute or contingent under, due or to become due, now existing or
hereafter arising, whether any present or future agreement or instrument, and
whether or not evidenced by a writing and specifically including but not being
limited to (i) the unpaid principal amount outstanding at any time under the
Notes, plus all accrued and unpaid interest thereon, together with all fees,
expenses, including attorneys' fees, penalties, and other amounts owing by or
chargeable to by Borrower under this Agreement, the Notes or the Other Documents
and (ii) unpaid Reimbursement Obligations.
Section 1.85. "Other Documents" means the Collateral Disclosure List, the
Security Agreement, the Mortgage, the Pledge Agreement, the Cash Management
Agreements, the Guaranty, the Stock Pledge and the Letter of Credit Applications
and any other document, agreement or instrument executed by any Credit Party in
connection with this Agreement and any Extension of Credit and any and all
amendments, modifications and supplements thereto.
-12-
<PAGE>
Section 1.86. "Outstanding Amount" means, as of any date as of which the
amount thereof shall be determined, the outstanding principal amount of the Line
of Credit as of the date of determination.
Section 1.87. "PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or part of its functions under ERISA.
Section 1.88. "Permitted Capital Expenditures" has the meaning set forth in
Section 8.9. hereof.
Section 1.89. "Permitted Encumbrances" has the meaning set forth in Section
8.5. hereof.
Section 1.90. "Permitted Indebtedness" has the meaning set forth in Section
8.1. hereof.
Section 1.91. "Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture or other entity of whatever nature, whether public or private.
Section 1.92. "Plan" means, at any time, an employee pension or other
benefit plan that is subject to Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either (i) maintained by
Borrower or any member of the Controlled Group for employees of Borrower or any
member of the Controlled Group or (ii) if such plan is established, maintained
pursuant to a collective bargaining agreement or any other arrangement under
which more than one (1) employer makes contributions and to which Borrower or
any member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five (5) plan years made
contributions.
Section 1.93. "Pledge Agreement" means the pledge agreement to be executed
and delivered by Borrower in favor of Bank, as it may be amended, modified or
supplemented from time to time.
Section 1.94. "Post Closing Matters" has the meaning set forth on Section
11.1.(m) hereof.
Section 1.95. "Qualifications" means, with respect to any report of
independent public accountants covering any Financial Statements of Borrower and
its Subsidiaries, a qualification to such report (such as a "subject to" or
"except for" statement therein) (i) resulting from a limitation on the scope of
examination of the Financial Statements or the underlying data; (ii) as to the
capability of the Person whose Financial Statements are certified to continue
operations as a going concern; or (iii) which could be eliminated by changes in
the Financial Statements or notes thereto covered by such report (such as, by
the creation of or increase in a reserve or a decrease in the carrying value of
assets) and which if so eliminated by the making
-13-
<PAGE>
of any such change and after giving effect thereto would constitute of and Event
of Default; provided that neither of the following shall constitute a
Qualification: (a) a consistency exception relating to a change in accounting
principles with which the independent public accountants for the Person whose
Financial Statements are being examined have concurred or (b) a qualification
relating to the outcome or disposition of any uncertainty, including but not
limited to threatened litigation, pending litigation being contested in good
faith, pending or threatened claims or other contingencies, the impact of which
litigation, claims, contingencies or uncertainties cannot be determined with
sufficient certainty to permit certification in such Financial Statements.
Section 1.96. "Qualified Investments" means, as applied to Borrower and its
Subsidiaries, investments in (i) notes, bonds or other obligations of the United
States of America or any agency thereof that as to principal and interest
constitute direct obligations of or are guaranteed by the United States of
America; (ii) certificates of deposit or other deposit instruments or accounts
of Banks or trust companies organized under the laws of the United States or any
state thereof that have capital and surplus of at least ONE HUNDRED MILLION AND
NO/100 DOLLARS ($100,000,000.00); (iii) commercial paper that is rated not less
than prime-one or A-1 or their equivalents by Moody's Investors Service, Inc. or
Standard & Poor's Corporation, respectively, or their successors; and (iv) any
repurchase agreement secured by any one (1) or more of the foregoing.
Section 1.97. "Reimbursement Obligations" means, as of any date as of which
the amount thereof shall be determined, the aggregate obligation of Borrower, as
of such date, to reimburse Bank in respect of Letters of Credit in accordance
with Section 2.2.4 hereof.
Section 1.98. "Release" means any release, emission, disposal, leaching, or
migration into the environment, (including, without limitation, the abandonment
or disposal of any barrels, containers, or other closed receptacles containing
any Hazardous Materials), or into or out of any property owned, occupied or used
by Borrower.
Section 1.99. "Reportable Event" means any of the events described in
Section 4043(b) of ERISA.
Section 1.100. "Revolving Credit Period" means the period beginning on the
Closing Date and extending through and including the Revolving Credit
Termination Date or such earlier date on which the obligation of Bank to make
Revolving Loans is terminated or the Commitment Amount is reduced to zero (0) in
accordance with the terms hereof.
Section 1.101. "Revolving Credit Termination Date" means (i) August 31,
1997 and (ii) any subsequent date to which the Revolving Credit Termination Date
may be extended under Section 2.1.11. hereof.
Section 1.102. "Revolving Credit Note" has the meaning set forth in Section
2.1.6. hereof.
-14-
<PAGE>
Section 1.103. "Revolving Loan" means the loan(s) and advance(s) which
Borrower requests or is deemed to have requested pursuant to Section 2.1.1.
hereof.
Section 1.104. "Secured Foreign Receivable" means an Account Receivable
(other than an Insured Foreign Receivable) that arises from the sale of goods to
an Account Debtor having its principal assets or place of business outside of
the United States of America, Canada or Puerto Rico so long as Bank has received
in respect of such Account Receivable a letter of credit or similar guaranty of
payment in form and substance and issued or confirmed by a financial institution
satisfactory to Bank and its legal counsel that has not expired, been revoked or
terminated, and has been pledged to, and had the proceeds thereof assigned to,
Bank.
Section 1.105. "Security Agreement" means the security agreement to be
executed and delivered by Borrower in favor of Bank, as it may be amended,
modified or supplemented from time to time.
Section 1.106. "Security Value of Accounts Receivable" means, as of any
date as of which the amount thereof shall be determined, eighty-five percent
(85%) (or such lesser percentage as Bank may determine in its reasonable credit
judgment) of the Eligible Account Receivables of Borrower as of the date of
determination.
Section 1.107. "Security Value of Inventory" means, as of any date as of
which the amount thereof shall be determined, the lesser of (i) forty percent
(40%) (or such lesser percentage as Bank may determine from time to time in its
reasonable credit judgment) of Borrower's Eligible Inventory as of the date of
determination valued on a FIFO basis at the lower of cost or market value, or
(ii) TWO MILLION AND NO/100 DOLLARS ($2,000,000.00) (the "Inventory Cap").
Section 1.108. "Solvent" means, when used with respect to any Person, that
as of the date as to which the Person's solvency is to be determined:
(a) the fair saleable value of such Person's properties and assets is
in excess of the total amount of its liabilities (including contingent
liabilities) as they become absolute and matured;
(b) it has sufficient capital to conduct its business; and
(c) it is able to meet its debts as they mature.
Section 1.109. "Stock Pledge" means the stock pledge agreement to be
executed and delivered by the Guarantor in favor of Bank, as it may be amended,
modified or supplemented from time to time.
Section 1.110. "Subordinated Indebtedness" means Indebtedness, whether now
existing or hereafter arising, with respect to which the payment of the
principal of and interest
-15-
<PAGE>
on is expressly subordinated in right of payment, in form and on terms approved
by Bank in writing, to the prior payment in full of the Obligations.
Section 1.111. "Subsidiary" means any Person of which fifty percent (50%)
or more of the ordinary voting power for the election of a majority of the
members of the board of directors or other governing body of such Person is held
or controlled by Borrower or a Subsidiary of Borrower; or any other such
organization the management of which is directly or indirectly controlled by
Borrower or Subsidiary of Borrower through the exercise of voting power or
otherwise; or any joint venture, whether incorporated or not, in which Borrower
has a fifty percent (50%) or more ownership interest. The term "control" (and
its correlative meanings "controlled by" and "under common control with") as
used in this Section means the possession, directly or indirectly, of the power
to direct, or cause the direction of, the management and policies of a Person,
whether through ownership of voting stock, by contract or otherwise.
Section 1.112. "Stand-by Letter of Credit" has the meaning set forth in
Section 2.2.1.(b) hereof.
Section 1.113. "Term Note" has the meaning set forth in Section 2.3.2.
hereof.
Section 1.114. "Term Loan" has the meaning set forth in Section 2.3.1.
hereof.
Section 1.115. "Uniform Customs and Practice" means the Uniform Customs and
Practice for Documentary Credits (1993) Revision, International Chamber of
Commerce Publication No. 500.
Section 1.116. "Work in Process" means as of any date of which the amount
thereof shall be determined, that portion of Borrower's Inventory which
constitutes work-in-process.
SECTION 2. THE CREDIT FACILITIES
Section 2.1. Line of Credit.
Section 2.1.1. Revolving Loans. Upon the execution of this Agreement, Bank
agrees to extend to Borrower a line of credit, so that as long as no Default or
Event of Default has occurred and is continuing, Borrower may borrow, repay and
reborrow, on a revolving basis in one (1) or more Revolving Loans from time to
time prior to the close of business on the Revolving Credit Termination Date,
amounts which together with the amount of (i) Credits Outstanding and (ii)
unpaid Reimbursement Obligations deemed to be Revolving Loans under this Section
2.1.1., do not exceed in the aggregate at any one time outstanding the lesser of
the Borrowing Base or the Commitment Amount in effect from time to time (the
"Line of Credit"). Bank shall have the right, in its reasonable credit judgment,
to deem any unpaid Reimbursement Obligations or and any other payments,
deposits, guaranties or indemnifications
-16-
<PAGE>
made by Bank under any letter of credit, reimbursement agreement, acceptance,
guaranty or similar instrument to be Revolving Loans, and Bank may, in its
reasonable credit judgment, establish such reserves as it deems appropriate
against any present or future obligation of Bank to make payment, to deposit or
to perform in respect of any of the same. Bank may, in its reasonable credit
judgment, fund such reserves and/or charge the same to the Loan Account at such
time as it deems appropriate. Notwithstanding any provision of this Agreement to
the contrary, all Revolving Loans, any unpaid Reimbursement Obligations, and all
other payments, deposits, guaranties or indemnifications deemed to be Revolving
Loans by Bank hereunder, shall constitute one obligation of Borrower to Bank,
secured by Bank's security interest in the Collateral.
Section 2.1.2. Notice and Manner of Borrowing. Except as provided in the
Cash Management Agreements, whenever Borrower desires to obtain a Revolving
Loan, Borrower shall notify Bank (which notice shall be irrevocable) by telex,
telegraph, telephone or telecopier received no later than 2:00 p.m. on the date
on which the requested Revolving Loan is to be made. Such notice shall specify
the effective date and amount of each Revolving Loan subject to the limitations
set forth in Section 2.1.1. hereof. Each such notification (a "Notice of
Borrowing") shall be immediately followed by a written confirmation thereof by
Borrower in substantially the form of Exhibit A attached hereto; provided,
however, that if such written confirmation differs in any material respect from
the action taken by Bank, the records of Bank shall control absent manifest
error. Subject to the terms and conditions of this Agreement, and provided that
the Borrowing Base is sufficient to permit Bank to make the requested Revolving
Loan, Bank shall make each Revolving Loan on the effective date specified
therefor by crediting the amount of such Revolving Loan to the Loan Account.
Section 2.1.3. Administration of the Line of Credit. Notwithstanding any
provision of this Agreement to the contrary, Borrower and Bank hereby
acknowledge and agree that the purpose of the Line of Credit and the making of
loans and advances thereunder is to fund Borrower's daily cash requirements. In
furtherance thereof, Borrower hereby authorizes Bank, subject to the terms,
conditions and limitations of this Agreement and the cash management, lockbox
and similar agreements (the "Cash Management Agreements") which Bank requires
Borrower to execute and deliver from time to time in connection with the
administration of the Line of Credit, to automatically make Revolving Loans in
such amounts as may be necessary to fund Borrower's daily cash requirements. In
addition, Bank hereby agrees to apply and credit against the Line of Credit any
amounts which are deposited on any Business Day in the Lockbox Account in
accordance with the terms, conditions and limitations of this Agreement and the
Cash Management Agreements. Borrower acknowledges that Bank shall have the right
to terminate its obligations and agreements under this Section 2.1.3. upon the
occurrence of a Default or Event of Default or in accordance with the terms of
the Cash Management Agreements.
Section 2.1.4. Calculation of Borrowing Base. The Borrowing Base as of any
time shall be calculated by Bank using the most recent Borrowing Base
Certificate and other financial reports delivered by Borrower to Bank under
Section 7.1. hereof. Bank shall
-17-
<PAGE>
have the right, in its reasonable credit judgment, and at any time and for any
reason, to exclude any items, types or categories of Accounts Receivable or
Inventory from the Borrowing Base and to reduce the dollar amount of (i)
Eligible Accounts Receivable by the amount of discounts, credits, allowances and
returns of any kind then outstanding, issued, granted, owing, accrued or liable
to be accrued or (ii) Eligible Inventory by the amount of special order goods,
advertising, packaging, parts, supplies, tooling or similar items. Any Accounts
Receivable or Inventory which have been so excluded as well as any Accounts
Receivable or Inventory which are or have become Disqualified Accounts
Receivable or Disqualified Inventory for any other reason shall remain as
collateral for the Obligations notwithstanding such exclusion or
disqualification.
Section 2.1.5. Reduction of Commitment Amount. Borrower may from time to
time, by written notice delivered to Bank at least five (5) Business Days prior
to the date of the requested reduction, reduce by integral multiples of ONE
HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) any unborrowed portion of the
Commitment Amount. No reduction of the Commitment Amount shall be subject to
reinstatement.
Section 2.1.6. Revolving Credit Note. Revolving Loans shall be evidenced by
a promissory note executed by Borrower in substantially the form attached hereto
as Exhibit B (the "Revolving Credit Note"), with all blanks therein
appropriately completed, payable to the order of Bank, which Revolving Credit
Note is hereby incorporated herein by reference and made a part hereof.
Section 2.1.7. Payment of Principal. The aggregate unpaid principal amount
of all Revolving Loans, together with accrued and unpaid interest thereon, as
evidenced by the Revolving Credit Note, shall, unless sooner accelerated by Bank
following the occurrence of an Event of Default, be repaid by Borrower on the
Revolving Credit Termination Date.
Section 2.1.8. Interest. The aggregate unpaid principal amount of all
Revolving Loans, as evidenced by the Revolving Credit Note, shall bear interest
at a fluctuating per annum rate equal to the Base Rate as in effect from time to
time, plus one percentage point (1.0%). Interest shall be due and payable (i) in
arrears commencing June 1, 1996 and continuing on the first (1st) day of each
succeeding calendar month (or portion thereof) until the principal amount of the
Revolving Credit Note is paid in full and (ii) when the principal amount of the
Revolving Credit Note is paid in full (whether at maturity, upon acceleration,
upon prepayment or otherwise).
Section 2.1.9. Record of Revolving Loans. Each Revolving Loan shall be
recorded on the books maintained by Bank with respect to the Loan Account by
Bank. Bank shall also record on such books all payments made by Borrower on the
Revolving Credit Note, interest and expenses and other appropriate debits and
credits as herein provided. Bank shall from time to time render and send to
Borrower a statement of the Loan Account showing the outstanding aggregate
principal balance of the Revolving Credit Note, together with interest and other
appropriate debits and credits as of the date of the statement. The statement of
Loan
-18-
<PAGE>
Account shall be considered correct in all respects and accepted by and be
conclusively binding upon Borrower unless Borrower makes specific written
objections thereto within sixty (60) days after the date the statement of the
Loan Account is received or later presents objective evidence demonstrating a
manifest error by Bank in the preparation of the statement of the Loan Account.
Bank may also record and endorse on Schedule A attached to and forming a part of
the Revolving Credit Note appropriate notations evidencing (i) the date and
amount of each Revolving Loan to be evidenced by the Revolving Credit Note and
(ii) the date and amount of each payment of principal made by Borrower with
respect thereto; provided, however, that the failure of Bank to make such
notation shall not limit or otherwise affect the obligations of Borrower under
the Revolving Credit Note or this Agreement. Bank is hereby irrevocably
authorized by Borrower to so endorse such Schedule A and to attach to and make a
part of the Revolving Credit Note a continuation of such Schedule A as and when
required.
Section 2.1.10. Termination. The Line of Credit and Bank's obligation to
lend thereunder shall terminate on the Revolving Credit Termination Date, at
which point all of the sums due and owing under the Line of Credit shall be
immediately due and payable, unless the Line of Credit is renewed in accordance
with Section 2.1.11. hereof.
Section 2.1.11. Renewal. Bank may, in its sole and absolute discretion,
upon written agreement with Borrower, renew the Line of Credit for additional
periods of time (but not in excess of one (1) year at any one time) on such
terms and conditions as it may elect; provided, however, that Bank hereby agrees
that it shall provide notice to Borrower of its intention not to renew the Line
of Credit at least thirty (30) days prior to the Revolving Credit Termination
Date. In the event Bank agrees to a renewal of the Line of Credit, the Revolving
Credit Termination Date shall be extended for a corresponding period.
Section 2.1.12. Prepayment. The Line of Credit can be prepaid, in whole or
in part, at any time without penalty or premium.
Section 2.1.13. Use of Proceeds. Revolving Loans under the Line of Credit
shall be used solely for the future working capital needs of Borrower, to
discharge existing Indebtedness of Borrower set forth on Schedule 2.1.13.
attached hereto and to pay fees and expenses incurred by Borrower in connection
with the closing of the transactions contemplated by this Agreement.
Section 2.1.14. Commitment Fee. Borrower shall pay to Bank during the
Revolving Credit Period a commitment fee (the "Commitment Fee") computed at the
rate of one-half of one percent (.50%) per annum on the average daily amount of
the unborrowed portion of the Commitment Amount in effect from time to time.
Commitment fees shall be payable monthly in arrears commencing April 1, 1996 and
continuing on the first day of each succeeding calendar month during the
Revolving Credit Period.
Section 2.1.15. Mandatory Prepayment. If at any time the outstanding
aggregate principal amount of all Revolving Loans shall exceed the Borrowing
Base in effect
-19-
<PAGE>
from time to time, then any such excess amount shall, at Bank's election, be due
and payable on demand.
Section 2.2. Letters of Credit.
Section 2.2.1. Issuance. (a) Upon the execution of this Agreement, and as
long as no Default or Event of Default has occurred and is continuing, Bank,
either directly or through a Bank Affiliate, hereby agrees to issue, extend,
amend or renew Letters of Credit or Letter of Credit Guaranties from time to
time after the Closing Date, either directly or through a Bank Affiliate, for
the account of Borrower; provided, however, that the amount of each requested
Letter of Credit or Letter of Credit Guaranty, when added to the aggregate
amount of all Revolving Loans, all Credits Outstanding and all unpaid
Reimbursement Obligations deemed to be Revolving Loans and other payments,
deposits, guaranties or indemnifications deemed to be Revolving Loans under
Section 2.1.1. hereof, does not exceed the lesser of the Borrowing Base or the
Commitment Amount in effect from time to time and provided, further, that the
aggregate amount of Credits Outstanding and unpaid Reimbursement Obligations
(after taking into account the amount of the requested Letter of Credit or
Letter of Credit Guaranty) shall not exceed TWO MILLION AND NO/100 DOLLARS
($2,000,000.00). Notwithstanding the foregoing, the issuance of each Letter of
Credit or Letter of Credit Guaranty other than documentary letters of credit
shall be made on a case by case basis in the sole and absolute discretion of
Bank.
(b) In addition to the provisions of this Agreement governing the issuance
of Letters of Credit, Bank and Borrower hereby acknowledge and agree that Bank
has agreed to issue a stand-by letter of credit for the account of Borrower in
the face amount of up to SEVEN HUNDRED AND N0/100 DOLLARS ($700,000.00) (the
"Stand-by Letter of Credit") for the benefit of Universal Bonding Insurance Co.
Borrower hereby agrees that upon the issuance of the Stand-by Letter of Credit
the face amount thereof shall be reserved against and reduce the Commitment
Amount by a corresponding amount. Bank and Borrower hereby agree that the
obligation of Bank to issue the Stand-by Letter of Credit is subject to the
satisfaction of the terms and conditions set forth in Section 6.2. hereof.
Section 2.2.2. Application. Borrower shall request the issuance of a Letter
of Credit or Letter of Credit Guaranty by its execution and delivery to Bank of
an application in such form as Bank may require from time to time (the "Letter
of Credit Application"). If the Letter of Credit Application is acceptable to
Bank, in its sole and absolute discretion, then Bank shall prepare the Letter of
Credit or the Letter of Credit Guaranty in accordance with the instructions set
forth in the Letter of Credit Application and, provided that there is adequate
availability under the Line of Credit as set forth in Section 2.1.1. above,
issue the Letter of Credit or the Letter of Credit Guaranty to the Beneficiary
thereof unless otherwise instructed by Borrower. Borrower acknowledges and
agrees that Bank shall have no obligation to issue any Letter of Credit or any
Letter of Credit Guaranty which provides for an expiration date later than
thirty (30) days prior to the Revolving Credit Termination Date, unless Borrower
provides cash collateral for the full face amount of such Letter of Credit
-20-
<PAGE>
Section 2.2.3. Reimbursement. Borrower hereby acknowledges and agrees that
it shall be obligated to reimburse Bank in respect of obligations under Letters
of Credit and Letter of Credit Guaranties:
(a) except as otherwise provided in this Agreement, or the
applicable Letter of Credit Application, on each date that any
Drawing is honored by Bank or a Bank Affiliate, or Bank or a Bank
Affiliate otherwise makes a payment with respect thereto, and
only to the extent that such Drawing is not deemed to be a
Revolving Loan under Section 2.1.1. hereof, (i) the amount paid
by Bank or a Bank Affiliate under or with respect to such
Drawing, and (ii) the amount of any taxes, fees, charges or other
reasonable costs and expenses whatsoever incurred by Bank or any
Bank Affiliate in connection with any payment made by Bank or
Bank Affiliate under, or with respect to, such Letter of Credit
or the Letter of Credit Guaranty;
(b) upon the reduction (but not termination) of the Commitment
Amount to an amount less than the sum of (i) all Revolving Loans
and amounts deemed to be Revolving Loans as of such date and
Credits Outstanding as of such date plus (ii) the amount of
unpaid Reimbursement Obligations as of such date, an amount equal
to any such difference which relates to Letters of Credit and
Letter of Credit Guarantees, which amount shall be held by Bank
as cash collateral for all Reimbursement Obligations; and
(c) upon the termination of the Commitment Amount, or the
acceleration of the Reimbursement Obligations in accordance with
Section 12.1. hereof, an amount equal to the sum of (i) Credits
Outstanding as of such date and, if the Stand-by Letter of Credit
is outstanding as of such date, the face amount of the Stand-by
Letter of Credit as of such date plus (ii) the amount of unpaid
Reimbursement Obligations as of such date, which amount shall be
held by Bank as cash collateral for all Reimbursement
Obligations.
Borrower shall pay interest on any amounts due and payable under this Section
2.2.3. from the date such amounts are payable (whether at maturity, by
acceleration or otherwise) until paid in full at the rate of interest applicable
to Revolving Loans for three (3) days and, thereafter, at the Default Rate
applicable to the Revolving Loans.
Section 2.2.4. Debit to Line of Credit. Bank shall be entitled, in its sole
and absolute discretion, to debit the amount of any Drawing as well as any fees,
costs and expenses incurred by Bank or a Bank Affiliate in connection with such
Drawing against the Line of Credit and deem such amount to be Revolving Loans
under Section 2.1.1. hereof.
-21-
<PAGE>
Section 2.2.5. Termination of Obligation. The obligation of Bank to issue
Letters of Credit or Letter of Credit Guaranties under this Section 2.2. shall
terminate thirty (30) days prior to the Revolving Credit Termination Date or any
renewal thereof.
Section 2.2.6. Obligations Absolute. The obligations of Borrower with
respect to Letters of Credit or Letter of Credit Guaranties issued under this
Agreement shall be unconditional and irrevocable, shall be paid strictly in
accordance with the terms of this Agreement under all circumstances and shall
not be reduced by: (a) any lack of validity or enforceability of any document
executed between Borrower and a Beneficiary; (b) the existence of any claim,
set-off, defense or other right which Borrower may have at any time against a
Beneficiary or any transferee of a Letter of Credit or Letter of Credit
Guaranties (or any Persons for which such Beneficiary or any such transferee may
be acting), against Bank, or against any other Person, whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction; and (c) any statement or any other document presented under a
Letter of Credit or Letter of Credit Guaranties proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect, unless Bank had actual knowledge
(without any investigation having been made) that such statement or other
document was forged, fraudulent, invalid or insufficient.
Section 2.2.7. Indemnification. Borrower hereby indemnifies and holds Bank,
and its directors, officers, employees and agents (collectively, the "Bank
Agents"), harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses (including reasonable legal fees and expenses)
which Bank or any Bank Agents may incur or which may be claimed against Bank by
any Person by reason of or in connection with the execution and delivery or
transfer of, or payment or failure to make lawful payment under, a Letter of
Credit or Letter of Credit Guaranties; provided, however, that Borrower shall
not be required to indemnify Bank or any Bank Agents for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by Bank's (i) failure to act in good faith and in conformity with such
laws, regulations or commercial or banking customs, as Bank may reasonably deem
to be applicable, or (ii) honoring a Drawing on a Letter of Credit or Letter of
Credit Guaranty issued hereunder when at the time of such honoring Bank had
actual knowledge (without any investigation having been made) that such Drawing
was forged, fraudulent, invalid or insufficient. Nothing in this Section 2.2.6.
is intended to limit Borrower's obligations hereunder. Without prejudice to the
survival of any other obligation of Borrower hereunder, the indemnities and
obligations of Borrower contained in this Section 2.2.7. shall survive the
payment in full of the Obligations. In case any claim is asserted or any action
or proceeding is brought against Bank or any Bank Agents, Bank or any such Bank
Agents shall promptly notify Borrower of such claim, action or proceeding and
Borrower shall resist, settle or defend with counsel reasonably acceptable to
Bank, such claim, action or proceeding. If, within thirty (30) days of
Borrower's receipt of such notice, Borrower does not commence and continue to
prosecute the defense of such claim, action or proceeding, Bank, or any such
Bank Agents, may retain legal counsel to represent it in such defense and
Borrower shall indemnify Bank, or any such Bank Agents, for the reasonable fees
and expenses of such legal counsel.
-22-
<PAGE>
Subject to the foregoing, Bank shall cooperate and join with Borrower, at the
expense of Borrower, as may be required in connection with any action taken or
defended by Borrower.
Section 2.2.8. Liability of Bank. Any action, inaction or omission on the
part of Bank under or in connection with a Letter of Credit or Letter of Credit
Guaranty issued hereunder or related instruments or documents, if in good faith
and in conformity with such laws, regulations or commercial or banking customs
as Bank may reasonably deem to be applicable, shall be binding upon Borrower,
shall not place Bank under any liability to Borrower, shall not affect, impair
or prevent the vesting of any of Bank's rights or powers hereunder or Borrower's
obligation to make full reimbursement to Bank. Borrower assumes all risks of the
acts or omissions of a Beneficiary or transferee of a Letter of Credit or Letter
of Credit Guaranty with respect to its use of the Letter of Credit or Letter of
Credit Guaranty. In furtherance of, and not in limitation of Bank's rights and
powers under the Uniform Customs and Practice, but subject to all other
provisions of this Section 2.2. it is understood and agreed that Bank shall not
have any liability for and that Borrower assumes all responsibility for: (a) the
genuineness of any signature; (b) the form, correctness, validity, sufficiency,
genuineness, falsification and legal effect of any draft, certification or other
document required by a Letter of Credit or Letter of Credit Guaranty and the
authority of the person signing the same; (c) the failure of any instrument to
bear any reference or adequate reference to the Letter of Credit or Letter of
Credit Guaranty or the failure of any persons to note the amount of any
instrument on the reverse of the Letter of Credit or to surrender the Letter of
Credit or Letter of Credit Guaranty or otherwise to comply with the terms and
conditions of the Letter of Credit or Letter of Credit Guaranty; (d) the good
faith or acts of any person other than Bank and its agents and employees; (e)
the existence, form, sufficiency or breach of or default under any other
agreement or instrument of any nature whatsoever; (f) any delay in giving or
failure to give any notice, demand or protest; and (g) any error, omission,
delay in or nondelivery of any notice or other communication, however sent. The
determination as to whether the required documents are presented prior to the
expiration of a Letter of Credit or Letter of Credit Guaranty issued hereunder
and whether such other documents are in proper and sufficient form for
compliance with the Letter of Credit or Letter of Credit Guaranty shall be made
by Bank in its sole and absolute discretion
Section 2.2.9. Fees. Borrower hereby agrees to pay to Bank or a Bank
Affiliate any issuance, drawing, renewal, amendment or other fee or charge
customarily assessed by Bank or a Bank Affiliate in connection with any Letter
of Credit or Letter of Credit Guaranty, including the Stand-by Letter of Credit.
Without limiting the foregoing, Borrower hereby agrees to pay an issuance fee
equal to one and three-quarters percent of the face amount of the Stand-by
Letter of Credit upon the issuance thereof and upon any renewal thereof. Any
such fees shall be paid at the time Borrower becomes obligated to pay any such
fee.
Section 2.3. Term Loan.
Section 2.3.1. Amount of Loan. Upon the execution of this Agreement,
Borrower agrees to borrow from Bank, and Bank agrees to lend to Borrower, the
principal
-23-
<PAGE>
amount of ONE MILLION TWO HUNDRED THOUSAND AND N0/100 DOLLARS ($1,200,000.00)
(the "Term Loan").
Section 2.3.2. Term Note. The Term Loan shall be evidenced by a promissory
note executed by Borrower in substantially the form attached hereto as Exhibit C
(the "Term Note"), with all blanks therein appropriately completed and payable
to the order of Bank, which Term Note is hereby incorporated by reference and
made a part hereof.
Section 2.3.3. Payment of Principal. Commencing June 1, 1996 and continuing
on the first day of each succeeding calendar month thereafter, the outstanding
principal amount of the Term Loan, as evidenced by the Term Note, shall be
payable in sixteen (16) consecutive installments, the first fifteen (15) of such
installments to be in the amount of TWENTY THOUSAND AND NO/100 DOLLARS
($20,000.00) and, if not sooner paid, a final installment in the then unpaid
principal amount of the Term Loan, together with accrued and unpaid interest
thereon and all other amounts due and owing under this Agreement with respect to
the Term Loan, shall be due and payable on August 31, 1997 (the "Maturity
Date").
Section 2.3.4. Interest. The unpaid principal amount of the Term Loan, as
evidenced by the Term Note, shall bear interest at a fluctuating per annum rate
equal to the Base Rate as in effect from time to time, plus one and one-half
percentage points (1.5%). Interest on the unpaid principal amount of the Term
Note shall be due and payable commencing June 1, 1996 and continuing on the
first day of each succeeding calendar month thereafter until the entire
outstanding principal amount of the Term Loan shall be paid in full.
Section 2.3.5. Prepayment. Borrower may prepay the principal of the Term
Note, in whole or in part, at any time, without penalty or premium. In addition,
in the event that Borrower shall sell its real property located in the Town of
Landis, Rowan County, North Carolina and, as a result of such sale, Borrower
shall fail to satisfy the financial covenant set forth in Section 9.6. hereof,
then Borrower shall make a mandatory prepayment in respect of the Term Loan in
an amount necessary to restore Borrower's compliance with said Section 9.6. Any
such prepayment shall first be applied to any outstanding cost or expense due to
Bank, then to any accrued and unpaid interest and then to installments of
principal in the inverse order of maturity thereof.
Section 2.3.6. Maturity. Except where this Agreement or any instrument
evidencing indebtedness hereunder provides that the obligations of Borrower
shall become due upon any earlier date and notwithstanding any applicable
provision permitting repayment at a later date, the Term Loan shall become fully
and finally due and payable on the Maturity Date.
Section 2.3.7. Use of Proceeds. The proceeds of the Term Loan shall be used
solely for the purposes set forth in Section 2.1.13. hereof.
-24-
<PAGE>
Section 2.4. General Terms Applicable to Any Extension of Credit.
Section 2.4.1. Increased Costs and Capital Adequacy.
(a) If Bank determines that any change in any law or regulation or
directive or bulletin or in the interpretation thereof after the Closing Date by
any court or administrative or governmental authority charged with the
administration thereof shall either (i) impose, modify or deem applicable any
reserve, special deposit or similar requirement against any credit extended by
Bank under this Agreement, or (ii) impose on Bank or its parent bank holding
company any other condition regarding this Agreement and the result of any event
referred to in the preceding clause (i) or (ii) above shall be to increase the
cost to Bank or such holding company of issuing, funding or maintaining any
Extension of Credit (which increase in cost shall be determined by Bank's
reasonable allocation of the aggregate of such cost increases resulting from
such event), then, upon written demand by Bank, Borrower shall pay to Bank from
time to time as specified by Bank, additional amounts which shall be sufficient
to compensate Bank for such increased cost from the date of such change. A
certificate as to such increased cost incurred by Bank as a result of any event
mentioned in clause (i) or (ii) above prepared in reasonable detail (which shall
include the method employed by Bank in determining the allocation of such costs
to Borrower) and otherwise in accordance with this subsection (a), submitted by
Bank to Borrower, shall be conclusive evidence, absent manifest error, as to the
amount thereof.
(b) If Bank shall determine that the adoption after the Closing Date of any
applicable law, rule or regulation pursuant to or arising out of the July 1988
report of the Basle Committee on Banking Regulations and Supervisory Practices
entitled "International Convergence of Capital Measurement and Capital
Standards", or the adoption after the date hereof of any other law, rule, or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof, or compliance by Bank or its
parent bank holding company with any requirement or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, except any such adoption or change or any such
compliance with a request or directive which applies or has been applied solely
to Bank or its parent Bank holding company by reason of events or conditions
relating solely to Bank, has the effect of reducing the rate of return on Bank's
or its parent bank holding company's capital as a consequence of its commitment
hereunder or to a level below that which Bank or such holding company could have
achieved but for such adoption, change or compliance by an amount deemed by Bank
to be material (for which reduction of the rate of return shall be determined by
Bank's or such holding company's reasonable allocation of such reduction of the
rate of return resulting from such event) then, upon written demand by Bank,
Borrower shall pay to Bank, from time to time as specified by Bank, such
additional amount or amounts which shall be sufficient to compensate Bank for
such reduction. A certificate as to such increased cost incurred by Bank as a
result of any event mentioned in this subsection (b), prepared in reasonable
detail (which shall include the method employed by Bank in determining the
allocation of such costs to Borrower) and otherwise in
-25-
<PAGE>
accordance with this subsection (b) submitted by Bank to Borrower, shall be
conclusive evidence, absent manifest error, as to the amount thereof.
(c) Amounts payable by Borrower pursuant to this Section 2.4.1. shall be
payable within ten (10) Business Days of receipt by Borrower of a certificate
described in subsection (a) or (b) of this Section 2.4.1.
(d) Notwithstanding any provision of this Section 2.4.1. to the contrary,
prior to seeking the payment of any amounts pursuant hereto, Bank shall first
use its best efforts (which shall not require additional costs or administrative
burdens on Bank) to take such steps as would eliminate or reduce any cost or
expense to be borne by Borrower under this Section 2.4.1.
(e) Borrower shall have the right, within thirty (30) Business Days of the
delivery of demand for payment under this Section 2.4.1., to terminate this
Agreement by paying the entire principal amount due and payable under this
Agreement, the Notes and the Other Documents and paying any amount required in
respect of Credits Outstanding and the Stand-by Letter of Credit in accordance
with Section 2.2.3.(c) hereof.
(f) Notwithstanding any provision of this Section 2.4.1. to the contrary,
in no event shall Borrower be obligated to pay any amounts under this Section
2.4.1. which relates to any income, excise or franchise taxes imposed or sought
to be imposed on Bank.
Section 2.4.2. Interest. Interest shall accrue on the basis of a three
hundred sixty (360) day year, and shall be calculated according to the actual
number of days elapsed during each accrual period. Each adjustment in the Base
Rate shall result immediately, without notice or demand of any kind, in a new
rate of interest effective with respect to periods on and after the date of such
adjustment. The Base Rate is a base interest rate used by Bank for loans making
reference thereto and is not necessarily the lowest rate at which Bank may lend
money. The Base Rate is neither tied to any external rate of interest nor is it
a rate charged by Bank to any particular class or category of customer. If the
Base Rate shall be discontinued or for any other reason not be available for
determining the rate of interest chargeable under this Agreement, then Bank
shall select a substitute method of determining the rate of interest chargeable
under this Agreement and shall notify Borrower of such selection, which method
shall, in Bank's estimation, yield a rate of return to Bank substantially
equivalent to the rate of return that Bank would have expected to receive if the
Base Rate remained available for that purpose.
Section 2.4.3. Late Payment. Any payment of principal or interest due under
this Agreement which is not made within ten (10) days of the date specified for
payment shall bear a late fee equal to five percent (5%) of the amount of the
payment then due to compensate Bank for the costs incurred in processing the
late payment. The imposition or collection of a late fee shall not affect Bank's
right to exercise any of its rights and remedies upon the occurrence of an Event
of Default.
-26-
<PAGE>
Section 2.4.4. Method of Payment. All payments and prepayments of principal
and all payments of interest shall be made by Borrower to Bank at its head
office in immediately available funds, on or before 3:00 p.m. on the due date
thereof, free and clear of, and without any deduction or withholding for, any
taxes or other payments. Bank may, and Borrower hereby authorizes Bank to, debit
the amount of any payment not made by such time to the Loan Account.
Section 2.4.5. Default Rate. Overdue principal (whether at maturity, by
reason of acceleration or otherwise) and, to the extent permitted by applicable
law, overdue interest and fees or any other amounts payable under this Agreement
shall bear interest from and including the due date thereof until paid, at the
Default Rate, which interest shall be payable on demand.
SECTION 3. SECURITY FOR THE OBLIGATIONS
Section 3.1. Collateral Disclosure List. Borrower shall deliver to Bank on
the Closing Date a list identifying, inter alia, all of its properties and
assets and the locations thereof on a form provided by Bank (the "Collateral
Disclosure List").
Section 3.2. Security. The Obligations shall be secured by:
Section 3.2.1. All properties and assets of Borrower, including goods,
accounts receivable, inventory, contract rights, accounts, documents,
instruments and chattel paper, business and financial records and general
intangible assets of Borrower as more particularly defined in the Security
Agreement and the Pledge Agreement.
Section 3.2.2. A guaranty executed by the Guarantor in substantially the
form attached hereto as Exhibit C attached hereto (the "Guaranty"), which shall
be secured by a pledge of all of Borrower's right, title and interest in and to
all shares of capital stock of the Borrower pursuant to the Stock Pledge.
Section 3.2.3. A first lien on the Mortgaged Property pursuant to a
Mortgage.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce Bank to enter into this Agreement and to make any
Extension of Credit, the Credit Parties, to the extent indicated in this Section
4, make the following representations and warranties to Bank, which shall be
deemed made as of the date hereof and, except as otherwise provided in this
Section 4., the date of each Extension of Credit.
Section 4.1. Corporate Existence. Each Credit Party is a corporation duly
incorporated, validly existing and in good standing under the laws of its
respective state of incorporation and to the best of its knowledge, is duly
qualified in all other jurisdictions in which
-27-
<PAGE>
the properties and assets owned, leased or operated by it, or the nature of the
business conducted by it, make such qualification necessary and where failure to
so qualify would have a Material Adverse Effect.
Section 4.2. Corporate Authority. The execution, delivery and performance
of this Agreement, the Notes, the Credit Parties and the Other Documents, the
consummation of the transactions herein and therein contemplated, the
fulfillment of and compliance with the terms and provisions hereof and thereof
have been duly authorized by all necessary corporate action of the Credit
Parties and are within its corporate power and will not result in a violation of
its Certificate of Incorporation or Bylaws, if and as amended.
Section 4.3. Binding Obligations. This Agreement, the Notes and the Other
Documents constitute the legal, valid and binding obligations of the Credit
Parties, enforceable against them in accordance with their respective terms
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws of general applicability affecting the enforcement of
creditors' rights or by general principles of equity limiting the availability
of equitable remedies.
Section 4.4. Noncontravention. The execution, delivery and performance by
Borrower of this Agreement, the Notes and the Other Documents will not violate
any existing law, ordinance, rule, regulation or order of any Governmental
Authority or result in a breach of any of the terms of, or constitute a default
under, any contractual obligation to which the Credit Parties is a party or by
which it or any of its properties or assets are bound or result in or require
the imposition of any Encumbrances on any of such Credit Party's properties or
assets (other than Permitted Encumbrances).
Section 4.5. Permits. Each Credit Party possesses all material permits,
authorizations, licenses, approvals, waivers and consents, without unusual
restrictions or limitations, the failure of which to possess would have a
Material Adverse Effect, all of which are in full force and effect.
Section 4.6. No Consents. The execution, delivery and performance of this
Agreement, the Notes and the Other Documents does not require any approval,
consent or waiver under any Contractual Obligation. No approval, authorization,
consent, waiver or order of, or registration, application or filing with, any
Governmental Authority is required in connection with the transactions
contemplated by this Agreement, the Notes, and the Other Documents.
Section 4.7. Financial Statements. Borrower has provided to Bank its
Financial Statements dated as of April 30, 1995 and related footnotes, audited
and certified by Arthur Andersen LLP as included in the consolidated Financial
Statements of Guarantor for the fiscal year then ended. Borrower has also
provided to Bank its internally prepared Financial Statements dated as of
January 31, 1996 as included in the consolidated Financial Statements of
Guarantor prepared as of the fiscal period then ended and certified by the chief
financial officer
-28-
<PAGE>
of Borrower but subject, however, to normal, recurring year-end adjustments that
shall not in the aggregate be material in amount. All Financial Statements of
Borrower heretofore provided to Bank present fairly in all material respects the
financial condition and results of business operations of Borrower for the
periods indicated in accordance with GAAP. Borrower has no direct or contingent
liabilities, liabilities for taxes, unusual commitments or unrealized or
unanticipated losses not disclosed in such Financial Statements. Since the date
of the latest dated consolidated balance sheet included in the Financial
Statements, there has been no material adverse change in the business operations
or financial condition of Borrower from that set forth in the balance sheet
contained in such Financial Statements and no Dividends have been declared or
made to stockholders, nor have any shares of its capital stock (or any warrant
to purchase, options to acquire or notes convertible, in whole or in part, into
any shares of its capital stock) been purchased or acquired by any Person in any
manner nor has Borrower made any Investment except as set forth on Schedule 4.7.
attached hereto.
Section 4.8. Financial Forecasts. Borrower has provided to Bank forecasted
Financial Statements together with appropriate supporting details and a
statement of the underlying assumptions, ranges and limitations, prepared on a
monthly basis covering the one (1) year period commencing on May 1, 1996 and
being attached hereto as Schedule 4.8 (the "Forecasts"). The Forecasts have been
prepared in good faith and represent the good faith opinion of Borrower and its
senior management as to the most probable course of Borrower's business
operations for the periods covered thereby and have a reasonable basis.
Section 4.9. Financial Information. All written data, reports and
information which the Credit Parties have supplied to Bank or caused to be so
supplied by a third party on its behalf in connection with this Agreement are
complete and accurate and contain no material omission or misstatement except
such as have been corrected in a writing delivered to Bank.
Section 4.10. Business Relationships. There exists no actual or, to the
best of Borrower's knowledge, threatened termination, cancellation or limitation
of, or any modification or change in, the business relationship of an Credit
Party with any customer or group of customers whose purchases individually or in
the aggregate are material to its business operations, or with any material
supplier (other than in the ordinary course of business where one supplier is
replaced by another offering terms which are no less favorable).
Section 4.11. Brokers. No broker or finder has brought about the obtaining,
making or closing of, and no broker's or finder's fees or commissions will be
payable by any Credit Party to any Person in connection with, the transactions
contemplated by this Agreement.
Section 4.12. Use of Proceeds. No Credit Party is an "investment company,"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C. (0)(0)80(a)(1) et seq.). No Extension of Credit, the
application of the proceeds and repayment thereof by Borrower or the performance
of the transactions contemplated by this Agreement will violate any provision of
said Act, or any rule, regulation or order issued by the
-29-
<PAGE>
Securities and Exchange Commission thereunder. No Credit Party owns any margin
security as that term is defined in Regulation U of the Board of Governors of
the Federal Reserve System and the proceeds of each Extension of Credit will be
used only for the purposes set forth in this Agreement. None of the proceeds of
any Extension of Credit will be used, or have been used, directly or indirectly,
for the purpose of purchasing or carrying any margin security or for the purpose
of reducing or retiring any Indebtedness which was originally incurred to
purchase or carry any margin security or for any other purpose which might
constitute such Extension of Credit a "purpose credit" within the meaning of
said Regulation U or Regulations G or X of the Federal Reserve Board. No Credit
Party will take, or permit any Person acting on its behalf to take, any action
which might cause this Agreement or any document or instrument delivered
pursuant hereto to violate any regulation of the Federal Reserve Board.
Section 4.13. Statutory Compliance. Each Credit Party is in compliance with
all material laws, ordinances, rules, regulations and orders of any Governmental
Authority applicable to it, its properties and assets and the business conducted
by it, including, without limitation, ERISA, the United States Occupational
Safety and Health Act of 1970 and all Environmental Laws except where
non-compliance would not have a Material Adverse Effect.
Section 4.14. Commitments. No Credit Party has any fixed, contingent or
other obligations to issue any shares, or rights exercisable into shares, of its
capital stock except as set forth on Schedule 4.14. attached hereto.
Section 4.15. Events of Default. No Default or Event of Default has
occurred and is continuing.
Section 4.16. Other Defaults. No Credit Party is in default in any material
respect in the performance, observance or fulfillment of any Contractual
Obligation.
Section 4.17. Taxes. Each Credit Party has filed all tax returns and
reports required to be filed by it with any Governmental Authority and has paid
in full, or made adequate provisions or established adequate reserves for, the
payment of all taxes, interest, penalties, assessments or deficiencies shown to
be due on or in respect to such tax returns and reports.
Section 4.18. Ownership of Borrower. A list of the holders of the shares of
capital stock of Borrower is set forth in Schedule 4.18. attached hereto and
incorporated herein by reference, and no other Person has any rights and/or
claim to any issued or unissued shares of such capital stock.
Section 4.19. Solvency. Each Credit Party is currently Solvent; and no
Credit Party is contemplating either the filing of a petition by it under
Bankruptcy Code or any state bankruptcy or insolvency law or the liquidating of
all or a major portion of its properties and assets or has any knowledge of any
Person contemplating the filing of any such petition against it.
-30-
<PAGE>
Section 4.20. Business Name. Borrower conducts its business solely through
the names set forth on Schedule 12 of the Collateral Disclosure List, without
the use of any trade name, or the intervention of or through any other Person.
Borrower has not, except as set forth in the Collateral Disclosure List, during
the preceding five (5) years, conducted its business through any other name or
trade name or been the surviving corporation in a merger or consolidation or
acquired all or substantially all of the assets of any other Person.
Section 4.21. Affiliate Contracts. All contracts and transactions between
Borrower and any Affiliate or Subsidiary of Borrower have been executed or will
be executed on such terms as would be contained in an agreement executed at
arms' length with an unrelated third party.
Section 4.22. Capitalization. The outstanding shares of capital stock of
Borrower have been duly issued and are fully paid and non-assessable.
Section 4.23. Litigation. Except as set forth on Schedule 4.23. attached
hereto, there are no actions, suits or proceedings by or before any Governmental
Authority or any arbitration or alternate dispute resolution proceeding, pending
or, to the knowledge of Borrower or any of its officers, threatened against such
Credit Party or its properties and assets, which if adversely determined, would
have a Material Adverse Effect.
Section 4.24. Title to Properties. Each Credit Party has good and
marketable title to all of the properties, assets and rights of every name and
nature now purported to be owned by it, including, without limitation, such
properties, assets and rights as are reflected in the Financial Statements
referred to in Section 4.7. (except such properties, assets or rights as have
been disposed of in the ordinary course of business since the date thereof),
free from all Encumbrances except Permitted Encumbrances or those Encumbrances
disclosed in Schedule 4.24. attached hereto, and, free from all defects of title
that might have a Material Adverse Effect (other than those covered by title
insurance in amounts sufficient to compensate Borrower for such defect). Each
Credit Party's properties, assets and rights are sufficient to permit such
Credit Party to conduct the business in which it is presently engaged. Each
Credit Party possesses all trademarks, service marks, trade names, trade service
styles, copyrights and patents that may be necessary to own its properties and
assets, and to conduct its business as it is presently conducted or as no Credit
Party intended to conduct it hereafter, without any infringement or conflict
with the rights of any other Person or any violation of law.
Section 4.25. Labor Relations. Except as set forth on Schedule 4.25.
attached hereto, no Credit Party is a party to any collective bargaining or
other agreement with any union and there are no material grievances, disputes or
controversies with any union or other organization of Credit Party's employees,
or threats of strikes, work stoppages or demands by any union or such other
organization.
Section 4.26. Guarantees. No Credit Party is a party to any Guarantee or
other similar type of agreement, and it has not offered its endorsement to any
Person which would in
-31-
<PAGE>
any way create a contingent liability (except by endorsement of negotiable
instruments payable at sight for deposit or collection or similar banking
transactions in the ordinary course of business).
Section 4.27. Subsidiaries. As of the date of this Agreement, all of the
Subsidiaries and Affiliates of Borrower are set forth on Schedule 14 of the
Collateral Disclosure List. Borrower or a Subsidiary of Borrower is the owner
(subject to specified minority interests) free and clear of all Encumbrances, of
all of the issued and outstanding capital stock of each Subsidiary. All shares
of such capital stock have been validly issued and are fully paid and
nonassessable, and no rights to subscribe to any additional shares have been
granted, and no options, warrants or similar rights are outstanding. Borrower is
not engaged in any joint venture, partnership or other business arrangement with
any other Person except as described on said Schedule 14.
Section 4.28. ERISA. Borrower and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and are in compliance in all material respects
with the applicable provisions of ERISA and the Code, and have not incurred any
liability to the PBGC or a Plan under Title IV of ERISA; and no "prohibited
transaction" or "reportable event" (as such terms are defined in ERISA) has
occurred with respect to any Plan.
Section 4.29. Environmental Protection. Except as set forth on Schedule
4.29. attached hereto:
(a) The Borrower's manufacturing operations and other business
operations involving the generation, storage, transport or use of Hazardous
Materials comply in all material respects with all Environmental Laws.
(b) Borrower has not received (i) any written notice or claim to the
effect that it is or may be liable to any Person as a result of the Release
or threatened Release of any Hazardous Materials or (ii) any letter or
request for information under CERCLA or any other Environmental Laws, and,
to the best of Borrower's knowledge, based upon reasonable investigation,
the Borrower's manufacturing operations and other business operations
involving the generation, storage, transport or use of Hazardous Materials
are not the subject of any investigation or claim by any Governmental
Authority evaluating whether any remedial action is needed to respond to a
Release or threatened Release of any Hazardous Material, or subject to a
lawsuit or claim arising under or related to any alleged violation of any
Environmental Law.
(c) Neither Borrower nor any Affiliate of Borrower is subject to any
outstanding written order or agreement with any Governmental Authority or
private party with respect to any Environmental Laws which relates to any
of Borrower's manufacturing operations or facilities or other business
operations or facilities which involve the generation, storage, transport
or use of Hazardous Materials.
-32-
<PAGE>
(d) Neither Borrower nor any Affiliate of Borrower has filed any
notice under any Environmental Law indicating past or present treatment or
disposal of Hazardous Materials on Borrower's business premises, and none
of the business operations of Borrower involves the generation,
transportation, storage or disposal of Hazardous Materials.
(e) To the best of Borrower's knowledge, based upon reasonable
investigation, no Hazardous Material exists on, under or about any of the
properties of Borrower in violation of Environmental Laws, and Borrower has
not filed any notice or report of a Release of any Hazardous Materials that
could give rise to any claim or suit against Borrower arising from such a
Release.
Section 4.30. Accounts Receivable. All of Borrower's Accounts Receivable
(i) are and shall be based on an actual and bona fide sale and delivery of goods
or the rendition of services to Account Debtors; (ii) are and shall be made by
Borrower in the ordinary course of its business; (iii) result from goods and
Inventory being sold which are the exclusive property of Borrower; (iv) are the
exclusive property of Borrower; (v) are not subject to any Encumbrance other
than Permitted Encumbrances; and (vi) are represented by invoices or statements
issued in the name of Borrower.
Section 4.31. Investments. Except as set forth on Schedule 4.31. attached
hereto Borrower has no Investment in any Person other than existing Investments
in Subsidiaries and Qualified Investments.
SECTION 5. CONDITIONS TO OBLIGATION OF BANK
Bank shall have no obligation under this Agreement to make any Extension of
Credit unless and until it is satisfied, in its sole and absolute discretion,
that all of the following conditions shall have been satisfied or waived by Bank
in writing prior to or on the Closing Date:
Section 5.1. Representations and Warranties True. The representations and
warranties contained in Section 4 are true and correct in all material respects,
and Borrower, by its President, shall have so certified to Bank.
Section 5.2. Delivery of Documents. The Credit Parties shall have duly
executed and delivered to Bank, in form and substance satisfactory to Bank and
its legal counsel, this Agreement, the Notes, the Other Documents and all
further documents as Bank may request to evidence the Obligations or to create,
perfect or continue any security interest or mortgage lien contemplated by this
Agreement and the Other Documents. In addition, Bank shall have received or
agreed in writing to waive or delay the receipt of:
Section 5.2.1. Copies of all corporate action taken by the Credit Parties
to authorize the execution and delivery of this Agreement, the Notes and the
Other Documents,
-33-
<PAGE>
together with a certificate of the corporate secretary of Borrower certifying
that the same are true, correct and complete as of the Closing Date.
Section 5.2.2. Copies of each Credit Party's Certificate of Incorporation
and Bylaws, if and as amended, together with a certificate of corporate
secretary certifying that the same are true, correct and complete as of the
Closing Date.
Section 5.2.3. A certificate(s) issued by the appropriate tax departments
or agencies of each state in which the chief executive office of each Credit
Party is located to the effect that such Credit Party has paid all income, sales
and applicable taxes.
Section 5.2.4. A certificate issued by the office of the Secretary of State
of the state of each Credit Party's incorporation to the effect that such Credit
Party is legally existing and in good standing under the laws of such states.
Section 5.2.5. A certificate issued by the office of the Secretary of State
of each state in which such Credit Party is qualified as a foreign corporation
to the effect that such Credit Party is duly qualified and in good standing as a
foreign corporation under the laws of such states.
Section 5.2.6. A certificate of the corporate secretary of each Credit
Party certifying to the incumbency and signatures of all officers of such Credit
Party who are authorized to execute this Agreement, the Notes, the Guaranty and
the Other Documents.
Section 5.2.7. Objective evidence satisfactory to Bank and its legal
counsel of the payment of all taxes and assessments due or claimed to be due to
any Governmental Authority with respect to the Collateral.
Section 5.2.8. A UCC-11 Request for Information certified by the Office of
the Secretary of State of the State of Connecticut (or an acceptable equivalent
thereto) for each name set forth on the Collateral Disclosure List listing the
filings against the Credit Parties as debtor under such names at such offices.
Section 5.2.9. Such UCC-1 Financing Statements as Bank deems necessary to
perfect any security interests contemplated by this Agreement or the Other
Documents.
Section 5.2.10. Insurance policies and certificates evidencing adequate
insurance coverage on Borrower's properties and assets which insurance policies
shall name Bank as an additional insured/loss payee.
Section 5.2.11. An environmental certificate and indemnity agreement
executed by Borrower, satisfactory in form and substance to Bank and its legal
counsel (the "Environmental Certificate").
-34-
<PAGE>
Section 5.2.12. Such cash management, lockbox and similar agreements
required by Bank to administer the Line of Credit.
Section 5.2.13. An ALTA title insurance policy or policies insuring the
lien of the Mortgage in the Mortgaged Property in amounts and with such
exceptions to coverage as may be approved by Bank and its legal counsel.
Section 5.2.14. Such further documents, instruments and agreements as Bank
shall reasonably request, all satisfactory in form and substance satisfactory to
Bank and its legal counsel.
Section 5.3. Validity of Liens. All Encumbrances in the Collateral shall
have been created in favor of Bank, which Encumbrances shall constitute legal,
valid and enforceable and, unless otherwise consented to by Bank, first security
interests in and liens upon the Collateral. All filings, recordings, deliveries
of instruments and other actions necessary or desirable in the sole and absolute
discretion of Bank and its legal counsel to create said Encumbrances shall have
been made, taken and/or effected.
Section 5.4. Opinion of Counsel. Bank shall have received from counsel for
the Credit Parties a written opinion, in the form of Exhibit E attached hereto,
satisfactory in form and substance to Bank and its legal counsel.
Section 5.5. Payment of Fees. Borrower shall have paid to Bank a facility
fee (the "Facility Fee") in the amount of THIRTY THOUSAND AND NO/100 DOLLARS
($30,000.00) on the Closing Date. Bank hereby acknowledges the receipt of a
non-refundable deposit in respect of the Facility Fee in the amount of TEN
THOUSAND AND N0/100 DOLLARS ($10,000.00). In addition, Borrower shall have paid
any other applicable fees and expenses due to Bank at closing, including the
fees and expenses of Bank's legal counsel.
Section 5.6. Legal Matters. All legal matters incident to the transactions
hereby contemplated shall be satisfactory to Bank and its legal counsel.
Section 5.7. Minimum Availability. Borrower shall have a Minimum
Availability of at least FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00)
after giving effect to all loans, advances and other extensions of credit made
under the Line of Credit on the Closing Date.
SECTION 6. CONDITIONS TO EXTENSION OF CREDIT
Section 6.1. In General. Bank shall have no obligation to make any
Extension of Credit unless and until, it is satisfied, in its sole and absolute
discretion, that all of the following conditions shall have been fulfilled prior
to or contemporaneously with the making of such Extension of Credit.
-35-
<PAGE>
Section 6.1.1. Notice of Borrowing. Bank shall have received, in a timely
manner, a Notice of Borrowing in a form satisfactory to Bank.
Section 6.1.2. Borrowing Base Certificate. Bank shall have received a
Borrowing Base Certificate satisfactory in form and substance to Bank showing
that the Borrowing Base is sufficient to permit Bank to make the requested
Extension of Credit.
Section 6.1.3. No Material Adverse Change. There has been no change in the
financial condition or business operations of Borrower or its Subsidiaries since
the date of the last Financial Statements or other financial reports delivered
to Bank which has a Material Adverse Effect.
Section 6.1.4. Truth of Representations and Warranties. All of the
representations and warranties set forth in Section 4 of this Agreement are true
and correct in all materials respects as of the date on which the requested
Extension of Credit is made.
Section 6.1.5. No Default. No Default or Event of Default shall have
occurred and be continuing or shall occur as a result of the requested Extension
of Credit.
Section 6.1.6. Payment of Fees. Borrower shall have paid any applicable
fees and expenses due to Bank, including any fees and expenses of Bank's legal
counsel.
Section 6.1.7. Corporate Action. The corporate action of Borrower referred
to in Section 5.2.1. shall remain in full force and effect and the incumbency of
officers shall be as stated in the certificates of incumbency delivered pursuant
to Section 5.2.6. or as subsequently reflected in a new certificate of
incumbency delivered to Bank in connection with the requested Extension of
Credit.
Section 6.1.8. Legal Matters. All legal matters incident to the
transactions contemplated by the requested Extension of Credit shall be
satisfactory to Bank and its legal counsel and no change shall have occurred in
any law or regulation or interpretation thereof, which, in the opinion of Bank
and its legal counsel, would make it illegal or against the policy of any
governmental body, agency or instrumentality for Bank to make the requested
Extension of Credit.
Section 6.2. The Stand-by Letter of Credit. In addition to the terms and
conditions set forth in Section 6.1. hereof, Bank shall have no obligation to
issue the Stand-by Letter of Credit unless and until it is satisfied, in its
sole and absolute discretion, that the following terms and conditions shall have
been fulfilled or waived by Bank in writing prior to or contemporaneously with
the issuance of the Stand-by Letter of Credit.
Section 6.2.1. Issuance Date. The Stand-by Letter of Credit shall be issued
on or before September 30, 1996.
-36-
<PAGE>
Section 6.2.2. Expiry Date. The Stand-by Letter of Credit shall expire on a
date which is not later than thirty (30) days prior to the Revolving Credit
Termination Date.
Section 6.2.3. Issuance Fee. Borrower shall pay to Bank a per annum
issuance fee equal to one and three-quarters percent of the face amount of the
Stand-by Letter of Credit.
Section 6.2.4. Mortgage. Borrower shall execute and deliver, if required by
Bank or its legal counsel, an amendment or modification agreement with respect
to the Mortgage and arrange for the recording thereof on the appropriate filing
office. In addition, if required by Bank, Borrower shall deliver an endorsement
to any ALTA title insurance policy delivered by Borrower to Bank on the Closing
Date in respect of the Mortgaged Property.
Section 6.2.5. Form of Letter of Credit. The form of the Stand-by Letter of
Credit shall be acceptable to Bank and its legal counsel.
SECTION 7. AFFIRMATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that from the date hereof until the payment
and performance in full of the Obligations, unless Bank otherwise consents in
writing:
7.1. Financial Statements and Reporting Requirements. Borrower shall
furnish to Bank:
Section 7.1.1. As soon as available, but in no event later than ninety (90)
days after the end of each Fiscal Year, consolidated and consolidating Financial
Statements for each of Borrower and Guarantor for such year, audited and
certified by Arthur Andersen LLP (or other independent certified public
accountants acceptable to Bank) in the case of such consolidated statements, and
certified by the chief financial officer of Borrower or Guarantor, as
applicable, in the case of such consolidating statements; and, concurrently with
the delivery of such Financial Statements, a copy of said certified public
accountants' management report and a written statement by such accountants that,
in the making of the audit necessary for their report and opinion upon such
Financial Statements, they have obtained no knowledge of any Default or Event of
Default, or, if in the opinion of such accountants any such Default or Event of
Default exists, they shall disclose in such written statement the nature and
status thereof.
Section 7.1.2. As soon as available, but in no event later than thirty (30)
days after the end of each month internally prepared Financial Statements,
prepared in accordance with GAAP on year-to-date and month to date basis
certified by the chief financial officer of Borrower but subject, however, to
normal, recurring year-end adjustments that shall not in the aggregate be
material in amount.
Section 7.1.3. As soon as available, but in no event later than fifteen
(15) days after the end of each month, internally prepared copies of the
following financial reports: (i) a reconciliation of Accounts Receivable in
substantially the form of Exhibit F attached hereto;
-37-
<PAGE>
(ii) aging of accounts receivable and accounts payable; (iii) an accounts
receivable exclusion report in substantially the form of Exhibit G attached
hereto; (iv) a Borrowing Base Certificate and (v) a designation of merchandise
report in substantially the form of Exhibit H attached hereto, all prepared in
accordance with GAAP.
Section 7.1.4. As soon as available, but in no event later than five (5)
days after the end of each calendar week, a certificate in substantially the
form of Exhibit I attached hereto setting forth (i) Borrower's then existing
Eligible Inventory or, if requested by Bank, particular items, types or
categories thereof; (ii) Borrower's then existing Eligible Accounts Receivable;
(iii) such other information in respect of Inventory, Accounts Receivable,
Equipment and other Collateral as Bank may reasonably request; and (iv)
containing a calculation of Borrowing Base and borrowing availability as of the
date of said certificate (the "Borrowing Base Certificate").
Section 7.1.5. As soon as available, but in no event later than thirty (30)
days prior to the end of each Fiscal Year, forecasted Financial Statements
prepared in accordance with the standards set forth in Section 4.8. hereof,
showing a most probable scenario and including collateral availability and usage
under the Line of Credit and in such further reasonable detail as Bank may
request for each of the forthcoming twelve (12) months, month by month, together
with such appropriate supporting details and statements or assumptions.
Section 7.1.6. As soon as available, but in no event later than forty-five
(45) days after the end of each Fiscal Quarter, a report in substantially the
form of Exhibit J attached hereto signed on behalf of Borrower by its chief
financial officer.
Section 7.1.7. On a daily basis as required by Bank, a loan advance
confirmation report and/or a loan payment calculation report in substantially
the form of Exhibit A and Exhibit K attached hereto.
Section 7.1.8. As soon as available, copies of any and all reports filed by
Guarantor with the United States Securities and Exchange Commission, including
Form 10-Q and Form 10-K.
Section 7.2. Fire and Hazard Insurance. Borrower shall keep its properties
and assets insured against fire and other hazards (so called "All Risk
Coverage") in amounts and with companies satisfactory to Bank to the same extent
and covering such risks as is customary in the state or similar business, but in
no event in an aggregate amount less than the Obligations, which policies shall
name Bank as first loss payee as its interest may appear. Borrower shall also
maintain public liability coverage against claims for personal injuries or
death, business interruption, worker's compensation, employment or similar
insurance with coverage and in amounts satisfactory to Bank and as may be
required by applicable law. Such policies shall provide for a minimum of thirty
(30) days' written cancellation notice to Bank. Borrower agrees to deliver
copies of all of the aforesaid insurance policies to Bank. In the event of any
loss or
-38-
<PAGE>
damage to the Collateral, Borrower shall give immediate written notice to Bank
and to its insurers of such loss or damage and shall promptly file proof of loss
with its insurers.
Section 7.3. Maintenance of Existence. Except as provided by Section 8.6.
hereof, Borrower shall preserve and maintain its corporate existence, rights,
franchises and privileges, including its corporate name, in the jurisdiction of
its incorporation, and qualify and remain qualified as a foreign corporation in
each jurisdiction in which such qualification is necessary or desirable.
Section 7.4. Preservation of Collateral. Borrower shall preserve and
maintain the Collateral in good repair, working order and operating condition
(ordinary wear and tear excepted) and Borrower shall immediately notify Bank of
any event causing material loss or unusual depreciation in the value of the
Collateral.
Section 7.5. Taxes and Other Assessments. Borrower shall pay and discharge,
and maintain adequate reserves for the payment and discharge of, all taxes,
assessments, government charges or levies, or claims for labor, supplies, rent
or other obligations made against it or its properties and assets which, if
unpaid, might become an Encumbrance against Borrower or its properties and
assets, except liabilities which are being contested in good faith in
appropriate proceedings. Borrower shall file all Federal, state and local tax
returns and other reports that it is required by law to file other than returns
and other reports in respect of taxes which are being contested in good faith in
accordance with applicable law. Borrower shall promptly notify or cause notice
to be given to Bank of any pending audits of its income tax returns by the
Internal Revenue Service or by any state in which Borrower conducts business
operations and the results of each such audit.
Section 7.6. Inspection. Borrower shall permit Bank or its designees, at
any time during normal business hours and upon reasonable prior notice (or if a
Default or Event of Default shall have occurred and is continuing, at any time
and without prior notice), to (i) visit and inspect the properties and assets of
Borrower and its Subsidiaries; (ii) examine and make copies of and take
abstracts from the books and records of Borrower and its Subsidiaries; and (iii)
discuss the affairs, finances and accounts of Borrower and its Subsidiaries with
their appropriate officers, employees and accountants. In handling such
information Bank shall exercise the same degree of care that it exercises with
respect to its own proprietary information of the same types, to maintain the
confidentiality of any non-public information thereby received or received
pursuant to Section 7.1. hereof except that disclosure of such information may
be made (i) to Bank Affiliates in connection with their present or prospective
business relations with Borrower; (ii) to prospective transferees or purchasers
of an interest in the Obligations; (iii) as required by law, regulation, rule or
order, subpoena, judicial order or similar order; and (iv) as may be required in
connection with the examination, audit or similar investigation of Bank.
Borrower shall permit Bank (or any of its officers, agents, attorneys or
accountants) for the purpose of ascertaining whether or not each and every
provision of this Agreement or the Other Documents is being performed or for the
purpose of examining the Collateral and the records relating thereto, to enter
the offices and business premises of Borrower and its Subsidiaries, and
-39-
<PAGE>
to conduct an audit of the Collateral and/or Borrower's financial and business
records on four (4) occasions during each twelve (12) month period at such times
as Bank may select in its sole and absolute discretion; provided, however, that
Bank shall have the right to conduct such an audit on more than four (4)
occasions if a Default or Event of Default shall have occurred and be continuing
for such services. Any such audit shall be conducted at Borrower's expense at
Bank's then current rates plus expenses; provided, however, that such maximum
shall not apply if a Default or an Event of Default shall have occurred or be
continuing. Any charges and expenses relating to such audits shall be directly
debited by Bank from the Loan Account.
Section 7.7. Notices. Borrower shall promptly upon becoming aware of the
occurrence of a Default or Event of Default notify Bank thereof in writing.
Borrower shall also promptly advise Bank of:
(a) any labor controversy resulting in or threatening to result in a
strike or work stoppage against Borrower or its Subsidiaries;
(b) any change of independent public accountants, notice that such
change has occurred together with the name of the new accountants; or
(c) any other matter which has resulted or may result in a material
adverse change in Borrower's or its Subsidiaries financial condition or
business operations.
Section 7.8. Litigation. Borrower shall promptly inform Bank of any action,
suit, or proceeding by or before any Government Authority or arbitration or
alternate dispute resolution proceeding, which might have a Material Adverse
Effect.
Section 7.9. Maintenance of Books and Records. Each of Borrower and its
Subsidiaries shall keep adequate books and records of account, in which true and
complete entries will be made reflecting all of its business and financial
transactions, and such entries will be made in accordance with GAAP including
the maintenance of adequate reserves for depreciation of property, if such
reserves are required by GAAP. Each of Borrower and its Subsidiaries shall
maintain duplicate copies of all such books and records (i) on-site at all times
and (ii) off-site updated on a monthly basis.
Section 7.10. Maintenance of Permits. Borrower shall obtain and/or maintain
in full force and effect all material permits, authorizations, licenses,
approvals, waivers and consents which it presently possesses or which may may
become necessary in the future to conduct its business operations.
Section 7.11. Use of Proceeds. Borrower will use the proceeds of any
Extension of Credit solely for the purposes set forth in this Agreement.
Section 7.12. Payment of Indebtedness. Borrower shall promptly pay and
discharge when due and payable (or within applicable grace periods) all
Indebtedness due to any
-40-
<PAGE>
Person from Borrower, except when the amount thereof is being contested in good
faith by appropriate proceedings and with reserves therefor being established as
a current liability on the books of Borrower as required by GAAP.
Section 7.13. Additional Offices. Borrower shall give Bank written notice
of each additional facility or office of Borrower to be opened after the Closing
Date. Except to the extent set forth in any such notice, the chief executive
office of Borrower and all records relating to the Collateral shall be located
at the locations set forth in the Collateral Disclosure List.
Section 7.14. Access to Collateral. With respect to each location at which
the Collateral is now or hereafter located, Borrower will obtain (subject to the
provisions of existing leases and other restrictions) such lien waivers,
estoppel certificates or subordination agreements as Bank may reasonably require
to insure the priority of its security interest in, and, subject to applicable
law, its ability to take possession of, the Collateral situated at such
locations.
Section 7.15. Compliance with Laws. Borrower shall comply in all material
respects with the requirements of all applicable laws, ordinances, rules,
regulations and orders of any Government Authority.
Section 7.16. ERISA. Borrower shall: (i) make prompt payments of
contributions required to meet the minimum funding standards set forth under
ERISA with respect to each and every Plan and, promptly after the filing
thereof, furnish to Bank copies of each annual report required to be filed under
ERISA in connection with each and every Plan for each and every Plan year; (ii)
notify Bank immediately of any fact, including, but not limited to, any
"reportable event", arising in connection with any Plan which might constitute
grounds for the termination thereof by the PBGC or for the appointment by the
appropriate United States district court of a trustee to administer the Plan;
(iii) promptly after the issuance thereof, furnish to Bank a copy of any notice
of any "reportable event" given to the PBGC with respect to any Plan; (iv)
promptly after receipt thereof, furnish to Bank a copy of any notice received
from the PBGC relating to the intention of the PBGC to terminate any Plan or to
appoint a trustee to administer any Plan; and (v) furnish to Bank, promptly upon
its request therefor, such additional information concerning each and every Plan
as may be reasonably requested.
Section 7.17. Compliance with Environmental Laws.
(a) Borrower shall, from time to time, if requested by Bank upon reasonable
cause, retain, at Borrower's expense, an independent professional environmental
consultant to prepare a report relating to Hazardous Materials and to conduct an
investigation of any or all of the business premises of Borrower. Borrower
agrees also that Bank (or its agents) may, upon reasonable cause, from time to
time retain at Borrower's expense, an independent professional environmental
consultant to advise Bank as to any such report relating to Hazardous Materials.
Borrower hereby grants to Bank, its agents, employees, consultants and
contractors the right to enter into or onto Borrower's business premises to
perform such tests
-41-
<PAGE>
and/or sampling as are reasonably necessary to conduct such a review and/or
investigation in accordance with a mutually agreeable site access agreement
between Borrower and Bank.
(b) Borrower shall promptly advise Bank in writing and in reasonable detail
of (i) any Release of any Hazardous Material on its business premises required
to be reported to any Governmental Authority under any applicable Environmental
Laws; (ii) any and all written communications with respect to claims or suits
under such laws or any Release of Hazardous Materials on its business premises
required to be reported to any Federal, state or local governmental authority,
instrumentality or agency; (iii) any remedial action taken by Borrower or any
other Person in response to (A) any Hazardous Materials on, under or about the
business premises of Borrower, the existence of which could have a Material
Adverse Effect or (B) any claim or suit resulting in a material adverse change
of Borrower's business operations or financial condition; (iv) Borrower's
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of Borrower's business premises that could cause such premises to
be subject to any material restrictions on the ownership, occupancy,
transferability or use thereof under any Environmental Laws; and (v) any request
for information from any Governmental Authority that indicates such authority,
instrumentality or agency is investigating whether Borrower may be potentially
responsible for a Release of Hazardous Materials.
(c) Borrower shall, at its own expense, provide copies of such documents or
information as Bank may reasonably request in relation to any matters disclosed
pursuant to this Section 7.17.
(d) Borrower shall comply in material respects with all Environmental Laws
and establish and maintain policies and procedures to ensure and monitor
continued compliance with all Environmental Laws. Borrower shall promptly take
any and all remedial action required by applicable Environmental Laws in
connection with the presence, storage, use, disposal, transportation or Release
of any Hazardous Materials on, under or about its business premises. If Borrower
undertakes any remedial action with respect to any Hazardous Materials on, under
or about its business premises, Borrower shall conduct and complete such
remedial action in compliance with the policies, orders and directives of any
Governmental Authority except when and only to the extent that Borrower's
liability for such presence, storage, use, disposal, transportation or discharge
of any Hazardous Material or the scope or extent of the remedial action is being
contested in good faith by Borrower.
Section 7.18. Appraisals. Borrower shall permit Bank to obtain, at the
expense of Borrower, on one occasion during each twelve month period (and more
often if an Event of Default shall occur), appraisals of the Fixed Assets
prepared by an appraiser satisfactory to Bank in its sole and absolute
discretion.
SECTION 8. NEGATIVE COVENANTS
Borrower covenants and agrees that from the date hereof until the payment
and performance in full of the Obligations, unless Bank otherwise consents in
writing:
-42-
<PAGE>
Section 8.1. Limitation on Indebtedness. Neither Borrower nor any of its
Subsidiaries shall create, incur, assume, guarantee or be or remain liable with
respect to any Indebtedness other than the following ("Permitted Indebtedness"):
(a) Indebtedness of Borrower or any of its Subsidiaries to Bank or any
Bank Affiliates;
(b) Indebtedness existing as of the date of this Agreement and
disclosed on Schedule 8.1. attached hereto or in the Financial Statements
referred to in Section 4.7. hereof;
(c) Subordinated Indebtedness incurred with the prior written consent
of Bank;
(d) Indebtedness secured by Permitted Encumbrances; and
(e) other Indebtedness of Borrower in an aggregate outstanding
principal amount not exceeding (i) ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00) in any one (1) instance or TWO HUNDRED AND NO/100 DOLLARS
($200,000.00) in the aggregate during any twelve (12) month period or (ii)
FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($400,000.00) in the aggregate at
any one time outstanding.
Section 8.2. Contingent Liabilities. Neither Borrower nor any of its
Subsidiaries shall create, incur, assume, guarantee or remain liable with
respect to any Guarantees other than the following:
(a) Guarantees in favor of Bank or any Bank Affiliates;
(b) Guarantees existing on the date of this Agreement and disclosed on
Schedule 8.2. attached hereto or in the Financial Statements referred to in
Section 4.7. hereof;
(c) Guarantees resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business;
(d) Guarantees with respect to surety, appeal performance and
return-of-money and other similar obligations incurred in the ordinary
course of business (exclusive of obligations for the payment of borrowed
money) not exceeding (i) ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00) in any one (1) instance or TWO HUNDRED THOUSAND AND NO/100
DOLLARS ($200,000.00) in the aggregate in any twelve (12) month period or
(ii) FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($400,000.00) in the
aggregate at any one time; and
(e) Guarantees of normal trade debt relating to the acquisition of
goods and supplies.
-43-
<PAGE>
Section 8.3. Leases. Neither Borrower nor any of its Subsidiaries shall
during any Fiscal Year enter into any leases of real or personal property as
lessee, except for Capital Leases or leases providing for payments in any one
(1) fiscal year (whether or not such payments are termed rent) as permitted
under Section 8.1. hereof, that in the aggregate do not increase the aggregate
annual lease payments of Borrower and its Subsidiaries in excess of ONE HUNDRED
FIFTY THOUSAND AND NO/100 DOLLARS ($150,000.00) over such payments required to
be made during the immediately preceding Fiscal Year.
Section 8.4. Sale and Leaseback. Neither Borrower nor any of its
Subsidiaries shall enter into any arrangement, directly or indirectly, whereby
it shall sell or transfer any property owned by it in order to lease such
property or lease other property that Borrower or any such Subsidiary intends to
use for substantially the same purpose as the property being sold or
transferred.
Section 8.5. Encumbrances. Neither Borrower nor any of its Subsidiaries
shall (i) create, incur, assume or suffer to exist any Encumbrance, or (ii)
assign or otherwise convey any right to receive income, including the Accounts
Receivable, with or without recourse, except the following ("Permitted
Encumbrances"):
(a) Encumbrances in favor of Bank or any Bank Affiliates;
(b) Encumbrances existing as of the date of this Agreement and
disclosed in Schedule 4.24. attached hereto;
(c) liens for taxes, fees, assessments and other governmental charges
to the extent that payment of the same may be postponed or is not required
in accordance with the provisions of Section 7.5. hereof;
(d) landlords' and lessors' liens in respect of rent not in default or
liens in respect of pledges or deposits under worker's compensation,
unemployment insurance, social security laws, or similar legislation (other
than ERISA) or in connection with appeal and similar bonds incidental to
litigation or or liens securing the performance of bids, tenders, contracts
(other than for the payment of money); and statutory obligations incidental
to the conduct of its business and that do not in the aggregate materially
detract from the value of its property or materially impair the use thereof
in the operation of its business;
(e) judgment, mechanics', laborers' and materialmen's and similar
liens, if the obligations secured by such liens are not then delinquent;
liens securing the performance of bids, tenders, contracts (other than for
the payment of money) that shall not have been in existence for a period
longer than thirty (30) days after the creation thereof or, if a stay of
execution shall have been obtained, for a period longer than thirty (30)
days after the expiration of such stay;
(f) rights of lessors under Capital Leases;
-44-
<PAGE>
(g) Encumbrances in respect of any purchase money obligations for
tangible property used in its business incurred as permitted under Section
8.1. hereof; provided, however, that any such Encumbrances shall not extend
to properties and assets of Borrower or any such Subsidiary not financed by
such purchase money obligation;
(h) easements, rights of way, restrictions and other similar charges
or Encumbrances relating to real property and not interfering in a material
way with the ordinary conduct of its business; and
(i) Encumbrances on its property or assets created in connection with
the refinancing of Indebtedness secured by Permitted Encumbrances on such
property; provided, however, that the amount of Indebtedness secured by any
such Encumbrance shall not be increased as a result of such refinancing and
no such Encumbrance shall extend to property and assets of Borrower or any
such Subsidiary not encumbered prior to any such refinancing.
Section 8.6. Merger; Consolidation; Sale or Lease of Assets. Neither
Borrower nor any of its Subsidiaries shall sell, lease or otherwise dispose of
properties or assets (valued at the lower of cost or market), other than sales
of Inventory in the ordinary course of business or Equipment as permitted under
Section 10.3.5. hereof, or liquidate, merge or consolidate into or with any
other Person; provided, however, that any Subsidiary of Borrower may merge or
consolidate into or with (i) Borrower if no Default or Event of Default has
occurred and is continuing or would result from such merger and if Borrower is
the surviving company, or (ii) any other wholly-owned Subsidiary of Borrower.
Notwithstanding the foregoing, Borrower may sell its real property located in
the Town of Landis, Rowan County, North Carolina as long as no Default or Event
of Default shall have occurred and be continuing as of the date of sale and the
net proceeds of such sale are used by Borrower in accordance with Sections
2.3.5. and 8.8. of this Agreement.
Section 8.7. Additional Stock Issuance. Borrower shall not permit any of
its Subsidiaries to issue any additional shares of its capital stock or other
equity securities, any options therefor or any securities convertible thereto
other than to Borrower. Neither Borrower nor any of its Subsidiaries shall sell,
transfer or otherwise dispose of any of the capital stock or other equity
securities of a Subsidiary, except (i) to Borrower or any of its wholly-owned
Subsidiaries, or (ii) in connection with a transaction permitted by Section 8.6.
Section 8.8. Dividends. Borrower shall not pay any (i) Dividends on any
class of its capital stock or make any other distribution or payment on account
of or in redemption, retirement or purchase of such capital stock or (ii) make
any tax sharing payments, corporate overhead contribution or any other similar
payment, contributions or charge except as follows:
(a) No Default or Event of Default shall have occurred or be
continuing or result from the payment of any such Dividends or other
payments;
-45-
<PAGE>
(b) Dividends and other payments may be paid on a semi-annual basis to
Guarantor commencing with the Fiscal Quarter ending April 30, 1996; and
(c) Prior to the payment of any Dividends or other payments, Bank
shall confirm in writing Borrower's compliance with the financial covenants
set forth in Section 9 hereof and, in the case of the payment of Dividends
or other payments for the Fiscal Quarter ending April 30 in each year, Bank
shall have received all financial statements, reports and certificates then
required to be provided under Section 7.1. hereof. This Section 8.8. shall
not apply to (i) the issuance, delivery or distribution by Borrower of
shares of its capital stock pro rata to its existing shareholders and (ii)
the purchase or redemption by Borrower of its capital stock with the
proceeds of the issuance of additional shares of capital stock.
Section 8.9. Capital Expenditures. Neither Borrower nor any of its
Subsidiaries shall purchase or agree to purchase, or incur any obligations
(including that portion of obligations arising under Capital Leases that is
required to be capitalized on the consolidated balance sheet of Borrower and its
Subsidiaries) for, any equipment or other property constituting fixed assets in
excess of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) in any Fiscal
Year commencing with the Fiscal Year ending April 30, 1997 ("Permitted Capital
Expenditures").
Section 8.10. Investments. Neither Borrower nor any of its Subsidiaries
shall make or maintain any Investments other than (i) existing Investments in
Subsidiaries and (ii) Qualified Investments.
Section 8.11. ERISA. Neither Borrower nor any member of the Controlled
Group shall permit any plan maintained by it to (i) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code); (ii) incur any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether or
not waived; or (iii) terminate any Plan in a manner that could result in the
imposition of an Encumbrance on the property and assets of Borrower or any of
its Subsidiaries pursuant to Section 4068 of ERISA.
Section 8.12. Change in Terms and Prepayment of Subordinated Indebtedness.
Borrower shall not:
(a) effect or permit any change in or amendment to (i) the terms by
which any Subordinated Indebtedness purports to be subordinated to the
payment and performance of the Obligations or (ii) the terms relating to
the repayment of any Subordinated Indebtedness; or
(b) directly or indirectly, make any payment of any principal of or in
redemption, retirement or repurchase of Subordinated Indebtedness except
payments required by the instruments evidencing such Indebtedness.
-46-
<PAGE>
Section 8.13. Change in Management. Borrower shall not make a material
change in its present form and structure of business and financial management.
Section 8.14. Change Name or Location. Borrower shall not change its
corporate name or conduct its business under any name other than those set forth
in the Collateral Disclosure List or change its chief executive office, place of
business or location of the Collateral or records relating to the Collateral
from the locations set forth in the Collateral Disclosure List unless it has
given Bank at least thirty (30) days prior written notice.
Section 8.15. Contracts. Borrower shall not enter into any contract other
than on such terms as would be contained in an agreement executed at arms'
length with an unrelated third party.
Section 8.16. Compliance with Environmental Laws. Borrower shall not
generate, handle, use, store or treat any Hazardous Materials except in
compliance with Environmental Laws.
Section 8.17. Lines of Business. Borrower shall not make a material change
in or discontinue its existing lines of business nor enter into any new line or
lines of business except as set forth in the Forecasts.
Section 8.18. Fiscal Year. Borrower shall not change its existing Fiscal
Year.
SECTION 9. FINANCIAL COVENANTS.
Borrower covenants and agrees that from the date hereof, until the payment
and performance in full of the Obligations, unless Bank otherwise consents in
writing:
Section 9.1. Current Ratio. The ratio of Borrower's Consolidated Current
Assets to its Consolidated Current liabilities shall not be less than 1.50. to
1.0 at the end of each Fiscal Quarter.
Section 9.2. Consolidated Tangible Net Worth. Borrower's Consolidated
Tangible Net Worth shall be at least FIVE MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($5,500,000.00) at the end of each Fiscal Quarter and shall
increase during each Fiscal Quarter on a cumulative basis by fifty percent (50%)
of Borrower's Consolidated Net Income for such Fiscal Quarter.
Section 9.3. Debt Service Coverage. Borrower shall not permit the ratio of
its Consolidated Operating Cash Flow to Consolidated Total Debt Service to be
less than 1.25 to 1.0 at the end of each Fiscal Quarter. Borrower's compliance
with such covenant shall be calculated commencing with the Fiscal Quarter ending
April 30, 1996 on a rolling basis by reference to the Fiscal Quarter then ending
and the three (3) immediately preceding Fiscal Quarters.
-47-
<PAGE>
Section 9.4. Modified Debt Service Coverage. Borrower shall not permit the
ratio of its Consolidated Operating Cash Flow to Consolidated Total Debt Service
plus the Guarantor Dividends to be less than 1.75 to 1.0 at the end of each
Fiscal Quarter. Borrower's compliance with such covenant shall be calculated
commencing with the Fiscal Quarter ending April 30, 1996 on a rolling basis by
reference to the Fiscal Quarter then ending and the three (3) immediately
preceding Fiscal Quarters.
Section 9.5. Consolidated Total Liabilities to Consolidated Tangible Net
Worth Ratio. The ratio of Borrower's Consolidated Total Liabilities to its
Consolidated Tangible Net Worth shall not be greater than 1.50 to 1.0 at the end
of each Fiscal Quarter.
Section 9.6. Loan to Value Ratio. Borrower shall not permit the ratio of
the outstanding principal amount of the Term Loan to the Fixed Asset Value to
exceed 1.0 to 1.0 at any time.
Section 9.7. Definitions. The following capitalized terms used in this
Section 9 and in any certificate, report or other document, instrument or
agreement executed or delivered in connection with the covenants set forth in
this Section 9 shall have the meanings ascribed to such terms below:
Section 9.7.1. "Consolidated Current Assets" means, as of any date as of
which the amount thereof shall be determined, all amounts that should, in
accordance with GAAP, be included as current assets on the consolidated balance
sheet of Borrower and its Subsidiaries prepared as of such date,
Section 9.7.2. "Consolidated Current Liabilities" means, as of any date as
of which the amount thereof shall be determined, all amounts that should, in
accordance with GAAP, be included as current liabilities on the consolidated
balance sheet of Borrower and its Subsidiaries prepared as of such date, plus,
to the extent not already included therein, all Revolving Loans and all
Indebtedness that is payable upon demand or within one (1) year from the date of
determination thereof unless such Indebtedness is renewable or extendable at the
option of Borrower or any Subsidiary to a date more than one (1) year from the
date of determination.
Section 9.7.3. "Consolidated Net Income" means, for any period, the
consolidated net income (as such term is understood under GAAP) of Borrower but
excluding any extraordinary items of gain.
Section 9.7.4. "Consolidated Operating Cash Flow" means, for any period,
the Consolidated Operating Income of Borrower before any provision for (i)
interest expense for such period, (ii) amounts in respect of depreciation and
amortization for such period, and (iii) non-cash charges attributable to the
Union Agreement described in Schedule 4.25 hereto, minus (x) income taxes for
such period paid or required to be paid within one (1) year and (y) capital
expenditures for such period, excluding capital expenditures incurred by the
-48-
<PAGE>
Borrower in the fiscal year ending April 30, 1996 with respect to the expansion
of its Alliance, Ohio manufacturing facility and the acquisition of a
point-to-point boring machine in April 1996, all of the foregoing determined in
accordance with GAAP.
Section 9.7.5. "Consolidated Operating Income" means, for any period, the
consolidated revenues of Borrower for such period minus (i) the cost of goods
sold for such period and (ii) Borrower's selling, engineering and general and
administrative expenses for such period and (iii) amounts in respect of
depreciation and amortization for such period, all of the foregoing determined
in accordance with GAAP.
Section 9.7.6. "Consolidated Tangible Net Worth" means, as of any date as
of which the amount thereof shall be determined, the consolidated total assets
of Borrower and its Subsidiaries minus (i) the sum of any amounts attributable
to (a) goodwill; (b) intangible items such as unamortized debt discount and
expense, patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses; (c) all reserves not already
deducted from assets; (d) any write-up in the book value of assets resulting
from any reevaluation thereof subsequent to the date of the Financial Statements
referred to in Section 7.1.; and (e) the value of any minority interests in
Subsidiaries and (ii) Consolidated Total Liabilities.
Section 9.7.7. "Consolidated Total Debt" means, as of any date as of which
the amount thereof shall be determined, all Indebtedness of Borrower including
the Obligations as of such date.
Section 9.7.8. "Consolidated Total Debt Service" means, for any period, the
aggregate amount of Borrower's obligation to make payments of principal,
interest and other amounts in respect of all Consolidated Total Debt for such
period.
Section 9.7.9. "Consolidated Total Liabilities" means, as of any date as of
which the amount thereof shall be determined, all obligations that should, in
accordance with GAAP, be classified as liabilities on the consolidated balance
sheet of Borrower and its Subsidiaries, including in any event all Indebtedness.
Section 9.8. Establishment of Covenants. Bank and Borrower acknowledge that
the foregoing covenants were established by Borrower and Bank on the basis of
the Forecasts provided to Bank by Borrower under Section 4.8. after leaving a
margin in favor of Borrower which Borrower and Bank have mutually agreed is
fair. Accordingly, Borrower and Bank havemutually agreed that Borrower's failure
to comply with the express terms of any financial covenants shall be deemed
material for the purposes of this Agreement.
SECTION 10. SPECIAL COVENANTS RELATING TO COLLATERAL
Borrower covenants and agrees that from the date hereof until the payment
and performance in full of the Obligations, unless Bank otherwise consents in
writing:
-49-
<PAGE>
Section 10.1. Accounts Receivable. With respect to its Accounts Receivable:
Section 10.1.1. Borrower shall deposit all payments received from or on
behalf of an Account Debtor into an account established with Bank and Borrower
shall direct or otherwise cause all Account Debtors to pay all monies due under
their respective Accounts Receivable to a lockbox account (the "Lockbox
Account") maintained by Bank in Borrower's name at Borrower's expense and, to
the extent Borrower receives such payments directly, all remittances received by
Borrower on account of Accounts Receivable shall be held as Bank's property by
Borrower as trustee of an express trust for Bank's benefit, and Borrower will
immediately deliver to Bank the identical checks, moneys or other forms of
payment received. Borrower hereby constitutes Bank, or any representative whom
Bank may designate, as Borrower's attorney-in-fact (i) to endorse the name on
any notes, acceptances, checks, drafts, money orders or other evidence of
payment or security interest that may come into Bank's possession, and (ii)
following the occurrence of an Event of Default, to sign Borrower's name on any
invoice or bill of lading relating to Accounts Receivable, on drafts against
customers, assignments and certificates of Accounts Receivable, and notices to
customers. Bank retains the right at all times after the occurrence of an Event
of Default to notify Account Debtors that their respective Accounts Receivable
have been assigned to Bank and to collect Accounts Receivable directly in its
own name and to charge the collection costs and expenses, including reasonable
attorneys' fees to, the Loan Account. Bank has no duty to protect, insure,
collect or realize upon the Accounts Receivable or other collateral or preserve
rights in them other than to act in a commercially reasonable manner. Borrower
releases Bank from any liability for any act or omission relating to the
Obligations, the Accounts Receivable or other Collateral or this Agreement,
except Bank's failure to act in a commercially reasonable manner. All amounts
received by Bank in payment in Accounts Receivable assigned to it are to be
credited to the Loan Account upon receipt by Bank, conditioned upon collection
by Bank of good funds in respect thereof.
Section 10.1.2. Following the occurrence of an Event of Default and in
connection with any audit conducted under Section 7.6. hereof, and in all other
instances following written notice to Borrower, any of Bank's officers,
employees, or agents shall have the right, in Bank's name or in the name of
Borrower, to request the verification of the validity, amount or any other
matter relating to any Account Receivable by mail, telephone, facsimile
transmission, telegraph, or other communication to Account Debtors.
Section 10.1.3. Borrower shall keep accurate and complete records of its
Accounts Receivable and accounts payable, and upon demand by Bank shall deliver
to Bank copies of proof of delivery and the original copy of all documents,
including, without limitation, repayment histories and present status reports,
relating to Borrower's Accounts Receivable and accounts payable and such other
matters and information relating to the status of the Accounts Receivable and
accounts payable as Bank shall reasonably request.
Section 10.1.4. Borrower shall promptly advise Bank:
-50-
<PAGE>
(a) of any material delay in Borrower's performance of any of its
obligations to any Account Debtor or the assertion of any claim, offset or
setoff by any Account Debtor in excess of ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000.00); or
(b) in the event that any Eligible Account Receivable becomes
ineligible for reasons other than lapse of time in payment and the reasons
therefor; or
(c) of the receipt of any Government Contract which is subject to the
Federal Assignment of Claims Act of 1940; or
(d) of the receipt of any cancellation or termination of, or the
delivery of notice of default under, any Government Contract.
Section 10.1.5. Borrower shall promptly execute any assignment and take any
action requested or required by Bank with respect to any Account Receivable, the
face value of which exceeds ONE THOUSAND AND NO/100 DOLLARS ($1,000.00), which
arises out of a Government Contract in order to insure compliance with the
Federal Assignment of Claims Act of 1940.
Section 10.1.6. Borrower shall maintain all Accounts Receivable free of all
Encumbrances other than those in favor of Bank.
Section 10.2. Inventory. With respect to its Inventory:
Section 10.2.1. Borrower shall maintain all Inventory free of all
Encumbrances other than those in favor of Bank.
Section 10.2.2. Borrower shall not store or deposit any Inventory with a
bailee, warehouseman, or similar party without Bank's prior written consent and,
if Bank gives such consent, Borrower will concurrently therewith cause any such
bailee, warehouseman, or similar party to issue and deliver to Bank, in form and
substance acceptable to Bank and its legal counsel, warehouse receipts for such
Inventory in Bank's name or a warehouseman's waiver and agreement.
Section 10.2.3. If any Inventory is in the possession or control of any
third party other than a purchaser in the ordinary course of business or a
warehouseman where the warehouse receipt is in the name of or held by Bank or
whom has executed a warehouseman's waiver and consent in favor of Bank, Borrower
shall notify such Person of Bank's security interest therein and, upon request,
instruct such Person or Persons to hold all such Inventory for the account of
Bank and subject to Bank's instructions.
Section 10.3. Equipment. With respect to its Equipment:
-51-
<PAGE>
Section 10.3.1. Borrower shall maintain the Equipment used in the ordinary
course of business in good operating condition and repair, and make all
necessary replacements of and repairs thereto so that the value and operating
efficiency of the Equipment shall be maintained and preserved.
Section 10.3.2. The Equipment, other than when being used in the ordinary
course of business, is located or stored at the locations described in Schedule
3 of the Collateral Disclosure List (other than Equipment being temporarily
stored for purposes of repair or maintenance), and Borrower shall promptly
notify Bank, in writing, in the event Borrower shall store or locate the
Equipment at any location other than the locations specified in said Schedule 3.
Section 10.3.3. Borrower, immediately on demand therefor by Bank, shall
deliver to Bank any and all evidence of ownership, if any, of any of the
Equipment Borrower purports to own (including, without limitation, certificates
of title and applications for title).
Section 10.3.4. Borrower shall maintain accurate, itemized records,
itemizing and describing the kind, type, quality, quantity and value of its
Equipment and shall furnish Bank with a current schedule containing the
foregoing information at Bank's reasonable request.
Section 10.3.5. Borrower shall not sell, lease, or otherwise dispose of or
transfer any interest in any of its Equipment or any part thereof in excess of
FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00) in any one (1) instance or ONE
HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) in the aggregate during any
fiscal year without the prior written consent of Bank, unless (a) no Default or
Event of Default shall exist at the time of such sale, lease or disposition, (b)
such sale, lease or disposition is made in the ordinary course of Borrower's
business, and (c) the net proceeds of such sale, lease or disposition are used
for the purchase of additional Equipment on which Bank will have a first
priority security interest. Where Borrower is permitted to dispose of any
Equipment under this Agreement or by any consent thereto hereafter given by
Bank, it shall do so at arm's length, in good faith and by obtaining the maximum
amount of recovery practicable therefor and without impairing the operating
integrity of the remaining Equipment.
Section 10.3.6 Borrower shall, if requested by Bank with due cause, provide
to Bank a forced and orderly liquidation value appraisal of Borrower's Equipment
performed by an appraiser acceptable to Bank and at Borrower's expense.
SECTION 11. DEFAULT
Section 11.1. The occurrence of any of the following events shall
constitute a default under this Agreement, the Notes and the Other Documents (an
"Event of Default"):
-52-
<PAGE>
(a) Borrower shall fail to pay (i) any outstanding principal amount of
the Line of Credit when due, (ii) any Reimbursement Obligations when due,
(iii) any outstanding principal of the Term Loan within ten (10) days of
the due date or (iv) any accrued and unpaid interest on the Loans or any
fees or expenses payable under this Agreement, the Notes or the Other
Documents within ten (10) days of the due date; or
(b) Borrower shall fail to perform any term, covenant or agreement
contained in Sections 7.1., 7.3., 7.6., 7.11., 7.14., 8. or 10 of this
Agreement; or
(c) Borrower shall fail to perform any covenant or agreement contained
in Sections 7.2. or 7.4. of this Agreement, and such failure shall continue
for thirty (30) days; or
(d) Borrower shall fail to perform any other term, covenant or
agreement (other than terms, covenants or agreements which are the subject
of Sections 11.1.(a) through 11.1.(c) and Section 11.1.(k) hereof)
contained in this Agreement and such default shall continue for thirty (30)
days after notice thereof has been sent to Borrower by Bank; or
(e) any representation or warranty of the Credit Parties made in this
Agreement, the Notes or the Other Documents or in any certificate or report
delivered hereunder or thereunder shall prove to have been false in any
material respect upon the date when made or deemed to have been made; or
(f) Any Credit Party shall fail to pay at maturity (unless disputed in
good faith), or within any applicable period of grace, any Indebtedness or
obligations for the use of real or personal property in excess of ONE
HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) in the aggregate or fail
to observe or perform any term, covenant or agreement evidencing or
securing such Indebtedness, or obligations for the use of real or personal
property, or relating to such use of real or personal property, the result
of which failure is to permit (i) the holder or holders of such
Indebtedness or obligations to cause the same to become due prior to its
stated maturity or (ii) the lessor of such real or personal property to
terminate such Credit Party use thereof prior to the specified term
therefor; or
(g) Any Credit Party shall (i) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar official of itself or of all or a substantial part of
its properties and assets; (ii) be generally not paying its debts as such
debts become due; (iii) make a general assignment for the benefit of its
creditors; (iv) commence a voluntary case under Bankruptcy Code; (v) take
any action or commence any case or proceeding under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, or any other law providing for the relief of debtors;
(vi) fail to contest in a timely or appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under
Bankruptcy Code or other law; (vii) take any action under the laws of its
jurisdiction of incorporation or organization similar to any of the
foregoing; or (viii) take any corporate action for the purpose of effecting
any of the foregoing; or
-53-
<PAGE>
(h) a proceeding or case shall be commenced, without the application
or consent of any Credit Party in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, dissolution, winding up, or
composition or readjustment of its debts; (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of it or of all or any
substantial part of its properties and assets; or (iii) similar relief in
respect of it, under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts or any
other law providing for the relief of debtors, or an order for relief shall
be entered in an involuntary case under the Bankruptcy Code, against any
Credit party; or action under the laws of the jurisdiction of incorporation
or organization of Borrower or any of its Subsidiaries similar to any of
the foregoing shall be taken with respect to any such Credit Party; or
(i) a judgment or order for the payment of money shall be entered
against any Credit Party by any court, or a warrant of attachment or
execution or similar process shall be issued or levied against property of
any Credit Party that in the aggregate exceeds ONE HUNDRED THOUSAND AND
NO/100 DOLLARS ($100,000.00) in value and such judgment, order, warrant or
process shall continue undischarged or unstayed for sixty (60) days; or
(j) Borrower or any member of the Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess of [ONE HUNDRED
THOUSAND AND NO/100 DOLLARS ($100,000.00)] that it shall have become liable
to pay to the PBGC or to a plan under Title IV of ERISA; intent to
terminate a plan or plans shall be filed under Title IV of ERISA by
Borrower, any member of the Controlled Group, any plan administrator or any
combination of the foregoing, if as of the date on which the Plan is
terminated the unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA exceeds ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00); or the PBGC shall institute proceedings under Title IV of
ERISA to terminate or to cause a trustee to be appointed to administer any
such plan or plans or a proceeding shall be instituted by a fiduciary of
any such plan or plans against Borrower and such proceedings shall not have
been dismissed within thirty (30) days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such plan or plans must be terminated; or
(k) Borrower shall fail to meet any financial covenant set forth in
Section 9. hereof; or
(l) Borrower's independent certified public accountants shall refuse
to deliver an opinion with no Qualification with respect to any Financial
Statements required to be delivered under Section 7.1.1. of this Agreement;
or
(m) The failure of Borrower to execute, deliver or address, or cause
to be executed, delivered and addressed, the matters set forth on Schedule
11.1. attached hereto within thirty (30) days after the Closing Date (the
"Post Closing Matters"); or
-54-
<PAGE>
(n) Any Government Authority shall condemn, seize or otherwise
appropriate, or take custody or control of, or file a lien, levy or
assessment in respect of, all or any substantial portion of the properties
or assets of and Credit Party; or
(o) Any Governmental Authority or other Person shall garnish, seize or
levy or execute upon any monies of any Credit Party on deposit with or
otherwise in the custody of Bank or any Bank affiliate; or
(p) Any material change in the executive or financial management
personnel of Borrower shall occur without the prior written approval of
Bank; or
(q) Bank, at any time and in good faith, shall deem itself insecure
(and for the purposes of this Agreement, Bank shall be entitled to deem
itself insecure when some event occurs, fails to occur or is threatened or
some objective condition exists or is threatened which materially impairs
the prospects that any of the Obligations will be paid when due, which
significantly impairs the value of the Collateral to Bank or which
materially affects the financial condition or business operations of any
Credit Party).
SECTION 12. REMEDIES
Section 12.1. Remedies. Upon the occurrence of an Event of Default, and at
any time thereafter while such Event of Default is continuing, immediately and
automatically in the case of an event of Default specified in Section 11.1(g) or
11.1.(h), and in all other cases, at Bank's option and upon Bank's declaration:
(a) Bank's obligation to make any Extension of Credit (including the
issuance of the Stand-by Letter of Credit) shall terminate;
(b) the unpaid principal amount of the Loans, together with accrued
interest thereon, and all other Obligations shall become immediately due
and payable without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived;
(c) Bank may exercise any right of setoff granted to Bank pursuant to
Section 13.2.4 hereof;
(d) Bank may reduce any advance rate in respect of Borrower's Accounts
Receivable or Inventory as set forth in Sections 1.100. and 1.101. of this
Agreement; and
(e) Bank may exercise any and all other rights and remedies it has
under this Agreement, the Notes or the Other Documents or at law or in
equity, and proceed to protect and enforce Bank's rights by any action at
law, in equity or other appropriate proceeding.
-55-
<PAGE>
Section 12.2. Default Interest Rate. At Bank's option, which may be
exercised following any Event of Default, whether or not Bank exercises any
other right or remedy, the Obligations shall bear interest thereafter at the
Default Rate.
SECTION 13. MISCELLANEOUS
Section 13.1. Cross Collateral. The security interests, liens and other
rights and interests in and relative to any collateral now or hereafter granted
to Bank by Borrower by or in any instrument or agreement, including but not
limited to this Agreement and the Other Documents, shall serve as security for
any and all obligations of Borrower to Bank, and, for the repayment thereof,
Bank may resort to any security held by it in such order and manner as it may
elect.
Section 13.2. Waivers.
Section 13.2.1. In General. Borrower waives presentment, demand, notice,
protest, notice of acceptance, notice of loans made, credit extended, collateral
received or delivered or other action taken in reliance hereon and all other
demands and notices of any description. With respect both to the Obligations and
the Collateral, Borrower assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of the
Collateral, to the addition or release of any party or Person primarily or
secondarily liable therefor, to the acceptance of partial payments thereon and
the settlement, compromising or adjusting of any thereof, all in such manner and
at such time or times as Bank may deem advisable in its sole and absolute
discretion. Bank shall have no duty, other than to act in a commercially
reasonable manner, as to the collection or protection of the Collateral or any
income thereon, as to the preservation of rights or remedies against prior
parties, or as to the preservation of any rights and remedies pertaining
thereto. Bank may exercise its rights and remedies with respect to the
Collateral without resorting or regard to other collateral or sources of
reimbursement for liability. Bank shall not be deemed to have waived any of its
rights and remedies with respect to the Obligations or the Collateral unless
such waiver be in writing and signed by Bank. No delay or omission on the part
of Bank in exercising any right or remedy shall operate as a waiver of such
right or remedy or any other right or remedy. A waiver on any one occasion shall
not be construed as a bar to any subsequent enforcement by Bank. All rights and
remedies of Bank with respect to the Obligations or the Collateral shall be
cumulative and may be exercised singularly or concurrently.
Section 13.2.2. PREJUDGMENT REMEDY. EACH CREDIT PARTY ACKNOWLEDGES THAT THE
TRANSACTION OF WHICH THIS AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION AND
HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE
CONNECTICUT GENERAL STATUTES OR BY OTHER APPLICABLE LAW WITH RESPECT TO ANY
PREJUDGMENT REMEDY WHICH BANK MAY DESIRE TO USE.
-56-
<PAGE>
Section 13.2.3. JURY TRIAL. EACH CREDIT PARTY HEREBY WAIVES TRIAL BY JURY
IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING OR ANY MATTER ARISING IN
CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTION OF WHICH THIS AGREEMENT
IS A PART AND/OR IN THE ENFORCEMENT BY BANK OF ANY OF ITS RIGHTS AND REMEDIES
HEREUNDER OR UNDER APPLICABLE LAW. EACH CREDIT PARTY ACKNOWLEDGES THAT IT MAKES
THIS WAIVER KNOWINGLY, VOLUNTARILY AND ONLY AFTER CONSIDERATION OF THE
RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEY.
Section 13.2.4. Lien and Setoff. Regardless of the adequacy of any
collateral or other means of obtaining repayment of the Obligations, any
deposits (general or special, time or demand, provisional or final), balances or
other sums credited by or due from Bank or any Bank Affiliate to Borrower (other
than payroll and payroll tax deposit accounts) may, at any time and from time to
time after the occurrence of an Event of Default, without notice to Borrower or
compliance with any other condition precedent now or hereafter imposed by
statute, rule of law, or otherwise (all of which are hereby expressly waived) be
setoff, appropriated, and applied by Bank or any Bank Affiliate against any and
all obligations of Borrower to Bank or any Bank Affiliate in such manner as Bank
or any Bank Affiliate in their sole and absolute discretion may determine, and
Borrower hereby grants Bank a continuing security interest in such deposits,
balances or other sums for the payment and performance of all such obligations.
The rights provided to Bank and any Bank Affiliate in this Section 13.2.4. shall
be in addition to and shall not limit any common law right of setoff available
to Bank or any Bank Affiliate.
Section 13.2.5. Claims. Borrower does hereby (i) waive any claim in tort,
contract or otherwise which Borrower may have against Bank, a Bank Affiliate or
their officers, directors, agents, or employees (collectively, "Bank Agents")
which may arise out of the relationship between Borrower and Bank or any Bank
Affiliate prior to the Closing Date; and (ii) absolutely and unconditionally
release and discharge Bank and any Bank Affiliate or Bank Agents from any and
all claims, causes of action, losses, damages or expenses which may arise out of
any relationship between it and Bank or any Bank Affiliate which Borrower may
have as of the Closing Date. Borrower acknowledges that it makes this waiver and
release knowingly, voluntarily and only after considering the ramifications of
this waiver and release with its attorney.
Section 13.3. Notices. All notices, requests, demands or other
communications required by this Agreement shall be made in writing, and unless
otherwise specifically provided herein, shall be deemed to have been duly given
when delivered by hand or mailed first class mail postage prepaid, or, in the
case of telecopy or facsimile notice, when transmitted, answer back received,
addressed as follows, or to such other address as either party may designate in
writing:
If to Bank:
-57-
<PAGE>
Bank of Boston Connecticut
100 Pearl Street
Hartford, CT 06103
Attn: Roger J. Roche, Jr.
Director
If to Borrower:
Greensteel, Inc.
866 North Main Street Extension
Wallingford, CT 06492
Attn: Alan J. Nickerson,
Chief Financial Officer
Section 13.4. Fees and Expenses. Borrower will pay on demand all expenses
incurred by Bank in connection with (i) the preparation, execution and delivery
of this Agreement, the Notes or the Other Documents, (ii) the administration of
Bank's obligations under this Agreement or (iii) Bank's exercise, preservation
or enforcement of any of its rights and remedies thereunder, including, without
limitation, reasonable fees and expenses of outside legal counsel or the
allocated costs of in-house legal counsel, accounting, appraisal, auditing,
consulting, brokerage or other similar professional fees or expenses, and any
fees or expenses associated with any travel or other costs relating to any
appraisals or examinations conducted in connection with the Obligations or the
Collateral.
Section 13.5. Term of Agreement. This Agreement shall continue in force and
effect so long as Bank has any commitment to extend credit or any of the
Obligations shall be outstanding.
Section 13.6. Stamp Tax. Borrower will pay any stamp, franchise or other
recording tax which becomes payable in respect of this Agreement, the Notes or
the Other Documents.
Section 13.7. Schedules and Exhibits. The schedules and exhibits which are
attached hereto are and shall constitute a part of this Agreement.
Section 13.8. Governing Law; Consent to Jurisdiction. This Agreement, the
Notes and the Other Documents, and the rights and obligations of the parties
hereunder and thereunder, shall be governed by and construed and interpreted in
accordance with, the laws of the State of Connecticut. Borrower agrees that any
suit for the enforcement of this Agreement, the Notes or the Other Documents may
be brought in the courts of the State of Connecticut or any federal court
sitting therein and consents to the non-exclusive jurisdiction of such court and
to service of process in any such suit being made upon Borrower by mail at the
address referred to Section 13.3. hereof. Borrower hereby waives any objection
that Borrower may now or
-58-
<PAGE>
hereafter have to the venue of any such suit or any such court or that such suit
is brought in an inconvenient court.
Section 13.9. Survival of Representations. All representations, warranties,
covenants and agreements contained in this Agreement, the Notes or the Other
Documents shall survive the Closing Date and continue in full force and effect
until the payment and the performance of the Obligations in full.
Section 13.10. Amendments. No modification or amendment of this Agreement,
the Notes or the Other Documents shall be effective unless the same shall be in
writing and signed by the parties hereto.
Section 13.11. Binding Effect of Agreement. This Agreement shall be binding
upon and inure to the benefit of Borrower and Bank and their respective
successors and assigns; provided, however, that Borrower may not assign or
transfer its rights or obligations hereunder. Bank may sell, transfer or grant
participations in the obligations without the prior written consent of Borrower
(but after obtaining an agreement to maintain the confidentiality of any
financial and business information of Borrower), and Borrower agrees that any
transferee or participant shall be entitled to the benefits of this Agreement to
the same extent as if such transferee or participant were Bank; provided,
further, that notwithstanding any such transfer or participation, Borrower may,
for all purposes of this Agreement, treat Bank as the Person entitled to
exercise all rights and remedies under this Agreement and under the Notes and
the Other Documents and to receive all payments with respect to the Obligations.
Section 13.12. Interest Rate. If the rate of interest payable by Borrower
under this Agreement, the Notes or the Other Documents shall be or become
usurious or otherwise unlawful under laws applicable thereto, the interest rate
shall be reduced to the maximum lawful rate and any amount paid by Borrower in
excess of the maximum lawful rate shall be considered a payment in reduction of
principal or, at the sole election of Bank, shall be returned to Borrower.
Section 13.13. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon one and the same instrument.
Section 13.14. No Agency Relationship. Bank is not the agent, fiduciary or
representative of Borrower nor is Borrower the agent, fiduciary or
representative of Bank and this Agreement shall not make Bank liable to any
third party, including but not limited to, Borrower's shareholders, directors,
officers, creditors or any other person.
Section 13.15. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
-59-
<PAGE>
Section 13.16. Headings. All article, section and subsection headings in
this Agreement, the Notes and the Other Documents are included for convenience
of reference only and shall not constitute a part of this Agreement, the Notes
or the Other Documents for any other purpose.
Section 13.17. Reinstatement. This Agreement shall continue to be effective
or be reinstated, as the case may be, if at any time any amount received by Bank
in respect of the Obligations is rescinded or must otherwise be restored or
returned by Bank upon the insolvency, Bankruptcy, dissolution, liquidation or
reorganization of Borrower or upon the appointment of any intervenor or
conservator of, or trustee or similar official for, Borrower or any substantial
part of its properties or assets, or otherwise, all as though such payments had
not been made.
Section 13.18. Interpretation and Construction. The following rules shall
apply to the interpretation and construction of this Agreement, the Notes and
the Other Documents unless the context requires otherwise: (a) the singular
includes the plural and the plural includes the singular; (b) words importing
any gender include the other genders; (c) references to statutes are to be
construed as including all statutory provisions consolidating, amending or
replacing the statute to which reference is made and all regulations promulgated
pursuant to such statutes; (d) references to "writing" shall include printing,
photocopy, typing, lithography and other means of reproducing words in a
tangible, visible form; (e) the words "including", "includes" and "include"
shall be deemed to be followed by the words "without limitation"; (f) references
to the introductory paragraph, preliminary statements, articles, sections (or
subdivisions of sections), exhibits or schedules are to those of this Agreement
unless otherwise indicated; (g) references to agreements and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications to such instruments, but only to the extent that such amendments
and other modifications are permitted or not prohibited by the terms of this
Agreement; (h) references to Persons include their respective permitted
successors and assigns; and (i) "or" is not exclusive.
Section 13.19. Relation to Other Documents. Nothing in this Agreement shall
be deemed to amend, or relieve Borrower of its obligations under, any of the
Other Documents and to the extent that the provisions of any of the Other
Documents allow Borrower to take certain actions, or not take certain actions,
with regard for example to the granting of liens, transfers of properties or
assets, maintenance of financial ratios and similar matters, Borrower
nevertheless shall be fully bound by the provisions of this Agreement.
Section 13.20 Confidentiality. The Bank agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information provided to it by the Borrower under this Agreement or the Other
Documents, and the Bank shall not use any such information other than in
connection with or in the administration or enforcement of this Agreement and
the Other Documents, except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Bank, (ii) was or becomes available on a non-confidential basis from a source
other than the Borrower, provided that such source is not bound by a
confidentiality agreement with the Borrower, known
-60-
<PAGE>
to the officers of the Bank handling the transaction contemplated hereby; and
provided, further, that the Bank may disclose such information (A) at the
request or pursuant to any requirement of any governmental authority or
regulator to which the Bank is subject or in connection with an examination of
the Bank by any such authority or regulator, (B) pursuant to subpoena or other
court process, (C) when required to do so in accordance with the provisions of
any applicable law, (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Bank may be party, (E) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any Other Document, (F) to the Bank's independent auditors, attorneys,
accountants and other professional advisors, and (G) to any Affiliate of the
Bank provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Bank hereunder.
Section 13.21. GAAP Changes. Notwithstanding anything to the contrary set
forth herein, if changes in GAAP from those used in the preparation of the
Borrower's Financial Statements for the fiscal year ended April 30, 1995 ("GAAP
Changes") hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) result in a change in the method of
calculation of, or in different components in, any of the financial covenants,
definitional provisions, standards of other terms or conditions found in this
Agreement, (i) the parties hereto agree to enter into negotiations with respect
to amendments to this Agreement to conform those covenants, definitional
provisions, standards or other terms and conditions as criteria for evaluating
the Borrower's financial condition and performance to substantially the same
criteria as were effective prior to such GAAP Change, and (ii) the Borrower
shall be deemed to be in compliance with the affected covenant or other
provision during the thirty (30) day period following any such GAAP Change if
and to the extent that the Borrower would have been in compliance therewith
under GAAP as in effect immediately prior to such GAAP Change; provided,
however, that this Section 13.21 shall not be deemed to require the Borrower or
the Bank to agree to modify any provision of this Agreement or the Other
Documents to reflect any such GAAP Change and, if the parties, in their sole
discretion, fail to reach agreement on such modifications prior to the end of
the thirty (30) day period referred to in clause (ii), the terms of this
Agreement shall remain unchanged and the compliance of the Borrower with the
financial covenants and other provisions contained herein shall, upon the
expiration of such thirty (30) day period, be calculated in accordance with GAAP
without giving effect to such GAAP Change.
-61-
<PAGE>
Section 13.22. Environmental Law Changes. Notwithstanding any provision of
this Agreement to the contrary, if changes in any Environmental Law or in any
Environmental Law which defines Hazardous Materials shall occur by virtue of the
enactment of new statutory laws, the adoption of regulations, the judicial or
administrative interpretation of new or existing Environmental Laws, the
expansion of existing such laws, or otherwise, and the result of such change is
to cause Borrower to be in default of any covenant or other provision under this
Agreement, then Borrower shall be deemed to be in compliance with the affected
covenant or other provision during the thirty (30) day period following any such
change if and to the extent that the Borrower would have been in compliance
therewith under Environmental Laws as in effect immediately prior to such
change; provided, however, that this Section 13.22 shall not be deemed to
require the Borrower or the Bank to agree to modify any provision of this
Agreement or the Other Documents to reflect any such change and, if the parties,
in their sole discretion, fail to reach agreement on such modifications prior to
the end of the thirty (30) day period referred to in clause (ii), the terms of
this Agreement shall remain unchanged and the compliance of the Borrower with
the financial covenants and other provisions contained herein shall, upon the
expiration of such thirty (30) day period, be determined by giving effect to
such changes.
IN WITNESS WHEREOF, Bank and Borrower have executed this Agreement as of
the date first above written.
BANK OF BOSTON CONNECTICUT
By: /s/ Roger J. Roche, Jr.
____________________________________________
Name: Roger J. Roche, Jr.
Title: Director
GREENSTEEL, INC.
By: /s/ Alan J. Nickerson
____________________________________________
Name: Alan J. Nickerson
Title: Treasurer and Secretary
POLYVISION CORPORATION)
(to the extent of Section 4 hereof
By: /s/ Alan J. Nickerson
____________________________________________
Name: Alan J. Nickerson
Title: Chief Financial Officer and Secretary
-62-
Exhibit 10.27
SECURITY AGREEMENT
This SECURITY AGREEMENT (the "Agreement") is made as of this 25th day of
April 1996 by and between BANK OF BOSTON CONNECTICUT, a Connecticut savings
bank, with its head office located at 31 Pratt Street, Hartford, Connecticut
06103 (the "Bank" or "Secured Party") and GREENSTEEL, INC., a Delaware
corporation, with its chief executive office located at 866 North Main Street
Extension, Wallingford, Connecticut 06492 ("Debtor").
WITNESSETH:
WHEREAS, pursuant to the provisions of a certain Master Credit Agreement of
even date herewith between Debtor and Bank (as amended and in effect from time
to time (the "Credit Agreement"), Bank has agreed to make loans and advances and
otherwise extend credit to Debtor; and
WHEREAS, Bank has requested that Debtor agree to provide certain collateral
to secure repayment of Debtor's obligations to Bank pursuant to the Credit
Agreement and any other present or future loan, advance or extension of credit
by Bank to Debtor; and
WHEREAS, Debtor has agreed to provide said collateral; and
NOW, THEREFORE, in consideration of the foregoing and of the covenants set
forth herein, Secured Party and Debtor hereby agree as follows:
Section 1. DEFINITIONS.
All capitalized terms used herein or in any certificate, report or other
document delivered pursuant hereto, unless otherwise defined, shall have the
meanings assigned to them below.
Section 1.1. "Accounts" means all rights of Debtor to payment for goods
sold or leased or for services rendered, all sums of money or other proceeds due
or becoming due thereon, all instruments pertaining thereto, all guarantees and
security therefor, and Debtor's rights pertaining to and interest in such goods,
including the right of stoppage in transit, replevin or reclamation; all Chattel
Paper; all amounts due from affiliates of Debtor; all insurance proceeds; all
other rights and claims to the payment of money, under contracts or otherwise;
and all other property constituting "accounts" as such term is defined in the
Uniform Commercial Code.
Section 1.2. "Collateral" means all Accounts, Chattel Paper, Documents,
Goods, Fixtures, Securities, Documents of Title, Inventory, Instruments, General
Intangibles, Equipment
<PAGE>
and Records now owned or acquired at any time hereafter by Debtor, wherever
located or situated, and the products and proceeds (including condemnation
proceeds) of the foregoing, all accessions and additions thereto and all
substitutions and replacements therefor.
Section 1.3. "Collateral Disclosure List" has the meaning set forth in the
Credit Agreement.
Section 1.4. "Chattel Paper" means "chattel paper" as that term is defined
in the Uniform Commercial Code.
Section 1.5. "Documents" means "documents" as that term is defined in the
Uniform Commercial Code.
Section 1.6. "Documents of Title" means "documents of title" as defined in
the Uniform Commercial Code.
Section 1.7. "Encumbrance" or "Encumbrances" means any security interest,
mortgage, pledge, lien, claim, charge, encumbrance, title retention agreement,
lessor's interest under a financing lease or any analogous arrangements in any
of the Collateral , intended as, or having the effect of, security.
Section 1.8. "Equipment" means all machinery, equipment and fixtures,
office furniture, furnishings and trade fixtures, specialty tools and parts,
motor vehicles and materials handling equipment of Debtor, together with
Debtor's interest in, and right to, any and all manuals, computer programs, data
bases and other materials relating to the use, operation or structure of any of
the foregoing; and all other property constituting "equipment" as such term is
defined in the Uniform Commercial Code.
Section 1.9. "Event of Default" has the meaning set forth in Section 7
hereof.
Section 1.10. "Fixtures" means "fixtures" as that term is defined in the
Uniform Commercial Code.
Section 1.11. "General Intangibles" means all rights with respect to
trademarks, service marks, trade names, trade styles, patents, copyrights,
trade-secrets information, other proprietary rights and rights to prevent others
from doing acts that constitute unfair competition with Debtor or
misappropriation of its property, including without limitation any sums (net of
expenses) that Debtor may receive arising out of any claim for infringement of
its rights in any of the foregoing, and all rights of Debtor under contracts to
enjoy performance by others or to be entitled to enjoy rights granted by others,
including without limitation any licenses; all tax refunds; all rights, title
and interest of Debtor in and to all documents, books, records and other
information (on whatever medium recorded, and including without limitation
computer programs, tapes, discs, punch cards, data processing software and
related property and rights) maintained by Debtor that reflect the conduct of
Debtor's business, such as financial records, marketing and sales records,
research and development records, and design, engineering and
<PAGE>
manufacturing records; all rights under service bureau service contracts; all
computer data and the concepts and ideas on which said data is based; all
developmental ideas and concepts, papers, plans, schematics, drawing,
blueprints, sketches and documents; all data bases; all customer lists; and all
other property constituting "general intangibles" as such term is defined in the
UCC.
Section 1.12. "Goods" means "goods" as that term is defined in the UCC.
Section 1.13. "Instruments" means "instruments" as that term is defined in
the UCC.
Section 1.14. "Inventory" means any and all goods, merchandise and other
personal property (including warehouse receipts and other negotiable and
non-negotiable documents of title covering any such property) of Debtor that are
held for sale, lease or other disposition, or for display or demonstration, or
leased or consigned, or that are raw materials, piece goods, supplies, work-
in-process, finished goods, goods returned by customers, or materials used or
consumed or to be used or consumed in Debtor's business, whether in transit or
in the possession of Debtor or another, including without limitation all goods
covered by purchase orders and contracts with suppliers and all goods billed and
held by suppliers and goods located on the premises of any carriers, forwarding
agents, truckers, warehousemen, vendors, selling agents or other third parties;
all proprietary rights, patents, plans, drawings, diagrams, schematics, assembly
and display materials relating to any of the foregoing; and all other property
constituting "inventory" as such term is defined in the UCC.
Section 1.15. "Obligations" means any and all loans, advances,
indebtedness, liabilities, obligations, covenants or duties of Debtor to Bank of
any kind or nature, including obligations to pay money and to perform acts or
refrain from taking action, whether arising under a loan, lease, credit card,
line of credit, letter of credit, guaranty, indemnity, overdraft, confirmation,
acceptance, interest rate protection, currency exchange or other type of
financing arrangement, and any and all extensions and renewals thereof, and
modifications and amendments thereto, whether in whole or in part, whether
created directly by Bank or acquired by assignment, purchase, discount or
otherwise, whether any of the foregoing are direct or indirect, joint or
several, absolute or contingent under, due or to become due, now existing or
hereafter arising under any present or future agreement or instrument, and
whether or not evidenced by a writing and specifically including but not being
limited to unpaid principal and all accrued and unpaid interest thereon,
together with all fees, expenses, including attorneys' fees, penalties, and
other amounts owing by or chargeable to by Debtor under the Credit Agreement.
Section 1.16. "Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture or other entity of whatever nature, whether public or private.
Section 1.17. "Records" means all books, records, customer lists, ledger
cards, computer programs, computer tapes, disks, printouts and records and other
property and General
<PAGE>
Intangibles at any time evidencing or relating to any of the types (or items) of
property covered by this Agreement, whether now in existence or hereafter
created.
Section 1.18. "Securities" means all of the securities and instruments of
Debtor, including without limitation all stocks, bonds, Treasury bills,
certificates of deposit and mutual or money market fund shares; and all sums due
or to become due on any of the foregoing, and all securities, instruments or
other property purchased or acquired as a result of the investment and
reinvestment thereof as hereinafter provided, and all other property
constituting "securities" as such term is defined in the UCC.
Section 1.19. "Subsidiary" has the meaning set forth in the Credit
Agreement.
Section 1.20. "Uniform Commercial Code" or "UCC" means the Uniform
Commercial Code as in effect in the State of Connecticut.
Section 2. GRANT.
As security for the prompt and complete payment and performance of the
Obligations, Debtor hereby grants to Secured Party a continuing security
interest in, and assigns and pledges to Secured Party, all of its right, title
and interest in and to the Collateral.
Section 3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Debtor makes the following representations and warranties, and agrees to
the following covenants, each of which representations, warranties and covenants
shall be continuing and in force so long as this Agreement is in effect:
Section 3.1. Name; Debtor/Collateral Location; Changes.
(a) The name of Debtor set forth on the first page hereof is the true and
correct legal name of Debtor, and except as otherwise disclosed to
Secured Party in the Collateral Disclosure List Debtor has not done
business as or used any other name.
(b) The address of Debtor set forth on the first page hereof is Debtor's
chief executive office and the place where its business records are
kept. Except as disclosed in the Collateral Disclosure List, all
tangible Collateral other than Securities is located at such chief
executive office.
(c) Debtor will not change its name, identity or organizational structure
or chief executive office or place where its business records are
kept, or move any tangible Collateral (other than Securities) to a
location other than those set forth in the Collateral Disclosure List,
or merge into or consolidate with any other Person, unless Debtor
shall have given Secured Party at least thirty (30) days' prior
written notice thereof and shall have
<PAGE>
delivered to the Secured Party such new UCC financing statements or
other documentation as may be necessary or required by Secured Party to
ensure the continued perfection and priority of the security interests
granted by this Agreement.
Section 3.2. Organization; Good Standing. Debtor is duly organized, validly
existing and in good standing under the laws of the state of Delaware.
Section 3.3. Authorization of Agreement; No Consents; No Conflicts. The
execution, delivery and performance of this Agreement has been duly authorized
by all necessary corporate action, and do not and will not: (i) require any
consent or approval of the stockholders of Debtor, if any; (ii) contravene the
terms of the charter, by-laws or other organizational papers of Debtor; (iii)
violate any applicable law, rule or regulation of any governmental agency; (iv)
contravene any provision of any agreement, instrument, order or undertaking
binding on Debtor or by which any of the Collateral is bound or affected; (v)
other than as contemplated hereby, result in or require the imposition of any
Encumbrance on any of the Collateral ; or (vi) other than filings required by
the Uniform Commercial Code, require the approval or consent of, or filing or
registration with, any Federal, state or local governmental or other agency,
authority or instrumentality, or any other Person.
Section 3.4. Ownership of Collateral; Absence of Liens and Restrictions.
The Debtor is, and in the case of property acquired after the date hereof, will
be, the sole legal and equitable owner of the Collateral, holding good and
marketable title to the same free and clear of all Encumbrances except for the
security interests, liens and encumbrances granted hereunder or permitted hereby
or in the Credit Agreement, and has good right and legal authority to assign,
deliver, and creates a security interest in the Collateral in the manner herein
contemplated. The Collateral is genuine and is what it is purported to be. The
Collateral is not subject to any restriction that would prohibit or restrict the
assignment, delivery or creation of the security interest contemplated
hereunder.
Section 3.5. First Priority Security Interests. This Agreement, together
with the filing of UCC-1 financing statements in the appropriate offices for the
locations of Collateral listed in the Collateral Disclosure List, creates a
valid and continuing first lien on and perfected security interest in the
Collateral (except for property located in the United States in which a security
interest may not be perfected by filing under the UCC), prior to all other
Encumbrances, and is enforceable as such against creditors of Debtor, any owner
of the real property where any of the Collateral is located, any purchaser of
such real property and any present or future creditor obtaining a lien on such
real property. Except as set forth on Schedule A attached hereto, no financing
statement under the Uniform Commercial Code of any state or other instrument
evidencing a lien that names Debtor as debtor is on file in any jurisdiction and
Debtor has not signed any such document or any agreement authorizing the filing
of any such financing statement or instrument.
Section 3.6. Sales and Further Encumbrances. The Debtor will not sell,
grant, assign or transfer any interest in, or permit to exist any Encumbrance
on, any of the Collateral
<PAGE>
other than in favor of Secured Party or its affiliates except to the extent as
permitted under the terms of the Credit Agreement, for: (i) sales of Inventory
or grants of licenses and other rights in the ordinary course of Debtor's
business for cash or on open account and on terms of payment ordinarily extended
to its customers; (ii) so long as no Event of Default hereunder has occurred and
is continuing, (a) sales of Securities, other than Securities that are listed on
Schedule B attached hereto or that represent ownership of its Subsidiaries, if
such sales are made on fair and reasonable terms in arms-length transactions, or
(b) dispositions of Equipment, other than Equipment listed on Schedule B, that
has become worn out or obsolete or that has been replaced by other Equipment; or
(iii) as otherwise permitted by Secured Party in writing. The Debtor shall
defend its title to and, as Secured Party may reasonably request, Secured
Party's interest in the Collateral against all claims and take any action
necessary to remove any Encumbrances other than those permitted hereunder or
under the Credit Agreement and defend the right, title and interest of Secured
Party in and to any of Debtor's rights in the Collateral.
Section 3.7. Validity of Accounts. Each currently-existing Account is, and
Debtor shall use its best efforts to ensure that each future Account shall be a
valid, legal and binding obligation of the account Debtor purported to be
obligated thereon, enforceable in accordance with its terms and free of material
setoffs, defenses or counterclaims.
Section 3.8. Fixture Conflicts; Required Waivers. The Debtor intends, to
the extent not inconsistent with applicable law, that the Collateral shall
remain personal property of Debtor and shall not be deemed to be a Fixture
irrespective of the manner of its attachment to any real estate. The Debtor will
deliver to Secured Party such disclaimers, waivers or other documents as Secured
Party may reasonably request, executed by each Person having an interest in such
real estate.
Section 3.9. Inspection; Verification of Accounts. The Debtor will upon
prior notice, at all reasonable times, including, without limitation, times when
such inspection will not unreasonably interfere with the conduct by Debtor of
its business, allow Secured Party to examine, inspect or make extracts from or
copies of Debtor's books and records, inspect the Collateral and arrange for
verification of Accounts constituting Collateral directly with Debtor's
accountants, or by other methods mutually agreed upon by Secured Party and
Debtor.
Section 3.10. Accounts; Collection and Delivery of Proceeds. The Debtor
will diligently collect all of its Accounts until Secured Party exercises its
rights to collect the Accounts pursuant to this Agreement. The Debtor shall,
upon an Event of Default at the reasonable request of Secured Party, notify
account debtors of the security interest of Secured Party in any Account and
that payment thereof is to be made directly to Secured Party. Upon the
reasonable request of Secured Party, upon an Event of Default any proceeds of
Accounts or Inventory constituting Collateral received by Debtor, whether in the
form of cash, checks, notes or other instruments, shall be held in trust for
Secured Party and Debtor shall deliver said proceeds daily to Secured Party,
without commingling, in the identical form received (properly endorsed or
assigned where required to enable to Secured Party to collect same).
<PAGE>
Section 3.11. Equipment and Inventory; Insurance. The Debtor will keep the
Collateral insured at all times by insurance in such form and amounts as may be
reasonably satisfactory to Secured Party, and in any event (without specific
request by Secured Party) will insure the Collateral against physical hazard
insurance on an "all risks" basis, including fire, theft, and, in the case of
motor vehicles, collision. Such insurance shall be with insurance companies
reasonably satisfactory to Secured Party and shall be payable to Secured Party
as an additional insured and Debtor, as their respective interests may appear.
Such insurance shall provide for not less than thirty (30) days' notice of
cancellation, change in form or non- renewal to Secured Party, and shall insure
the interest of Secured Party regardless of any breach or violation by Debtor or
any other person of the warranties, declarations or covenants contained in such
policies. The Debtor shall insure the Collateral in amounts sufficient to
prevent the application of any co-insurance provisions. The Debtor shall
evidence its compliance with the foregoing by delivering a certificate with
respect to each policy concurrently with the execution hereof, annually
thereafter, and from time to time upon the request of Secured Party.
Section 3.12. Equipment and Inventory; Maintenance and Use, Payment of
Taxes. The Debtor will keep the Collateral in good order and repair (ordinary
wear and tear excepted, will not use the same in violation of law or any policy
of insurance thereon, and, except as otherwise provided in the Credit Agreement,
will pay promptly when due all taxes and assessments on the Collateral or on its
use or operation.
Section 3.13. General Intangibles; Registration, Maintenance of Copies. The
Debtor will apply for, and pursue diligently applications for, registration of
its ownership of the General Intangibles for which registration is appropriate,
and will use such other measures as are appropriate to preserve its rights in
its other General Intangibles. The Debtor will, at the reasonable request of
Secured Party, retain off-site current copies of all materials created by or
furnished to Debtor on which is recorded then-current information about any
computer programs or data bases that Debtor has developed or otherwise has the
right to use from time to time. Such materials include, without limitation,
magnetic or other computer media on which object, source or other code is
recorded or documentation of those computer programs or data bases, in the
nature of listing printouts, narrative descriptions, flow diagrams and similar
things.
Section 3.14. Securities; Voting, Dividends, Certificates, Options, Etc.
Until the occurrence of an Event of Default, Debtor shall retain the right to
vote any of the Securities constituting Collateral in a manner not inconsistent
with the terms of this Agreement. If Debtor, as registered holder of such
Securities, receives (i) any dividend or other distribution in cash or other
property in connection with the liquidation or dissolution of the issuer of such
Securities, or in connection with the redemption or payment of such Securities,
or (ii) any stock certificate, option or right, or other distribution, whether
as an addition to, in substitution of, or in exchange for, such Securities, or
otherwise, Debtor agrees to accept same in trust for Secured Party and to
deliver same forthwith to Secured Party or its designee, in the exact form
received, with Debtor's endorsement or reassignment when necessary, to be held
by Secured Party as Collateral.
<PAGE>
Section 3.15. Securities; Delivery or Registration. Upon request of Secured
Party, Debtor will (i) deliver all of its Securities constituting Collateral and
represented by certificates, including without limitation all stock of its
Subsidiaries, to Secured Party to hold pursuant to the terms of this Agreement,
and (ii) register Secured Party's security interest therein on the books
maintained by or on behalf of the issuer thereof or the depository therefor.
Section 3.16. Further Assurances. Upon the written request of Secured
Party, and at the sole expense of Debtor, Debtor will promptly execute and
deliver such further instruments and documents and take such further actions as
Secured Party may deem reasonably necessary to obtain the full benefits of this
Agreement and of the rights and powers herein granted, including, without
limitation, filing of any financing statement under the UCC, execution of
assignments of General Intangibles, delivery of appropriate stock or bond
powers, and transfer of Collateral (other than Inventory, Accounts, Equipment
and any other collateral not requiring possession in order to perfect a security
interest therein) to Secured Party's possession. The Debtor authorizes Secured
Party to file any such financing statement without the signature of Debtor to
the extent permitted by applicable law, and to file a copy of this Agreement in
lieu of a financing statement.
Section 4. NOTICES AND REPORTS PERTAINING TO COLLATERAL
The Debtor will, with respect to the Collateral:
(a) promptly notify Secured Party of any Encumbrance asserted against the
Collateral, including any attachment, levy, execution or other legal
process levied against any of the Collateral, and of any information
received by Debtor relating to the Collateral, including the Accounts,
the account Debtors, or other Persons obligated in connection
therewith, that may in any way materially and adversely affect the
value of the Collateral or the rights and remedies of Secured Party
with respect thereto;
(b) promptly notify Secured Party when it obtains knowledge of actual or
imminent bankruptcy or other insolvency proceeding of any account
Debtor or issuer of Securities;
(c) deliver to Secured Party, as Secured Party may from time to time
reasonably request, copies of delivery receipts, customers' purchase
orders, shipping instructions, bills of lading and any other evidence
of shipping arrangements;
(d) concurrently with the reports required to be furnished under
subsection (a), and immediately if material in amount, notify Secured
Party of any return or adjustment, rejection, repossession, or loss or
damage of or to merchandise represented by Accounts or constituting
Inventory and of any credit, adjustment or dispute arising in
connection with the goods or services represented by Accounts or
constituting Inventory; and
<PAGE>
(e) promptly after the application by Debtor for registration of any
General Intangibles, as contemplated in Section 3.13, notify Secured
Party thereof.
The Debtor authorizes Secured Party to destroy all invoices, delivery receipts,
reports and other types of documents and records submitted to Secured Party in
connection with the transactions contemplated herein at any time subsequent to
twelve (12) months from the time such items are delivered to Secured Party;
provided, however, that Secured Party shall return to Debtor all of Debtor's
original documents in the possession or control of Secured Party.
Section 5. SECURED PARTY'S RIGHTS WITH RESPECT TO COLLATERAL The Secured
Party may, at its option and at any time after an Event of Default shall have
occurred (subject to the rights of Debtor and limitations of the rights of
Secured Party under this Agreement and the Credit Agreement)
(a) with respect to any Accounts: (i) notify account Debtors of the
security interest of Secured Party in such Accounts and that
payment thereof is to be made directly to Secured Party; (ii)
demand, collect, and receipt for any amounts relating thereto, as
Secured Party may determine; (iii) commence and prosecute any
actions in any court for the purposes of collecting any such
Accounts and enforcing any other rights in respect thereof; (iv)
defend, settle or compromise any action brought and, in
connection therewith, give such discharges or releases as Secured
Party may deem appropriate; (v) receive, open and dispose of mail
addressed to Debtor and endorse checks, notes, drafts,
acceptances, money orders, bills of lading, warehouse receipts or
other instruments or documents evidencing payment, shipment or
storage of the goods giving rise to such Accounts or securing or
relating to such Accounts, on behalf of and in the name of
Debtor; and (vi) sell, assign, transfer, make any agreement in
respect of, or otherwise deal with or exercise rights in respect
of, any such Accounts or the goods or services which have given
rise thereto, as fully and completely as though Secured Party
were the absolute owner thereof for all purposes;
(b) with respect to any Equipment and Inventory: (i) make, adjust and
settle claims under any insurance policy related thereto and
place and pay for appropriate insurance thereon; (ii) discharge
taxes and other Encumbrances at any time levied or placed
thereon; (iii) make repairs or provide maintenance with respect
thereto; and (iv) pay any necessary filing fees and any taxes
arising as a consequence of any such filing. The Secured Party
shall have no obligation to make any such expenditures nor shall
the making thereof relieve Debtor of its obligation to make such
expenditures; and
(c) with respect to any Securities: (i) transfer them at any time to
itself, or to its nominee, and receive the income thereon and
hold the same as
<PAGE>
Collateral hereunder or apply it to any matured Obligations; and
(ii) demand, sue for, collect or make any compromise or
settlement it deems desirable.
Except as otherwise provided herein or in the Credit Agreement, Secured Party
shall have no duty as to the collection or protection of the Collateral nor as
to the preservation of any rights pertaining thereto, beyond the safe custody of
any Collateral in its possession.
Section 6. SET-OFF RIGHTS
Regardless of the adequacy of any Collateral or any other means of
obtaining repayment for any Obligations, Secured Party may at any time and from
time to time, without notice to Debtor (any such notice being expressly waived
by Debtor) and to the fullest extent permitted by law, set off and apply any and
all deposits (general or special, time or demand, provisional or final) and
other sums credited by or due from Secured Party to Debtor or subject to
withdrawal by Debtor and any other property and securities at any time in the
possession or control of Secured Party against any Obligations, whether or not
Secured Party shall have made any demand for such Obligations and although such
Obligations may be contingent or unmatured.
Section 7. DEFAULTS
An event of default ("Event of Default") shall exist under this Agreement
if an Event of Default shall occur under the Credit Agreement.
Section 8. SECURED PARTY'S RIGHTS AND REMEDIES
(a) If an Event of Default shall have occurred and be continuing:
(i) Secured Party may, at its option, without notice or demand,
cause all of the Obligations to become immediately due and
payable and take immediate possession of the Collateral, and
for that purpose Secured Party may, so far as Debtor can
give authority therefor and to the extent permitted by
applicable law, enter upon any premises on which any of the
Collateral is situated and remove the same therefrom or
remain on such premises and in possession of such Collateral
for purposes of conducting a sale or enforcing the rights of
Secured Party therein or for completing the manufacture,
processing or production thereof;
(ii) Debtor will, upon demand, assemble the Collateral and make
it available to Secured Party at a place and time designated
by Secured Party that is reasonably convenient to both
parties;
<PAGE>
(iii) Secured Party may collect and receive all income and
proceeds in respect of the Collateral and exercise all
rights of Debtor with respect thereto, including without
limitation the right to exercise all voting and corporate
rights at any meeting of the shareholders of the issuer of
any Securities and to exercise any and all rights of
conversion, exchange, subscription or any other rights,
privileges or options pertaining to any Securities as if
Secured Party were the absolute owner thereof, including the
right to exchange, at its discretion, any and all of any
Securities upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer
thereof, all without liability except to account for
property actually received (but Secured Party shall have no
duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do
so or delay in so doing);
(iv) Secured Party may sell, lease or otherwise dispose of the
Collateral at a public or private sale, with or without
having the Collateral at the place of sale, and upon such
terms and in such manner as Secured Party may reasonably
determine, and, to the extent permitted by applicable law,
Secured Party may purchase any Collateral at any such sale.
Unless the Collateral threatens to decline rapidly in value
or is of the type customarily sold on a recognized market,
Secured Party shall send to Debtor prior written notice
(which, if given within five (5) days of any sale, shall be
deemed to be reasonable) of the time and place of any public
sale of the Collateral or of the time after which any
private sale or other disposition thereof is to be made. The
Debtor agrees that upon any such sale the Collateral shall
be held by the purchaser free from all claims or rights of
every kind and nature, including any equity of redemption or
similar rights after such sale, and all such equity of
redemption and similar rights are hereby expressly waived
and released by Debtor. In the event any consent, approval
or authorization of any governmental agency is necessary to
effectuate any such sale, Debtor shall execute all
applications or other instruments as may be required; and
(v) in any jurisdiction where the enforcement of its right
hereunder is sought, Secured Party shall have, in addition
to all other rights and remedies, the rights and remedies of
a secured party under the UCC.
(b) Prior to any disposition of Collateral pursuant to this Agreement
Secured Party may, at its option, cause any of the Collateral to
be repaired or
<PAGE>
reconditioned (but not upgraded unless mutually agreed) in such
manner and to such extent as to make it saleable.
(c) The Secured Party is hereby granted a license or other right to
use, without charge, Debtor's labels, patents, copyrights, rights
of use of any name, trade secrets, trade names, trademarks and
advertising matter, or any property of a similar nature, relating
to the Collateral, in completing production of, advertising for
sale and selling any Collateral.
(d) The Debtor recognizes that Secured Party may be unable to effect
a public sale of all or a part of the Securities by reason of
certain prohibitions contained in the Securities Act of 1933 (as
amended from time to time, the "Securities Act") or the
securities laws of various states (the "Blue Sky Laws"), but may
be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree,
among other things, to acquire the Securities for their own
account, for investment and not with a view to the distribution
or resale thereof. The Debtor acknowledges that private sales so
made may be at prices and upon other terms less favorable to the
seller than if the Securities were sold at public sales. The
Debtor agrees that Secured Party has no obligation to delay sale
of any of the Securities for the period of time necessary to
permit the Securities to be registered for public sale under the
Securities Act or the Blue Sky Laws, and that private sales made
under the foregoing circumstances shall be deemed to have been
made in a commercially reasonable manner.
(e) The Secured Party shall be entitled to retain and to apply the
proceeds of any disposition of the Collateral, first, to its
reasonable expenses of retaking, holding, protecting and
maintaining, and preparing for disposition and disposing of, the
Collateral, including reasonable attorneys' fees and other legal
expenses incurred by it in connection therewith; and second, to
the payment of the Obligations in such order of priority as
Secured Party shall determine. Any surplus remaining after such
application shall be paid to Debtor or to whomever may be legally
entitled thereto, provided that in no event shall Debtor be
credited with any part of the proceeds of the disposition of the
Collateral until such proceeds shall have been received in cash
by Secured Party. The Debtor shall remain liable for any
deficiency remaining unpaid after the application of proceeds in
accordance with the foregoing provisions.
Section 9. MISCELLANEOUS
Section 9.1. Waivers. The Debtor waives presentment, demand, notice,
protest, notice of acceptance of this Agreement, notice of any loans made,
credit or other extensions granted, collateral received or delivered or any
other action taken in reliance hereon and all
<PAGE>
other demands and notices of any description, except for such demands and
notices as are expressly required to be provided to Debtor under this Agreement,
the Credit Agreement or any other document evidencing the Obligations. With
respect to both the Obligations and the Collateral, Debtor assents to any
extension or postponement of the time of payment or any other forgiveness or
indulgence, to any substitution, exchange or release of Collateral, to the
addition or release of any party or person primarily or secondarily liable, to
the acceptance of partial payment thereon and the settlement, compromise or
adjustment of any thereof, all in such manner and at such time or times as
Secured Party may deem advisable. The Secured Party may exercise its rights with
respect to the Collateral without resorting, or regard, to other collateral or
sources of reimbursement for Obligations. The Secured Party shall not be deemed
to have waived any of its rights with respect to the Obligations or the
Collateral unless such waiver is in writing and signed by Secured Party. No
delay or omission on the part of Secured Party in exercising any right shall
operate as a waiver of such right or any other right. A waiver on any one
occasion shall not bar or waive the exercise of any right on any future
occasion. All rights and remedies of Secured Party in the Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers, are
cumulative and not exclusive of any remedies provided by law or any other
agreement, and may be exercised separately or concurrently.
Section 9.2. Expenses. The Debtor shall, on demand, pay or reimburse
Secured Party for all reasonable expenses (including attorneys' fees of outside
counsel or allocation costs of in-house counsel) incurred or paid by Secured
Party in connection with the preparation, negotiation and closing, and the
administration or enforcement, of this Agreement, its on-site periodic
examinations of the Collateral and any other amounts permitted to be expended by
Secured Party hereunder, including without limitation such expenses as are
incurred to preserve the value of the Collateral and the validity, perfection,
priority and value of any security interest created hereby, the collection, sale
or other disposition of any of the Collateral or the exercise by Secured Party
of any of the rights conferred upon it hereunder, without duplication under the
Credit Agreement. The obligation to pay any such amount shall be an additional
obligation secured hereby and each such amount shall bear interest from the time
of demand at the Default Rate.
Section 9.3. Successors and Assigns. This Agreement shall be binding upon
Debtor, its successors and assigns, and shall inure to the benefit of and be
enforceable by Secured Party and its successors and assigns. Without limiting
the generality of the foregoing sentence, Secured Party may assign or otherwise
transfer any agreement or any note held by it evidencing, securing or otherwise
executed in connection with the Obligations, or sell participations in any
interest therein, to any other person or entity, and such other person or entity
shall thereupon become vested, to the extent set forth in the agreement
evidencing such assignment, transfer or participation, with all the rights in
respect thereof granted to Secured Party herein.
Section 9.4. Amendment. This Agreement may not be amended or modified
except by a writing signed by Debtor and Secured Party, nor may Debtor assign
any of its rights hereunder.
<PAGE>
Section 9.5. Cross Collateral. The security interests, liens and other
rights and interests in and relative to any of the real or personal property of
Debtor now or hereafter granted to Bank by Debtor by or in any instrument or
agreement, including but not limited to this Agreement, shall serve as security
for any and all liabilities of Debtor to Bank, including but not limited to the
liabilities described in this Agreement and the Credit Agreement and, for the
repayment thereof, Bank may resort to any security held by it in such order and
manner as it may elect.
Section 9.6. Commercial Transaction. DEBTOR ACKNOWLEDGES THAT THE
TRANSACTION OF WHICH THIS AGREEMENT IS PART IS A COMMERCIAL TRANSACTION AND
WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER CHAPTER 903A OF THE CONNECTICUT
GENERAL STATUTES OR BY OTHER APPLICABLE LAW WITH RESPECT TO ANY PREJUDGMENT
REMEDY WHICH THE BANK MAY SEEK OR BE PERMITTED TO USE.
Section 9.7. Jury Trial. DEBTOR HEREBY WAIVES (TO THE EXTENT PERMITTED BY
APPLICABLE LAW) TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING OR
ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTION
OF WHICH THIS AGREEMENT IS A PART AND/OR IN THE ENFORCEMENT BY BANK OF ANY OF
ITS RIGHTS AND REMEDIES HEREUNDER OR UNDER APPLICABLE LAW. Debtor ACKNOWLEDGES
THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY AND ONLY AFTER CONSIDERATION OF
THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEY.
Section 9.8. Reinstatement. This Agreement shall continue to be effective
or be reinstated, as the case may be, if at any time any amount received by Bank
in respect of the Obligations is rescinded or must otherwise be restored or
returned by Bank upon the insolvency, Bankruptcy, dissolution, liquidation or
reorganization of Debtor or upon the appointment of any intervenor or
conservator of, or trustee or similar official for, Debtor or any substantial
part of its properties, or otherwise, all as though such payments had not been
made.
Section 9.9. Notices. All notices, requests or demand to or upon a party to
this Agreement shall be given or made in the manner set forth in the Credit
Agreement.
No other method of giving notice, request or demand is hereby precluded
provided such shall not be deemed given until such notice is actually received
at the address of the addressee.
Section 9.10. Governing Law; Consent to Jurisdiction. This Agreement and
the rights and obligations of the parties hereunder shall be governed by and
construed and interpreted in accordance with, the laws of the State of
Connecticut. Debtor agrees that any suit for the enforcement of this Agreement,
may be brought in the courts of the State of Connecticut or any federal court
sitting therein and consents to the non-exclusive jurisdiction of such court and
to service of process in any such suit being made upon Debtor by mail at the
address referred to Section 9.9. hereof. The Debtor hereby waives any objection
that Debtor may now
<PAGE>
or hereafter have to the venue of any such suit or any such court or that such
suit is brought in an inconvenient court.
Section 9.11. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
Section 9.12. Headings. All article, section and subsection headings in
this Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 9.13. Interpretation and Construction. The following rules shall
apply to the interpretation and construction of this Agreement unless the
context requires otherwise: (a) the singular includes the plural and the plural
includes the singular; (b) words importing any gender include the other genders;
(c) references to statutes are to be construed as including all statutory
provisions consolidating, amending or replacing the statute to which reference
is made and all regulations promulgated pursuant to such statutes; (d)
references to "writing" shall include printing, photocopy, typing, lithography
and other means of reproducing words in a tangible, visible form; (e) the words
"including", "includes" and "include" shall be deemed to be followed by the
words "without limitation"; (f) references to the introductory paragraph,
preliminary statements, articles, sections (or subdivisions of sections),
exhibits or schedules are to those of this Agreement unless otherwise indicated;
(g) references to agreements and other contractual instruments shall be deemed
to include all subsequent amendments and other modifications to such
instruments, but only to the extent that such amendments and other modifications
are permitted or not prohibited by the terms of this Agreement; (h) references
to Persons include their respective permitted successors and assigns; and (i)
"or" is not exclusive.
Section 9.14. Termination. After termination of the Credit Agreement and
when Secured Party and Bank have received payment and performance, in full, of
all Obligations, Secured Party shall execute and deliver to Debtor a termination
of all of the security interests granted by Debtor hereunder and shall deliver
to Debtor any Collateral remaining in Secured Party's possession.
<PAGE>
IN WITNESS WHEREOF, Secured Party and Debtor have executed this Agreement
as of the date first set forth above.
SECURED PARTY:
BANK OF BOSTON CONNECTICUT
By:/s/ Roger J. Roche, Jr.
--------------------------------
Roger J. Roche, Jr.
Director
Debtor:
GREENSTEEL, INC.
By:/s/ Alan J. Nickerson
--------------------------------
Alan J. Nickerson
Treasurer and Secretary
Exhibit 10.28
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (the "Agreement") is made as of this 25th day of
April, 1996, by and between BANK OF BOSTON CONNECTICUT, a Connecticut savings
bank, with its head office located at 31 Pratt Street, Hartford, Connecticut
06103 (the "Bank") and GREENSTEEL, INC., a Delaware corporation with its chief
executive office located at 866 North Main Street Extension, Wallingford,
Connecticut 06492 ("Pledgor").
WITNESSETH:
WHEREAS, the Pledgor entered into a certain Master Credit Agreement of even
date herewith (as amended and in effect from time to time, the "Credit
Agreement"), with Bank, pursuant to which Bank, subject to the terms and
conditions contained therein, has agreed to make loans and advances and
otherwise extend credit to the Borrower; and
WHEREAS, it is a condition precedent to Bank making any loans or otherwise
extending credit to Pledgor under the Credit Agreement that Pledgor execute and
deliver to Bank a pledge agreement in substantially the form hereof; and
WHEREAS, Pledgor wishes to grant pledges, assignments and security
interests in favor of Bank as herein provided;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
Section 1. Pledge of Collateral.
(a) Pledgor hereby pledges, assigns, grants a security interest in,
and delivers to Bank, the collateral listed and described on Schedule A
attached hereto, together with the stock powers or other instruments of
assignment executed in blank, endorsements, instructions to or approvals by
brokers or other financial intermediaries or other book-entry custodians or
other instructions or confirmations as may have been requested by Bank as
necessary or appropriate for Bank's security interest in such collateral to
attach, become perfected, achieve priority over competing claimants and
otherwise be preserved as are listed and described on Schedule B attached
hereto.
(b) Pledgor also hereby pledges, assigns, grants a security interest
in, and delivers to Bank, the Cash Collateral Account and all of the Cash
Collateral as such terms are hereinafter defined.
<PAGE>
Section 2. Definitions. The terms "Obligations," "Default" and "Event of
Default" and all other capitalized terms used herein without definition shall
have the respective meanings provided therefor in the Credit Agreement. Terms
used herein and not defined in the Credit Agreement or otherwise defined herein
that are defined in the Uniform Commercial Code (as hereinafter defined) have
such defined meanings herein, unless the context otherwise indicates or
requires, and the following additional terms shall have the following meanings:
"Cash Collateral" has the meaning set forth in Section 5 hereof.
"Cash Collateral Account" has the meaning set forth in Section 5
hereof.
"Collateral" means the property at any time assigned or pledged to
Bank hereunder (whether described herein or not) and all income therefrom,
increases therein and products and proceeds thereof, including without
limitation that included in Cash Collateral.
"Time Deposits" has the meaning set forth in Section 5 hereof.
"Uniform Commercial Code" means the Uniform Commercial Code as is in
effect in the State of Connecticut.
Section 3. Security for Obligations. This Agreement and the security
interest in, and assignment and pledge of, the Collateral hereunder are made
with and granted to Bank as security for the prompt and complete payment and
performance in full of all the Obligations.
Section 4. Changes Affecting the Collateral. Pledgor represents to Bank
that it has made its own arrangements for keeping informed about or potential
changes affecting the Collateral (including, but not limited to, rights to
convert, rights to subscribe, payment of dividends, reorganization or other
exchanges, tender offers and voting rights), and Pledgor agrees that Bank shall
have no responsibility or liability for informing Pledgor of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto. Bank may, upon or at any time after the occurrence of an Event
of Default, without notice, and at its option, transfer or register the
Collateral or any part thereof into its or its nominee's name with or without
any indication that such Collateral is subject to the security interest
hereunder.
Section 5. Interest, Dividends, Etc.
(a) Any sums or other property paid or distributed upon or with
respect to any of the Collateral, whether by dividend, interest or
redemption or upon the liquidation or dissolution of the issuer thereof or
otherwise, shall, except to the limited extent provided in Section 6
hereof, be paid over and delivered to Bank to be held by Bank as security
for the prompt and complete payment and performance in full of all of the
Obligations.
2
<PAGE>
(b) All sums of money that are delivered to Bank pursuant to this
Section 5 shall be deposited into an interest bearing account with Bank
(the "Cash Collateral Account"). Some or all of the funds from time to time
in the Cash Collateral Account may be invested in time deposits, including,
without limitation, certificates of deposit issued by Bank (such
certificates of deposit or other time deposits being hereinafter referred
to, collectively, as "Time Deposits"), that are satisfactory to Bank after
consultation with Pledgor. Interest earned on the Cash Collateral Account
and on the Time Deposits, and the principal of the Time Deposits at
maturity that is not invested in the new Time Deposits, shall be deposited
in the Cash Collateral Account. The Cash Collateral Account, all sums from
time to time standing to the credit of the Cash Collateral Account, any and
all Time Deposits, any and all instruments or other writings evidencing
Time Deposits and any and all proceeds of any thereof are hereinafter
referred to as the "Cash Collateral."
(c) Except as otherwise expressly provided in Section 15, Pledgor
shall have no right to withdraw sums from the Cash Collateral Account, to
receive any of the Cash Collateral or to require Bank to part with Bank's
possession of any instruments or other writings evidencing any Time
Deposits.
Section 6. Warranty of Title; Authority. Pledgor hereby represents and
warrants that: (a) Pledgor has good and marketable title to the Collateral
described in Section 1 hereof, subject to no pledges, liens, security interests,
charges, options, restrictions or other encumbrances or other adverse claims
except the pledge, assignment and security interest created by this Agreement;
(b) Pledgor has full power, authority and legal right to execute, deliver and
perform its obligations under this Agreement and to pledge, assign and grant a
security interest in all of the Collateral pursuant to this Agreement; and (c)
the execution, delivery and performance hereof and the pledge and assignment of
and granting of a security interest in the Collateral hereunder have been duly
authorized by all necessary corporate or other action of Pledgor and do not
contravene any law, rule or regulation or any provision of Pledgor's Certificate
of Incorporation or by-laws or other governing documents or of any judgment,
decree or order of any tribunal or of any agreement or instrument to which
Pledgor is a party or by which Pledgor or any of Pledgor's property is bound or
affected or constitute a default thereunder. Pledgor covenants that Pledgor will
defend Bank's rights and security interest in the Collateral against the claims
and demands of all persons whomsoever. Pledgor further covenants that Pledgor
will have the title to and right to pledge and assign and grant a security
interest in the Collateral hereafter pledged or assigned or in which a security
interest is granted to Bank hereunder and will likewise defend Bank's rights,
pledge, assignment and security interest thereof and therein.
Section 7. Remedies.
(a) If an Event of Default shall have occurred and be continuing, Bank
shall thereafter have the following rights and remedies in addition to the
rights and remedies of a secured party under the Uniform Commercial Code,
all such rights and remedies being
3
<PAGE>
cumulative, not exclusive, and enforceable alternatively, successively or
concurrently, at such time or times as Bank deems expedient:
(i) Bank may demand, sue for, collect or make any compromise or
settlement Bank deems suitable in respect of any of the Collateral;
(ii) Bank may sell, resell, assign or deliver or otherwise
dispose of any or all of the Collateral, for cash or credit or both
and upon such terms at such place or places, at such time or times and
to such entities or other persons as Bank thinks expedient, all
without demand for performance by Pledgor or any notice or
advertisement whatsoever except as expressly provided herein or as may
otherwise be required by law;
(iii) Bank may cause all or any part of the Collateral held by it
to be transferred into its name or the name of its nominee or nominees
and, for such purpose, without limitation upon any other rights or
remedies available to Bank, may give instructions to such effect to
any issuer of any of the Collateral or any broker or other financial
intermediary or book-entry custodian in possession of any of the
Collateral or upon whose books any of the Collateral is then
registered; and
(iv) Bank may set off or otherwise apply against any of the
Obligations any and all sums deposited with it or held by it,
including without limitation, any sums standing to the credit of the
Cash Collateral Account and any Time Deposits issued by Bank.
(b) In the event of any disposition of any of the Collateral as
provided in clause ii. of Section 7(a), Bank shall give to Pledgor at least
five (5) Business Days' prior written notice of the time and place of any
public sale of such Collateral or of the time after which any private sale
or any other intended disposition is to be made. Pledgor hereby
acknowledges that five (5) Business Days' prior written notice of such sale
or other disposition shall be reasonable notice. Bank may enforce its
rights hereunder without any other notice and without compliance with any
other condition precedent now or hereunder imposed by statute, rule of law
or otherwise (all of which are hereby expressly waived by Pledgor, the the
fullest extent permitted by law). Bank may buy any part or all of the
Collateral at any public sale and if any part or all of the Collateral is
of a type customarily sold in a recognized market or is of the type which
is the subject of widely-distributed standard price quotations, Bank may
buy at private sale and make payments thereof by any means.
(c) Bank may apply the cash proceeds actually received from any sale
or other disposition or collection of any of the Collateral to the
reasonable expenses of retaking, holding, preparing for sale, selling and
the like, including breakage costs or early withdrawal penalties relating
to any Time Deposits, to reasonable attorneys' fees, travel and all other
expenses which may be incurred by Bank in attempting to collect any of the
Obligations or to enforce this Agreement or in the prosecution or defense
of any action or proceeding related to the subject matter of this
Agreement, and then to the Obligations in the order set forth in the
4
<PAGE>
Credit Agreement or in such order or preference as Bank may determine after
proper allowance for any Obligations not then due. Only after such
applications and the Obligations have been paid in full in cash, and after
payment by Bank of any amount required by Section 9-504(1)(c) of the
Uniform Commercial Code, need bank account to Pledgor for any surplus. To
the extent that any of the Obligations are to be paid or performed by the
Pledgor or a person other than Pledgor, Pledgor waives and agrees not to
assert any rights or privileges which it may have under Section 9-112 of
the Uniform Commercial Code.
Section 8. Marshalling. Bank shall not be required to marshal any present
or future collateral security for (including but not limited to this Agreement
and the Collateral), or other assurances of payment of, the Obligations or any
of them, or to resort to such collateral security or other assurances of payment
in any particular order. All of Bank's rights and remedies hereunder and in
respect of such security and other assurances of payment shall be cumulative and
in addition to all other rights, however existing or arising. To the extent that
Pledgor lawfully may, Pledgor hereby agrees that Pledgor will not invoke any law
relating to the marshalling of collateral that might cause delay in or impede
the enforcement of Bank's rights under this Agreement or under any other
instrument evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and to the extent that it lawfully may
Pledgor hereby irrevocably waives the benefits of all such laws.
Section 9. Pledgor's Obligations Not Affected. The obligations of Pledgor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any exercise or nonexercise, or any waiver, by Bank of any
right, remedy, power or privilege under or in respect of any of the Obligations
or any collateral security therefor (including this Agreement); (b) any
amendment to or modification of the Credit Agreement or any of the Obligations;
(c) any amendment to or modification of any document, agreement or other
instrument (other than this Agreement) evidencing or securing any of the
Obligations; or (d) the taking of additional security for, or any other
assurances of payment of, any of the Obligations or the release or discharge or
termination of any security or other assurances of payment or performance for
any of the Obligations or the liability of the Borrower therefor; whether or not
Pledgor shall have notice or knowledge of any of the foregoing.
Section 10. Transfer, Etc. by Pledgor. Without the prior written consent of
Bank, Pledgor will not sell, assign, transfer or otherwise dispose of, grant any
option with respect to, or pledge or grant any security interest in or otherwise
encumber or restrict any of the Collateral or any interest therein, except for
the pledge and assignment thereof and security interest therein provided for in
this Agreement.
Section 11. Further Assurances. Pledgor will do all such acts, and will
furnish to Bank all such financing statements, certificates, legal opinions and
other documents and will obtain all such governmental consents and corporate or
other approvals and will do or cause to be done all such other things as Bank
may reasonably request from time to time in order to give full effect to this
Agreement and to secure, preserve and protect the rights of Bank hereunder,
5
<PAGE>
all without any cost or expense to Bank. If Bank so elects, a photocopy of this
Agreement may at any time and from time to time be transmitted to any issuer of
any of the Collateral or any broker or other financial intermediary or
book-entry custodian in possession of any of the Collateral or on whose books
any of the Collateral is registered or be filed by Bank as a financing statement
in any recording office in any jurisdiction.
Section 12. Bank's Exoneration. Under no circumstances shall Bank be deemed
to assume any responsibility for or obligation or duty with respect to any part
or all of the Collateral oF any nature or kind or any matter or proceedings
arising out of or relating thereto, other than (a) to exercise reasonable care
in the physical custody of the collateral and (b) after an Event of Default
shall have occurred and be continuing to act in a commercially reasonable
manner. Bank shall not be required to take any action of any kind to collect,
preserve or protect its or Pledgor's rights in any of the Collateral or against
other parties thereto. Bank's prior recourse to any part or all of the
Collateral shall not constitute a condition of any demand, suit or proceeding
for payment or collection of any of the Obligations.
Section 13. No Waiver, Etc. Neither this Agreement nor any term hereof may
be changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the party to be charged. No act, failure or delay by
Bank shall constitute a waiver of its rights and remedies hereunder or
otherwise. No single or partial waiver by Bank of any default or right or remedy
that it may have shall operate as a waiver of any other default, right or remedy
or of the same default, right or remedy on a future occasion. Pledgor hereby
waives acceptance and notice of acceptance of this Agreement and presentment,
notice of dishonor and protest of all instruments, included in or evidencing any
of the Obligations or any of the Collateral, and any and all other notices and
demands whatsoever (except as expressly provided in the Credit Agreement).
Section 14. Notice, Etc. All notices, requests, demands and other
communications hereunder shall be made in the manner set forth in the Credit
Agreement and, if to Pledgor, at Pledgor's address on the signature page hereof
or at such other address as Pledgor may have provided to Bank by like notice.
Section 15. Termination. Upon final payment and performance in full of all
of the Obligations, this Agreement shall terminate and Bank shall, at Pledgor's
request and expense, return such Collateral in the possession or control of Bank
as has not theretofore been disposed of pursuant to the provisions hereof,
together with any moneys and other property at the time held by Bank hereunder.
Section 16. Overdue Amounts. Until paid, all amounts due and payable by
Pledgor hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
6
<PAGE>
Section 17. Governing Law; Consent To Jurisdictions. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CONNECTICUT. Pledgor agrees that any suit for the enforcement of this Agreement
may be brought in the courts of the State of Connecticut or any federal court
sitting therein and consents to the non-exclusive jurisdiction of such court and
to service of process in any such suit being made upon Pledgor by mail at the
address referred to in Section 14 hereof. Pledgor hereby waives any objection
that Pledgor may now or hereafter have to the venue of any such suit or any such
court or that such suit is brought in an inconvenient court.
Section 18. Commercial Waiver. PLEDGOR ACKNOWLEDGES THAT THE TRANSACTION OF
WHICH THIS AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION AND HEREBY WAIVES ITS
RIGHT TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL
STATUTES OR BY OTHER APPLICABLE LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH
BANK MAY DESIRE TO USE.
Section 19. Waiver of Jury Trial. PLEDGOR HEREBY WAIVES TRIAL BY JURY IN
ANY COURT IN ANY SUIT, ACTION OR PROCEEDING OR ANY MATTER ARISING IN CONNECTION
WITH OR IN ANY WAY RELATED TO THE TRANSACTION OF WHICH THIS AGREEMENT IS A PART
AND/OR IN THE ENFORCEMENT BY BANK OF ANY OF ITS RIGHTS AND REMEDIES HEREUNDER OR
UNDER APPLICABLE LAW. PLEDGOR ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY,
VOLUNTARILY AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER
WITH ITS ATTORNEY.
Section 20. Waiver Of Damages. Except as prohibited by law, Pledgor waives
any right which Pledgor may have to claim or recover in any litigation referred
to in the preceding sentence any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages. Pledgor
(a) certifies that neither Bank nor any representative, agent or attorney of
Bank has represented, expressly or otherwise, that Bank would not, in the event
of litigation, seek to enforce the foregoing waivers and (b) acknowledges that,
in entering into the Credit Agreement, Bank is relying upon, among other things,
the waivers and certifications contained in this Section 20.
Section 21. Miscellaneous. All section headings in this Agreement are for
convenience and reference only and shall not constitute a part of this Agreement
for any other purpose. This Agreement and all rights and obligations hereunder
shall be binding upon Pledgor and Pledgor's respective heirs, representatives,
successors and assigns, and shall inure to the benefit of Bank and its
successors and assigns, including any participant of Bank in the Obligations. If
any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall be in no way
affected thereby, and this Agreement
7
<PAGE>
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein. Pledgor acknowledges receipt of
a copy of this Agreement.
IN WITNESS WHEREOF, Pledgor and Bank have executed this Agreement as of the
date first above written.
GREENSTEEL, INC.
By: /s/ Alan J. Nickerson
-------------------------------------
Alan J. Nickerson
Chief Financial Officer and Secretary
BANK OF BOSTON CONNECTICUT
By: /s/ Roger J. Roche, Jr.
-------------------------------------
Roger J. Roche, Jr.
Director
8
Exhibit 10.29
UNLIMITED CONTINUING GUARANTY AGREEMENT
This UNLIMITED CONTINUING GUARANTY AGREEMENT (the "Guaranty") is made as of
this 25th day of April, 1996 by POLYVISION CORPORATION, a New York corporation,
with its chief executive office located at 866 North Main Street Extension,
Wallingford, Connecticut 06492 ("Guarantor") in favor and for the benefit of
BANK OF BOSTON CONNECTICUT, a Connecticut savings bank, with its head office
located at 31 Pratt Street, Hartford, Connecticut 06103 (the "Bank").
W I T N E S S E T H:
WHEREAS, Bank has agreed to make loans and advances and otherwise extend
credit to GREENSTEEL, INC., a Delaware corporation, with its chief executive
office located at 866 North Main Street Extension, Wallingford, Connecticut
06492 ("Borrower") pursuant to the terms of a certain Master Credit Agreement of
even date herewith between Borrower and Bank (the "Credit Agreement"); and
WHEREAS, Borrower is a wholly-owned subsidiary of Guarantor and, as such,
Guarantor has and will derive substantial benefits from the making of such
loans, advances and extensions of credit to Borrower by Bank; and
WHEREAS, in consideration of such benefits, Guarantor has agreed to
guarantee the payment and performance of Borrower's obligations to Bank;
NOW, THEREFORE, Guarantor agrees as follows:
1. Guaranty of Payment and Performance. Guarantor hereby absolutely,
unconditionally and irrevocably guarantees to Bank the full and punctual payment
and performance of any and all loans, advances, indebtedness, liabilities,
obligations, covenants or duties of Borrower to Bank of any kind or nature,
whether arising under a loan, lease, credit card, line of credit, letter of
credit, guaranty, indemnity, confirmation, currency exchange, interest rate
protection arrangement, overdraft, or other type of financing arrangement, and
any and all extensions and renewals thereof, and modifications and amendments
thereto, whether in whole or in part, whether created directly by Bank or
acquired by assignment, purchase, discount or otherwise, whether any of the
foregoing are direct or indirect, joint or several, absolute or contingent, due
or to become due, now existing or hereafter arising, whether under any present
or future document, agreement or other instrument, and whether or not evidenced
by a writing and specifically including, but not being limited to, unpaid
principal, plus all accrued and unpaid interest thereon, together with all fees,
expenses, commissions, charges, penalties and other amounts owing by or
chargeable to Borrower under the Credit Agreement
<PAGE>
(collectively, the "Obligations"), as and when the same shall become due and
payable, whether at maturity, by acceleration or otherwise.
2. Maximum Guaranteed Amount. Notwithstanding any other provision of this
Guaranty to the contrary, if the obligations of Guarantor hereunder would
otherwise be held or determined by a court of competent jurisdiction in any
action or proceeding involving any state corporate law or any state or Federal
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other law affecting the rights or creditors generally, to be void, invalid or
unenforceable to any extent on account of the amount of Guarantor's liability
under this Guaranty, then notwithstanding any other provision of this Guaranty
to the contrary, the amount of liability shall, without any further action by
Guarantor or any other person, be automatically limited and reduced to the
highest amount which is valid and enforceable as determined in action or
proceeding.
3. Continuing Nature. This Guaranty is a primary and original obligation of
Guarantor and is an absolute, unconditional, continuing and irrevocable guaranty
of payment and performance and not of collectibility and is in no way
conditioned or contingent upon any action or omission by Bank, including any
requirement that Bank first attempt to collect any of the Obligations from
Borrower or resort to any security therefor, or upon any other action,
occurrence, or circumstance whatsoever other than the failure of Borrower to
promptly and completely make any payment due to Bank in respect to the
Obligations as and when the same become due and payable, whether at maturity, by
acceleration or otherwise until this Guaranty has been specifically terminated.
This Guaranty is in addition to, and not in substitution for or in reduction of,
any other guaranty by Guarantor or any other guarantor in favor of Bank. This
Guaranty shall be continuing and shall not be discharged, impaired or affected
by (i) the power or authority or lack thereof of Borrower to incur or contract
for the Obligations or to execute, acknowledge or deliver any document,
agreement or other instrument evidencing, securing or otherwise executed in
connection with the Obligations; (ii) the regularity or irregularity, validity
or invalidity, or enforceability or unenforceability of the Obligations; (iii)
any defenses or counterclaims whatsoever that Borrower may or might have to the
payment or performance of the Obligations or to the assertion of a default under
any document, agreement or other instrument evidencing, securing or otherwise
executed in connection with the Obligations including, but not limited to, lack
of consideration, statute of frauds, infancy, breach of warranty, lender
liability, usury, fraud and statute of limitations; (iv) the existence or
non-existence of Borrower as a legal entity; (v) the transfer by Borrower of all
or any part of the property securing the Obligations; (vi) any right of setoff,
counterclaim or defense (other than the payment and performance of the
Obligations in full) that Guarantor may or might have to its respective
undertakings, liabilities and obligations under this Guaranty, each and every
such defense being hereby waived by Guarantor; or (vii) the inability of Bank to
claim any amount of interest, fees, costs, or charges from Borrower pursuant to
Section 506(b) of the United States Bankruptcy Code, as amended.
4. Guarantor's Agreement To Pay. Guarantor further agrees, as the principal
obligor and not as a guarantor or surety only, to pay to Bank, on demand, all
costs and expenses
2
<PAGE>
(including court costs and legal expenses) incurred or expended by Bank in
connection with the Obligations, this Guaranty and the enforcement thereof,
together with interest on amounts recoverable under this Guaranty from the time
such amounts become due until payment, at the rate per annum equal to the rate
of interest announced by Bank from time to time at its head office as its Base
Rate, plus four percent (4%); provided, however, that if such interest exceeds
the maximum amount permitted to be paid under applicable law, then such interest
shall be reduced to such maximum permitted amount.
5. Unlimited Guaranty. The liability of Guarantor hereunder shall be
unlimited.
6. Waivers by Guarantor; Bank's Freedom to Act. Guarantor agrees that the
Obligations will be paid and performed strictly in accordance with their terms
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of Bank with respect
thereto. Guarantor waives, to the extent permitted by law, presentment, demand,
protest, notice of acceptance, notice of obligations incurred and all other
notices of any kind, all defenses which may be available by virtue of any
valuation, stay, moratorium or other similar law now or hereafter in effect, any
right to require the marshalling of assets of Borrower, and all suretyship
defenses generally. Without limiting the generality of the foregoing, Guarantor
agrees to the provisions of any document, agreement or other instrument
evidencing, securing or otherwise executed in connection with any Obligations
and agrees that the obligations of Guarantor hereunder shall not be released or
discharged, in whole or in part, or otherwise affected by: (i) the failure of
Bank to assert any claim or demand or to enforce any right or remedy against
Borrower; (ii) any extensions or renewals of any Obligations; (iii) any
rescissions, waivers, amendments or modifications of any of the terms or
provisions of any document, agreement or other instrument evidencing, securing
or otherwise executed in connection with the Obligations; (iv) the substitution
or release of any person or entity primarily or secondarily liable for the
Obligations; (v) the adequacy of any rights or remedies Bank may have against
any collateral or other means of obtaining repayment of the Obligations; (vi)
the impairment of any collateral securing the Obligations, including without
limitation the failure to perfect or preserve any rights or remedies Bank might
have in such collateral or the substitution, exchange, surrender, release, loss
or destruction of any such collateral; or (vii) any other act or omission which
might in any manner or to any extent vary the risk of Guarantor or otherwise
operate as a release or discharge of Guarantor, all of which may be done without
notice to Guarantor.
7. Proceedings on Default. Upon the failure of Borrower to promptly and
completely make any required payment and performance of the Obligations, Bank
may, at its option: (a) proceed directly and at once without notice of such
default, against Guarantor to collect and recover the full amount of the
liability hereunder, or any portion thereof, without proceeding against Borrower
or any other person, or endorser, surety or guarantor, or foreclosing upon,
selling, or otherwise disposing of, or enforcing, or collecting or applying any
property, real or personal, Bank may then have as security for the Obligations,
and without enforcing or proceeding under any other guaranty; (b) sell the real
and personal property Bank
3
<PAGE>
may then have as security for the Obligations under the power of sale contained
in any mortgage deed, security agreement or similar instrument pursuant to which
such property is held or to which such property is subject or sell such property
through judicial foreclosure, as Bank may elect, notice of any such election
being expressly waived by Guarantor, and proceed against Guarantor for an amount
equal to the difference between the net proceeds of such sale to Bank and the
amount of the Obligations then due and owing. Nothing herein shall prohibit Bank
from exercising its rights against Guarantor, any other guarantor, endorser, or
surety, the security, if any, for the Obligations, and Borrower simultaneously,
jointly and/or severally. Notwithstanding this Section 7 to the contrary, and
all rights and remedies of Bank with respect to the disposition of the "Stock
Collateral," as such term is defined in that certain Stock Pledge Agreement,
dated as of the date hereof (the "Stock Pledge"), entered into between Bank and
the Guarantor, after default shall be exercised solely in accordance with the
specific terms of the Stock Pledge.
8. Representations. Guarantor represents and warrants to Bank that this
Guaranty does not violate the provisions of any document, agreement or other
instrument by which Guarantor is bound; no consent or authorization is required
as a condition to the execution of this Guaranty; Guarantor is fully aware of
the financial condition of Borrower; Guarantor delivers this Guaranty based
solely upon Guarantor's own independent investigation and understanding of the
transaction of which this Guaranty is a part and in no part upon any
representation or statement of Bank with respect thereto; Guarantor is in a
position to and hereby assumes full responsibility for obtaining any additional
information concerning Borrower's financial condition or business operations as
Guarantor may deem material to its obligations hereunder and Guarantor is not
relying upon, nor expecting Bank to furnish Guarantor with, any information in
Bank's possession concerning Borrower's financial condition or business
operations. Guarantor acknowledges and agrees that it hereby knowingly accepts
the full range of risk encompassed within a contract of "continuing guaranty",
which risk includes, without limitation, the possibility that Borrower will
incur or contract for additional indebtedness for which Guarantor will be liable
hereunder.
9. Independent Obligation. The obligations of Guarantor hereunder shall be
absolute and unconditional and are independent of the obligations of Borrower or
of any other person, endorser, surety or guarantor.
10. INTENTIONALLY OMITTED
11. Bankruptcy. All of the Obligations shall, at the option of Bank,
forthwith become due and payable if there shall be filed against Borrower or
Guarantor a petition in bankruptcy or for insolvency proceedings or for
reorganization, dissolution or liquidation, or for appointment of a receiver or
trustee, or if Borrower or Guarantor makes an assignment for the benefit of
creditors. This Guaranty shall remain in full force and effect, without
abatement, until the Obligations have been paid or performed in full to the
satisfaction of Bank, it being expressly understood and agreed to by Guarantor
that this Guaranty shall continue to be effective or shall be reinstated, as the
case may be, if at any time payment, in whole or in part, of any
4
<PAGE>
of the Obligations is rescinded, invalidated, declared to be fraudulent or
preferential, set aside or must otherwise be restored or returned by Bank upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of
Borrower all as though such payment had not been made, to Borrower or a trustee,
receiver or any other party. Guarantor understands and agrees that in the event
Bank is required to so return all or any portion of a payment received from
Borrower, Guarantor shall be required to pay Bank for such amount.
12. Unenforceability of Obligations Against Borrower. If for any reason
Borrower has no legal existence or is under no legal obligation to discharge any
of the Obligations, or if any of the Obligations have become irrecoverable from
Borrower by operation of law or for any other reason, this Guaranty shall
nevertheless be binding on Guarantor to the same extent as if Guarantor at all
times had been the principal obligor on all such Obligations. In the event that
acceleration of the time for payment of the Obligations is stayed upon the
insolvency, bankruptcy or reorganization of Borrower or for any other reason,
all such amounts otherwise subject to acceleration under the terms of any
document, agreement or other instrument evidencing, securing or otherwise
executed in connection with any of the Obligations shall be immediately due and
payable by Guarantor.
13. Waiver of Subrogation/Subordination. Guarantor hereby waives to the
fullest extent possible against any of the primary obligors and their assets (i)
any right of subrogation, indemnity, reimbursement, right to enforce any remedy
which Bank now has or may hereafter have against Borrower, any endorser or any
guarantor of all or any part of any any benefit of, and any right to participate
in, any security or collateral given to Bank to secure the payment or
performance of all or any part of the Obligations or any other liability of
Borrower to Bank until (a) that date which is 400 days after the date on which
the Obligations have been paid in full (the "Subrogation Trigger Date"), and
then if and only if (x) no Event of Default has occurred under Sections 11.1.(f)
or 11.1.(g) of the Credit Agreement with respect to Borrower at any time on and
after the date hereof to and including the Subrogation Trigger Date and (y) the
existence of Guarantor's rights under this Section 12 would not make the
Guarantor a creditor (as defined in the Federal Bankruptcy Code) of Borrower
with respect to this Guaranty in any insolvency, bankruptcy, reorganization or
similar proceeding commenced on or prior to the Subrogation Trigger Date.
Guarantor and Bank intend the preceding waivers to be for the benefit of
Borrower and their permitted successors and assigns as an absolute defense
against Borrower or their assets that arises out of Guarantor having made any
payment to Bank with respect to the Obligations. The Guarantor agrees that any
and all claims of Guarantor against Borrower, any endorser or any other
guarantor of all or any part of the Obligations, or against any of their
respective properties, shall be subordinate and subject in right of payment to
the prior payment, in full, of the Obligations. Guarantor, in its capacity as a
guarantor, also waives all setoffs and counterclaims and all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance of this Guaranty.
guarantor, in its capacity as a guarantor, further waives all notices of the
existence, creation or incurring of new or additional indebtedness, arising
either from additional loans extended to Borrower or otherwise, and also waives
all notices that the principal amount, or any portion thereof, and/or any
interest or documents evidencing all of any
5
<PAGE>
part of the Obligations is due and notice of any and all proceedings to collect
from the maker, any endorser or any other guarantor of all or any part of the
Obligations, or from any other Person. If, notwithstanding the foregoing,
Guarantor shall collect, enforce or receive any amounts in respect of such
indebtedness, such amount shall be collected, enforced and received by Guarantor
as trustee for Bank and be paid over to Bank on account of the Obligations
without affecting in any manner the liability of Guarantor under the other
provisions of this Guaranty.
14. Payments. Guarantor covenants and agrees that the Obligations will be
paid strictly in accordance with their respective terms regardless of any law,
regulation or order now or hereinafter in effect in any jurisdiction affecting
any of such terms of the rights of the Bank with respect thereto. Without
limiting the generality of the foregoing, Guarantor's obligations hereunder with
respect to any Obligation shall not be discharged by a payment in a currency
other than U.S. dollars or at a place other than the place specified for the
payment of the Obligations, whether pursuant to a judgment or otherwise, to the
extent that the amount so paid on conversion to U.S. dollar and transferred to
the Bank at 31 Pratt Street, Hartford, Connecticut 06103 under normal banking
procedures does not yield the amount of U.S. dollars due thereunder.
15. Taxes. All payments hereunder shall be made without any counterclaim or
setoff, free and clear of, and without reduction by reason of, any taxes,
levies, imposts, charges and withholdings, restrictions or conditions of any
nature ("Taxes"), which are now or may hereafter been imposed, levied or
assessed by any country, political subdivision or taxing authority, all of which
will be for the account of and paid by Guarantor hereunder. If for any reason,
any such reduction is made or any Taxes are paid by the Bank, Guarantor will pay
to the Bank the additional amounts as may be necessary to ensure that it
receives the same net amount which it would have received had no reduction been
made of Taxes paid.
16. Further Assurances. Guarantor agrees that it will provide to Bank
information relating to the financial condition and business operations of
Guarantor as Bank may reasonably request.
17. Successors and Assigns. This Guaranty shall be binding upon Guarantor
and its successors and assigns, and shall inure to the benefit of and be
enforceable by Bank and its successors, transferees and assigns. Without
limiting the generality of the foregoing sentence, Bank may assign or otherwise
transfer any document, agreement or other instrument held by it evidencing,
securing or otherwise executed in connection with the Obligations, or sell
participations in any interest therein to any other Person or entity, and such
other person or entity shall thereupon become vested, to the extent set forth in
the agreement evidencing such assignment, transfer or participation, with all
rights in respect thereof granted to Bank herein.
18. Amendments and Waivers. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall be effective
unless the same shall be in writing and signed by Bank. No failure on the part
of Bank to exercise, and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof, nor
6
<PAGE>
shall any single or partial exercise of any right hereunder preclude any other
or further exercise of any other right.
19. Notices. All notices, requests, demands, and other communications
called for hereunder shall be made in writing and, unless otherwise specifically
provided herein, shall be deemed to have been duly made or given when delivered
by hand or mailed first class mail postage prepaid or, in the case of telecopy
or facsimile notice, when transmitted, answer back received, addressed as
follows, or at such address as either party may designate in writing.
If to Bank:
Bank of Boston Connecticut
100 Pearl Street
Hartford, CT 06103
Attn: Roger J. Roche, Jr.,
Director
If to Guarantor; to the address set forth above.
20. Joint and Several Obligations. If this Guaranty is now, or hereafter
shall be, signed by more than one Person, it shall be the joint and several
obligation of all such persons (including, without limitation, all makers,
endorsers, guarantors and sureties, if any) and shall be binding on all such
persons and their respective heirs, executors, administrators, legal
representatives, successors and assigns.
21. Governing Law; Consent to Jurisdiction. This Guaranty, and the rights
and obligations of the parties hereunder, shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Connecticut.
Guarantor agrees that any suit for the enforcement of this Guaranty may be
brought in the courts of the State of Connecticut or any Federal Court sitting
therein and consents to the non-exclusive jurisdiction of such court and to
service of process in any such suit being made upon Guarantor by mail at the
address specified in Section 19 hereof. Guarantor hereby waives any objection
that it may now or hereafter have to the venue of any such suit or any such
court or that such suit was brought in an inconvenient court.
22. Termination. This Guaranty shall remain in full force and effect,
without abatement, until the Obligations have been paid or performed in full.
23. Amendments and Modifications. The provisions of this Guaranty shall
extend and be applicable to all renewals, amendments, extensions and
modifications of the Obligations and the documents, agreements and other
instruments evidencing, securing or otherwise executed in connection with the
Obligations, and all references to the Obligations and such documents,
agreements or instruments shall be deemed to include any renewal, extension,
amendment or modification thereof.
7
<PAGE>
24. Commercial Transaction. GUARANTOR ACKNOWLEDGES THAT THE TRANSACTION OF
WHICH THIS GUARANTY IS A PART IS A COMMERCIAL TRANSACTION, AND HEREBY WAIVES ITS
RIGHT TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL
STATUTES OR BY OTHER APPLICABLE LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH
BANK MAY DESIRE TO USE.
25. Waiver of Jury Trial. GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY
COURT IN ANY SUIT, ACTION OR PROCEEDING OR ANY MATTER ARISING IN CONNECTION WITH
OR IN ANY WAY RELATED TO THE TRANSACTION OF WHICH THIS GUARANTY IS A PART AND/OR
THE ENFORCEMENT OF ANY OF ITS RIGHTS AND REMEDIES. GUARANTOR ACKNOWLEDGES THAT
IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY AND ONLY AFTER CONSIDERATION OF THE
RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEY.
26. Miscellaneous. This Guaranty constitutes the entire agreement of
Guarantor with respect to the matters set forth herein. The rights and remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or any other document, agreement or other instrument and this Guaranty shall be
in addition to any other guaranty of the Obligations. The invalidity or
unenforceability of any one or more sections of this Guaranty shall not affect
the validity or enforceability of its remaining provisions. All section headings
in this Guaranty are included for convenience of reference only and shall not
constitute a part of this Guaranty for any other purpose. The meanings of all
defined terms used in this Guaranty shall be equally applicable to the singular
and plural forms of the terms defined.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first set forth above.
POLYVISION CORPORATION
By: /s/ Alan J. Nickerson
-------------------------------------
Alan J. Nickerson
Chief Financial Officer and Secretary
8
Exhibit 10.30
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT (the "Agreement") is made as of this 25th day
of April, 1996 by and between BANK OF BOSTON CONNECTICUT, a Connecticut savings
bank, with its head office located at 31 Pratt Street, Hartford, Connecticut
06103 (the "Bank") and POLYVISION CORPORATION, a New York corporation, with its
chief executive office located at 866 North Main Street Extension, Wallingford,
CT 06492 (the "Pledgor").
W I T N E S S E T H:
WHEREAS, the Pledgor is the direct legal and beneficial owner of all of the
issued and outstanding shares of each class of the capital stock of GREENSTEEL,
INC., a Delaware corporation, with its chief executive office located at 866
North Main Street Extension, Wallingford, Connecticut 06492 as more fully
described on Schedule A (the "Subsidiary"); and
WHEREAS, the Subsidiary has entered into a certain Master Credit Agreement
of even date herewith (as amended and in effect from time to time, the "Credit
Agreement") with the Bank, pursuant to which the Bank, subject to the terms and
conditions contained therein, has agreed to make loans and advances and
otherwise extend credit to the Subsidiary; and
WHEREAS, Pledgor has agreed to guarantee the payment and performance of the
Subsidiary obligations under the Credit Agreement pursuant to a guaranty
agreement of even date herewith (the "Guaranty"); and
WHEREAS, it is a condition precedent to the Bank making any loans and
advances and otherwise extending credit to the Subsidiary under the Credit
Agreement that the Pledgor execute and deliver to the Bank a pledge agreement in
substantially the form hereof; and
WHEREAS, the Pledgor wishes to grant pledges, assignments and security
interests in favor of the Bank as herein provided;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
Section 1. Pledge of Stock. etc.
(a) The Pledgor hereby pledges, and grants a security interest in all
of the shares of capital stock of the Subsidiary of every class, as more
fully described on Schedule A hereto, to be held by the Bank subject to the
terms and conditions hereinafter set forth. The certificates for such
shares, accompanied by stock powers or other appropriate instruments of
assignment thereof duly executed in blank by the Pledgor, have been
delivered to the Bank.
<PAGE>
(b) In case the Pledgor shall acquire any additional shares of the
capital stock of the Subsidiary or corporation which is the successor of
any Subsidiary, or any securities exchangeable for or convertible into
shares of such capital stock of any class of any Subsidiary, by purchase or
otherwise, then the Pledgor shall forthwith deliver to and pledge such
shares or other securities to the Bank under this Agreement. The Pledgor
agrees that the Bank may from time to time attach as Schedule A hereto an
updated list of the shares of capital stock or securities at the time
pledged with the Bank hereunder.
(c) The Pledgor also hereby pledges, and grants a security interest in
the Cash Collateral Account and all of the Cash Collateral as such terms
are hereinafter defined.
Section 2. Definitions. The term "Obligations" and all other capitalized
terms used herein without definition shall have the respective meanings provided
therefor in the Guaranty. Terms used herein and not defined in the Guaranty or
otherwise defined herein that are defined in the Uniform Commercial Code have
such defined meanings herein, unless the context otherwise indicates or
requires, and the following terms shall have the following meanings:
"Cash Collateral" has the meaning set forth in Section 4 hereof.
"Cash Collateral Account" has the meaning set forth in Section 4
hereof.
"Stock" means the shares of stock described in Schedule A attached
hereto and any additional shares of stock at the time pledged with the Bank
hereunder.
"Stock Collateral" means the property at any time pledged to the Bank
hereunder (whether described herein or not) and all income therefrom,
increases therein and proceeds thereof, including without limitation that
included in Cash Collateral, but excluding from the definition of "Stock
Collateral" any income, increases or proceeds received by the Pledgor to
the extent expressly permitted by Section 6 hereof.
"Time Deposits" has the meaning set forth in Section 4 hereof.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect in the State of Connecticut.
Section 3. Security for Obligations. This Agreement and the security
interest in and pledge of the Stock Collateral hereunder are made with and
granted to the Bank as security for the prompt and complete payment and
performance in full of all the obligations owing to the Bank under the Guaranty.
Section 4. Liquidation, Recapitalization, Etc.
(a) Any sums or other property paid or distributed upon or with
respect to any of the Stock, whether by dividend or redemption or upon the
liquidation or dissolution of the
2
<PAGE>
issuer thereof or otherwise, shall, except to the limited extent provided
in Section 6 hereof, be paid over and delivered to the Bank to be held by
the Bank as security for the payment and performance in full of all of the
Obligations. In case, pursuant to the recapitalization or reclassification
of the capital of the issuer thereof or pursuant to the reorganization
thereof, any distribution of capital shall be made on or in respect of any
of the Stock or any property shall be distributed upon or with respect to
any of the Stock, the property so distributed shall be delivered to the
Bank to be held by it as security for the Obligations. Except to the
limited extent provided in Section 6, all sums of money and property paid
or distributed in respect of the Stock, whether as a dividend or upon such
a liquidation, dissolution, recapitalization or reclassification or
otherwise, that are received by the Pledgor shall, until paid or delivered
to the Bank, be held in trust for the Bank as security for the payment and
performance in full of all of the Obligations.
(b) All sums of money that are delivered to the Bank pursuant to this
Section 4 hereof shall be deposited into an interest bearing account with
the Bank (the "Cash Collateral Account"). Some or all of the funds from
time to time in the Cash Collateral Account may be invested in time
deposits, including, without limitation, certificates of deposit issued by
the Bank (such certificates of deposit or other time deposits being
hereinafter referred to, collectively, as "Time Deposits"), that are
satisfactory to both the Bank and the Pledgor. Interest earned on the Cash
Collateral Account and on the Time Deposits, and the principal of the Time
Deposits at maturity that is not invested in new Time Deposits, shall be
deposited in the Cash Collateral Account. The Cash Collateral Account, all
sums from time to time standing to the credit of the Cash Collateral
Account, any and all Time Deposits, any and all instruments or other
writings evidencing Time Deposits and any and all proceeds or any thereof
are hereinafter referred to as the "Cash Collateral."
(c) Except as otherwise expressly provided in Section 15 hereof, the
Pledgor shall have no right to withdraw sums from the Cash Collateral
Account, to receive any of the Cash Collateral or to require the Bank to
part with the Bank's possession of any instruments or other writings
evidencing any Time Deposits.
Section 5. Warranty of Title; Authority. The Pledgor hereby represents and
warrants that: (a) the Pledgor has good and marketable title to the Stock
described in Section 1, subject to no pledges, liens, security interests,
charges, options, restrictions or other encumbrances except the pledge and
security interest created by this Agreement, (b) the Pledgor has full power,
authority and legal right to execute, deliver and perform its obligations under
this Agreement and to pledge and grant a security interest in all of the Stock
Collateral pursuant to this Agreement, and the execution, delivery and
performance hereof and the pledge of and granting of a security interest in the
Stock Collateral hereunder have been duly authorized by all necessary corporate
action and do not contravene any law, rule or regulation or any provision of the
Pledgor's charter documents or by-laws or of any judgment, decree or order of
any tribunal or of any agreement or instrument to which the Pledgor is a party
or by which it or any of its property is bound or affected or constitute a
default thereunder, and (c) the information set forth in Schedule A attached
hereto relating to the Stock is true, correct and complete in all respects. The
3
<PAGE>
Pledgor covenants that, at the reasonable request of the Bank, it will defend
the Bank's rights and security interest in such Stock against the claims and
demands of all persons whomsoever. The Pledgor further covenants that it will
have the like title to and right to pledge and grant a security interest in the
Stock Collateral hereafter pledged or in which a security interest is granted to
the Bank hereunder and will likewise defend the Bank's rights in the pledge and
security interest thereof and therein.
Section 6. Dividends, Voting, etc., Prior to Maturity. So long as no Event
of Default shall have occurred and be continuing, the Pledgor shall be entitled
to receive all dividends and distributions paid in respect of the Stock, to vote
the Stock and to give consents, waivers and ratifications in respect of the
Stock; provided, however, that no vote shall be cast or consent, waiver or
ratification given by the Pledgor if the effect thereof would in the reasonable
judgment of the Bank be inconsistent with or result in any violation of any of
the provisions of the Credit Agreement, this Agreement or the Guaranty. All such
rights of the Pledgor to receive cash dividends shall cease in case an Event of
Default shall have occurred and be continuing. All such rights of the Pledgor to
vote and give consents, waivers and ratifications with respect to the Stock
shall, at the Bank's option, as evidenced by the Bank's notifying the Pledgor of
such election, cease in case an Event of Default shall have occurred and be
continuing.
Section 7. Remedies.
(a) If an Event of Default shall have occurred and be continuing, the
Bank shall thereafter have the following rights and remedies (to the extent
permitted by applicable law) in addition to the rights and remedies of a
secured party under the Uniform Commercial Code, all such rights and
remedies being cumulative, not exclusive, and enforceable alternatively,
successively or concurrently, at such time or times as the Bank deems
expedient:
(i) if the Bank so elects and gives notice of such election to
the Pledgor, the Bank may vote any or all shares of the Stock (whether
or not the same shall have been transferred into its name or the name
of its nominee or nominees) for any lawful purpose, including, without
limitation, if the Bank so elects, for the liquidation of the assets
of the issuer thereof, and give all consents, waivers and
ratifications in respect of the Stock and otherwise act with respect
thereto as though it were the outright owner thereof (the Pledgor
hereby irrevocably constituting and appointing the Bank the proxy and
attorney-in-fact of the Pledgor, with full power of substitution, to
do so);
(ii) the Bank may demand, sue for, collect or make any compromise
or settlement the Bank deems suitable in respect of any Stock
Collateral;
(iii) the Bank may sell, resell, assign and deliver, or otherwise
dispose of any or all of the Stock Collateral, for cash or credit or
both and upon such terms at such place or places, at such time or
times and to such entities or other persons as the Bank thinks
expedient, all without demand for performance by the Pledgor or any
notice or advertisement whatsoever except as expressly provided herein
or as may otherwise be required by law;
4
<PAGE>
(iv) the Bank may cause all or any part of the Stock held by it
to be transferred into its name or the name of its nominee or
nominees; and
(v) the Bank may set off against the Obligations any and all sums
of the Pledgor deposited with it or held by it, including without
limitation, any sums standing to the credit of the Cash Collateral
Account and any Time Deposits issued by the Bank.
(b) In the event of any disposition of the Stock Collateral as
provided in clause iii) of Section 7(a) hereof, the Bank shall give to the
Pledgor at least five (5) Business Days' prior written notice of the time
and place of any public sale of the Stock Collateral or of the time after
which any private sale or any other intended disposition is to be made. The
Pledgor hereby acknowledges that five (5) Business Days' prior written
notice of such sale or sales shall be reasonable notice. The Bank may
enforce its rights hereunder without any other notice and without
compliance with any other condition precedent now or hereunder imposed by
statute, rule of law or otherwise (all of which are hereby expressly waived
by the Pledgor, to the fullest extent permitted by law). The Bank may buy
any part or all of the Stock Collateral at any public sale and if any part
or all of the Stock Collateral is of a type customarily sold in a
recognized market or is of the type which is the subject of
widely-distributed standard price quotations, the Bank may buy at private
sale and may make payments thereof by any means. The Bank may apply the
cash proceeds actually received from any sale or other disposition to the
reasonable expenses of retaking, holding, preparing for sale, selling and
the like, to reasonable attorneys' fees, and all other reasonable expenses
which may be incurred by the Bank in attempting to collect the Obligations
or to enforce this Agreement or in the prosecution or defense of any action
or proceeding related to the subject matter of this Agreement, and then to
the Obligations in the order set forth in such order or preference as the
Bank may determine after proper allowance for Obligations not then due.
Only after such applications, and after payment by the Bank of any amount
required by Section 9-504(1)(c) of the Uniform Commercial Code, need the
Bank account to the Pledgor for any surplus. To the extent that any of the
obligations are to be paid or performed by a person other than the Pledgor,
the Pledgor waives and agrees not to assert any rights or privileges which
it may have under Section 9-112 of the Uniform Commercial Code.
(c) The Pledgor recognizes that the Bank may be unable to effect a
public sale of the Stock by reason of certain prohibitions contained in the
Securities Act, federal banking laws, and other applicable laws, but may be
compelled to resort to one or more private sales thereof to a restricted
group of purchasers. The Pledgor agrees that any such private sales may be
at prices and other terms less favorable to the seller than if sold at
public sales and that such private sales shall not by reason thereof be
deemed not to have been made in a commercially reasonable manner. The Bank
shall be under no obligation to delay a sale of any of the Stock for the
period of time necessary to permit the issuer of such securities to
register such securities for public sale under the Securities Act, or such
other federal banking or other applicable laws, even if the issuer would
agree to do so. Subject to the foregoing, the Bank agrees that any sale of
the Stock shall be made in a commercially reasonable manner, and the
Pledgor agrees to use its best efforts to cause the issuer or issuers of
the Stock contemplated to be sold, to execute and
5
<PAGE>
deliver, and cause the directors and officers of such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments and documents,
and to do or cause to be done all such other acts and things as may be
necessary or, in the reasonable opinion of the Bank, advisable to exempt
such Stock from registration under the provisions of the Securities Act,
and to make all amendments to such instruments and documents which, in the
opinion of the Bank, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Pledgor further
agrees to use its best efforts to cause such issuer or issuers to comply
with the provisions of the securities or "Blue Sky" laws of any
jurisdiction which the Bank shall designate and, if required, to cause such
issuer or issuers to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(d) The Pledgor further agrees to do or cause to be done all such
other acts and things as may be reasonably necessary to make any sales of
any portion or all of the Stock pursuant to this Section 7 valid and
binding and in compliance with any and all applicable laws (including,
without limitation, the Securities Act, the Securities Exchange Act of
1934, as amended, the rules and regulations of the Securities and Exchange
Commission applicable thereto and all applicable state securities or "Blue
Sky" laws), regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic
or foreign, having jurisdiction over any such sale or sales, all at the
Pledgor's expense. The Pledgor further agrees that a breach of any of the
covenants contained in this Section 7 will cause irreparable injury to the
Bank, that the Bank has no adequate remedy at law in respect of such breach
and, as a consequence, agrees that each and every covenant contained in
this Section 7 shall be specifically enforceable against the Pledgor and
the Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants.
Section 8. Marshalling. The Bank shall not be required to marshal any
present or future security for (including but not limited to this Agreement and
the Stock Collateral), or other assurances of payment of, the Obligations or any
of them, or to resort to such security or other assurances of payment in any
particular order. All of the Bank's rights hereunder and in respect of such
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, the Pledgor hereby agrees that it will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Bank's rights under this Agreement or under any other instrument evidencing
any of the Obligations or under which any of the Obligations is outstanding or
by which any of the Obligations is secured or payment thereof is otherwise
assured, and to the extent that it lawfully may the Pledgor hereby irrevocably
waives the benefits of all such laws.
Section 9. Company's Obligations Not Affected. The obligations of the
Pledgor hereunder shall remain in full force and effect without regard to, and
shall not be impaired by (a) any exercise or nonexercise, or any waiver, by the
Bank of any right, remedy, power or privilege
6
<PAGE>
under or in respect of any of the Obligations or any security thereof (including
this Agreement); (b) any amendment to or modification of the Credit Agreement or
any of the Obligations; (c) any amendment to or modification of any instrument
(other than this Agreement) securing any of the Obligations; or (d) the taking
of additional security for, or any other assurances of payment of, any of the
Obligations or the release or discharge or termination of any security or other
assurances of payment or performance for any of the Obligations; whether or not
the Pledgor shall have notice or knowledge of any of the foregoing.
Section 10. Transfer, etc., by Company. Without the prior written consent
of the Bank, the Pledgor will not sell, assign, transfer or otherwise dispose
of, grant any option with respect to, or pledge or grant any security interest
in or otherwise encumber or restrict any of the Stock Collateral or any interest
therein, except for the pledge thereof and security interest therein provided
for in this Agreement.
Section 11. Further Assistance. The Pledgor will do all such acts, and will
furnish to the Bank all such financing statements, certificates, legal opinions
and other documents and will obtain all such governmental consents and corporate
approvals and will do or cause to be done all such other things as the Bank may
reasonably request from time to time in order to give full effect to this
Agreement and to secure the rights of the Bank hereunder, all without any cost
or expense to the Bank. If the Bank so elects, a photocopy of this Agreement may
at any time and from time to time be filed by the Bank as a financing statement
in any recording office in any jurisdiction.
Section 12. Bank's Exoneration. Under no circumstances shall the Bank be
deemed to assume any responsibility for or obligation or duty with respect to
any part or all of the Stock Collateral of any nature or kind or any matter or
proceedings arising out of or relating thereto, other than (a) to exercise
reasonable care in the physical custody of the Stock Collateral and (b) after an
Event of Default shall have occurred and be continuing to act in a commercially
reasonable manner and (c) as provided in Section 9-207 of the Uniform Commercial
Code. The Bank shall not be required to take any action of any kind to collect,
preserve or protect its or the Pledgor's rights in the Stock Collateral or
against other parties thereto. The Bank's prior recourse to any part or all of
the Stock Collateral shall not constitute a condition of any demand, suit or
proceeding for payment or collection of any of the Obligations.
Section 13. No Waiver, Etc. Neither this Agreement nor any term hereof may
be changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the party to be charged. No act, failure or delay by
the Bank shall constitute a waiver of its rights and remedies hereunder or
otherwise. No single or partial waiver by the Bank of any default or right or
remedy that it may have shall operate as a waiver of any other default, right or
remedy or of the same default, right or remedy on a future occasion. The Pledgor
hereby waives presentment, notice of dishonor and protest of all instruments,
included in or evidencing any of the Obligations or the Stock Collateral, and
any and all other notices and demands whatsoever (except as expressly provided
herein or in the Credit Agreement).
7
<PAGE>
Section 14. Notices, Etc. All notices, requests and other communications
hereunder shall be made in the manner set forth in the Guaranty.
Section 15. Termination. Upon final payment and performance in full of the
Obligations, this Agreement shall terminate and the Bank shall, at the Pledgor's
request and expense, return such Stock Collateral and Cash Collateral in the
possession or control of the Bank as has not theretofore been disposed of
pursuant to the provisions hereof, together with any moneys and other property
at the time held by the Bank hereunder.
Section 16. Overdue Amounts. Until paid, all amounts due and payable by the
Pledgor hereunder shall be a debt secured by the Stock Collateral and shall
bear, whether before or after judgment, interest at the rate of interest for
overdue principal set forth in the Credit Agreement.
Section 17. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT. The Pledgor
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the State of Connecticut or any federal court sitting therein and
consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Pledgor by mail at the address
specified in the Guaranty. The Pledgor hereby waives any objection that it may
now or hereafter have to the venue of any such suit or any such court or that
such suit is brought in an inconvenient court.
Section 18. Commercial Waiver. PLEDGOR ACKNOWLEDGES THAT THE TRANSACTION OF
WHICH THIS AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION AND HEREBY WAIVES ITS
RIGHT TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL
STATUTES OR BY OTHER APPLICABLE LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH
BANK MAY DESIRE TO USE.
Section 19. Waiver of Jury Trial. PLEDGOR HEREBY WAIVES TRIAL BY JURY IN
ANY COURT IN ANY SUIT, ACTION OR PROCEEDING OR ANY MATTER ARISING IN CONNECTION
WITH OR IN ANY WAY RELATED TO THE TRANSACTION OF WHICH THIS AGREEMENT IS A PART
AND/OR IN THE ENFORCEMENT BY BANK OF ANY OF ITS RIGHTS AND REMEDIES HEREUNDER OR
UNDER APPLICABLE LAW. PLEDGOR ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY,
VOLUNTARILY AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER
WITH ITS ATTORNEY.
Section 20. Waiver of Damages. Except as prohibited by law, the Pledgor
waives any right which it may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages. The Pledgor (a) certifies that neither the Bank nor any representative,
agent or attorney of the Bank has represented, expressly or otherwise, that the
8
<PAGE>
Bank would not, in the event of litigation, seek to enforce the foregoing
waivers and (b) acknowledges that, in entering into the Credit Agreement, the
Bank is relying upon, among other things, the waivers and certifications
contained in this Section 20.
Section 21. Miscellaneous. The headings of each section of this Agreement
are for convenience only and shall not define or limit the provisions thereof.
This Agreement and all rights and obligations hereunder shall be binding , and
inure to the benefit of the Bank and Pledgor and their respective successors and
assigns. If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall be in no way
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Pledgor acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF, the Bank and the Pledgor have executed this Agreement
as of the date first above written.
POLYVISION CORPORATION
By: /s/ Alan J. Nickerson
-------------------------------------
Alan J. Nickerson
Chief Financial Officer and Secretary
BANK OF BOSTON CONNECTICUT
By: /s/ Roger J. Roche, Jr.
-------------------------------------
Roger J. Roche, Jr.
Director
9
<PAGE>
The undersigned Subsidiary hereby joins in the above Agreement for the sole
purpose of consenting to and being bound by the provisions of Sections 4a., 6
and 7 thereof, the undersigned hereby agreeing to cooperate fully and in good
faith with the Bank and the Pledgor in carrying out such provisions.
GREENSTEEL, INC.
By: /s/ Alan J. Nickerson
-------------------------------------
Alan J. Nickerson
Treasurer and Secretary
10
Exhibit 10.31
AGREEMENT OF TRANSFER
AGREEMENT OF TRANSFER, dated as of January 31, 1996 (the "Agreement"), by
and between PolyVision Corporation, a New York corporation ("PolyVision"), and
Greensteel, Inc., a newly-formed Delaware corporation ("Greensteel").
W I T N E S S E T H:
WHEREAS, PolyVision desires to transfer to Greensteel certain operating
assets owned by PolyVision, subject to related liabilities, under the terms and
conditions set forth herein, including, without limitation, the assumption of
certain liabilities as provided herein and, in exchange therefor, to receive
shares of capital stock of Greensteel which, when issued, will represent all of
the issued and outstanding shares of capital stock of Greensteel; and
WHEREAS, Greensteel desires to obtain from PolyVision said operating
assets, subject to related liabilities, under the terms and conditions set forth
herein and to assume said liabilities as provided herein;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained and subject to the terms and conditions hereinafter
set forth, it is hereby agreed as follows:
1. Issuance of Stock to PolyVision and Conveyance of Assets to
Greensteel.
1.1 At the Closing (as defined in Section 6.1 hereof), (a)
Greensteel shall issue 100 shares of common stock, par value $.01 per share, of
Greensteel (the "Greensteel Stock"), representing all of the issued and
outstanding capital stock of Greensteel, to PolyVision and, in exchange
therefor, (b) subject to Sections 1.3 and 1.4 hereof, PolyVision shall transfer
or cause to be transferred to Greensteel by executing and delivering the
appropriate documents required to effect such transfer, all of the properties,
assets, business and goodwill of every nature and disposition, tangible and
intangible, whether real, personal or mixed and wherever located, of PolyVision,
relating to the operation of its Greensteel Division (the "Division") and which
are owned by PolyVision immediately prior to the Closing, including, without
limitation (except as otherwise herein agreed), the following (the "Assets"):
(a) All of the "contractor" licenses and permits as required by
the operation of the Division;
(b) All of the business and goodwill relating to the operation of
the Division;
<PAGE>
(c) All of the machinery, equipment, furniture, fixtures,
vehicles and other personal property and all of the materials and
supplies, owned by PolyVision and used in the operation of the
Division;
(d) All of the cash, bank deposits, notes receivable, accounts
receivable, advance payments and prepaid items owned by PolyVision and
relating to the Division;
(e) All trademarks, service marks, tradenames, product names,
process names, patent rights, including patents and patent licenses,
and copyrights and applications for and licenses and rights and
interests to or with respect to patents, trademarks, service marks,
tradenames, product names, process names and the goodwill associated
therewith and copyrights, in each case owned or held by PolyVision or
immediately prior to the Closing relating predominantly to the
operation of the Division;
(f) All real property, including leases thereof or other
interests therein or rights to use thereof, and all buildings,
structures, appurtenances and improvements erected upon, attached to
or located on the real property, owned or held by PolyVision
immediately prior to the Closing relating to the operation of the
Division, including, without limitation, the real property interests
set forth on Exhibit A hereto;
(g) All contracts and contract rights held by PolyVision at the
Closing relating to the operation of the Division; and
(h) All books, records and other data and papers of every nature
held by PolyVision at the Closing relating to the operation of the
Division; provided, however, that PolyVision may retain copies
thereof.
In addition, until and unless superseded by subsequent written
agreement, all operating arrangements between PolyVision and its successors, on
the one hand, and Greensteel, on the other hand, will continue on the same basis
as when the business and operations of the Division were conducted by
PolyVision.
1.2 In case of any dispute arising before or after the Closing as
to the identity or existence of Assets relating to the operation of the Division
or the existence of such a relationship or the transferability thereof, the
determination of PolyVision, if made before the Closing, or the joint
determination of PolyVision and Greensteel, if made after the Closing, shall be
final, conclusive and binding upon PolyVision, Greensteel and all others
claiming rights in or with respect to the Assets by, through or under PolyVision
or Greensteel.
1.3 Anything in this Section 1 to the contrary notwithstanding,
PolyVision shall retain and not transfer to Greensteel at the Closing: (a) any
"contractor" licenses or permits containing requirements that the party or
parties thereto (other than PolyVision) shall consent to an assignment of such
license or permit, provided that such consent has not been obtained at or before
the Closing; (b) any lease, real property interest or use right
2
<PAGE>
which by its terms may be transferred or assigned only with the consent of a
third party thereto (other than PolyVision), provided that such consent has not
been obtained at or before the Closing, and (c) any right, title and interest in
respect of the equipment and personal property leases described in Exhibit B
hereto and the equipment and other property underlying such leases; provided,
however, that PolyVision and Greensteel shall, at the Closing, enter into
sublease agreements whereby the equipment underlying an equipment lease relating
to the Division is subleased to Greensteel.
1.4 Nothing herein shall be deemed to require the transfer of any
of the Assets (tangible or intangible) which by their terms or operation of law
cannot be assigned or transferred; provided, however, that PolyVision and
Greensteel shall cooperate to obtain any necessary consents or approvals for the
transfer of all Assets. In the event that the parties are unsuccessful in
obtaining necessary consents or approvals for the transfer of any of the Assets
prior to the Closing, PolyVision shall (at the expense of Greensteel) hold such
Assets and take such action as may be reasonably requested by Greensteel in
order to place Greensteel, to the extent reasonably possible and consistent with
the appropriate documents relating to such Assets, in the same position as would
have existed had such consent or approval been obtained prior to the Closing and
such part of the Assets transferred to Greensteel as contemplated hereby. As and
when such Assets become transferable, PolyVision will transfer such Assets
forthwith to Greensteel and the assignment to Greensteel by PolyVision of any
such Assets shall be deemed effective at the time such consent or approval is
obtained.
2. Assumption of Liabilities by Greensteel.
2.1 At the Closing, contemporaneously with the transfer of Assets
and the issuance of the Greensteel Stock as specified in Section 1.1 above,
Greensteel shall assume and agree to pay, perform or discharge when due (except
while contested in good faith by appropriate proceedings) (a) all of the
liabilities and debts of PolyVision thereof which relate to or arise out of the
Assets or the businesses or operations of the Division, and (b) all known and
unknown contingent or unliquidated liabilities of and claims against PolyVision
or any subsidiary thereof of any kind and nature to the extent they relate to or
arise out of the Assets or the business or operation of the Division and (c) the
indebtedness of PolyVision evidenced by that certain letter agreement, dated May
24, 1995, between PolyVision and The Alpine Group, Inc., providing for the
funding of working capital deficiencies of up to $2,500,000.
2.2 In case of any dispute arising before or after the Closing as
to the identity or existence of liabilities, debts, obligations or claims to be
assumed by Greensteel or as to which Greensteel is to indemnify PolyVision and
its subsidiaries, the determination of PolyVision, if made before the Closing,
or the joint determination of PolyVision and Greensteel, if made after the
Closing, shall be final, conclusive and binding upon PolyVision, Greensteel and
all others claiming rights in or with respect to such assumptions and
indemnities by, through, or under PolyVision or Greensteel.
3. Indemnification Upon Transfer.
Without in any way limiting the provisions of Section 2 of this
Agreement, at the Closing, Greensteel shall, contemporaneously with the transfer
of Assets, indemnify and
3
<PAGE>
hold harmless PolyVision, its successors and its subsidiaries from and against
any and all losses, liabilities, claims, damages, costs and expenses, mature or
unmature, absolute or contingent, liquidated or unliquidated, known or unknown
(including, without limitation, reasonable attorneys' fees and any and all
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any litigation commenced or threatened, or any claim whatsoever) of any
kind and nature which (a) relate to claims which arise from and after the
Closing out of the business or operation of the Division or (b) are to be
assumed or paid by Greensteel pursuant to this Agreement.
4. Certain Employee Benefit Plans.
From and after the Closing, all employees of Greensteel shall be covered by
covered by or included as an eligible employee in any employee benefit plan
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended) which, immediately prior to the Closing, covered or
included such employee in his or her capacity as an employee of PolyVision, to
the same extent as such employee was covered or included in any such plan or
plans immediately prior to the Closing. Greensteel hereby adopts the employee
benefit plans set forth in Exhibit C hereto and PolyVision agrees to use its
best efforts to cause the amendment of each such plan so as to provide for (a)
the eligibility of Greensteel to adopt such plan with respect to its employees
as of the Closing, (b) the crediting to each such employee of qualifying service
under each such plan, for purposes of eligibility, vesting, contributions and
benefits, and all other relevant purposes, in respect of such employee's service
with PolyVision prior to the Closing, and (c) the crediting to each such
employee of qualifying service under each such plan for the purposes set forth
in (b) above in respect of such employee's service with Greensteel from and
after the Closing.
5. Condition of Goods Transferred; Disclaimers.
All goods (as such term is defined in the Uniform Commercial Code) to be
conveyed pursuant to this Agreement at the Closing are expressly agreed to be
conveyed "As Is" and "With All Faults." All Assets to be transferred by
PolyVision to Greensteel pursuant to the provisions of this Agreement shall be
transferred to Greensteel as is, where is, in the condition thereof and subject
to the state of title thereto, the rights of any parties in possession, and the
rights of ownership of others therein, and are subject to all applicable laws,
rules, regulations, ordinances, licenses, permits, franchises, judgments,
orders, decrees and other governmental actions, whether now in effect or
hereafter taken, all without representations or warranties of any kind by
PolyVision or any person acting or purporting to act on its behalf. PolyVision
makes no warranty or representation, express or implied, as to the title,
design, condition, value, operation, workmanship, merchantability or suitability
for a particular purpose of the Assets or any part thereof, or any other
warranty or representation, express or implied, of any kind whatsoever with
respect to the Assets or any part thereof.
6 Closing Procedures.
6.1 The sale, transfer, assignment and delivery by PolyVision to
Greensteel of the Assets referred to in Section 1 hereof, the assumption by
Greensteel of the liabilities of PolyVision referred to in Section 2 hereof, and
the indemnification referred to in
4
<PAGE>
Section 3 hereof shall take place at such time and place on January 31, 1996, or
on such earlier date, as may be agreed to by PolyVision and Greensteel (such
date being herein defined as the "Closing").
6.2 At the Closing, (a) PolyVision and Greensteel shall execute and
deliver an omnibus bill of sale and assignment and assumption agreement (the
"Bill of Sale and Instrument of Assignment and Assumption") effecting the
transfer by PolyVision of the Assets to be transferred to Greensteel pursuant to
Section 1 hereof and the assumption by Greensteel of liabilities pursuant to
Section 2 hereof, which Bill of Sale and Instrument of Assignment and Assumption
will include an indemnification agreement by Greensteel pursuant to Section 3
hereof, (b) PolyVision shall execute and deliver to Greensteel deeds effecting
the transfer of the real estate owned in fee simple included in the Assets, (c)
subject to Section 1.4 hereof, PolyVision and Greensteel shall execute and
deliver assignments and assumptions, respectively, of the real property leases
included in the Assets to be transferred to Greensteel and (d) Greensteel shall
deliver duly issued stock certificate(s) evidencing the Greensteel Stock to
PolyVision, which capital stock shall represent 100% of the issued and
outstanding shares of capital stock of Greensteel. PolyVision and Greensteel
hereby agree that, to the extent that the Bill of Sale and Instrument of
Assignment and Assumption and any other documents referred to herein which are
to be delivered by PolyVision or Greensteel at the Closing are not sufficient
for the purposes of effectuating the transactions contemplated by this
Agreement, PolyVision and the Greensteel (and their respective subsidiaries and
successors) shall, after the Closing, make, execute, acknowledge and deliver
such other and further instruments or documents as may be reasonably requested
by either party for that purpose.
7. Conditions Precedent to Closing.
The obligations of PolyVision to transfer the Assets and Greensteel to
issue the Greensteel Stock pursuant to Section 1 hereof are subject to, and
shall be conditioned upon, the fulfillment (or waiver by PolyVision or
Greensteel, as the case may be) at or before the Closing of each of the
following conditions:
(a) Approvals. All consents, approvals, authorizations, permits
and orders with respect to the transactions contemplated by this
Agreement which, in the opinion of PolyVision, may be required from
any board of directors, shareholder, person, entity or court or
governmental agency, authority or instrumentality, federal, state or
local, having or asserting rights against or jurisdiction over any
party hereto, the Assets or such transactions shall have been obtained
and be valid and in full force and effect, unless the failure to
obtain any such consent, approval, authorization, permit or order
would not in the opinion of PolyVision have a material adverse effect
on consummation of such transaction or on the respective business or
financial condition, after the transfer of Assets pursuant to Section
1 hereof, of Greensteel.
(b) No Litigation. No action, suit, investigation or other
proceeding shall be threatened or pending before any arbitrator, court
or governmental agency which, in the opinion of PolyVision, presents a
substantial risk of the restraint or prohibition of any of the
transactions contemplated by this Agreement,
5
<PAGE>
or the recovery of material damages or other relief in connection with
the transaction contemplated by this Agreement.
(c) Assumption of Liabilities and Indemnification. The assumption
or indemnification by Greensteel of the liabilities of PolyVision
referred to in Sections 2 and 3 hereof shall occur simultaneously with
the transfer of Assets.
(d) Proceedings. All corporate and other proceedings taken or to
be taken in connection with the consummation of the transactions
contemplated hereby (including with respect to this Agreement) and all
documents incident thereto shall be satisfactory in substance and form
to PolyVision.
(e) Shares Duly Authorized. The shares of Greensteel Stock to be
issued to PolyVision pursuant to this Agreement, when issued and
delivered in accordance with the terms of this Agreement, will be duly
and validly issued and will be fully paid and nonassessable, and free
and clear of all liens.
8. Termination.
This Agreement may be terminated at any time prior to the Closing
referred to in Section 6 hereof by PolyVision. In the event of such termination,
no party shall have any liability of any kind to any other party.
9. Transfer Taxes.
Unless otherwise agreed, sales and use taxes, if any, and real
property transfer, gains or documentary stamp taxes or recording fees imposed on
the sale or transfer of the Assets by PolyVision in connection with the transfer
thereof to Greensteel pursuant to this Agreement, or on the use thereof by
Greensteel after such sale or transfer, shall be paid by Greensteel.
10. Survival of Covenants.
Unless otherwise agreed, the covenants of the parties contained
in this Agreement shall survive the Closing and any investigation by any party.
11. Cooperation.
In order to effect the transfer of assets and assumption of
liabilities contemplated by Sections 1 and 2 of this Agreement in an orderly
manner, Greensteel and PolyVision (and their respective subsidiaries and
successors) shall cooperate in, make, execute, acknowledge and deliver such
other instruments and documents and take all such other actions as may
reasonably be requested solely to effectuate the purposes of this Agreement and
resolve any matters directly relating thereto or which are a consequence thereof
not specifically dealt with herein, including, without limitation, respectively
making available from time to time and at all reasonable times from and after
the Closing (a) their respective internal financial, legal and tax personnel for
consultation, advice and service and jointly used facilities, if any, and (b)
full
6
<PAGE>
and complete access to (and permitting duplication thereof) books, records,
contracts, documents, instruments, data and other information, but only insofar
as same is necessary or useful in compliance with legal, tax or insurance
requirements or is directly related to the transactions contemplated by this
Agreement or the consequences thereof, in their respective possession or control
or (to the extent possible) in the possession or control of persons or firms
which have rendered services to or otherwise done business with either
PolyVision or Greensteel (or any of their respective subsidiaries); provided,
however, that neither party need make any person available to the other to the
extent that doing so would unreasonably interfere with the performance by the
person of services for his primary employer or would, in the sole judgment of
PolyVision or its successors, not be in the best interest of PolyVision or its
successors. In addition to the foregoing, PolyVision and Greensteel each agrees
to use its best efforts to make available to the other, upon another party's
written request, their respective officers, directors, employees and agents as
witnesses to the extent that the same may reasonably be required in connection
with any legal, administrative or other proceedings arising out of the
transactions contemplated by this Agreement or arising out of acts, transactions
or occurrences relating to the businesses of PolyVision prior to the Closing in
which PolyVision or Greensteel, or their respective subsidiaries or successors,
as the case may be, may, from time to time be involved; provided, however, that
PolyVision and its successors shall have no such obligation if in the sole
judgment of PolyVision or its successors making such person available would not
be in the best interest of PolyVision or its successors.
12. Tax Treatment. It is the intention of the parties hereto for
the transaction contemplated by this Agreement to qualify as a tax-free
transaction pursuant to Section 351 of the Internal Revenue Code of 1986, as
amended, thereby resulting in no gain or loss to PolyVision or Greensteel.
13. Miscellaneous.
13.1 Entire Agreement. This Agreement, together with the Bill of
Sale and Instrument of Assignment and Assumption, all agreements referred to
herein and all other written agreements which may be entered into between the
parties in connection herewith and therewith and the transactions contemplated
hereby and all other documents and instruments delivered in connection herewith
and therewith and the transactions contemplated hereby and thereby, set forth
the full and complete understanding of the parties hereto with respect to the
transactions contemplated hereby and shall not be amended other than by a
written document executed by the parties hereto.
13.2 Binding Effect; Benefits. This Agreement shall inure to the
benefit of and be binding upon and enforceable against the parties hereto and
their respective successors and assigns, and no other person shall have any
right or obligation hereunder.
13.3 Separability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
7
<PAGE>
13.4 Amendments and Waivers. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Either
party hereto may, by an instrument in writing, waive compliance by the other
party with any term or provision of this Agreement on the part of such other
party hereto to be performed or complied with. The waiver by any party hereto of
a breach of any term or provision of this Agreement shall not be construed as a
waiver of any subsequent breach.
13.5 Governing Law. This Agreement shall be governed by and con-
strued in accordance with the laws of the State of New York, without giving
effect to the choice of law principles thereof.
13.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement of
Transfer to be duly executed and delivered as of the date first above written.
POLYVISION CORPORATION
By: /s/ Joseph A. Menniti
-------------------------------
Joseph A. Menniti
President and Chief Operating Officer
GREENSTEEL, INC.
By: /s/ Alan J. Nickerson
---------------------
Alan J. Nickerson
Treasurer and Secretary
Exhibit 22.1
SUBSIDIARIES OF
POLYVISION CORPORATION
Name of Subsidiary State of Incorporation Percentage Owned
- ------------------ ---------------------- ----------------
Greensteel, Inc. Delaware 100%
APV, Inc. Delaware 100%
Posterloid Corporation Delaware 100%
