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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): AUGUST 19, 1999
POLYVISION CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 1-10555 13-3482597
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
4888 SOUTH OLD PEACHTREE ROAD, NORCROSS, GEORGIA 30071
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 447-5043
48-62 36TH STREET, LONG ISLAND CITY, NEW YORK 11101
(Former name or former address, if changed since last report)
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CURRENT REPORT ON FORM 8-K
POLYVISION CORPORATION
August 19, 1999
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On August 19, 1999, pursuant to a Stock Purchase Agreement, dated
May 17, 1999 and amended on July 26 and August 19, 1999, PolyVision Corporation
acquired from Mark A. Lawer, as trustee under the Lawer Family Trust, Michael J.
Lawer, Matthew B. Lawer and Suzanne M. Lawer, all of the outstanding common
stock of A. Lawer Corporation, also known as Nelson Adams, for $30.0 million,
consisting of $24.0 million in cash (including approximately $3.1 million of
debt which was refinanced) and $6.0 million in shares of PolyVision's Series D
convertible preferred stock. The purchase price was determined as a result of
arm's length negotiations between the parties.
Nelson Adams is a leading designer and supplier of visual
display and related products primarily for the educational products market.
Nelson Adams maintains design and production facilities in Corona, California,
Clymer, Pennsylvania and Pompano Beach, Florida, and sales and distribution
offices throughout the United States.
The cash portion of the transaction was funded by a $22.0
million increase in PolyVision's senior secured credit facility and $2.0 million
in cash proceeds from the sale of shares of PolyVision's Series C convertible
preferred stock to The Alpine Group, Inc.
Nelson Adams had no material relationship or association with
PolyVision. The acquisition will be accounted for under the purchase method of
accounting.
(b) There are presently no significant changes anticipated in the
business or product lines of Nelson Adams.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
In accordance with Item 7(a), the financial
statements of Nelson Adams shall be provided not later than
November 2, 1999.
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(b) PRO FORMA FINANCIAL INFORMATION.
In accordance with Item 7(b), the pro forma financial
information shall be provided not later than November 2, 1999.
(c) EXHIBITS.
2.3 Stock Purchase Agreement, dated May 17, 1999, by and
among PolyVision Corporation, Mark A. Lawer, as
trustee under the Lawer Family Trust, Michael J.
Lawer, Matthew B. Lawer and Suzanne M. Lawer, as
amended by letter agreements, dated July 26 and
August 19, 1999.
10.44 Amendment No. 1 to Credit Agreement, dated as of
December 30, 1998, by and among PolyVision
Corporation, Greensteel, Inc. and Posterloid
Corporation, as borrowers, the financial institutions
signatory thereto and Fleet National Bank, as
administrative agent and in certain other capacities
specified therein.
10.45 Amendment No. 2 to Credit Agreement, dated as of
August 19, 1999, by and among PolyVision Corporation,
Greensteel, Inc. and Posterloid Corporation, as
borrowers, the financial institutions signatory
thereto and Fleet National Bank, as administrative
agent and in certain other capacities specified
therein.
10.46 Amendment No. 1 to Senior Subordinated Note and
Warrant Purchase Agreement, dated as of August 19,
1999, among PolyVision Corporation, Greensteel, Inc.
and Posterloid Corporation, and John Hancock Mutual
Life Insurance Company, John Hancock Variable Life
Insurance Company and Hancock Mezzanine Partners L.P.
10.47 Series C Preferred Stock Purchase Agreement, dated as
of August 19, 1999, between PolyVision Corporation
and The Alpine Group, Inc.
99.1 Press Release issued by PolyVision Corporation on
August 20, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
POLYVISION CORPORATION
Dated: September 2, 1999 By: /s/ GARY L. EDWARDS
----------------------------------
Gary L. Edwards
Chief Financial Officer, Treasurer
and Secretary
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EXHIBIT INDEX
Exhibit Number Description Page
- -------------- ----------- ----
2.3 Stock Purchase Agreement, dated May 17, 1999, by and
among PolyVision Corporation, Mark A. Lawer, as
trustee under the Lawer Family Trust, Michael J.
Lawer, Matthew B. Lawer and Suzanne M. Lawer, as
amended by letter agreements, dated July 26 and
August 19, 1999.
10.44 Amendment No. 1 to Credit Agreement, dated as of
December 30, 1998, by and among PolyVision
Corporation, Greensteel, Inc. and Posterloid
Corporation, as borrowers, the financial
institutions signatory thereto and Fleet
National Bank, as administrative agent and in
certain other capacities specified therein.
10.45 Amendment No. 2 to Credit Agreement, dated as of
August 19, 1999, by and among PolyVision
Corporation, Greensteel, Inc. and Posterloid
Corporation, as borrowers, the financial
institutions signatory thereto and Fleet
National Bank, as administrative agent and in
certain other capacities specified therein.
10.46 Amendment No. 1 to Senior Subordinated Note and
Warrant Purchase Agreement, dated as of August
19, 1999, among PolyVision Corporation,
Greensteel, Inc. and Posterloid Corporation, and
John Hancock Mutual Life Insurance Company, John
Hancock Variable Life Insurance Company and
Hancock Mezzanine Partners L.P.
10.47 Series C Preferred Stock Purchase Agreement, dated
as of August 19, 1999, between PolyVision Corporation
and The Alpine Group, Inc.
99.1 Press Release issued by PolyVision Corporation on
August 20, 1999.
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POLYVISION CORPORATION
and
ALL OF THE STOCKHOLDERS OF
A. LAWER CORPORATION
STOCK PURCHASE AGREEMENT
May 17, 1999
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
1. Sale and Purchase of the Shares ...........................................1
2. The Closing; Purchase Price, etc. .........................................1
2.1. The Closing .......................................................1
2.2. Delivery of Shares ................................................1
2.3. Payment at Closing ................................................1
2.4. Seller Representative .............................................2
2.5. Section 338(h)(10) Election .......................................3
2.6. Current Year Taxes ................................................3
3. Representations and Warranties of the Sellers .............................4
3.1. Organization and Qualification ....................................4
3.2. No Subsidiaries ...................................................4
3.3. Capitalization ....................................................4
3.4. Agreement; Title to Shares ........................................4
3.5. Financial Statements ..............................................5
3.6. Title to Property, Absence of Encumbrances, etc. ..................6
3.7. Inventories; Accounts Receivable ..................................6
3.8. Patents; Trademarks. ..............................................7
3.9. Employee Remuneration. ............................................7
3.10. Union and Employment and Consulting Agreements. ...................7
3.11. Officers, Directors and Bank Accounts .............................8
3.12. No Material Adverse Change ........................................8
3.13. Absence of Certain Changes ........................................8
3.14. Environmental Matters .............................................9
3.15. Litigation .......................................................10
3.16. Contracts. .......................................................10
3.17. Taxes ............................................................11
3.18. Licenses and Permits .............................................12
3.19. Internal Software Applications. ..................................13
3.20. Employee Benefit Plans ...........................................14
3.21. Other Liabilities ................................................16
3.22. Absence of Certain Payments ......................................16
3.23. Investment Representation ........................................17
4. Representations and Warranties of the Buyer ..............................17
4.1. Organization and Qualification ...................................17
4.2. Agreement ........................................................17
4.3. Validity of Shares ...............................................17
4.4. Information ......................................................18
4.5. Investment Representation ........................................18
</TABLE>
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<TABLE>
<S> <C>
4.6. SEC Compliance ...................................................18
4.7. No Adverse Change ................................................18
5. Covenants of the Sellers .................................................18
5.1. Action Prior to Closing ..........................................18
5.2. Access and Information ...........................................19
5.3. Publicity ........................................................19
5.4. Best Efforts .....................................................19
5.5 No Shopping or Disclosure ........................................19
6. Covenants of the Buyer ...................................................20
6.1. Publicity ........................................................20
6.2. Best Efforts .....................................................20
6.3. Confidentiality ..................................................20
6.4. Buyer Financial Capacity .........................................20
6.5. Merger of the Company ............................................20
6.6. Assignment of Certain Insurance Coverage .........................20
6.7. Guarantees .......................................................21
6.8. Employee Benefits ................................................21
7. Conditions to the Obligations of the Sellers .............................21
7.1. Representations and Warranties ...................................21
7.2. Performance ......................................................21
7.3. Closing Certificate ..............................................21
7.4. Opinion of Counsel ...............................................21
7.5. Execution of Other Documents .....................................21
8. Conditions to the Obligations of the Buyer ...............................22
8.1. Representations and Warranties ...................................22
8.2. Performance ......................................................22
8.3. Closing Certificate ..............................................22
8.4. Report on Environmental Matters ..................................22
8.5. Schedules ........................................................22
8.6. Opinion of Counsel ...............................................22
8.7. Non-Competition Agreements .......................................22
8.8. Employment Agreement .............................................22
8.9. Amended Leases ...................................................22
8.10. Shareholder Loans ................................................22
8.11. Completion of Financing ..........................................23
8.12. No Material Adverse Change .......................................23
8.13. Resignation of Officers and Directors ............................23
9. Survival of Representations and Warranties ...............................23
10. Indemnification ..........................................................23
10.1. By the Sellers ...................................................23
</TABLE>
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<TABLE>
<S> <C>
10.2. Indemnification by the Buyer .....................................25
10.3. Indemnification Procedures .......................................25
10.4. Third Party Claims ...............................................26
11. Termination ..............................................................28
11.1 Termination Events ...............................................28
12. Dispute Resolution .......................................................29
13. Miscellaneous ............................................................29
13.1. Expenses .........................................................29
13.2. Notices. .........................................................29
13.3. Further Assurances ...............................................30
13.4. Amendments .......................................................30
13.5. Miscellaneous ....................................................30
</TABLE>
LIST OF DISCLOSURE SCHEDULES AND EXHIBITS
Schedule 2.3 Outstanding Indebtedness
Schedule 3.6 Real Property; Equipment, etc.
Schedule 3.8 Patents, Trademarks and Copyrights
Schedule 3.9 Employees
Schedule 3.10 Union and Employment Agreements
Schedule 3.11 Officers, Directors and Bank Accounts
Schedule 3.12 Adverse Changes
Schedule 3.13 Certain Changes
Schedule 3.14 Environmental Matters
Schedule 3.15 Litigation
Schedule 3.16 Contracts and Other Agreements
Schedule 3.19 Software Applications
Schedule 3.20 Employee Benefit Plans
Exhibit A Certificate of Amendment of the Certificate of Incorporation
Exhibit B Escrow Agreement
Exhibit C Opinion of Buyer's Counsel
Exhibit D Opinion of Sellers' Counsel
Exhibit E Non-Competition Agreement
Exhibit F Employment Agreement
Exhibit G Amended Leases
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated May 17, 1999,
between POLYVISION CORPORATION, a New York corporation (the "Buyer"), and Mark
A. Lawer, as trustee under the MARK A. LAWER FAMILY TRUST, MICHAEL J. LAWER,
MATTHEW B. LAWER and SUZANNE M. LAWER (each individually, a "Seller" and
collectively, the "Sellers").
WHEREAS, the Sellers own all of the issued and outstanding shares of
capital stock, consisting of 1,000 shares of common stock (the "Shares"), of A.
Lawer Corporation, a California corporation (the "Company"); and
WHEREAS, the Buyer desires to purchase from the Sellers and the Sellers
desire to sell to the Buyer all (and not less than all) of the Shares;
NOW, THEREFORE, in reliance on and in consideration of the promises and
agreements contained herein, the parties hereto agree as follows:
1. SALE AND PURCHASE OF THE SHARES. Subject to the terms and conditions
hereof and in reliance upon the representations, warranties and covenants
contained herein, the Sellers will sell all (and not less than all) of the
Shares to the Buyer, and the Buyer will purchase all (and not less than all) of
the Shares from the Sellers on the Closing Date (as defined in Section 2.1).
2. THE CLOSING; PURCHASE PRICE, ETC.
2.1. THE CLOSING. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Greenberg
Traurig, 200 Park Avenue, New York, New York, at 10:00 a.m., New York time, on
July 1, 1999, or on such other date on or prior to July 15, 1999, or such other
time and place as may be agreed upon by the Buyer and the Sellers. The date of
the Closing is herein referred to as the Closing Date.
2.2. DELIVERY OF SHARES. At the Closing, the Sellers will deliver to
the Buyer certificates for all of the Shares duly endorsed for transfer by the
Sellers or accompanied by stock powers duly executed by the Sellers.
2.3. PAYMENT AT CLOSING. At the Closing, the Buyer will pay the
purchase price for the Shares by (a) paying to the Sellers, by wire transfer of
funds to an account(s) designated by the Sellers, an amount equal to the
difference of (i) $23,500,000, MINUS (ii) all principal, interest and other
charges outstanding on the Closing Date in respect of the indebtedness described
in SCHEDULE 2.3 attached hereto (exclusive of purchase money indebtedness and
capital leases of the Company for operating equipment and vehicles), which
indebtedness will be paid by the Company at Closing, (b) paying to the escrow
agent (the "Escrow Agent") under the Escrow Agreement referred to in Section
10.2(b), the sum of $1,500,000 in immediately available funds and (c) paying to
the Sellers the sum of $5,000,000, payable by delivery to the Sellers of one or
more stock certificates (as the Sellers may elect)
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representing, in the aggregate, 100,000 shares of Series D convertible preferred
stock of the Buyer (the "Series D Preferred Stock"), which have a liquidation
preference of $50.00 per share, are convertible into an aggregate of 1,000,000
shares of Common Stock of the Buyer, subject to certain adjustments, and have
the attributes set forth in the Certificate of Amendment of the Certificate of
Incorporation of the Buyer (the "Certificate of Amendment") in the form attached
hereto as EXHIBIT A. The components of the purchase price set forth in clauses
(a) and (c) of this Section 2.3 shall be allocated and paid or issued to the
Sellers in proportion to their relative ownership of the Stock as set forth in
SCHEDULE 3.3.
2.4. SELLER REPRESENTATIVE. Each Seller hereby irrevocably appoints
Mark A. Lawer with full power of substitution and resubstitution, as their true
and lawful agent, attorney-in-fact and representative (such person and his
appointed and designated successor being herein referred to as the "Seller
Representative"), with full power to act for and on behalf of the Sellers, and
each of them, for purposes of: (i) giving instructions to the Buyer and any
other third party on behalf of the Sellers as to the method of payment of the
portion of the purchase price set forth in clause (a)(i) of Section 2.3 which
may, at the direction of the Seller Representative, be paid into a common bank
account on a temporary basis pending distribution, it being understood and
agreed among the Sellers that the Seller Representative shall consult with each
Seller as to his or her preferences with regard to the manner of payments to be
made to each Seller, but as to which the Buyer shall not be responsible for
verifying that the Seller Representative made any necessary consultation, (ii)
determining the amount of any Losses (as hereinafter defined) suffered or
incurred by the Company or the Buyer, (iii) receiving notices from the Buyer
given under this Agreement, of which the Seller Representative will give a copy
to the other Sellers, (iv) approving and agreeing with the Buyer as to
additions, deletions, changes, modifications and amendments to this Agreement
and the Exhibits and Schedules hereto, except with respect to any addition,
deletion, change, modification or amendment to a material financial term or
condition of any of such documents that would materially, financially and
adversely affect the Sellers, and (v) settling finally and completely any
disputes or controversies among the parties hereto (other than solely among the
Sellers) with respect to the interpretation or effect of or damages or relief
under this Agreement and any and all transactions contemplated hereby. The
Seller Representative shall be entitled to reimbursement by the Sellers from the
consideration actually payable to the Sellers or otherwise for all reasonable
costs and expenses incurred by him in fulfilling his duties hereunder, and the
Sellers agree among themselves that such costs and expenses shall be borne pro
rata among them according to the number of Shares owned by each of the Sellers
immediately prior to the Closing. The Sellers agree that the Seller
Representative may make reasonable requests for advances to cover such costs and
expenses, and the Sellers will promptly make such advances. In no event will the
Buyer be liable for any costs or expenses of any nature incurred by the Seller
Representative in his capacity as such. THE COMPANY AND EACH SELLER, JOINTLY AND
SEVERALLY, AGREE THAT THE SELLER REPRESENTATIVE SHALL HAVE NO LIABILITY TO THE
SELLERS FOR ACTION TAKEN OR OMITTED IN GOOD FAITH IN EXERCISING THE AUTHORITY
GRANTED UNDER THIS SECTION 2.4. The Buyer shall not have any obligation or
liability to indemnify or defend the Seller Representative in respect of any
claim or liability asserted against the Seller Representative by any Seller or
its successors, assigns, heirs or personal representatives. To the extent
permitted by law and this Section 2.4, all
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determinations, decisions, actions and the like made by the Seller
Representative shall be final, conclusive and binding upon all Sellers and all
persons claiming under or through them, and may be relied upon by the Buyer as
such. If Mark A. Lawer is at any time unable to act as Seller Representative,
another Seller Representative shall be selected by the written consent of the
holders of a majority of the Shares outstanding immediately prior to the
Closing, or their successors, assigns, heirs or personal representatives, to
serve until such time as Mark A. Lawer is again able to serve.
2.5. SECTION 338(H)(10) ELECTION. If requested by the Buyer, the
Sellers agree to jointly make and file a Section 338(h)(10) election on Form
8023-A and under any similar provisions of state law with regard to the purchase
of the Shares no later than the 15th day of the ninth month beginning after the
month in which the Closing occurs. The Buyer shall be responsible for the
preparation and filing of Form 8023-A, including any appraisals and required
schedules thereto, and any similar forms under state or local law. The Buyer and
the Sellers agree to file all federal, state, local and foreign tax returns
consistent with a reasonable allocation schedule based on appraisals obtained by
the Buyer for the purpose of complying with the allocation of the Modified
Adjusted Deemed Sales Price rules of Treas. Reg. Section 1.338(h)(10) or other
regulations promulgated pursuant to Section 338(h)(10) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Buyer shall indemnify the Sellers for
any federal, state or local income taxes (and interest and penalties thereon)
("Taxes") resulting from the Section 338(h)(10) election (including, without
limitation, any Taxes on built-in gains under Code Section 1374, any recapture
under Code Section 1245, and any LIFO inventory recapture under Code Section
1363) in this Section 2.5 over and above such federal, state or local taxes that
the Sellers would have incurred but for the Section 338(h)(10) election (the
"Incremental Taxes") by paying to the Sellers an amount equal to the Incremental
Taxes plus a tax gross-up such that the Sellers' after-tax proceeds from the
sale of the Shares pursuant to this Agreement will equal: (a) the Sellers'
after-tax proceeds from the sale of the Shares, less (b) the Taxes that the
Sellers would have incurred in a stock sale transaction without the Section
338(h)(10) election. For purposes of computing "Incremental Taxes," the Sellers
shall provide to Buyer the computations of the tax basis which each Seller has
in his or her Shares and the tax rate in the absence of the Section 338(h)(10)
election. The Buyer shall have the reasonable right to review such computations
and all supporting schedules and other information related thereto. In the event
that the Buyer and the Sellers cannot agree whether there are any Incremental
Taxes, the parties will retain a Big 5 accounting firm to make the
determination. The determination of such accounting firm shall be dispositive.
The Buyer agrees to pay any amount due pursuant to this Section 2.5 within
ninety (90) days of a determination of the Sellers' liability for Incremental
Taxes.
2.6. CURRENT YEAR TAXES. The net income of the Company for the 1999
calendar year shall not be prorated as between the Sellers (on the one hand) and
the Company or the Buyer (on the other hand), but shall be determined, for
income tax purposes, based on the actual net income of the Company during that
portion of 1999 through the Closing Date (as to which the Sellers shall be
liable for the payment of all taxes payable thereon in accordance with their
respective interests in the Shares) and that portion of 1999 subsequent to the
Closing Date (as to which the Company shall be liable for the payment of all
taxes payable
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thereon), with the Company having been deemed to have closed its books for such
purposes on and as of the Closing Date. The Buyer and the Sellers shall
cooperate with each other and shall share all necessary information required in
order to make the foregoing calculations in a timely manner so as to enable each
subject person to timely pay his, her or its taxes in respect of his, her or its
share of the Company's 1999 net income.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The Sellers, jointly
and severally, represent and warrant to the Buyer, subject to the exceptions
specifically disclosed in writing in the Disclosure Schedules, as follows:
3.1. ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has all requisite power and authority to own, lease and
operate its properties and carry on its business as now being conducted. The
Company is duly qualified and in good standing as a foreign corporation
authorized to do business in the States of Arizona, Florida, Illinois, Nevada,
North Carolina, Oregon, Pennsylvania, South Carolina, Texas, Utah, Virginia,
Wisconsin and Washington, and each other jurisdiction where the character of the
properties owned or leased or the nature of activities conducted makes such
qualification necessary.
3.2. NO SUBSIDIARIES. The Company does not own or control, directly
or indirectly, any shares of, or interest in, any corporation, association or
other business entity.
3.3. CAPITALIZATION. The authorized capital stock of the Company
consists of 20,000 shares of common stock (the "Common Stock"), of which 1,000
shares are issued and outstanding and no shares are held as treasury shares. All
of the issued and outstanding shares of Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights, and are
owned by the Sellers in the respective amounts and proportions set forth in
Schedule 3.3 attached hereto. There are no options, warrants, calls,
subscriptions, convertible securities, or other rights or other agreements or
commitments of any character whatsoever obligating the Company to issue or sell
any shares of its capital stock, or any securities convertible into or
exchangeable or exercisable for or otherwise evidencing a right to acquire any
shares of its capital stock or other securities of any kind of the Company,
(except for the Stock Purchase Agreement among the Sellers, which will be
terminated on or before the Closing Date). There are no voting trusts or other
agreements or understandings to which the Company or the Sellers are a party
with respect to the voting of the capital stock of the Company.
3.4. AGREEMENT; TITLE TO SHARES. The Sellers have the legal capacity
to enter into this Agreement and, as applicable, the Non-Competition Agreements,
Employment Agreement and Amended Leases referred to in Sections 8.7, 8.8 and 8.9
hereof. This Agreement has been duly executed and delivered by the Sellers and,
assuming due execution by the Buyer, constitutes the legal and binding
obligation of the Sellers enforceable in accordance with its terms. Upon
execution and delivery thereof by the Company and the Sellers (and, in the case
of the Non-Competition Agreements and Employment Agreement, the Buyer), each of
such Non-Competition Agreements, Employment Agreement and Amended Leases will
constitute legal and binding obligations of the Sellers, enforceable in
accordance with their respective terms.
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The execution and delivery by the Sellers of this Agreement and, as applicable,
such Non-Competition Agreements, Employment Agreement and Amended Leases, the
consummation of the transactions contemplated hereby and thereby, and the
performance by the Sellers of their obligations hereunder and thereunder, will
not conflict with or result in any violation of or default under (either
immediately or with notice or lapse of time), or result in any right to
accelerate or the creation of any lien, charge or encumbrance pursuant to, any
provision of (a) the Articles of Incorporation or By-laws of the Company, (b)
except as set forth in SCHEDULE 3.4, any agreement, contract, lease, license,
note, bond, mortgage, indenture, deed of trust or other instrument to which the
Sellers or the Company is a party or by which any of the properties or other
assets of the Company is bound, (c) any governmental franchise, license, permit
or authorization, or any judgment or order of any tribunal or governmental body
applicable to the Sellers or the Company, or any of the properties or other
assets of the Company, or (d) any applicable law, statute, decree, rule or
regulation of any jurisdiction, except where such conflict, violation or
default, acceleration or creation would not have a material adverse effect on
the Company. Except for any applications or other filings required to be made
with the California Commissioner of Corporation's office with regard to the
transfer of shares, no authorization, consent or approval of, or declaration of,
filing with or notice to any governmental body or authority by the Sellers or
the Company is necessary for the execution of this Agreement, such
Non-Competition Agreements, Employment Agreement or Amended Leases by the
Sellers, the consummation by the Sellers of the transactions contemplated hereby
and thereby or the performance by the Sellers of their obligations hereunder and
thereunder. The Sellers own, beneficially and of record, free and clear of any
lien, option or other encumbrance, or own of record and have full power and
authority to convey free and clear of any lien, option or other encumbrance
(except for the Stock Purchase Agreement among the Sellers, which will be
terminated on or before the Closing Date), all of the Shares in the respective
amounts set forth in SCHEDULE 3.3, and, upon delivery of and payment for the
Shares as herein provided, the Buyer will acquire good and valid title thereto,
free and clear of any lien, option or other encumbrance.
3.5. FINANCIAL STATEMENTS. The Company has previously delivered to
the Buyer true and complete copies of (a) the unaudited balance sheets of the
Company as of December 31, 1998 and 1997, and the related unaudited statements
of income, retained earnings and cash flows for such years then ended, and the
schedules thereto, as reviewed by the Company's certified public accountants
(the "Company Financials"), and (b) unaudited financial statements, including
the balance sheet of the Company as of March 31, 1999 and the related statement
of income, for the period from January 1, 1999 to the date of such balance
sheet, certified by the President of the Company (the "Interim Financials"). The
Company Financials and the Interim Financials, including the notes to all such
statements, are referred to herein collectively as the "Financial Statements."
Except as noted in the review letters included in the Company Financials or as
set forth in SCHEDULE 3.5, the Company Financials have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods specified, and present fairly in all material
respects the financial position of the Company as of the respective dates
specified and the results of operations and changes in financial position of the
Company for the respective periods specified. Except as set forth in SCHEDULE
3.5, the Interim Financials have been prepared consistently with the Company's
past practice and, to the Sellers' knowledge, present fairly the financial
position of the Company as of
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March 31, 1999 and the results of operations for the period from January 1
through March 31, 1999, subject to normal, recurring year-end adjustments (which
would not be material) and the absence of notes.
3.6. TITLE TO PROPERTY, ABSENCE OF ENCUMBRANCES, ETC. SCHEDULE 3.6
contains a complete and accurate list of (a) all owned or leased real property
and (b) all machinery, equipment, tools, furniture and fixtures having an
original cost in excess of $25,000, owned or leased by the Company, and of all
mortgages, liens and material encumbrances to which such real property,
machinery, equipment, tools, furniture and fixtures are subject. Except for
leased property and as specified in such SCHEDULE 3.6, the Company has good and
marketable title to, or a valid leasehold or license to use, all assets, real or
personal, tangible or intangible, owned or used by it, including, without
limitation, all assets reflected in the most recent balance sheet included in
the Company Financials (other than any assets sold or otherwise disposed of in
the ordinary course of business since the date of the Company Financials), free
and clear of all mortgages, pledges, liens, security interests or encumbrances
of any nature (other than liens for taxes, assessments or other governmental
charges not yet due and payable, or presently payable without penalty or
interest) including, without limitation, any governmental restrictions on the
operation of such assets, except for such leases and such mortgages, liens and
encumbrances, or as otherwise disclosed in SCHEDULE 3.6 to this Agreement.
Except as noted in SCHEDULE 3.6, all buildings, other improvements and leasehold
improvements, and all machinery, equipment, tools, furniture and fixtures listed
in SCHEDULE 3.6 owned or leased by the Company are in operating condition and
repair, except for reasonable wear and tear. All real property leased by the
Company has been constructed and operated in compliance with all applicable
Federal, state, county and municipal laws, regulations, ordinances, standards
and orders, including, without limitation, all zoning and environmental laws,
regulations, ordinances, standards and orders, except where non-compliance would
not have a material adverse effect on the Company. There are no outstanding
enforcement actions or notices of violation issued by any Federal, state, county
or municipal authority having jurisdiction over any such property.
3.7. INVENTORIES; ACCOUNTS RECEIVABLE. The inventories of the
Company are, as of the date of the Interim Financials, and will be, as of the
Closing Date, except as reserved against on the Interim Financials or in
SCHEDULE 3.7, (a) in the case of raw materials and work in progress, usable for
the production of currently produced products which meet the Company's current
product specifications and, in the case of finished goods, saleable to customers
in the normal course of its business, and (b) not obsolete, deteriorated,
unusable or in excess of customary levels. Except as set forth in SCHEDULE 3.7
and except as reflected in the reserve for doubtful accounts set forth in the
balance sheet included in the Interim Financials as of March 31, 1999, all
accounts receivable of the Company as of the date of such Interim Financials and
uncollected on the date hereof are collectible in the full aggregate face amount
thereof in the ordinary course of business. Except as set forth in SCHEDULE 3.7,
all accounts receivable created subsequent to the date of such Interim
Financials through the Closing Date will have been collected in full prior to
the Closing Date or are collectible thereafter in the full aggregate face amount
thereof in the ordinary course of business, less an applicable reserve for
doubtful accounts established in a manner consistent with the Company's prior
practices and not greater, as a percentage of such accounts receivable, than the
reserve for doubtful accounts stated
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in such Interim Financials. Any account receivable existing at the Closing Date
and uncollected 180 days after the Closing Date, less any applicable reserves,
shall be deemed a Loss for the purposes of Section 10 and shall, upon payment to
the Buyer of any required indemnification in respect thereof, be assigned
without recourse to the Sellers, provided that no such assignment shall be
required if indemnification under Section 10 is not payable for such Loss for
any reason.
3.8. PATENTS; TRADEMARKS. SCHEDULE 3.8 contains a complete and
correct list of all patents, trademarks registered or claimed by the Company,
trade names and registered copyrights owned or used by, or registered in the
name of, the Company, and all applications for patents or for registration of
trademarks, trade names or copyrights made by the Company, or by any of its
employees for the benefit of the Company. Except as otherwise indicated in
SCHEDULE 3.8, the Company is the registered and beneficial owner of all such
patents, trademarks, trade names and registered copyrights, free and clear of
any license, royalty, lien, encumbrance or, to the Sellers' knowledge, other
interest of a third party. The Company owns or has the right to use all patents,
patent applications, trademarks, trade names, copyrights and other intellectual
property rights, including, without limitation, inventions, processes, designs,
formulae, trade secrets, technology and know-how necessary for the conduct of
its business. There is no pending or, to the Seller's knowledge, threatened
claim by the Company against any third party for infringement, misuse or
misappropriation of any patent, trademark, trade name, copyright or other
intellectual property (including, without limitation, any trade secrets or
know-how), owned by the Company or in which the Company has an interest, whether
as licensee or otherwise. There is no pending or, to the Sellers' knowledge,
threatened action, suit or proceeding against the Company for infringement,
misuse or appropriation by it of any patent, trademark, trade name, copyright or
other intellectual property (including, without limitation, any trade secret or
know-how) owned by any third party or, to the knowledge of the Sellers, are
there any facts or circumstances which would make such an action, suit or
proceeding likely to occur.
3.9. EMPLOYEE REMUNERATION. SCHEDULE 3.9 lists the current salaries
and bonuses (together with pending or anticipated increases therein) of each
director, officer, employee, consultant or agent of the Company currently paid
at a rate in excess of $60,000 per year. Except as set forth in SCHEDULE 3.9, no
officer or other key employee of the Company has indicated to the Sellers that
such officer or key employee will, and to the Sellers' knowledge no such officer
or key employee has an intention to, terminate his or her employment with the
Company. Except as set forth in SCHEDULE 3.9, as of the Closing Date, the
aggregate renumeration paid by the Company to the Sellers, in their capacity as
an officer, director or employee of the Company, since January 1, 1999 shall not
have been at an annualized rate in excess of $150,000 per annum per person.
3.10. UNION AND EMPLOYMENT AND CONSULTING AGREEMENTS. Except as
disclosed in SCHEDULE 3.10, the Company is not a party to any collective
bargaining agreement, or to any written or, to the Sellers' knowledge, oral
employment or consulting agreement, with any of its officers, directors,
employees, consultants or agents. Copies of any written agreements disclosed in
SCHEDULE 3.10 (or written summaries of oral agreements so disclosed) have been
delivered to the Buyer. Except as disclosed on SCHEDULE 3.10, to the Sellers'
knowledge, no attempts to organize the employees of the Company have been made,
nor are any such attempts
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now threatened or being planned. The Company is in compliance in all material
respects with all applicable Federal, state and local laws, rules and
regulations regarding employment conditions and practices, has withheld all
amounts required by law or agreement to be withheld from the wages or salaries
of its employees and is not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing. To the Sellers'
knowledge, the Company has not engaged in any unfair labor practices or has
discriminated on the basis of age, sex, race or other discrimination prohibited
by law in its employment conditions or practices. Except as set forth in
SCHEDULE 3.10, there are no unfair labor practice or age, sex or race
discrimination charges or complaints or other charges or complaints alleging
illegal discriminatory practices pending or, to the Sellers' knowledge,
threatened against the Company before any Federal, state or local board,
department, commission or agency nor, to the Sellers' knowledge, are there any
facts or circumstances which would make any of the foregoing likely to occur.
There are no existing or, to the Sellers' knowledge, threatened labor strikes or
material disputes, grievances, controversies or other labor troubles affecting
the Company. There are no pending or, to the Sellers' knowledge, threatened
union representation questions respecting the employees of the Company or any
pending arbitration proceedings. The Company is not obligated to pay, and has
not granted or promised in writing or, to the Sellers' knowledge, orally, to pay
to any employee, officer, director or provider of services any separation,
severance, termination, change in control or similar benefits in the event of,
or as a consequence of, the severance of their employment or relationship with
the Company, or a change in control of the Company.
3.11. OFFICERS, DIRECTORS AND BANK ACCOUNTS. SCHEDULE 3.11 lists (a)
the names of all directors and officers of the Company and (b) the name and
location of each bank or other institution in which the Company has any account
or safe deposit box, the number or other identification thereof and the names of
all persons authorized to draw thereon or have access thereto.
3.12. NO MATERIAL ADVERSE CHANGE. Except as specified in SCHEDULE
3.12, since January 1, 1999, there has not been, individually or in the
aggregate, any material adverse change or changes in the business, assets,
properties, results of operations or financial condition of the Company.
3.13. ABSENCE OF CERTAIN CHANGES. Except as specified in SCHEDULE
3.13, since January 1, 1999, the Company has not (a) issued, sold or delivered
or agreed to issue, sell or deliver any shares of its capital stock or any
options or rights to acquire any such capital stock or securities convertible
into or exchangeable for such capital stock, (b) incurred any obligations or
liabilities, whether absolute, accrued, contingent or other, other than
obligations and liabilities incurred in the ordinary course of business, (c)
mortgaged, pledged or subjected to any lien, lease, security interest or other
encumbrance (other than liens for taxes, assessments or other governmental
charges not yet due and payable, or presently payable without penalty or
interest) any of its assets, real or personal, tangible or intangible, (d)
acquired or disposed of any assets or properties, or entered into any agreement
for any such acquisition or disposition, except in the ordinary course of
business, (e) declared, made, paid or set apart any sum for any dividend or
other distribution to its shareholders, or purchased or redeemed any shares of
its capital stock
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or granted any option, warrant or right to purchase any such capital stock, (f)
forgiven or cancelled any debts or claims or waived any rights of material value
not previously accrued for, (g) granted any increase in compensation in any form
to any officer, salaried employee or any class of other employees, or granted
any severance or termination pay, or entered into any employment agreement, or
any modification of a previously existing employment agreement, with any officer
or any other salaried employee, other than increases in compensation of less
than 10% granted in the ordinary course of business consistent with prior
practice to employees whose base pay at the time of such increase was less than
$60,000, (h) adopted, amended or entered into any collective bargaining, bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation or other plan, agreement or arrangement for the benefit of
employees, (i) granted any rights or licenses under any of its patents,
trademarks, trade names, copyrights or other industrial property rights, (j)
suffered any material loss of, or material adverse change in its relationship
with, any supplier or customer and the Sellers have no knowledge that any such
supplier or customer intends or is contemplating any action which would
constitute or lead to such a loss or adverse change, (k) suffered any damage,
destruction or loss (whether or not covered by insurance) which has a material
adverse effect on its business, (1) suffered any strike or other labor trouble
which has materially affected its operations, (m) terminated or made any
substantial revision of, or engaged in any renegotiation of, any material
contract, (n) materially decreased, in the aggregate, the level of maintenance
on, or its expenditures for maintenance of, the real property, machinery,
equipment, tools, furnitures and fixtures owned or leased by it, (o) made any
change in accounting principles or methods or in classification, depreciation or
amortization policies or rates, (p) settled any dispute involving payment by the
Company in excess of $25,000 or cancelled, forgiven or reduced any obligation of
any person or entity in an amount in excess of $25,000, (q) made any loan or
advance in excess of $10,000 to any person or entity other than travel or
expense advances in accordance with its normal policies which have been
accounted for or repaid and extension of trade credit in accordance with its
normal business practices, or (r) entered into any material transaction other
than in the ordinary course of business.
3.14. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 3.14,
there are not nor, to the Sellers' knowledge, are there any facts on
circumstances which would make it likely to occur, (a) any proceedings or
governmental investigations concerning or against the Company, pending or
threatened, before any court or tribunal or governmental instrumentality, (b)
any citation, summons, directive, order or notice of violation of any law,
decree, rule, regulation, permit or order by or against, the Company, (c) any
lien, or any governmental actions resulting or which are likely to result in the
imposition of any such lien, on any of the properties owned or leased by the
Company, (d) any claim against the Company for bodily injury, property damage,
personal injury, consequential damages or clean-up costs, or (e) any obligation
to perform or contribute to remediation or to make capital expenditures, which
in each case is based upon or related in any way to Environmental Matters (as
defined below). To the Sellers' knowledge, no toxic or hazardous substances have
been generated, treated, released, stored, discharged or deposited on any of the
premises of the Company or by the Company (whether directly or indirectly
through a third party) at any other location, except in compliance with
applicable laws. There are no underground storage tanks or friable
asbestos-containing material on any of the premises of the Company. As used
herein, the term "Environmental Matters"
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refers to all matters relating to ground, air and water pollution or discharge,
solid or hazardous wastes, toxic, hazardous or polluting substances,
occupational health, the transport, storage, recycling or disposal of waste
(including, without limitation, garbage, refuse, sludge and other discarded
materials, whether solid, liquid, semisolid or gaseous and whether on-site or
off-site), ground water and soil monitoring, and discharge or emission of
pollutants, contaminants or by-products (including, without limitation, dredged
soil, solid wastes, incinerator residue, sewage, garbage, sewage sludge,
chemical wastes, biological materials, radioactive materials, heat, wrecked or
discarded equipment, industrial waste, chemicals, metals or other substances),
whether such pollution or discharge was caused by (i) the Company, or (ii) any
third party arising from off-site hazardous waste transport, storage, disposal
or treatment on behalf of the Company.
3.15. LITIGATION. Other than as disclosed in SCHEDULES 3.8, 3.10,
3.14 and 3.15, there are no judicial or administrative actions, suits or
proceedings pending or, to the Sellers' knowledge, governmental investigations
pending or judicial or administrative actions, suits and proceedings threatened
before any court or tribunal or governmental instrumentality, or any citation,
order or notice of violation of any law, decree, rule or regulation, by or
against the Sellers, in their capacity as officers, directors or shareholders of
the Company, or the Company or any of their respective properties, or which
relate in any way to the Company's business, properties, assets or operations,
or which have resulted or are likely to result in an imposition of a lien on any
of the properties or assets owned or leased by the Company, or which question
the validity of this Agreement or the Amended Leases or any action to be taken
in connection herewith or therewith, nor is there any such action, suit,
proceeding or investigation, to the knowledge of the Sellers, pending or
threatened, which involves any director, officer, employee, consultant or
independent contractor of the Company in its or his or her capacity as such.
Except as set forth in SCHEDULE 3.15, neither the Sellers, nor the Company nor
any property or assets of the Company is subject to any judicial or
administrative order, judgment, injunction or decree (except for orders,
judgments and decrees related to garnishment of wages, child support, alimony
payment, divorce settlements and like matters relating to Company employees,
which are not material to the Company).
3.16. CONTRACTS. SCHEDULE 3.16 contains a complete and correct list
of each (a) mortgage, debenture, note or installment obligation, or other
instrument or contract for the borrowing or lending of money by the Company,
including, without limitation, any agreement or arrangement relating to the
maintenance of compensating balances or the availability of a line of credit,
(b) material license agreement, sales agency agreement or distribution agreement
to which the Company is a party, (c) guaranty of any obligation by the Company,
including, without limitation, any keep-well, make-whole or maintenance of
working capital or earnings or similar agreement, (d) agreement for the sale of
any properties or assets by the Company other than sales of products in the
ordinary course of business, (e) contract, other than a contract, purchase order
or other agreement for the purchase of raw materials or other supplies in the
ordinary course of business or for the purchase of machinery, equipment, tools,
furniture or fixtures with a cost of less than $100,000, pursuant to which the
Company is or may be obligated to make payments, contingent or otherwise, on
account of or arising out of the acquisition, prior, pending or future, of the
shares, business or other assets of another enterprise,
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(f) secrecy or invention agreement under which the Sellers or the Company or, to
the Sellers' knowledge, any of the present officers or employees of the Company
has any obligation and relating to the business of the Company, (g) requirements
contract with the Company as purchaser or other agreement for the purchase or
sale of goods or services not terminable without liability by the Company on 30
days' (or less) notice or involving payments by or to the Company in excess of
$100,000, (h) agreement or arrangement with a customer or supplier of the
Company for rebates, sharing of expenses or any similar device for the effective
reduction or increase of prices or other charges and involving products with a
value in excess of $100,000, (i) agreement of the Company with, or loan or
advance by the Company to or from, or other obligation of the Company to or from
any officer or director of the Company, (j) lease of real or personal property
with the Company as lessor or lessee, involving rents of more than $5,000 per
year, (k) agreement or arrangement limiting the freedom of the Sellers or the
Company or, to the Sellers' knowledge, any of the present officers or employees
of the Company to compete in any line of business similar to the Company's
business, with any person or other entity or in any geographical area, (1)
governmental license, franchise, permit or authorization held by and material to
the business of the Company and not listed on any other Schedule hereto, (m)
insurance policy relating to the properties, businesses or products of the
Company having a currently unexpired term or, as to any casualty, workers'
compensation, general or product liability or excess liability insurance policy
currently in effect, (n) joint venture agreement or partnership, profit sharing
or other agreements to which the Company is a party, (o) agreement pursuant to
which the Company has indemnified or shared tax liability with any party, and
(p) performance bond of the Company and related agreements, and (q) contract,
commitment or agreement not referred to above in this Section 3.16 or in any
other Schedule to this Agreement and which involves aggregate payments by or to
the Company of $100,000 or more. All such contracts and agreements are in full
force and effect against the Company, the Company is not in material default
thereunder and no event has occurred which, whether with notice, lapse or time
or otherwise, would constitute a material default thereunder.
3.17. TAXES.
(a) The Company has been classified throughout its entire
existence as an electing small business (Subchapter S) corporation, and will
continue to be so classified through the Closing Date, for federal and state tax
purposes. All federal, state and local, income, sales, franchise and other taxes
due and payable or accruable by the Company on or before the date of this
Agreement have been paid or adequately reserved in the books and records of the
Company. The Company has filed all tax returns and reports required to be filed
by it with all taxing authorities through December 31, 1997 (and will file all
such returns through the Closing Date) and such returns are, or will be, true,
correct and complete in all material respects, giving due regard to permitted
extensions. All liabilities for taxes reflected in the Company's books and
records have been, or will be, computed in accordance with all applicable laws
and regulations and represent adequate provision for the payment of all accrued
or unpaid or deferred taxes of the Company for all periods through the Closing
Date. There are no tax liens upon any of the Company's property or assets.
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(b) (i) The Federal income tax returns of the Company are
closed for all years ended on or prior to the end of the taxable year ended
December 31, 1995, (ii) there are no outstanding proposed adjustments, (iii) all
Federal income tax returns for taxable years ended through December 31, 1997,
have been filed and (iv) there are no pending audits.
(c) No deficiency for any other tax has been asserted or
assessed against the Company, and there are neither unresolved claims
concerning, proceedings nor actions pending which relate to, either the tax
liability of the Company or the collection or assessment of tax for any period
for which returns covering the Company have been filed or were due.
(d) There are no outstanding agreements, extensions or waivers
extending the statutory period of limitation applicable to any Federal tax
return or state franchise, income or other tax returns covering the Company.
(e) The Company has not agreed to, or is the Company required
to, make any adjustment pursuant to Section 481(a) of the Code or any
predecessor provision by reason of any change in any accounting method of the
Company (other than any changes mandated by regulations under the Code), and the
Company has not made any application pending with any taxing authority
requesting permission for any changes in any of their respective accounting
methods.
(f) The Company has not consented to the application of
Section 341(f)(2) of the Code (or any predecessor provision).
(g) The Company has duly and timely withheld from all
salaries, wages and other compensation of their respective employees and have
duly and timely paid over to the appropriate governmental authorities all
amounts required to be so withheld and paid over for all periods under all
applicable laws.
3.18. LICENSES AND PERMITS. The Company has obtained and holds, in
its name or in the names of employees who are "qualifiers" under applicable
laws, all licenses, permits, authorizations, consents and orders or approvals of
all foreign, Federal, state or local governmental or regulatory bodies that are
necessary for the lawful conduct of its business (the "Permits") including,
without limitation, any licenses or filings, permits to operate machinery, or to
store, handle, utilize or dispose of raw materials (including without limitation
hazardous materials) and waste, the absence of which would not have a material
adverse effect on the Company. All of the Permits are validly issued and in full
force and effect and the Company is in material compliance therewith. No
proceeding is pending or, to the Sellers' knowledge, threatened which seeks or
may result in canceling, suspending, restricting or modifying any Permit. The
business of the Company is being operated in all respects in accordance with the
terms and conditions of the Permits, the failure of which would not have a
material adverse effect on the Company.
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3.19. INTERNAL SOFTWARE APPLICATIONS.
(a) SOFTWARE APPLICATIONS; YEAR 2000. The current software
applications used by the Company in the operation of its business are set forth
and described in SCHEDULE 3.19 (the "Software"). All of the Software used by the
Company complies in all material respects with the necessary requirements to
function efficiently after December 31, 1999, and will operate without a
material deviation as a result of the Year 2000 date change.
(b) OWNED SOFTWARE. To the extent that any of the Software has
been designed or developed by the Sellers or the Company's management
information or development staff or by consultants on the Sellers' or the
Company's behalf, such Software is original and capable of copyright protection
in the United States, and the Company has complete rights to and ownership of
such Software, including possession of, or ready access to, the source code for
such Software in its most recent version. To the Sellers' knowledge, no part of
any such Software is an imitation or copy of, or infringes upon, the software of
any other person or entity, or violates or infringes upon any common law or
statutory rights of any other person or entity, including, without limitation,
rights relating to defamation, contractual rights, copyrights, trade secrets,
and rights of privacy or publicity. Except as set forth in SCHEDULE 3.19,
neither the Sellers nor the Company has sold, assigned, licensed, distributed or
in any other way disposed of or encumbered any of the Software.
(c) LICENSED SOFTWARE. The Software, to the extent it is
licensed from any third party licensor or constitutes "off-the-shelf" software,
is held by the Company legitimately and is fully transferable hereunder without
any third party consent. To the Sellers' knowledge, all of the Company's
computer hardware has legitimately licensed software installed therein.
(d) NO ERRORS; NONCONFORMITY. To the Sellers' knowledge, the
Software is free from any significant defect or programming or documentation
error, operates and runs in a reasonable and efficient business manner, conforms
to the stated specifications thereof, and, with respect to owned Software, the
applications can be recreated from their associated source codes.
(e) NO BUGS OR VIRUSES. The Company has not knowingly altered
its data, or any Software or supporting software which may, in turn, damage the
integrity of the data, stored in electronic, optical, or magnetic or other form.
Except as set forth in SCHEDULE 3.19, the Sellers have no knowledge of the
existence of any bugs or viruses with respect to the Software.
(f) PASS-THROUGH WARRANTIES. The Company shall, to the maximum
possible extent, pass through to the Buyer all manufacturer's and supplier's
warranties and support contracts for the Software that are not owned by the
Company, and the Company shall, upon the Buyer's reasonable request, execute
each and every document that is necessary or appropriate to effectuate the
purchaser's obtaining and enjoying the benefits of any such pass-through
warranty.
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(g) DOCUMENTATION. The Sellers and the Company will, before
the Closing Date, make available to the Buyer true and accurate copies of all
documentation (end user or otherwise) relating to the use, maintenance and
operation of the Software.
3.20. EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE BENEFIT PLANS. SCHEDULE 3.20 contains a list
setting forth each employee benefit plan or arrangement sponsored, maintained or
contributed to by the Company or with respect to which the Company has or may
have any actual or contingent liability or obligation, including but not limited
to employee pension benefit plans, as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), multiemployer
plans, as defined in Section 3(37) of ERISA, employee welfare benefit plans, as
defined in Section 3(1) of ERISA, deferred compensation plans, stock option
plans, bonus plans, stock purchase plans, material fringe benefit plans, life,
hospitalization, disability and other insurance plans, severance or termination
pay plans and policies, sick pay plans, and vacation plans or arrangements,
whether or not described in Section 3(3) of ERISA (but excluding any plans,
programs, agreements or arrangements maintained or contributed to pursuant to
collective bargaining that are not subject to Title IV of ERISA). Each and every
such plan, program, agreement or arrangement (other than plans, programs,
agreements or arrangements maintained or contributed to pursuant to collective
bargaining) is hereinafter referred to as an "Employee Benefit Plan."
(b) PROVISION OF DOCUMENTS. With respect to each Employee
Benefit Plan, Sellers have delivered to Buyer (i) current, accurate and complete
copies of each such written Employee Benefit Plan (including all related trust
agreements, insurance or annuity contracts); (ii) copies of the most recent
Internal Revenue Service determination or opinion letter (including copies of
any outstanding requests for determination letters) with respect to each such
Employee Benefit Plan which is an employee pension benefit plan (as such term is
defined in Section 3(2) of ERISA) intended to qualify under Section 401(a) of
the Code; (iii) to the extent applicable, copies of the most recent Form 5500
annual report and accompanying schedules, the most recent actuarial report, and
the most recent summary plan descriptions; and (iv) Forms 5310 and any relating
filings with the Pension Benefit Guaranty Corporation ("PBGC") with respect to
the last 6 plan years for each Employee Benefit Plan subject to Title IV of
ERISA.
(c) COMPLIANCE WITH PLAN TERMS AND LAW. Except as otherwise
provided in Schedule 3.20, with respect to each Employee Benefit Plan: (i) each
has been administered in all material respects in compliance with its terms and
with all applicable laws, including, but not limited to, ERISA and the Code;
(ii) no actions, suits, claims or disputes are pending, or to Sellers' knowledge
threatened, other than routine claims for benefits; (iii) no audits, inquiries,
reviews, proceedings, claims, or demands are pending with any governmental or
regulatory agency; (iv) there are no facts which could give rise to any material
liability in the event of any such investigation, claim, action, suit, audit,
review or other proceeding; (v) all premiums, contributions, or other payments
required to have been made by law or under the terms of any Employee Benefit
Plan as of the Closing Date will have been made; (vi) all material reports,
returns and similar documents required to be filed with any governmental agency
or distributed to any plan participant have been duly or timely filed or
distributed; and (vii) no non-
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exempt "prohibited transaction" has occurred within the meaning of the
applicable provisions of ERISA or the Code for which the Company would have any
liability.
(d) QUALIFIED PLANS. With respect to each Employee Benefit
Plan intended to qualify under Section 401(a) of the Code: (i) the Internal
Revenue Service has issued a favorable determination or opinion letter, true and
correct copies of which have been furnished to Buyer, that such plans are, and
such plans in fact are, qualified and exempt from federal income taxes; (ii) no
such determination letter, and to Seller's knowledge no such opinion letter, has
been revoked nor has revocation been threatened, nor, to Sellers' knowledge, has
any amendment or other action or omission occurred with respect to any such plan
since the date of its most recent determination or opinion letter or application
therefor in any respect which would adversely affect its qualification or
materially increase its costs; (iii) no such plan has been amended in a manner
that would require security to be provided in accordance with Section 401(a)(29)
of the Code; (iv) no reportable event (within the meaning of Section 4043 of
ERISA) has occurred, other than one for which the 30-day notice requirement has
been waived; (v) as of the Closing Date, the present value of all liabilities
that would be "benefit liabilities" under Section 4001(a)(16) of ERISA if
benefits described in Code Section 411(d)(6)(B) were included will not exceed
the then current fair market value of the assets of each such plan subject to
Title IV of ERISA (determined using the actuarial assumptions used for the most
recent actuarial valuation for such plan); (vi) all contributions to, and
payments from and with respect to such plans, which may have been required to be
made in accordance with such plans and, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made; and (vii) all such contributions
to the plans including without limitation PBGC (as defined below) and insurance
premiums for any period ending before the Closing Date that are not yet, but
will be, required to be made are or will be properly accrued and reflected on
the Financial Statements.
(e) MULTIEMPLOYER PLANS. With respect to any multiemployer
plan as described in Section 4001(a)(3) of ERISA to which the Company
contributes or with respect to which the Company may have any actual or
contingent liability ("MPPA Plan"): (i) all contributions required to be made
with respect to employees of the Company have been timely paid; (ii) the Company
has not incurred and as of the Closing is not expected to incur, directly or
indirectly, any withdrawal liability under ERISA with respect to any such plan
(whether by reason of the transactions contemplated by the Agreement or
otherwise); (iii) none of the MPPA Plans covers any employees of the Company or
any Controlled Group Members, other than employees who are "installers" of the
Company's products; and (iv) to Sellers' knowledge, no such plan is insolvent or
in reorganization and no accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any such plan.
(f) WELFARE PLANS. (i) The Company is not obligated under any
Employee Benefit Plan that is an employee welfare benefit plan as described in
Section 3(1) of ERISA ("Welfare Plan") to provide medical or death benefits with
respect to any employee or former employee of the Company or its predecessors
after termination of employment, except as required under Section 4980B of the
Code or Part 6 of Title I of ERISA; and (ii) the Company has complied in all
material respects with the notice and continuation coverage requirements of
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Section 4980B of the Code and Parts 6 and 7 of Title I of ERISA, and the
regulations thereunder with respect to each Welfare Plan that is, or was during
any taxable year for which the statute of limitations on the assessment of
federal income taxes remains open, by consent or otherwise, a group health plan
within the meaning of Section 5000(b)(1) of the Code.
(g) CONTROLLED GROUP LIABILITY. The Company does not have any
material actual or contingent liability or obligation for, under or with respect
to any employee benefit plan or arrangement sponsored, maintained or contributed
to by any entity that has been or would be aggregated with the Company under
Section 414(b), (c), (m) or (o) of the Code (each a "Controlled Group Member").
(h) OTHER LIABILITIES. (i) The Company is not and will not be
obligated to pay separation, severance, termination or similar benefits, to
accelerate the time of payment or vesting, or increase the amount of
compensation due to any individual as a result of a "change of control" (as such
term is defined in Section 280G of the Code) that occurs on the Closing Date or
solely as a result of any transaction contemplated by this Agreement and (ii)
all required premiums under any group health plan within the meaning of Section
5000(b)(1) of the Code maintained or contributed to by the Company (including
pursuant to collective bargaining) or contributions (including additional
premiums payable in arrears to reflect claims experience) for all periods ending
prior to or as of the Closing shall have been made or properly accrued on the
Financial Statements prior to or as of the Closing and will not, in the
aggregate, exceed by more than 15% the aggregate amount accrued for such items
on the December 31, 1998 Company Financials.
3.21. OTHER LIABILITIES. To the Sellers' knowledge, the Company does
not have any liabilities or obligations (direct or indirect, contingent or
absolute, matured or unmatured) of whatever nature, whether arising out of
contract, tort, statute or otherwise, of the type required to be reflected as
liabilities on a balance sheet of the Company as currently prepared pursuant to
Section 3.5, except (a) as reflected in the balance sheets included in the
Company Financials or Interim Financials, (b) disclosed in the Schedules to this
Agreement, (c) as contemplated by this Agreement and (d) liabilities and
obligations incurred in the ordinary course of business since January 1, 1999.
3.22. ABSENCE OF CERTAIN PAYMENTS. Neither the Sellers nor the
Company nor, to the best of the Sellers' knowledge, any officers, directors,
employees, agents, representatives, or independent contractors of the Company
has made, or arranged for the making of, any unlawful payment to any official,
officer or employee of any Federal, state, county, municipal or other
governmental or regulatory body or authority or any self-regulatory body or
authority, or made any payment to any customer or supplier of the Company or any
officer, director, partner, employee or agent of any customer or supplier, for
the unlawful sharing of fees or to any such customer or supplier or any such
officer, director, partner, employee or agent for the unlawful rebating of
charges, or engaged in any other unlawful reciprocal practice, or made any other
unlawful payment or given any other unlawful consideration to any such customer
or supplier or any such officer, director, partner, employee or agent, in
respect of the Company.
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3.23. INVESTMENT REPRESENTATION. Each Seller is acquiring the shares
of Series D Preferred Stock issuable under Section 2.3 for investment, and not
with a view toward any distribution thereof except in compliance with the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
securities laws.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to the Sellers as follows:
4.1. ORGANIZATION AND QUALIFICATION. The Buyer is a corporation duly
organized, validly existing and in good
standing under the laws of the State of New York and has all requisite power and
authority to own, lease and operate its properties and carry on its business as
it is now being conducted.
4.2. AGREEMENT. This Agreement has been duly executed and delivered
by the Buyer and constitutes the legal and binding obligation of the Buyer
enforceable in accordance with its terms. The execution and delivery by the
Buyer of this Agreement, the consummation of the transactions contemplated
hereby, and the performance by the Buyer of its obligations hereunder will not
conflict with or result in any violation of, or default under (either
immediately or with notice or lapse of time), or in any right to accelerate or
the creation of any lien, charge or encumbrance pursuant to, any provision of
(a) the Certificate of Incorporation or By-laws of the Buyer, (b) any agreement,
contract, lease, license, note, bond, mortgage, indenture, deed of trust or
other instrument to which the Buyer is a party or by which any of the Buyer's
properties or other assets is bound, (c) any governmental franchise, license,
permit or authorization, or any judgment or order of any tribunal or
governmental body applicable to the Buyer, or any of the Buyer's properties or
other assets, or (d) any applicable law, statute, decree, rule or regulation of
any jurisdiction, except where such conflict, violation or default, acceleration
or creation would not have a material adverse effect on the Company. Except for
the filing of the Certificate of Amendment, no authorization, consent or
approval of, or declaration of, filing with or notice to any governmental body
or authority by the Buyer is necessary for the execution of this Agreement by
the Buyer, the consummation by the Buyer of the transactions contemplated hereby
and thereby or the performance by the Buyer of its obligations hereunder.
4.3. VALIDITY OF SHARES. The 100,000 shares of Series D Preferred
Stock to be issued at the Closing pursuant to Section 2.3 hereof, when issued
and delivered in accordance with the terms hereof and of the Certificate of
Amendment, shall be duly and validly issued, fully paid and nonassessable. The
certificates evidencing such shares shall comply as to form with applicable law,
and the Sellers shall receive good title thereto, free and clear of all claims,
encumbrances, security interests and liens. The shares of the Buyer's common
stock initially issuable upon the conversion of the Series D Preferred Stock
shall be duly and validly authorized and reserved for issuance, shall be free
and clear from preemptive rights (if any), and such shares, when issued and
delivered in accordance with the provisions of the Certificate of Amendment
pertaining to the Series D Preferred Stock shall be validly issued, fully paid
and nonassessable. Based in part on the representations and warranties of the
Sellers in this Agreement and assuming the accuracy thereof, the issuance of the
Series D Preferred Stock at the Closing pursuant to Section 2.3 will be exempt
from the registration requirements of the
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Securities Act and from the qualification or registration requirements of any
applicable state blue sky or securities laws.
4.4. INFORMATION (a) The Buyer has delivered to the Sellers true and
complete copies of the Buyer's (i) Transition Report on Form 10-K for the eight
months ended December 31, 1998, (ii) Current Report on Form 8-K and Form 8-K/A,
dated November 20, 1998, reporting the acquisition of Alliance International
Group, Inc. and containing the financial statements required by reason of such
acquisition, (iii) Quarterly Report on Form 10-Q for the quarter ended March 31,
1999, and (iv) the definitive Proxy Statement, dated April 20, 1999, in
connection with the Buyer's 1998 Annual Meeting of Shareholders to be held May
18, 1999 (the "SEC Documents"). None of the SEC Documents, as of their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements contained
therein not misleading.
(b) The Buyer has not filed, and nothing has occurred with
respect to which the Buyer would be required to file, any Current Report on Form
8-K since January 1, 1999. Prior to and until the Closing, the Buyer will
provide to the Sellers copies of any and all reports filed by the Buyer after
January 1, 1999 with the Securities and Exchange Commission (the "SEC") and any
and all reports or notices delivered to the shareholders of the Buyer.
4.5. INVESTMENT REPRESENTATION. The Buyer is acquiring the Shares
for investment and not with a view toward any distribution thereof except in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
and applicable state securities laws.
4.6. SEC COMPLIANCE. Since 1997, the Buyer has filed all reports
required to be filed with the SEC pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act") (such requests together with all
registration statements, prospectuses and proxy statements filed by the Buyer
referred to as the "Buyer SEC Reports"). As of their respective dates, all such
Buyer SEC Reports complied in all material respects with the applicable
requirements of the Exchange Act.
4.7. NO ADVERSE CHANGE. Since the Buyer filed its Transition Report
on Form 10-K for the eight months ended December 31, 1998 with the SEC, there
has not been any material adverse change in the financial condition, operations
or business of the Buyer.
5. COVENANTS OF THE SELLERS. The Sellers, jointly and severally,
covenant as follows:
5.1. ACTION PRIOR TO CLOSING. From the date of this Agreement until
the Closing Date, the Sellers will use their commercially reasonably efforts to
cause the Company to (a) conduct its operations only in the ordinary course, in
substantially the manner as heretofore conducted and in accordance with all
applicable material laws, rules, regulations, orders, approvals, authorizations,
exemptions, classifications and registrations applicable to the Company or
relating to its operations, (b) maintain its property in substantially the same
condition and repair as of the date hereof, except for reasonable wear and tear,
(c) perform in all material respects all of the respective obligations under all
contracts listed in SCHEDULE 3.16, and
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not amend, alter or modify any material provision of any such contract or enter
into any new contract or transaction involving consideration in excess of
$25,000 or dispose of any asset having a value in excess of $25,000 without the
prior written consent of the Buyer, (d) use its commercially reasonably efforts
to maintain the existing relationships of the Company with its suppliers and
customers, (e) use its commercially reasonable efforts to keep available the
services of its present officers and employees, (f) promptly deliver to the
Buyer interim financial statements as regularly prepared for its internal use,
which financial statements shall be in accordance with the last sentence of
Section 3.5, (g) not pay any dividends or distributions on its capital stock, or
issue or redeem any shares of capital stock or any options, warrants or other
rights to purchase or acquire capital stock, (h) confer on a regular and
frequent basis with representatives of the Buyer to report material operational
matters and the general status of ongoing operations, and (i) not, without the
prior written consent of the Buyer, take any action or engage in any transaction
not expressly permitted by this Section 5.1 or otherwise contemplated by this
Agreement which would cause any of the representations made by the Sellers
herein to be untrue in any material respect as of the Closing Date or a material
breach of the terms and conditions of this Agreement.
5.2. ACCESS AND INFORMATION. The Sellers agree to cause the Company
to afford the Buyer and the Buyer's employees, accountants, counsel and other
authorized representatives reasonable access to its plants, properties, books
and records and the Sellers will, and will cause the Company to, furnish to the
Buyer and its representatives during normal business hours and upon reasonable
notice all additional financial and operating data and other information as to
its business and properties as the Buyer may from time to time reasonably
request.
5.3. PUBLICITY. The Sellers will not, and will not permit the
Company to, without the consent of the Buyer, issue or cause the publication of
any press release or other announcement with respect to this Agreement, except
where such release or announcement is required by law.
5.4. BEST EFFORTS. The Sellers agree to use their reasonable best
efforts to satisfy the conditions to the obligations of the Buyer hereunder set
forth in Section 8, and will take no action that would impair or preclude the
satisfaction of the conditions to the obligations of the Sellers hereunder set
forth in Section 7.
5.5 NO SHOPPING OR DISCLOSURE. From the date hereof and until the
earlier of termination of this Agreement pursuant to Section 11 or the Closing
Date, neither the Sellers nor the Company will, or will permit their respective
employees, officers or agents to, directly or indirectly (a) solicit, initiate
or encourage any sale or acquisition of the stock of the Company, or sale or
acquisition of the assets of the Company (outside the ordinary course of
business), or any merger, consolidation or business combination with the
Company, or (b) with respect to any effort or attempt by any other person to do
or seek any of the foregoing (i) participate in any discussions or negotiations,
(ii) furnish to any other person any information with respect to the Company, or
(iii) otherwise cooperate in any way with, or assist or participate in, or
facilitate or encourage any such effort. The Sellers will promptly notify the
Buyer if any such proposal or offer, or any inquiry or contact with any person
with respect thereto is made.
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5.6. NOTICE OF CHANGES. From the date hereof through the Closing
Date, the Sellers or the Buyer, as the case may be, will promptly notify the
other party in writing of any material changes in the representations and
warranties set forth in Section 3 (in the case of the Sellers) or Section 4 (in
the case of the Buyer) of this Agreement, such notice to be given in accordance
with the provisions of Section 13.2 and to state clearly that it is being given
pursuant to this Section 5.6. If, as a result of a notice provided pursuant to
this Section 5.6, the conditions of the Buyer's obligation to close set forth in
Section 8.1 are not fulfilled, and the Buyer provides notice to the Seller of
its decision not to close the transactions contemplated hereby, then the Buyer
and the Sellers shall negotiate in good faith to adjust the purchase price by
mutual agreement to reflect the diminution in value of the Company in connection
with the changes so disclosed. Subject to the preceding sentence, any notice
given hereunder will be effective to cure any breach of a representation or
warranty which would have otherwise existed but for the notice.
6. COVENANTS OF THE BUYER. The Buyer covenants as follows:
6.1. PUBLICITY. The Buyer will not, without the consent of the
Sellers, issue or cause the publication of any press release or other
announcement with respect to this Agreement except where such release or
announcement is required by law.
6.2. BEST EFFORTS. The Buyer will use its reasonable best efforts to
satisfy the conditions to the obligations of the Sellers hereunder set forth in
Section 7, and will take no action that would impair or preclude the
satisfaction of the conditions to the obligations of the Buyer hereunder set
forth in Section 8.
6.3. CONFIDENTIALITY. Notwithstanding anything to the contrary
contained in this Agreement, the Confidentiality Agreement, dated February 9,
1999, between the Buyer and the Company will continue in effect until the
Closing or, in the event that the transactions contemplated hereby do not close,
for the term stated therein.
6.4. BUYER FINANCIAL CAPACITY. The Buyer will deliver to the Sellers
prior to the Closing Date evidence reasonably satisfactory to the Sellers of
Buyer's capacity to finance the transactions contemplated hereby.
6.5. MERGER OF THE COMPANY. Following the Closing Date, the Buyer
intends that the Company will be merged with and into Greensteel, Inc., a
Delaware corporation and wholly-owned subsidiary of the Buyer.
6.6. ASSIGNMENT OF CERTAIN INSURANCE COVERAGE. On the Closing Date,
the Buyer will cause the Company to transfer the ownership to each of the
Sellers the term insurance policies which the Company currently holds on their
lives. On or before the Closing, the Buyer shall add the Sellers as additional
insureds (as their interests appear) on any commercial general liability,
product liability and/or personal injury coverages maintained by the Company for
a period of three years after the Closing Date; provided that the foregoing
shall not require the Buyer to maintain any particular coverages at any time.
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6.7. GUARANTEES. The Buyer shall use its commercially reasonable
efforts to have released or to replace the Sellers as guarantors under three
automobile loans, the Company's Burlingame, California real property lease and
the performance bonds listed in SCHEDULE 3.16, to be effective on or about the
Closing Date.
6.8. EMPLOYEE BENEFITS. The Buyer agrees to credit Company Employees
with their service with the Company prior to the Closing Date for purposes of
eligibility and vesting under tax-qualified plans of the Buyer, its subsidiaries
and affiliates. The Buyer further agrees to cause elective deferral
contributions (as defined in Section 402(g)(3) of the Code) made by Company
Employees for calendar year 1999 under any tax-qualified plan maintained by the
Company, the Buyer or any of the Buyer's subsidiaries or affiliates to be
matched at the same percentage rate as the elective deferral contributions (as
defined in Section 402(g)(3) of the Code) made by similarly situated employees
of the Buyer or its subsidiaries or affiliates. Buyer further agrees to cover
Company Employees under its bonus programs to the same extent as similarly
situated employees of the Buyer or its subsidiaries and affiliates. For purposes
of this Section 6.8, "Company Employees" means employees of the Company
immediately prior to the Closing.
7. CONDITIONS TO THE OBLIGATIONS OF THE SELLERS. The obligations of the
Sellers to effect the transactions contemplated hereby are subject to the
fulfillment to their satisfaction, prior to or at the Closing, of the following
conditions:
7.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Buyer contained herein shall have been true and correct in all
material respects when made (except for representations and warranties made as
of a specific date, in which case such representations and warranties shall have
been true and correct in all material respects as of such date) and shall be
true and correct at and as of the Closing as though such representations and
warranties were made at and as of the Closing (except for representations and
warranties made as of a specific date, in which case such representations and
warranties shall have been true and correct in all material respects as of such
date).
7.2. PERFORMANCE. The Buyer shall have performed and complied in all
material respects with each covenant or condition required by this Agreement to
be performed or complied with by it prior to or at the Closing.
7.3. CLOSING CERTIFICATE. The Buyer shall have delivered to the
Sellers a certificate, dated the Closing Date and executed on its behalf by a
principal executive or financial officer, certifying that the conditions
specified in Sections 7.1 and 7.2 have been fulfilled.
7.4. OPINION OF COUNSEL. The Sellers shall have received from
Greenberg Traurig, counsel for the Buyer, an opinion, dated the Closing Date,
substantially in the form attached hereto as EXHIBIT C.
7.5. EXECUTION OF OTHER DOCUMENTS. The Buyer shall have executed and
delivered to the Sellers one or more stock certificates representing the shares
of Series D Preferred Stock issuable at the Closing pursuant to Section 2.3
hereof.
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8. CONDITIONS TO THE OBLIGATIONS OF THE BUYER. The obligations of the
Buyer to effect the transactions contemplated hereby are subject to the
fulfillment to its satisfaction, prior to or at the Closing, of the following
conditions:
8.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sellers contained herein and in the Schedules hereto shall
have been true and correct in all material respects when made (except for
representations and warranties made as of a specific date, in which case such
representations and warranties shall have been true and correct in all material
respects as of such date) and shall be true and correct in all material respects
at and as of the Closing as though such representations and warranties were made
at and as of the Closing (except for representations and warranties made as of a
specific date, in which case such representations and warranties shall have been
true and correct in all material respects as of such date).
8.2. PERFORMANCE. The Sellers shall have performed and complied in
all material respects with each covenant and condition required by this
Agreement to be performed or complied with by them prior to or at the Closing.
8.3. CLOSING CERTIFICATE. The Sellers shall have delivered to the
Buyer a certificate, dated the Closing Date and executed by each of the Sellers,
certifying that the conditions specified in Sections 8.1 and 8.2 have been
fulfilled.
8.4. REPORT ON ENVIRONMENTAL MATTERS. The Buyer shall have received
a report from an environmental consultant of the results of soil and other
testing at the production facilities of the Company and such report shall be
reasonably satisfactory to the Buyer.
8.5. SCHEDULES. The Schedules to this Agreement to be delivered by
the Sellers to the Buyer shall be reasonably satisfactory to the Buyer.
8.6. OPINION OF COUNSEL. The Buyer shall have received from the Law
Offices of Jeffrey A. Hartman and Baker & McKenzie, counsels for the Sellers,
opinions, dated the Closing Date, in substantially the forms attached hereto as
Exhibit D.
8.7. NON-COMPETITION AGREEMENTS. The Company and each of the Sellers
shall have executed and delivered a Non-Competition Agreement substantially in
the form attached hereto as EXHIBIT E.
8.8. EMPLOYMENT AGREEMENT. The Company and Mark A. Lawer shall have
executed and delivered an Employment Agreement in the form attached hereto as
EXHIBIT F.
8.9. AMENDED LEASES. The Company and the Sellers shall have executed
and delivered Amended Leases with respect to the Company's Corona, California,
Clymer, Pennsylvania and Pompano Beach, Florida sales and production facilities,
in the respective forms attached hereto as EXHIBIT G.
8.10. SHAREHOLDER LOANS. All loans and advances of any kind from the
Company to any of the Sellers or any member of their families or their
affiliates shall have been
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repaid, except for such advances for travel and business expenses incurred in
the ordinary course of business, which will be repaid and reconciled in the
ordinary course of business.
8.11. COMPLETION OF FINANCING. The Buyer shall have obtained
financing for the transactions contemplated
8.12. NO MATERIAL ADVERSE CHANGE. There shall not have been,
individually or in the aggregate, any material adverse change or changes (except
for any change resulting from general economic or market conditions) since the
date hereof in the business, assets, properties, results of operations or
financial condition of the Company.
8.13. RESIGNATION OF OFFICERS AND DIRECTORS. Except for any officer
or director as to whom the Buyer has waived this condition and as otherwise
provided in the Employment Agreement referred to above, the officers and
directors of the Company shall have submitted their written resignations as
officers and directors of the Company, respectively, effective as of the Closing
Date.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Sections 3 and 4 of this Agreement shall survive the
Closing. All statements contained in the Disclosure Schedules hereto, the
Financial Statements and the certificates delivered pursuant to Sections 7.3 and
8.3 shall be deemed representations and warranties of such party under this
Agreement.
10. INDEMNIFICATION
10.1. BY THE SELLERS. (a) From and after the Closing, the Buyer
shall be indemnified and held harmless by the Sellers (jointly and severally)
against and in respect of any and all damages (excluding punitive damages in an
original action commenced in the name of the Buyer), losses or deficiencies,
whether suffered by the Buyer or the Company:
(i) resulting from any misrepresentation or breach of any
warranty or covenant by the Sellers made herein;
(ii) arising out of or relating to Environmental Matters
occurring prior to the Closing Date connected to the activities, facilities or
products of the Company, including without limitation, fines, liabilities for
personal injury, death or property damage, costs of environmental studies and
costs of clean-up as required by applicable law;
(iii) arising out of or relating to any defective,
hazardous or injurious product sold by the Company prior to the Closing Date or
any product sold by the Company prior to the Closing Date in violation of any
applicable governmental law, rule, regulation or other requirement, including
without limitation, liabilities for any violation of any law, rule, regulation
or other requirement of any federal, state or local governmental entity having
jurisdiction over the Company, personal injury, death or property damage, costs
of replacing such products, costs related to recall of such products and refunds
to purchasers;
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(iv) arising out of any claim for fees or expenses of any
finder, broker, agent or other intermediary who has acted on behalf of the
Sellers or the Company in connection with this Agreement or the transactions
contemplated hereby; and
(v) any and all actions, suits, procedures, demands,
assessments, judgments, damages, fines, awards, costs and expenses (including
but not limited to reasonable fees and disbursements of counsel, interest and
penalties) incident to the foregoing. All such damages, losses, deficiencies,
assessments, judgments, fines, awards, costs and expenses are referred to in
this Agreement as "Losses."
(b) The indemnification of the Buyer hereunder shall be
subject to the following limitations:
(i) Except for indemnification for a Loss described in
Section 10.1(a)(iv) or incident thereto as set forth in Section 10.1(a)(v), no
claim for indemnification shall be made and no payment therefor shall be due
hereunder with respect to the first $100,000 of Losses incurred by the Buyer or
the Company.
(ii) Indemnification hereunder shall be limited solely,
except with respect to indemnification for any breach of Sections 3.3
(pertaining to capitalization and shareholder agreements), 3.4 (pertaining to
title to shares and enforceability), 3.5 (pertaining to financial statements),
3.14 (pertaining to environmental matters), 3.17 (pertaining to taxes) and/or
3.20 (pertaining to employee benefit plans) as hereinafter set forth, to the
remaining principal of the $1,500,000 (the "Escrow Deposit") delivered to the
Escrow Agent pursuant to Section 2.3, which Escrow Deposit is to be held and
disbursed pursuant to an escrow agreement (the "Escrow Agreement") among the
Buyer, the Sellers and the Escrow Agent, in the form attached hereto as EXHIBIT
B.
(iii) With respect to any claim for indemnification for
any breach of Sections 3.5 (pertaining to financial statements), 3.14
(pertaining to environmental matters), 3.17 (pertaining to taxes) and/or 3.20
(pertaining to employee benefit plans), (A) the maximum aggregate liability of
the Sellers therefor shall be $5,000,000 (inclusive of the Escrow Deposit, as to
which the Buyer shall first assert an indemnification claim pursuant to the
Escrow Agreement) and (B) each Seller shall have the right (but not the
obligation) to satisfy all or any portion of his, her or its indemnification
obligations by tendering to the Buyer for cancellation a number of shares of
Series D Preferred Stock (or a number of shares of Common Stock of the Buyer
received upon conversion of the Series D Preferred Stock) having a value equal
to the amount of the subject indemnification claim being satisfied in such
manner. For purposes of this Section 10.1(b)(iii), the Series D Preferred Stock
shall be valued at its $50.00 per share liquidation preference, and any Common
Stock issued upon conversion of the Series D Preferred Stock shall be valued at
the price at which it was converted in accordance with the Certificate of
Amendment (subject to appropriate adjustment in the event of any stock splits,
stock dividends, combinations of shares, recapitalizations or other such events
respecting the Common Stock of the Buyer occurring from time to time following
the conversion of the Series D Preferred Stock).
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10.2. INDEMNIFICATION BY THE BUYER. (a) From and after the Closing,
the Sellers shall be indemnified and held harmless by the Buyer against and in
respect of any and all Losses:
(i) resulting from any misrepresentation or breach of any
warranty, covenant or undertaking by the Buyer made herein; and
(ii) arising out of any claim for fees or expenses of any
finder, broker, agent or other intermediary who has acted on behalf of the Buyer
in connection with this Agreement or the transactions contemplated hereby.
(b) The indemnification of the Buyer hereunder shall be
subject to the following limitations:
(i) Except for indemnification for a Loss described in
Section 10.2(a)(ii), no claim for indemnification shall be made and no payment
therefor shall be due hereunder with respect to the first $100,000 of Losses
incurred by the Sellers.
(ii) The aggregate amount of indemnification payable by
the Buyer hereunder shall not exceed $1,500,000.
10.3. INDEMNIFICATION PROCEDURES. A party or parties entitled to
indemnification hereunder shall herein be referred to as an "Indemnitee." A
party or parties obligated to indemnify an Indemnitee hereunder shall herein be
referred to as an "Indemnitor."
(a) Any indemnification hereunder shall be net of:
(i) any insurance proceeds recovered by the Indemnitee on
account of, or applicable to, the satisfaction of claims for which
indemnification is provided hereunder; PROVIDED, HOWEVER, that the term
"insurance proceeds," as used in this subdivision, shall mean the payment
received under any applicable insurance policy less the amount of additional
premium payable, or the reduction of any premium refund, consequent to the
application of any retrospective loss adjustment provisions of such insurance
policy to such insurance payment;
(ii) amounts recovered or recoverable by the Indemnitee
under rights of subrogation, or contribution or indemnification (other than
hereunder); and
(iii) any Tax Benefit (as such term is defined in Section
10.3(c)).
(b) The Buyer shall make no claim for indemnification and the
Sellers shall not have any liability for indemnification due unless the Buyer
gives initial written notice of its claim as follows:
(i) with regard to breaches of all representations,
warranties, covenants and agreements, within 18 months after the Closing Date,
except that claims for breaches of (A) Sections 3.3 (pertaining to
capitalization and shareholders agreements)
25
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and 3.4 (pertaining to title to shares and enforceability) may be made at any
time, (B) Sections 3.17 (pertaining to taxes) must be made within 90 days after
the expiration of the applicable statute of limitations for any affected tax
period, (C) Section 3.20 (pertaining to employee benefit plans) must be made
within 2 years after the Closing Date, and (D) Section 3.14 (pertaining to
environmental matters) must be made within 3 years after the Closing Date;
(ii) with regard to claims under Sections 10.1(a)(ii)
(pertaining to environmental matters) and 10.1(a)(iii) (pertaining to product
liability matters), within 3 years of the Closing Date; and
(iii) with regard to claims under Section 10.1(a)(iv)
(pertaining to finder's fees), at any time.
(c) The limitations set forth in Section 10.2(b) shall not
apply to any claim of the Sellers based on the Buyer's agreements,
representations and warranties as to the Series D Preferred Stock or to the
Buyer's failure to pay the purchase price.
(d) As used in this Section 10.3, "Tax Benefit," with respect
to any Loss, shall mean any reduction in the net federal or state income tax
liability of the Indemnitee as a result of such Loss, PROVIDED that any
calculation of Tax Benefit, with respect to any Loss, shall include any increase
in federal income tax liability attributable to a reduction in state or local
taxes as a result of such Loss. Any payments for a Loss under the provisions of
this Section 10 shall be reduced by the Tax Benefit in the year in which such
payment is made but not by any potential or anticipated Tax Benefit in future
years. If the Indemnitee receives Tax Benefits subsequent to the year in which
such payment is made but within five years thereafter, the Indemnitee will
refund any amount of indemnification received to the extent of such Tax
Benefits. For the purposes of calculating such Tax Benefits, any net operating
losses shall be deemed to be utilized in the order in which they were incurred.
If the Company becomes part of a group filing consolidated tax returns of which
a corporation other than the Buyer is the parent, the provisions of this Section
10.3(c) shall, with respect to any Tax Benefit relating to such Loss which
becomes available to such new parent instead of the Buyer, henceforth be applied
to the parent of such group rather than to the Buyer. In the event that the
Company files a separate return for state income tax purposes or does not join
in filing a consolidated federal tax return, "Tax Benefit" shall mean any
reduction in the state or federal tax liability of the Company or such
Subsidiary.
(e) Each Indemnitee shall use commercially reasonable efforts
and shall consult and cooperate with the Indemnitor to mitigate any Losses that
may give rise to claims hereunder.
10.4. THIRD PARTY CLAIMS. (a) DEFINITION. As used herein, "Third
Party Claim" means a Loss or potential Loss for which indemnification is claimed
by the Indemnitee under the provisions of this Section 10 and which is
consequent to a claim asserted during the applicable indemnification period
indicated in Section 10.3(b) and (c) against the Indemnitee by a corporation,
association, partnership or other business organization or an individual or a
government, any political subdivision thereof or a governmental agency by
commencement
26
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against the Indemnitee of a legal action or proceeding or receipt by the
Indemnitee of a written assertion of such claim.
(b) NOTICE OF CLAIM. The Indemnitee will promptly give notice
of a Third Party Claim to the Indemnitor stating the nature thereof and
enclosing copies of any complaint, summons, written assertion of such Third
Party Claim or similar document. No claim for indemnification on account of a
Third Party Claim shall be made and no payment therefor shall be payable
hereunder unless the Indemnitee shall have given initial written notice of its
claim to the Indemnitor during the applicable indemnification period indicated
in Section 10.3(b) and (c) hereof.
(c) EMPLOYMENT OF COUNSEL BY THE INDEMNITOR. Except as
hereinafter provided, the Indemnitor shall have the right to engage counsel to
defend a Third Party Claim, such right to be exercisable by notice delivered to
the Indemnitee not later than ten (10) business days following delivery by the
Indemnitee to the Indemnitor of a notice of a Third Party Claim. The Indemnitee
will and, in the case of the Buyer, will cause the Company to, fully cooperate
with such counsel. The Indemnitor will cause such counsel to consult with the
Indemnitee as to the defense of such claim, and the Indemnitee may, at its own
expense, participate in such defense, assistance or enforcement but the
Indemnitor shall control such defense, assistance or enforcement. The Indemnitor
will cause such counsel engaged by it to keep the Indemnitee informed at all
times of the status of such defense, assistance or enforcement.
(d) EMPLOYMENT OF COUNSEL BY THE INDEMNITEE. Notwithstanding
the provisions of Section 10.4(c), the Indemnitee shall have the right to engage
counsel and to control the defense of a Third Party Claim if:
(i) the Indemnitor shall not have notified the Indemnitee
of the exercise of their right to choose counsel pursuant to Section 10.4(c)
within the time period therein provided;
(ii) the Third Party Claim is a claim for the payment of
taxes arising out of an audit of a tax period ending subsequent to the Closing
Date but which may nevertheless affect the tax liability of the Company for a
tax period ending prior to the Closing Date and therefore be subject to
indemnification under the provisions of this Section 10; or
(iii) the Third Party Claim relates in a significant
degree to acts, omissions, conditions, events or other matters occurring during
the Indemnitee's period of ownership of the Company and the amount attributable
thereto that may be reasonably payable, if such Third Party Claim is successful,
exceeds the amount so payable which is attributable to acts, omissions,
conditions, events or other matters occurring during the Indemnitor's period of
ownership of the Company. If the Indemnitee chooses to exercise its right to
appoint counsel under this Section 10.4(d), it shall deliver notice thereof to
the Indemnitor setting forth in reasonable detail why it believes that it has
such right and the name of the counsel it proposes to employ. Unless the
Indemnitor delivers a notice of objection thereto to the Indemnitee within the
following ten (10) business days, the Indemnitee shall have the right to appoint
such counsel
27
<PAGE>
and to control such defense, assistance or enforcement, but the Indemnitee
will cause such counsel to consult with the Indemnitor as to the conduct of
such defense, assistance or enforcement. If such notice of objection is
timely received, the issue may be submitted to arbitration in accordance with
the procedures set forth in Section 12, and final determination of the party
who shall so appoint counsel and control the defense shall be made upon entry
of judgment on the arbitral award. Pending such determination, the Indemnitee
shall appoint counsel to defend such Third Party Claim. The Indemnitor may
appoint counsel to assist in such defense, assistance or enforcement.
(e) SETTLEMENT OF THIRD PARTY CLAIMS. The Indemnitor will not
enter into a settlement of a Third Party Claim without the written consent of
the Indemnitee; PROVIDED, HOWEVER, if the Indemnitee shall not consent to a bona
fide settlement proposal acceptable to the other party of such Third Party Claim
within ten (10) business days of delivery by the Indemnitor to the Indemnitee of
notice of such settlement proposal, the amount of indemnification payable under
this Section 10 with respect to such Third Party Claim (other than matters not
disposed of by such proposed settlement) shall not exceed the amount that would
have been payable if such settlement had been entered into. If the Buyer or the
Company is the Indemnitee, the Buyer will not, and will not permit the Company
to, enter into an agreement of settlement of a Third Party Claim without the
consent of the Sellers; PROVIDED, HOWEVER, that if the Sellers do not within ten
(10) business days of delivery to them by the Buyer of a notice of such proposed
settlement deliver to the Buyer notice of their objection thereto, they shall be
deemed to have consented to such settlement.
(f) CLAIMS AS TO WHICH INDEMNIFICATION IS PARTIALLY PAYABLE.
Notwithstanding the foregoing, in the event of any settlement of, or final
judgment with respect to, a Third Party Claim which relates to acts, omissions,
conditions, events or other matters occurring both before and after the Closing
Date, the Buyer and the Sellers shall negotiate in good faith as to the portion
of such Third Party Claim as to which such indemnification is payable. If the
Buyer and the Sellers are unable to reach agreement, the issue shall be
submitted to arbitration in accordance with the procedures set forth in Section
12.
11. TERMINATION
11.1 TERMINATION EVENTS. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by mutual written consent of the Buyer and the Sellers;
(b) by either the Buyer or the Sellers if the Closing has not
occurred prior to July 15, 1999, provided that the non-occurrence of the Closing
is not attributable to a breach of the terms hereof by the party seeking
termination; or
(c) by either the Sellers or the Buyer if any court of
competent jurisdiction or any governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this
28
<PAGE>
Agreement and such order, decree, ruling or other action shall have become final
and non-appealable.
12. DISPUTE RESOLUTION. Any controversy or dispute between the Buyer
and any of the Sellers involving the construction, interpretation, application
or performance of the terms, covenants or conditions of this Agreement or in any
way arising under this Agreement shall, on demand by either the Buyer or any of
the Sellers by written notice to the other, be finally settled by arbitration in
New York, New York in accordance with the American Arbitration Association Rules
of Arbitration before one arbitrator appointed pursuant thereto. Any
counterclaim shall take place in the same venue. The arbitration award shall be
final, in writing and binding upon the parties hereto, and may be entered in any
court having jurisdiction thereof.
13. MISCELLANEOUS
13.1. EXPENSES. The Buyer and the Sellers shall pay their own
respective expenses and costs, including, without limitation, expenses of their
respective counsel and accountants, incidental to the preparation of this
Agreement and the other agreements referred to herein, the performance and
compliance with all agreements and conditions contained in this Agreement and
such other agreements to be performed or complied with by them, and the
consummation of the transactions contemplated hereby and thereby. The Sellers
expressly stipulate that the Company shall not pay or be liable for any expenses
and costs of the Sellers in connection with this Agreement or such other
agreements or the transactions contemplated hereby or thereby.
13.2. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given when delivered in person or
five (5) days after being mailed by first-class registered or certified mail,
postage prepaid, addressed as follows:
(a) If to the Buyer, at:
48-62 36th Street
Long Island City, New York 11101
Attention: Mr. Joseph A. Menniti,
Chief Executive Officer
with a copy to:
Greenberg Traurig
MetLife Building
200 Park Avenue, 15th Floor
New York, New York 10166
Attention: Spencer G. Feldman, Esq.
29
<PAGE>
(b) If to the Sellers, at:
180 North Sherman Avenue
Corona, California 91720
Attention: Mr. Mark A. Lawer, President
with a copy to:
Jeffrey A. Hartman, Esq.
4 Corporate Plaza, Suite 215
Newport Beach, California 92660
- and -
Baker & McKenzie
130 East Randolph Drive
Chicago, Illinois 60601
Attention: Steven M. Surdell, Esq.
or, in each case, at such other address as may be specified in writing to the
other parties.
13.3. FURTHER ASSURANCES. The parties hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments or
documents as the other party hereto may reasonably request in order to carry
out, the intent and purposes of this Agreement and the consummation of the
transactions contemplated hereby.
13.4. AMENDMENTS. This Agreement may be amended, waived, discharged
or terminated only by an instrument in writing executed by or on behalf of the
party against which enforcement of such amendment, waiver, discharge or
termination is sought.
13.5. MISCELLANEOUS. This Agreement and the agreements and
instruments referred to herein embody the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof. The
headings in this Agreement are for convenience of reference only and shall not
constitute a part of this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to the choice of law principles thereof. This Agreement may be
executed in several counterparts, each of which is an original but all of which
shall constitute one instrument. Neither this Agreement nor any rights or
obligations hereunder may be assigned by any party without the consent of all
other parties hereto, except that (a) the Buyer may, without requirement of any
consent, assign this Agreement to any of its subsidiaries or affiliates, such
assignment not to discharge the Buyer from its obligations hereunder, and (b)
the Buyer may, without requirement of any consent, assign its rights and
remedies for indemnification hereunder to any financial institution(s) providing
financing to the Buyer from time to time. Subject to the previous sentence, this
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the Buyer and the successors, assigns, heirs, administrators,
executors and legal representatives of each of the Sellers.
30
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first above written.
The Buyer:
POLYVISION CORPORATION
By: /s/ Joseph A. Menniti
----------------------------
Joseph A. Menniti
Chief Executive Officer
The Sellers:
MARK A. LAWER FAMILY TRUST
By: /s/ Mark A. Lawer
----------------------------
Mark A. Lawer, Trustee
/s/ Michael B. Lawer
-------------------------------
MICHAEL J. LAWER
/s/ Matthew B. Lawer
-------------------------------
MATTHEW B. LAWER
/s/ Suzanne M. Lawer
-------------------------------
SUZANNE M. LAWER
31
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POLYVISION CORPORATION
48-62 36th Street
Long Island City, New York 11101
July 26, 1999
A. Lawer Corporation
180 North Sherman Avenue
Corona, California 91720
Attn: Mr. Mark A. Lawer, President
Dear Sirs:
PolyVision Corporation, a New York corporation (the "Buyer"), and Mark
A. Lawer, as trustee under the Mark A. Lawer Family Trust, Michael J. Lawer,
Matthew B. Lawer and Suzanne M. Lawer (each individually, a "Seller" and
collectively, the "Sellers"), being all of the shareholders of A. Lawer
Corporation, a California corporation (the "Company"), entered into a Stock
Purchase Agreement, dated May 17, 1999 (the "Purchase Agreement'), which they
now desire to amend and modify as set forth in this amendment (the "Amendment").
(Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Purchase Agreement.)
1. CONTINUATION OF AGREEMENT. Despite the fact that the Purchase
Agreement expired on July 15, 1999 pursuant to Section 11.1(b) thereof, the
Purchase Agreement shall be deemed to have continued, unterminated on that date,
so that the parties shall be deemed to continue to possess, as if the Purchase
Agreement had not be terminated, all of their respective rights and suffer all
of their respective covenants and obligations under the Purchase Agreement, as
amended by this Amendment.
2. THE CLOSING; TERMINATION. The outside date of Closing pursuant to
Section 2.1 of the Purchase Agreement, and the date after which the parties may
terminate the Purchase Agreement pursuant to the terms of Section 11.1(b)
thereof, shall be extended to Friday, September 10, 1999.
3. MODIFICATION OF PAYMENT AT CLOSING. Section 2.3 shall be replaced in
its entirety with the following language:
(a) PAYMENTS. The Buyer will pay the purchase price for the
Shares by:
(i) at the Closing, paying to the Sellers, by wire
transfer of funds to an account(s) designated by the Sellers,
an amount equal to the difference of (A)
<PAGE>
Twenty-Two Million Five Hundred Thousand Dollars
($22,500,000), MINUS (B) all principal, interest and other
charges outstanding on the Closing Date in respect of the
indebtedness described in SCHEDULE 2.3 attached hereto
(exclusive of purchase money indebtedness and capital leases
of the Company for operating equipment and vehicles), which
indebtedness will be paid by the Company at Closing;
(ii) at the Closing, paying to the escrow agent (the
"Escrow Agent") under the Escrow Agreement referred to in
Section 10.2(b), the sum of One Million Five Hundred Thousand
Dollars ($1,500,000) in immediately available funds;
(iii) at the Closing, paying to the Sellers the sum
of Six Million Dollars ($6,000,000), payable by delivery to
the Sellers of one or more stock certificates (as the Sellers
may elect) representing, in the aggregate, One Hundred Twenty
Thousand (120,000) shares of Series D convertible preferred
stock of the Buyer (the "Series D Preferred Stock"), which
have a liquidation preference of Fifty Dollars ($50.00) per
share, are convertible into an aggregate of One Million Five
Hundred Thousand (1,500,000) shares of Common Stock of the
Buyer, subject to certain adjustments, and have the attributes
set forth in the Certificate of Amendment of the Certificate
of Incorporation of the Buyer (the "Certificate of Amendment")
in the form attached hereto as EXHIBIT A;
(iv) on or following the Closing Date, but no later
than September 13, 1999:
(a) an amount equal to twenty-six and
thirty-five one-hundredths percent (26.35%) of the Company's
net income for the period from July 1, 1999 through and
including the Closing Date, plus interest thereon at a rate of
eight percent (8%) per annum, for the period, if any, between
the date that the Sellers paid their estimated taxes on the
Company's income for such period, through and including the
date that such amount is paid by the Buyer to the Sellers; and
(b) an amount equal to twenty-six and
thirty-five one-hundredths percent (26.35%) of the excess, if
any, of the Company's net income for the six-month period from
January 1, 1999 through and including June 30, 1999 over the
Company's net income projected for such six-month period, as
reflected in the Nelson Adams Budget (as such term is defined
in Section 11(a) hereof), plus interest thereon at a rate of
eight (8%) per annum, for the period from the Closing Date
through and including the date that such amount is paid by the
Buyer to the Sellers; and
(v) following the Closing (but by no later than
December 31, 1999), paying to the Sellers, by wire transfer of
funds to an account(s) designated by the Sellers, (A) the
amount by which at Closing the Company's indebtedness for
2
<PAGE>
working capital, including all interest and other charges,
under its trade credit line with Union Bank of California
exceeds One Million Five Hundred Thousand Dollars
($1,500,000), and (B) interest thereon from the Closing Date
to and including the date such amount is paid to the Sellers,
at a rate of eight percent (8%) per annum; PROVIDED that the
indebtedness referenced in clause (A) above is incurred in the
normal course of business consistent with past practice and is
not incurred through distributions to the Company's
shareholders.
The components of the purchase price set forth in Section
2.3(a)(i), (iii), (iv) and (v) shall be allocated and paid or
issued to the Sellers in proportion to their relative
ownership of the Stock as set forth in SCHEDULE 3.3.
4. CLARIFICATION TO TERMS OF SERIES D PREFERRED STOCK. EXHIBIT A to the
Purchase Agreement shall be amended to include the hand-marked changes to the
Certificate of Amendment which are attached as EXHIBIT A-4 hereto, the intention
of which is to ensure that the Series D Preferred shall (a) with respect to
distribution rights upon the liquidation, dissolution or winding-up of the
affairs of the Buyer and dividend rights, rank senior to all classes or series
of common stock and preferred stock of the Buyer, whether now existing or
hereinafter created, other than the Series B and C Preferred, and (b) with
respect to distribution rights upon the liquidation, dissolution or winding-up
of the affairs of the Buyer and dividend rights, rank PARI PASSU with the Series
B and Series C Preferred.
5. NELSON ADAMS INCENTIVE PLAN. The Buyer shall cause the Company to
continue in place, from the Closing Date until December 31, 1999, the Nelson
Adams Incentive Plan, and the Buyer shall make, in accordance with the terms of
that plan and consistent with the Company's past practice over prior years, all
payments required to be made thereunder to Company employees for the 1999
calendar year, by no later than March 15, 2000.
6. CONTRACTS AND TRANSACTIONS. Notwithstanding anything to the contrary
set forth in Section 5.1 of the Purchase Agreement, from the date of the
Purchase Agreement through the Closing Date, the Purchase Agreement shall not
prohibit the Company, or the Sellers, acting on behalf of the Company, from
amending, altering or modifying any contract or transaction to which the Company
is or was a party, from entering into any contract or transaction, or from
disposing of any Company asset, all without the prior written consent of the
Buyer, PROVIDED that such actions do not have a material adverse effect on the
Company.
7. SECTION 5.6, NOTICE OF CHANGES. The word "material" shall be deleted
from the first sentence in Section 5.6.
8. SECTION 13.5, MISCELLANEOUS. The third sentence of Section 13.5
shall be replaced in its entirety with the following language:
This Agreement will be governed by and construed under the
laws of the State of New York without regard to conflicts of
laws principles that would require the application of any
other law.
3
<PAGE>
9. CONSTRUCTION OF CERTAIN WORDS. On and after the date of this
Amendment, each reference in the Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or like words shall mean and be a reference to the Agreement
as amended hereby.
10. EFFECT ON PURCHASE AGREEMENT; MISCELLANEOUS. The Purchase Agreement
shall be deemed to be amended and modified by the terms of this Amendment.
Except as so amended and modified, all of the terms and conditions of the
Purchase Agreement shall remain in full force and effect. This Amendment shall
be governed by the laws of the State of New York without regard to conflicts of
laws principles that would require the application of any other law, and may be
executed in one or more counterparts which together shall constitute one
instrument.
11. LOYALTY PAYMENTS.
(a) The Buyer acknowledges that the Sellers will pay in cash
up to $600,000 as "loyalty payments" to certain of its key employees for
services previously rendered to the Company and as "matching" payments under the
Nelson-Adams 401(k) Savings Plan for the period from January 1, 1999 to the
Closing Date (together, the "Loyalty Payments"), at their own expense, from the
cash portion of the purchase price payable to the Sellers at Closing (but not by
the Company prior to Closing). The Buyer agrees that, in the event the net
income of the Company for the year ending December 31, 1999 exceeds the net
income projected for such year, as reflected in the "Nelson Adams Consolidated
Income Statement for the 12 [sic] Period Ending December 31, 1999 Budget,"
attached as EXHIBIT A-11 hereto (the "Nelson Adams Budget") (the amount of such
excess, the "Excess Amount"), by $600,000 or more, the Buyer shall pay and
reimburse the Sellers for all Loyalty Payments paid by the Sellers up to
$600,000. The Buyer shall make payment of the foregoing reimbursement to the
Sellers by no later than March 15, 2000, following its review of all relevant
books and records. If the parties do not agree on the amount of Excess Income
(the amount so disputed, the "Disputed Amount"), they shall resolve their
differences as set forth in Section 11(b) below. If the Sellers do not make any
or all of the Loyalty Payments to Company employees as contemplated by this
Section 11(a), the Company and the Sellers shall have no liability or obligation
to such employees for any such payments after the Closing, and neither the
Sellers nor the Company shall commit the Sellers or the Company to make them.
(b) If there is a Disputed Amount, then the parties will
negotiate in good faith before Closing to determine what the Excess Amount
should be. If they fail to reach agreement, then, with the assistance of Arthur
Andersen LLP, Buyer's independent public accountants, Buyer will prepare and
deliver to the Sellers a draft balance sheet (the "Draft Balance Sheet") for the
Company as of December 31, 1999. The Draft Balance Sheet will (a) set forth the
Company's net income for the year ending December 31, 1999 (the "Net Income"),
and (b) Net Income in accordance with the principles, policies and practices
used in the preparation of the Company's December 31, 1998 balance sheet.
Contemporaneously with the delivery of the Draft Balance Sheet, Buyer will
deliver to the Sellers such work papers and other documents and information
relating to the Draft Balance Sheet as the Sellers may reasonably request (the
"Supporting Schedules").
4
<PAGE>
If, within thirty (30) days following delivery of the Draft
Balance Sheet and Supporting Schedules to Sellers, the Sellers have not given
Buyer written notice of their objection to the Draft Balance Sheet, then there
will be deemed not to be any Disputed Amount. If, however, the Sellers have any
objections to the Draft Balance Sheet, then they must provide Buyer with written
notice of their objections, with reasonable detail, within thirty (30) days
following delivery of the Draft Balance Sheet and Supporting Schedules to the
Sellers.
The parties will use reasonable efforts to resolve any
objections to the Draft Balance Sheet themselves. If the parties do not resolve
the objections within thirty (30) days after Buyer has received the Sellers'
written notice of objections, then the parties will select an accounting firm
mutually acceptable to them to resolve any remaining objections. If the parties
are unable to agree on an accounting firm, they will select a
nationally-recognized accounting firm by lot (after excluding their respective
regular outside accounting firms) (any accounting firm agreed to or chosen, the
"Accountants").
If a dispute is submitted to the Accountants for resolution,
then each party: (i) will furnish or make available to the Accountants at
reasonable times and upon reasonable notice, the Draft Balance Sheet, and such
work papers and other documents and information relating to the disputed issues
as the Accountants may request and are available to that party (or its
independent public accountants), including Supporting Schedules, work papers and
back-up materials used in preparing the Draft Balance Sheet, the books, records
and financial staff of the Company, Buyer's accountants, and summaries by the
parties of their resolution of any objections thereto; and (ii) will be afforded
the opportunity to present to the Accountants any material relating to the
determination, and to discuss the determination with the Accountants.
The role of the Accountants will be to confirm the application
of the principles, policies and practices used in the preparation of the
Company's December 31, 1998 financial statements in connection with the
preparation of those items on the Draft Balance Sheet, and to determine whether
the parties wrongly disputed all or any portion of the Disputed Amounts. If the
Accountants determine that any disputed items on the Draft Balance Sheet were
not prepared in accordance with such principles, policies and practices, then
the Accountants will recalculate the Excess Income in accordance therewith, and
so notify the parties. Absent demonstrable error, the Accountants'
determination, as set forth in a notice delivered to both parties by the
Accountants, will be binding and conclusive on the parties. The Buyer and
Sellers will each bear 50% of the fees for the Accountant's determination. The
Buyer will pay the Sellers by wire transfer of funds to an account(s) designated
by the Sellers, (A) the portion of the Disputed Amount which the Accountants
determined was wrongly disputed, and (B) interest thereon from March 15, 2000 to
and including the date such amount is paid to the Sellers, at a rate of eight
percent (8%) per annum.
The foregoing dispute resolution procedure shall also be
applicable to determinations of excess amounts in respect of the Nelson Adams
Budget pursuant to the portion of Section 3 hereof which refers to Section
2.3(a)(iv) of the Purchase Agreement, adjusted for the relevant time periods
specified therein.
5
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to the Buyer the enclosed counterpart of this Amendment, whereupon
this Amendment shall constitute a binding agreement between the Buyer and the
Sellers in accordance with its terms.
Very truly yours,
POLYVISION CORPORATION
By: /s/ Joseph A. Menniti
-----------------------------
Joseph A. Menniti
Chief Executive Officer
Agreed to and Accepted
as of the date first written above:
The Sellers:
MARK A. LAWER FAMILY TRUST
By: /s/ Mark A. Lawer
------------------------------
Mark A. Lawer, Trustee
/s/ Michael J. Lawer
------------------------------
MICHAEL J. LAWER
/s/ Matthew B. Lawer
------------------------------
MATTHEW B. LAWER
/s/ Suzanne M. Lawer
------------------------------
SUZANNE M. LAWER
6
<PAGE>
POLYVISION CORPORATION
48-62 36th Street
Long Island City, New York 11101
August 19, 1999
A. Lawer Corporation
180 North Sherman Avenue
Corona, California 91720
Attn: Mr. Mark A. Lawer, President
Dear Sirs:
PolyVision Corporation, a New York corporation (the "Buyer"),
and Mark A. Lawer, as trustee under the Mark A. Lawer Family Trust, Michael J.
Lawer, Matthew B. Lawer and Suzanne M. Lawer (each individually, a "Seller" and
collectively, the "Sellers"), being all of the shareholders of A. Lawer
Corporation, a California corporation (the "Company"), entered into a Stock
Purchase Agreement, dated May 17, 1999, as amended on July 26, 1999 (the
"Purchase Agreement'), which they now desire to amend and modify as set forth in
this amendment (the "Amendment"). (Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Purchase Agreement.)
1. FLORIDA SALES TAX WARRANT. The Sellers acknowledge that the
lien search conducted by Buyer in the course of its ongoing due diligence has
disclosed a Warrant for Collection of Delinquent Sales Tax, a copy of which is
attached hereto (the "Florida Sales Tax Warrant"), issued against AKI Inc., 1831
N.W. 33rd Street, Pompano Beach, Florida 33064, by the Department of Revenue,
State of Florida, on April 21, 1999, in the total amount of $245,607.76 (which
includes $90,919.83 in interest, and which interest accrues at a cost of $80.74
per day), which the parties have agreed requires prompt final resolution. The
Sellers hereby agree to reimburse, indemnify and hold the Buyer harmless for all
costs and expenses incurred and expenditures made by the Buyer in connection
with the settlement, defense and satisfaction of the Florida Sales Tax Warrant
(including, without limitation, interest, penalties, fines or other
administrative impositions thereon asserted by the Florida Department of
Revenue). Such reimbursement and indemnification shall be payable solely out of
the Florida Sales Tax Warrant Fund (as defined below). The Buyer's rights to
indemnity set forth in this Amendment shall be in addition to, and shall not
count against, its rights pursuant to Section 10 of the Purchase Agreement.
2. FLORIDA SALES TAX WARRANT FUND. On the Closing Date, the
Buyer shall pay to the Sellers in accordance with the terms of Section 2.3(a)(i)
of the Purchase Agreement,
<PAGE>
$22,200,000 of the Cash Purchase Price and shall deposit $300,000 of such Cash
Purchase Price as
a fund (the "Florida Sales Tax Warrant Fund") in an interest-bearing escrow
account with Greenberg Traurig, counsel to the Buyer, to be held and disbursed
in accordance with the terms of this Amendment exclusively for the satisfaction
of the Florida Sales Tax Warrant. The Sellers (i) shall have sole authority and
control over the settlement and defense of the Florida Sales Tax Warrant, (ii)
shall actively pursue, at its own expense, the resolution of the Florida Sales
Tax Warrant and (iii) shall give notice to the Buyer of any and all developments
concerning the settling or contesting or the Florida Sales Tax Warrant; PROVIDED
that notwithstanding the foregoing, the sole authority and control over the
settlement and defense of the Florida Sales Tax Warrant shall be assumed by the
Buyer upon the earlier of (a) January 1, 2000 or (b) the imposition of a lien by
the Florida Department of Revenue which would reasonably interfere in any way
with the ongoing business operations being conducted by the Buyer at 1831 N.W.
33rd Street, Pompano Beach, Florida, regardless of the status of the Sellers'
then current negotiations with the Florida Department of Revenue. In the event
the Buyer assumes the settlement and defense of the Florida Sales Tax Warrant,
it shall have no obligation to settle the Florida Sales Tax Warrant at a reduced
amount and the attorneys' fees and expenses reasonably incurred by the Buyer in
so settling and defending the Florida Sales Tax Warrant shall be reimbursable to
the Buyer from the Florida Sales Tax Warrant Fund. The disbursement of funds out
of the Florida Sales Tax Warrant Fund by the Buyer in satisfaction of the
Florida Sales Tax Warrant shall be preceded by a written notice from the Sellers
to the Buyer or from the Buyer to the Sellers, as the case may be, setting forth
in reasonable detail, among other things, the amount of such disbursement, the
material facts supporting the disbursement (including copies of relevant
documentation) and a statement (if sent by the Buyer) of the amount remaining in
the Florida Sales Tax Warrant Fund after making such disbursement. The Buyer
shall, within three (3) business days, pay to the Seller the amount of the
Florida Sales Tax Warrant Fund remaining undisbursed, if any, plus interest
thereon, upon the final resolution of the Florida Sales Tax Warrant.
3. CONSTRUCTION OF CERTAIN WORDS. On and after the date of
this Amendment, each reference in the Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or like words shall mean and be a reference to
the Agreement as amended hereby.
4. EFFECT ON PURCHASE AGREEMENT; MISCELLANEOUS. The Purchase
Agreement shall be deemed to be amended and modified by the terms of this
Amendment. Except as so amended and modified, all of the terms and conditions of
the Purchase Agreement shall remain in full force and effect. This Amendment
shall be governed by the laws of the State of New York without regard to
conflicts of laws principles that would require the application of any other
law, and may be executed in one or more counterparts which together shall
constitute one instrument.
2
<PAGE>
If the foregoing is in accordance with your understanding,
please sign and return to the Buyer the enclosed counterpart of this Amendment,
whereupon this Amendment shall constitute a binding agreement between the Buyer
and the Sellers in accordance with its terms.
Very truly yours,
POLYVISION CORPORATION
By: /s/ Joseph A. Menniti
--------------------------
Joseph A. Menniti
Chief Executive Officer
Agreed to and Accepted
as of the date first written above:
The Sellers:
MARK A. LAWER FAMILY TRUST
By: /s/ Mark A. Lawer
------------------------------
Mark A. Lawer, Trustee
/s/ Michael J. Lawer
------------------------------
MICHAEL J. LAWER
/s/ Matthew B. Lawer
------------------------------
MATTHEW B. LAWER
/s/ Suzanne M. Lawer
------------------------------
SUZANNE M. LAWER
3
<PAGE>
Exhibit 10.44
AMENDMENT NO. 1
TO
CREDIT AGREEMENT
AMENDMENT, dated as of December 30, 1998 ("AMENDMENT"), to the
Credit Agreement dated as of November 20, 1998 (as amended hereby and from time
to time hereafter, the "CREDIT AGREEMENT"), by and among POLYVISION CORPORATION,
a New York corporation ("POLYVISION"), POSTERLOID CORPORATION, a Delaware
corporation ("POSTERLOID"), GREENSTEEL, INC., a Delaware corporation
("GREENSTEEL") (each of PolyVision, Posterloid and Greensteel, a "BORROWER" and
collectively, the "BORROWERS"), the banks, financial institutions and other
institutional lenders from time to time party thereto (each a "LENDER" and
collectively, the "LENDERS"), KBC BANK N.V. ("KBC" or "KBC LENDER"), FLEET
NATIONAL BANK, as the Initial Issuing Bank, SwingLine Bank, European Letter of
Credit Bank ("FLEET," and together with KBC, each a "SENIOR LENDER" and together
the "SENIOR LENDERS") and Fleet National Bank as administrative agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, the Borrowers have requested that the Lenders and the
Administrative Agent (a) consent to (i) the issuance and sale of certain 12.5%
Senior Subordinated Notes in the aggregate principal amount of $25,000,000 and
certain Warrants by PolyVision to John Hancock Mutual Life Insurance Company,
Hancock Mezzanine Partners L.P. and John Hancock Variable Life Insurance Company
(each a "Purchaser" and together the "Purchasers") pursuant to a Senior
Subordinated Note and Warrant Purchase Agreement dated as of the date hereof and
more fully identified below (as defined below, the "Subordinated Note
Agreement"), (ii) the use of the proceeds of such sale to prepay the Bridge Loan
and terminate the Bridge Loan Warrant (as such terms are defined in the
Subordinated Note Agreement), and (b) make certain other changes in the Credit
Agreement as hereinafter set forth; and
WHEREAS, capitalized terms used and not defined herein shall
have the respective meanings ascribed thereto in the Credit Agreement except as
otherwise indicated herein;
NOW, THEREFORE, in consideration of the premises, the
Borrowers, the Lenders, the Senior Lenders and the Administrative Agent agree as
follows:
ARTICLE I. AMENDMENTS TO CREDIT AGREEMENT.
<PAGE>
This Amendment to Credit Agreement shall be deemed to be an
amendment to the Credit Agreement, and shall not be construed in any way as a
replacement therefor. All of the terms and provisions of this Amendment ,
including, without limitation, the representations and warranties set forth
herein, are hereby incorporated by reference into the Credit Agreement as if
such terms and provisions were set forth in full therein. The Credit Agreement
is hereby amended, effective as of the Effective Date (as defined in Section 5.1
hereof) upon the satisfaction of the conditions precedent set forth in Article V
hereof, in the following respects.
1.1 Paragraph 3(c) of the Preliminary Statements is amended to correct
the following typographical errors: the reference to "BEF 640,240,846" in clause
(a) is replaced with "BEF 378,015,000 with respect to PolyVision Belgium and
PolyVision France (and BEF 897,978,347 in the aggregate when taken together with
the amendment and restatement of the credit facility referred to in the
following clause (b) "; and the reference to "Twenty-Six Million One Hundred
Thirty Thousand Six Hundred Eight ($26,130,608)" in clause (c) is replaced with
"Eighteen Million Six Hundred Thirty Thousand Six Hundred Eight ($18,630,608)".
1.2 The definitions of "SENIOR SUBORDINATED NOTES" and "SENIOR
SUBORDINATED NOTE AGREEMENT" appearing in Section 1.1 of the Credit Agreement
are amended and restated in their entireties to read as follows:
"SENIOR SUBORDINATED NOTES" means, collectively, the Senior
Subordinated Note and Warrant Purchase Agreement dated as of
December 30, 1998 among PolyVision, Posterloid, Greensteel,
and the Purchasers thereunder, relating to the issuance of $25
million in Senior Subordinated Notes together with all
exhibits, attachments, annexes and schedules thereto and all
agreements, instruments and documents executed or delivered
pursuant thereto as in effect on December 30, 1998 with such
amendments, modifications and supplements thereto or
replacements thereof as are permitted to be made in accordance
with the terms of this Agreement.
"SENIOR SUBORDINATED NOTE AGREEMENT" (or "SENIOR SUBORDINATED
LOAN AGREEMENT") means the Senior Subordinated Note and Warrant Purchase
Agreement referred to in the definition of "Senior Subordinated Notes".
1.3 Section 5.21, "GRANT OF SECURITY INTEREST IN FOREIGN DEBT" is
amended to replace all references to "Administrative Agent" with "KBC."
1.4 Section 6.1(f), "LIENS, ETC." is amended to replace the reference
to "Section 4.14(a)" with a reference to "Section 3.8".
1.5 Section 6.2(c) (iv), "DEBT", is amended to add at the conclusion
thereof the following:
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<PAGE>
"PROVIDED, FURTHER, that if any prepayment penalty or similar
amount is actually paid by any of the Borrowers upon any
refinancing of the Senior Subordinated Notes (as such term is
defined herein after giving effect to Amendment No. 1 to this
Agreement) an amount equal to the aggregate sum of (1) plus
(2) and the costs and expenses associated with such
refinancing shall be added to the principal amount of the
Senior Subordinated Notes; and"
1.6 Section 6.7, "DIVIDENDS, ETC.", is amended to include the following
words immediately after the first reference therein to "dividends":
", make any payments in the nature of or in lieu of dividends
to holders of warrants"
1.7 Section 6.7(a), "DIVIDENDS, ETC.", is amended as follows
(underlined text indicates additions):
"(a) PolyVision and any Borrower may declare and pay dividends
and distributions payable solely in common stock of PolyVision
or such Borrower; and the Borrowers and Subsidiaries may,
subject to the applicable subordination provisions of the
Senior Subordinated Note Agreement pay dividends and
distributions to PolyVision in an amount equal to interest AND
SCHEDULED PRINCIPAL PAYMENTS (but no sooner than (2) days
prior to the due date of such PRINCIPAL OR interest payments)
payable from time to time in respect of the Senior
Subordinated Notes, [remainder of paragraph is unchanged]..."
1.8 Section 6.13(b)(ii) , "AMENDMENT OF MATERIAL CONTRACTS", is amended
to delete the period at the conclusion of clause (b)(ii) and to insert in lieu
thereof the following:
"; and none of the "Transaction Documents" as defined in the
Senior Subordinated Note Agreement (as defined herein after
giving effect to Amendment No. 1 to this Agreement) relating
to the warrants issued pursuant thereto shall mandate or
require the Borrowers to, and no holder thereof shall have the
right to require the Borrowers to, (i) declare or pay any cash
dividends or cash distributions in respect thereof (other than
payments to warrant holders in lieu of dividends on common
stock (which payments of dividends are not permitted to be
made hereunder) on the terms set forth in the Warrant
Agreement or Warrants (as defined in the Senior Subordinated
Note Agreement as in effect on the date of Amendment No. 1 to
this Agreement), or (ii) purchase, redeem, retire, defease or
otherwise acquire for cash any of its capital stock, warrants,
options or rights to acquire such capital stock (provided that
the terms of this clause (ii) shall not be deemed to limit the
rights of the holders of the warrants issued in connection
with the Senior Subordinated Note Agreement (as in effect on
the date of Amendment No. 1 to this Agreement) under Section
5.01 of said Agreement in respect of anti-dilution protection
for such warrants) or (iii) issue securities in respect
thereof which payments of or in respect of which are not
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<PAGE>
subordinate to the Obligations under the Loan Documents, and,
PROVIDED, further that no such equity interests shall contain
any rights, whether or not on conversion or otherwise that, if
exercisable or exercised at any time could result in a Change
of Control."
1.9 Section 6.13(b)(ii) , "AMENDMENT OF MATERIAL CONTRACTS", is amended
to read as follows in clause (vi) (underlined text indicates additions):
"(vi) provide for any security in respect of the obligations
under the Senior Subordinated Note Agreement OTHER THAN AS PERMITTED BY SECTION
6.1(F) [reminder of clause is unchanged] . . ."
1.10 Section 6.18, "ISSUANCE OF STOCK," is amended to add the following
new subparagraph (f):
"and (f) PolyVision may issue the warrants described
in the Senior Subordinated Note Agreement and the
shares of its common stock or other securities
required to be issued by it pursuant to the terms of
the "Warrants" and "Warrant Agreement" (as such terms
are defined in the Senior Subordinated Note
Agreement) (as such Warrants and Warrant Agreement
are in effect on the date of Amendment No. 1 to this
Agreement) upon exercise of any such warrant subject
to the provisions of Section 6. 13(b)(ii)."
1.11 Section 6.22, "RETENTION OF CASH," is amended as follows
(underlined text indicates additions):
"SECTION 6.22 RETENTION OF CASH. Retained cash at
PolyVision or in any accounts of PolyVision except
for such amounts as are reasonably expected to be
used for the payments of amounts contemplated
hereunder OR THE SENIOR SUBORDINATED NOTE AGREEMENT
OR THE SENIOR SUBORDINATED NOTES (SUBJECT TO THE
SUBORDINATION PROVISIONS IN SUCH AGREEMENT AND NOTES)
and are due within a reasonably short period of time"
[remainder of Section unchanged].
ARTICLE II. ACKNOWLEDGMENT UNDER KBC LOAN AGREEMENTS.
2.1 The KBC Lender acknowledges that the definition "Senior
Subordinated Loan Agreement" in each KBC Loan Agreement is a reference to the
"Senior Subordinated Note Agreement" in the Credit Agreement after giving effect
to this Amendment No. 1.
ARTICLE III. CONSENT TO SENIOR SUBORDINATED NOTE AGREEMENT.
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<PAGE>
3.1 The Lenders, Fleet and the Administrative Agent hereby consent to
the execution and delivery by the Company and its Subsidiaries of the Senior
Subordinated Note Agreement and the Senior Subordinated Notes as defined in
Section 1.2 hereof (herein sometimes referred to as the "Subordinated Note
Agreement"), the related Warrant Agreement, the related Warrants, the related
Registration Agreement and the Intracompany Subordination Agreement all in
substantially the form of the drafts dated December 30, 1998 (with appropriate
completion of blanks (the "Subordination Documents") (to the extent each is a
party thereto) and their performance of their obligations thereunder (subject to
Section 7 of the Subordinated Note Agreement) and the issuance and sale of the
Senior Subordinated Notes and Warrants by the Company are hereby consented to by
the Lenders, Fleet, the Administrative Agent and the KBC Lender.
3.2 The Lenders, Fleet, the Administrative Agent and the KBC Lender
hereby confirm that none of (i) the execution and delivery by the Company and
its Subsidiaries of the Senior Subordinated Note Agreement, the Senior
Subordinated Notes, the related Warrant Agreement, the related Warrants, the
related Registration Agreement and the related Intracompany Subordination
Agreement (to the extent each is a party thereto); (ii) the issuance and sale of
the Notes and Senior Subordinated Notes and Warrants by the Company; and (iii)
the use of the proceeds thereof to prepay the Bridge Loan and terminate the
Bridge Loan Warrant constitute a "Default" or "Event of Default" under the
Credit Agreement or the KBC Loan Agreements.
3.3 The Lenders, Fleet, the Administrative Agent and the KBC Lender
acknowledge and agree that the Purchasers, in connection with their execution
and delivery of the Subordinated Note Agreement, may rely on: (i) the due
authorization of each officer of a Lender, Fleet, the Administrative Agent or
the KBC Lender executing this Amendment on behalf of such Lender, Fleet, the
Administrative Agent and the KBC Lender and (ii) the Lenders, Fleet, the
Administrative Agent and the KBC Lender party hereto as being the sole parties
under the Credit Agreement and the KBC Loan Agreements whose consent are
required to take the action being taken hereby.
ARTICLE IV. REPRESENTATION AND WARRANTIES OF BORROWERS.
Each of the Borrowers represents and warrants as follows:
4.1 Each Borrower has the power to execute and deliver this Amendment
and to perform the Credit Agreement, as amended hereby, and the transactions
contemplated hereby and each Borrower has taken all necessary action, corporate
or otherwise, to authorize the execution and delivery of this Amendment, the
performance of the Credit Agreement, as amended hereby, and the delivery of and
performance under the Subordinated Documents. No consent or approval of any
Person (including, without limitation, any stockholder of any Borrower), no
consent or approval of any landlord or mortgagee, no waiver of any Lien or right
of distraint or other similar right and no consent, license, approval,
authorization or declaration of any governmental authority, bureau or agency, is
or will be required in connection with the execution or delivery by any Borrower
of this Amendment or the performance by any Borrower, or the validity or
-5-
<PAGE>
enforcement of the Credit Agreement as amended hereby or of the transactions
contemplated hereby.
4.2 The execution and delivery by the Borrower of this Amendment and
performance by it hereunder and under the Credit Agreement as amended hereby,
does not and will not violate any provision of law (including, without
limitation, the Williams Act, Sections 13 and 14 of the Securities and Exchange
Act of 1934, and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and
Regulations U, G and X of the Board of Governors of the Federal Reserve System
and the rules and regulations promulgated thereunder) and does not and will not
conflict with or result in a breach of any order, writ, injunction, ordinance,
resolution, decree, or other similar document or instrument of any court or
governmental authority, bureau or agency, domestic or foreign, or any
certificate of incorporation or by-laws of any Borrower or create (with or
without the giving of notice or lapse of time, or both) a default under or
breach of any agreement, instrument, document, bond, note or indenture to which
any Borrower is a party, or by which it is bound or any of its properties or
assets is affected, or result in the imposition of any Lien of any nature
whatsoever upon any of the properties or assets owned by or used in connection
with the business of the Borrowers, except for the Liens created and granted
pursuant to the Security Documents or otherwise permitted under the Credit
Agreement.
4.3 This Amendment has been duly executed and delivered by the
Borrowers and this Amendment and the Credit Agreement as amended hereby each
constitutes the valid and legally binding obligation of the Borrowers,
enforceable in accordance with its terms.
4.4 The Liens granted pursuant to the Security Documents secure,
without limitation, the Obligations under the Credit Agreement as amended by
this Amendment whether or not so stated in the Security Documents. The terms
"Obligations" as used in the Security Documents (or any other term used therein
to refer to the Indebtedness, liabilities and obligations of the Borrower to the
Lenders) include, without limitation, Indebtedness, liabilities and obligations
to the Lenders under the Credit Agreement as amended by this Amendment.
4.5 The representations and warranties contained herein and in the
Credit Agreement and other Loan Documents are correct on and as of the Effective
Date after giving effect to this Amendment as though made on and as of such date
except for changes in the ordinary course of business not prohibited by the
Credit Agreement and not individually or in the aggregate having a Material
Adverse Effect, and (ii) no Default or Event of Default has occurred and is
continuing on the Effective Date or would result from the taking effect of this
Amendment; and execution and delivery hereof by the Borrowers shall constitute
confirmation that the terms of this Section 4.5 are true and correct.
ARTICLE V. CONDITIONS PRECEDENT.
5.1 EFFECTIVE DATE CONDITIONS. The effectiveness of the amendments set
forth in Article I hereof shall be subject to the fulfillment by the Borrowers,
in a manner satisfactory to the Administrative Agent and the Lenders, of all of
the conditions precedent set forth in this Article V, and the date on which the
last of all such conditions shall have been fulfilled to the
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<PAGE>
satisfaction of the Administrative Agent and the Lenders, shall be herein called
the "EFFECTIVE DATE":
(a) The Borrower, the Lenders and the Administrative Agent
shall have executed and delivered this Amendment.
(b) The Borrowers shall have paid all outstanding fees and
expenses of counsel to the Administrative Agent incurred in connection herewith.
(c) All legal matters incident to this Amendment and the
Credit Agreement shall be reasonably satisfactory to the Administrative Agent
and counsel to the Administrative Agent.
Article VI. MISCELLANEOUS.
6.1 The Credit Agreement and the other agreements to which any Borrower
is a party delivered in connection herewith or with the Credit Agreement are,
and shall continue to be, in full force and effect, and are hereby ratified and
confirmed in all respects, except that on and after the Effective Date (a) all
references in the Credit Agreement to "this Agreement," "hereto," "hereof,"
"hereunder" or words of like import referring to the Credit Agreement shall mean
the Credit Agreement as amended hereby, (b) all references in the Credit
Agreement, the Security Documents or any other agreement, instrument or document
executed and delivered in connection therewith to the "Credit Agreement,"
"thereto," "thereof," "thereunder" or words of like import referring to the
Credit Agreement shall mean the Credit Agreement as amended hereby.
6.2 The Credit Agreement and all agreements, instruments and documents
executed and delivered in connection with any of the foregoing shall each be
deemed amended hereby to the extent necessary, if any, to give effect to the
provisions of this Amendment. Except as so amended hereby, the Credit Agreement
and the other Loan Documents shall remain in full force and effect in accordance
with their respective terms. The execution and delivery of this Amendment by the
Borrowers, the Lenders and the Administrative Agent shall not waive or be deemed
to waive any default which has occurred or which may be occurring in respect of
the Credit Agreement.
6.3 The miscellaneous provisions under Article 11 of the Credit
Agreement, together with the definitions of all terms used therein, and all
other Sections of the Credit Agreement to which such Sections refer are hereby
incorporated by reference as if the provisions thereof were set forth in full
herein.
6.4 This Amendment may be executed in counterparts by the parties
hereto, and each such counterpart shall be considered an original, and all such
counterparts shall constitute one and the same instrument.
6.5 THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF
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<PAGE>
CONFLICTS OF LAWS), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
-8-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 1 to the Credit Agreement to be duly executed as of the date first
above written.
POLYVISION CORPORATION
By: /s/ JOSEPH A. MENNITI
--------------------------------
Name: Joseph A. Menniti
Title: Chief Executive Officer
POSTERLOID CORPORATION
By: /s/ JOSEPH A. MENNITI
--------------------------------
Name: Joseph A. Menniti
Title: President
GREENSTEEL, INC.
By: /s/ JOSEPH A. MENNITI
--------------------------------
Name: Joseph A. Menniti
Title: President
FLEET NATIONAL BANK,
as Administrative Agent, as European
Letter of Credit Bank as Initial Issuing Bank,
as SwingLine Bank, as a Lender
By: /s/ ALEX SADE
--------------------------------
Name: Alex Sade
Title: Director
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<PAGE>
KBC BANK N.V.,
as a Lender under the Credit Agreement
and each of the KBC Loan Agreements
By: /s/ RAYMOND F. MURRAY
--------------------------------
Name: Raymond F. Murray
Title: First Vice President
By: /s/ MICHAEL V. CURRAN
--------------------------------
Name: Michael V. Curran
Title: Vice President
-10-
<PAGE>
Exhibit 10.45
AMENDMENT AND SUPPLEMENT NO. 2
TO
CREDIT AGREEMENT
AGREEMENT, made as of this 19th day of August, 1999, by and
among:
POLYVISION CORPORATION, a New York corporation ("POLYVISION"),
POSTERLOID CORPORATION, a Delaware corporation ("POSTERLOID"), GREENSTEEL, INC.,
a Delaware corporation ("GREENSTEEL") (each of PolyVision, Posterloid and
Greensteel, a "BORROWER" and collectively, the "BORROWERS");
The financial institutions which have executed the signature
pages annexed hereto (individually, a "LENDER PARTY" and collectively, the
"LENDER PARTIES");
UNION BANK OF CALIFORNIA, N.A., as syndication agent;
FLEET NATIONAL BANK, as European Letter of Credit Bank,
Initial Issuing Bank, Swing Line Bank and Administrative Agent (in its capacity
as Administrative Agent, together with its successors in such capacity, the
"ADMINISTRATIVE AGENT");
WHEREAS:
(A) The Borrowers are indebted to the Lender Parties pursuant
to a Credit Agreement dated as of November 20, 1998 (as amended by Amendment No.
1 to Credit Agreement dated as of December 30, 1998, and as it is hereby and as
it may hereafter from time to time be further amended, modified or supplemented,
the "CREDIT AGREEMENT");
(B) The Borrowers have requested and the Lender Parties and
the Administrative Agent have agreed, upon the terms and conditions set forth
herein, (i) to permit the acquisition by PolyVision, of 100% of the issued and
outstanding capital stock of A. Lawer Corporation, a California corporation
("NELSON ADAMS") from the "Sellers" as identified in the Stock Purchase
Agreement dated May 17, 1999 relating to such proposed transaction
(collectively, the "SELLER") for an aggregate cash purchase price not to exceed
Twenty Four Million Dollars ($24,000,000) before fees and expenses and Six
Million Dollars ($6,000,000) in the form of Series D Convertible Preferred Stock
of PolyVision, (ii) to increase the Term A Facility by an aggregate principal
amount of Eleven Million ($11,000,000) Dollars, which amount shall be used to
finance, in part, the Nelson Adams Acquisition (as hereinafter defined), (iii)
to increase the Term B Facility by an aggregate principal amount of Eleven
Million ($11,000,000) Dollars, which amount shall be used to finance, in part,
the Nelson Adams Acquisition, (iv) to amend and restate Sections 2.4(a) and
2.4(b) of the Credit Agreement relating to the repayment of the Term A Advances
and the Term B Advances, (v) to amend and restate the grid set forth in the
definition of "APPLICABLE MARGIN" in the Credit Agreement so as to change the
interest rates applicable to the Revolving Credit Advances, the Term A Advances
and the Term B Advances, (vi) to reflect the creation of Nelson Adams as a new
Subsidiary of
<PAGE>
PolyVision (which is expected to be merged into Greensteel immediately
subsequent to the Nelson Adams Acquisition (as hereinafter defined) (the "NELSON
ADAMS MERGER")) and which is to become a Guarantor under the terms of Credit
Agreement and a grantor of liens to the Administrative Agent, (vii) to add new
Lenders; and (viii) to revise certain other provisions of the Credit Agreement;
(C) PolyVision will pledge the capital stock of Nelson Adams
to the Administrative Agent in accordance with the Initial Security Agreement;
and
(D) All capitalized terms that are used herein without
definition and which are defined in the Credit Agreement shall have the
respective meanings ascribed thereto therein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I.
AMENDMENTS TO CREDIT AGREEMENT.
This Amendment and Supplement No. 2 to Credit Agreement shall
be deemed to be an amendment and supplement to the Credit Agreement, and shall
not be construed in any way as a replacement therefor. All of the terms and
provisions of this Amendment and Supplement No. 2 are hereby incorporated by
reference into the Credit Agreement as if such terms and provisions were set
forth in full therein. The Credit Agreement is hereby amended, effective upon
the satisfaction of the conditions precedent set forth in Article V hereof, in
the following respects:
1.1. Article 1, "DEFINITIONS", is amended to insert the
following new definitions where alphabetically appropriate:
"A. LAWER CORPORATION" means A. Lawer Corporation, a
California corporation that became a Wholly-Owned Subsidiary of PolyVision upon
the consummation of the Nelson Adams Acquisition and that was subsequently
merged into Greensteel on or about the date of Amendment No. 2.
"AMENDMENT NO. 2" means Amendment and Supplement No. 2 to this
Credit Agreement dated as of August 19, 1999, among the Borrowers, the Lender
Parties signatory thereto and the Administrative Agent.
"AMENDMENT NO. 2 EFFECTIVE DATE" means the date set forth in
Amendment No. 2 as the "Amendment No. 2 Effective Date".
"AMENDMENT NO. 2 TERM A BORROWING" means the Term A Advances
made by the Term A Lenders pursuant to the Credit Agreement as amended by
Amendment No. 2.
2
<PAGE>
"AMENDMENT NO. 2 TERM B BORROWING" means the Term B Advances
made by the Term B Lenders pursuant to the Credit Agreement as amended by
Amendment No. 2.
"NELSON ADAMS ACQUISITION" means the acquisition by PolyVision
of all of the issued and outstanding capital stock of A. Lawer Corporation,
pursuant to the Nelson Adams Stock Purchase Agreement.
"NELSON ADAMS ACQUISITION DOCUMENTS" means the Nelson Adams
Stock Purchase Agreement and each of the other agreements, instruments, and
documents executed or delivered by any of the parties thereto or their
respective Subsidiaries pursuant thereto or in connection herewith, and all
schedules and exhibits related to such agreement including, without limitation,
the Escrow Agreement relating thereto.
"NELSON ADAMS STOCK PURCHASE AGREEMENT" means the Stock
Purchase Agreement dated as of May 17, 1999, as amended on July 26, 1999 (as it
may from time to time be further amended, supplemented, restated or otherwise
modified to the extent not prohibited under this Agreement), by and among
PolyVision and the holders of all of the issued and outstanding capital stock of
A. Lawer Corporation, together with all schedules, exhibits and annexed thereto
or delivered as a part thereof.
"NELSON ADAMS TRANSACTION" means the transactions contemplated
by the Nelson Adams Acquisition Documents and by Amendment No. 2.
1.2. The grid set forth in the definition of "APPLICABLE
MARGIN" is amended and restated to read as follows:
Applicable Margin for
REVOLVING CREDIT ADVANCES AND TERM A ADVANCES
<TABLE>
<CAPTION>
Applicable Margin for Applicable Margin for Consolidated Debt to
Eurodollar Rate Advances Prime Rate Advances Ebitda Ratio
------------------------ ------------------- ------------
<S> <C> <C>
3% 1.75% Equal to or greater than 4.5:1.0
2.75% 1.50% Equal to or greater than
4.0:1.0 but less than 4.5:1.0
2.50% 1.25% Equal to or greater than
3.5:1.0 but less than 4.0:1.0
2.25% 1% Less than 3.5:1.0
</TABLE>
3
<PAGE>
APPLICABLE MARGIN FOR TERM B ADVANCES
<TABLE>
<CAPTION>
Applicable Margin for Applicable Margin for Consolidated Debt to
Eurodollar Rate Advances Prime Rate Advances Ebitda Ratio
- ------------------------ ------------------- ------------
<S> <C> <C>
3.50% 2.25% Equal to or greater than 4.0:1.0
3.25% 2% Less than 4.0:1.0
</TABLE>
1.3. The definition of "Fiscal Year" is amended to change
"April 30" to read "December 31".
1.4. The definition of "Material Adverse Effect" is amended to
add immediately following the words "on the Closing Date" the words "and after
giving effect to the consummation of the Nelson Adams Acquisition on the
Amendment No. 2 Effective Date".
1.5. The definition of "Existing Debt" is amended and restated
to read "means Debt of the Borrowers and their Subsidiaries outstanding
immediately before giving effect to the Transaction and (as of the date of
Amendment No. 2) the Nelson Adams Transaction and described in SCHEDULE
4.19(A)."
1.6. Section 2.1(a), "THE TERM A ADVANCES", is amended and
restated to read as follows:
(a) THE TERM A ADVANCES. (i) The Borrowers acknowledge that
each of the Term A Lenders (other than Union Bank of
California, N.A, Greater Bay Corporate Finance, a division of
Cupertino National Bank (hereinafter, "GREATER BAY") and
SunTrust Bank, Atlanta (hereinafter, "SUNTRUST"), which became
Lenders pursuant to Amendment No. 2) has made a Term A Advance
to the Borrowers on the Closing Date (or assumed a portion
thereof by assignment thereafter) in an amount equal to such
Term A Lender's Term A Commitment as in effect on such date
(or as assumed by such Lender after the Closing by
assignment). Each Term A Lender (other than Union Bank of
California, N.A,
4
<PAGE>
Greater Bay and SunTrust) severally agrees, on the terms and
conditions hereinafter set forth, to make a second Term A
Advance to the Borrowers on the Amendment No. 2 Effective Date
which shall constitute a refinancing of the existing Term A
Advances. Each of Union Bank of California, N.A, Greater Bay
and Sun Trust severally agrees, on the terms and conditions
hereinafter set forth, to make a Term A Advance to the
Borrowers on the Amendment No. 2 Effective Date; (ii) each
aforementioned Term A Advance to be in the principal amount
equal to such Lender's Term A Commitment as it exists on the
effectiveness of Amendment No. 2, with the aggregate increase
of the Term A Advances being $11,000,000. Each Term A
Borrowing shall consist of Term A Advances made simultaneously
by the Term A Lenders ratably according to their Term A
Commitments as in effect on the date of the relevant Term A
Borrowing. Amounts borrowed under this Section 2.1(a) and
repaid or prepaid may not be reborrowed.
1.7. Section 2.1(b), "THE TERM B ADVANCES", is amended and
restated to read as follows:
(b) THE TERM B ADVANCES. (i) The Borrowers acknowledge that
each of the Term B Lenders (other than Union Bank of
California, N.A., Greater Bay and SunTrust, which became
Lenders pursuant to Amendment No. 2) has made a Term B Advance
to the Borrowers on the Closing Date (or assumed a portion
thereof by assignment thereafter) in an amount equal to such
Term B Lender's Term B Commitment as in effect on such date
(or as assumed by such Lender after the Closing by
assignment). Each Term B Lender (other than Union Bank of
California, N.A., Greater Bay and SunTrust) severally agrees,
on the terms and conditions hereinafter set forth, to make a
second Term B Advance to the Borrowers on the Amendment No. 2
Effective Date which shall constitute a refinancing of the
existing Term B Advances. Each of Union Bank of California,
N.A, Greater Bay and SunTrust severally agrees, on the terms
and conditions hereinafter set forth, to make a Term B Advance
to the Borrowers on the Amendment No. 2 Effective Date; (ii)
each aforementioned Term B Advance to be in the principal
amount equal to such Lender's Term B Commitment as it exists
on the effectiveness of Amendment No. 2, with the aggregate
increase of the Term B Advances being $11,000,000. Each Term B
Borrowing shall consist of Term B Advances made simultaneously
by the Term B Lenders ratably according to their Term B
Commitments as in effect on the date of the relevant Term B
Borrowing. Amounts borrowed under this Section 2.1(b) and
repaid or prepaid may not be reborrowed.
1.8. Section 2.1(d) is amended to insert the words "Revolving
Credit" prior to the words "Termination Date" in the last sentence of such
section. Section 2.1(d) is also
5
<PAGE>
amended to replace the phrase "this Section 2.1 (e)" each time it appears in
such section with the phrase "this Section 2.1(d)."
1.9. Section 2.1(e) is amended to replace the phrase "this
Section 2.1(f)" each time it appears in such section with "this section 2.1(e)."
1.10. (a) The grid set forth in Section 2.4(a) relating to
repayment of Term A Advances, is amended and restated to read as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Date Amount
---- ------
- --------------------------------------------------------------------------------
<S> <C>
October 31, 1999 $ 206,554.09
- --------------------------------------------------------------------------------
Each of January 31, April 30, July 31 and October 31, 2000 $649,887.84
- --------------------------------------------------------------------------------
Each of January 31, April 30, July 31 and October 31, 2001 $774,415.51
- --------------------------------------------------------------------------------
Each of January 31, April 30, July 31 and October 31, 2002 $865,316.56
- --------------------------------------------------------------------------------
Each of January 31, April 30, July 31 and October 31, 2003 $1,212,163.52
- --------------------------------------------------------------------------------
Each of January 31, April 30, July 31 and October 31, 2004 $284,010.47
- --------------------------------------------------------------------------------
</TABLE>
(b) The grid set forth in Section 2.4(b) relating to
repayment of Term B Advances, is amended and restated to read as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Date Amount
---- ------
- --------------------------------------------------------------------------------
<S> <C>
October 31, 1999 $65,000.00
- --------------------------------------------------------------------------------
Each of January 31, April 30, July 31 and October 31, 2000 $77,500.00
thereafter continuing until (and including) October 31,
2003
- --------------------------------------------------------------------------------
Each of January 31, April 30, July 31 and October 31, 2004 $1,610,273.00
- --------------------------------------------------------------------------------
Each of January 31, April 30, July 31 and October 31, 2005 $5,785,352.00
- --------------------------------------------------------------------------------
</TABLE>
1.11. Section 2.6(b)(i), "PREPAYMENTS", is amended as follows:
(a) to insert in the first line immediately after the words "Fiscal Year" the
following "(commencing December 31, 1999)";
6
<PAGE>
(b) to change the proviso to delete clauses (B) and (C)
thereof, to delete the "(A)" (but not the text of clause (A)) and to change the
semi-colon at the conclusion of the remaining proviso to a period.
1.12. Section 2.6(b)(iv), "PREPAYMENTS", is amended to add a
new sentence at the conclusion thereof to read as follows:
Within fifteen (15) days after receipt by PolyVision of any
sums held in escrow under the escrow agreement executed in
connection with the Nelson Adams Acquisition, to the extent
that such sums are not required to be paid to a third party or
to cover expenses of the Borrowers incurred in connection with
an indemnity claim relating to the Nelson Adams Acquisition,
the Borrowers shall prepay the outstanding Advances in an
amount equal to one hundred percent (100%) of such sums.
1.13. Section 2.14, "USE OF PROCEEDS" is amended and restated
to read as follows:
SECTION 2.14 USE OF PROCEEDS. (a) The proceeds of the Advances
and issuances of Letters of Credit (other than the Advances
made on the Amendment No. 2 Effective Date) shall be
available, and the Borrowers shall use such proceeds and
Letters of Credit solely (i) to finance in part the AIG
Acquisition, (ii) to pay fees and expenses incurred in
connection with the AIG Acquisition and the Transaction, and
(iii) to finance working capital and capital expenditures of
the Borrowers, but not in any event to finance the Nelson
Adams Acquisition, nor shall any Revolving Credit Advances be
borrowed in anticipation of the Nelson Adams Acquisition, and
(b) the proceeds of the Term A Borrowing and the Term B
Borrowing made on the Amendment No. 2 Effective Date shall be
used to finance, in part, the Nelson Adams Acquisition, and to
refinance the Term A Borrowing and the Term B Borrowing made
on the Closing Date.
1.14. Sections 4.27 and 11.4(b) are amended to add immediately
following the words "Transaction" or "Transactions" the phrase "or the Nelson
Adams Transaction."
1.15. Section 5.15, "PERFORMANCE OF AIG ACQUISITION
DOCUMENTS", is amended to add immediately following the words "AIG Acquisition
Document", the first time they appear in Section 5.15, the following: "(which
capitalized term shall, for purposes of this Section 5.15, be deemed to include
reference to the Nelson Adams Acquisition Documents)".
7
<PAGE>
1.16. A new Section 5.22 is added to the Credit Agreement to
read in its entirety as follows:
5.22 NELSON ADAMS FINANCIALS. The Lender Parties shall have
received on or before the date which is 75 days following the
consummation of the Nelson Adams Acquisition, audited financial
statements for Nelson Adams' fiscal years ended 1996, 1997 and 1998
prepared by Arthur Andersen LLP, in form and substance (excluding in
immaterial respects) satisfactory to the Required Lenders.
1.17. Section 6.6, "INVESTMENTS IN OTHER PERSONS", is amended
to delete the final indented paragraph at the conclusion thereof following
subsection (i).
1.18. Section 6.7, "DIVIDENDS, ETC." is amended to insert in
clause (d) immediately after the words "preferred stock" the following:
"(excluding, however, the Series D Preferred Stock)".
1.19. Section 6.12, "AMENDMENT, ETC. OF AIG ACQUISITION
DOCUMENTS", is amended to add immediately following the words "AIG Acquisition
Document", the first time they appear in Section 6.12, the following: "(which
capitalized term shall, for purposes of this Section 6.12, be deemed to include
reference to the Nelson Adams Acquisition Documents)".
1.20. Section 6.17, "CAPITAL EXPENDITURES", is amended to
change the chart set forth therein to read in its entirety as follows:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Fiscal Year ended December 31, 1999 $3,000,000.00
Fiscal Year ended December 31, 2000 $3,000,000.00
Each Fiscal Year thereafter $3,500,000.00
</TABLE>
1.21. A new Section 6.24 is added to the Credit Agreement to
read in its entirety as follows:
6.24 LOYALTY PAYMENTS AND INCENTIVE PLAN PAYMENTS. The
Borrowers will not, and will not permit any of their Subsidiaries, to
(a) make any Loyalty Payments, as such term is defined in Section 11 of
the amendment to the Nelson Adams Stock Purchase Agreement dated July
26, 1999("the Nelson Adams Amendment"), or (b) make any payments
pursuant to the existing Nelson Adams Incentive Plan including, without
limitation, any payments described in Section 5 of the Nelson Adams
Amendment, unless
8
<PAGE>
(i) no Default or Event of Default would exist after making any such
Loyalty Payments or Nelson Adams Incentive Plan payments and (ii) the
Borrowers are in compliance with the financial covenants set forth in
Article 8 for the period ending March 31, 2000 and the reporting
requirements set forth in Section 7.3 for the period ending March 31,
2000.
1.22. Sections 8.1, 8.2 and 8.3, "CONSOLIDATED DEBT TO EBITDA
RATIO" and "INTEREST COVERAGE RATIO" and "FIXED CHARGE COVERAGE RATIO", are
amended and restated in their entireties to read in each case as follows:
8.1 CONSOLIDATED DEBT TO EBITDA RATIO. Maintain as of the end
of each fiscal quarter of the Borrowers a Consolidated Debt to EBITDA
Ratio of not more than the ratio set forth below:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Date of Determination: Maximum Ratio
---------------------------------------------------------------------
<S> <C>
September 30, 1999 5.00 to 1.0
---------------------------------------------------------------------
December 31, 1999 5.00 to 1.0
---------------------------------------------------------------------
March 31, 2000 4.75 to 1.0
---------------------------------------------------------------------
June 30, 2000 4.75 to 1.0
---------------------------------------------------------------------
September 30, 2000 4.25 to 1.0
---------------------------------------------------------------------
December 31, 2000 4.25 to 1.0
---------------------------------------------------------------------
March 31, 2001 4.25 to 1.0
---------------------------------------------------------------------
June 30, 2001 4.25 to 1.0
---------------------------------------------------------------------
September 30, 2001 3.75 to 1.0
---------------------------------------------------------------------
December 31, 2001 3.75 to 1.0
---------------------------------------------------------------------
March 31, 2002 3.75 to 1.0
---------------------------------------------------------------------
June 30, 2002 3.75 to 1.0
---------------------------------------------------------------------
September 30, 2002 3.25 to 1.0
---------------------------------------------------------------------
December 31, 2002 3.25 to 1.0
---------------------------------------------------------------------
March 31, 2003 3.25 to 1.0
---------------------------------------------------------------------
June 30, 2003 3.25 to 1.0
---------------------------------------------------------------------
September 30, 2003 through (and including) September 2.75 to 1.0
30, 2005
---------------------------------------------------------------------
</TABLE>
PROVIDED, HOWEVER, that for purposes of calculating EBITDA for
the most recently completed four fiscal quarters of the Borrowers ending on each
of the following dates, there shall be added to such EBITDA the amounts set
forth next to such dates (representing in each case estimated cost savings
resulting from the AIG Acquisition and the Nelson Adams Acquisition):
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Date Amount
--------------------------------------------------------------------
<S> <C>
September 30, 1999 $2,500,000
--------------------------------------------------------------------
December 31, 1999 $1,500,000
--------------------------------------------------------------------
March 31, 2000 $ 750,000
--------------------------------------------------------------------
9
<PAGE>
---------------------------------------------------------------------
June 30, 2000 $ 500,000
--------------------------------------------------------------------
September 30, 2000 $ 250,000
--------------------------------------------------------------------
</TABLE>
Section 8.2 INTEREST COVERAGE RATIO. Maintain as of each date set forth
below, a ratio of (i) EBITDA for the most recently completed four fiscal
quarters of the Borrowers to (ii) Consolidated Interest Expense (to the extent
paid in cash during such period) for such period of not less than the ratio set
forth below for such period:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Date of Determination: Minimum Ratio
---------------------------------------------------------------------
<S> <C>
September 30, 1999 2.00 to 1.0
---------------------------------------------------------------------
December 31, 1999 2.20 to 1.0
---------------------------------------------------------------------
March 31, 2000 2.20 to 1.0
---------------------------------------------------------------------
June 30, 2000 2.20 to 1.0
---------------------------------------------------------------------
September 30, 2000 2.50 to 1.0
---------------------------------------------------------------------
December 31, 2000 2.50 to 1.0
---------------------------------------------------------------------
March 31, 2001 2.50 to 1.0
---------------------------------------------------------------------
June 30, 2001 2.50 to 1.0
---------------------------------------------------------------------
September 30, 2001 2.50 to 1.0
---------------------------------------------------------------------
December 31, 2001 3.00 to 1.0
---------------------------------------------------------------------
March 31, 2002 3.00 to 1.0
---------------------------------------------------------------------
June 30, 2002 3.00 to 1.0
---------------------------------------------------------------------
September 30, 2002 through (and including) September 3.50 to 1.0
30, 2005
---------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing: (a) if, as at any date (a
"CALCULATION DATE"), fewer than four complete fiscal quarters have elapsed
subsequent to the Amendment No. 2 Effective Date, Interest Expense shall be
calculated only for the portion of such period commencing on the Amendment No. 2
Effective Date and ending on the calculation date and shall then be annualized
by multiplying the amount of such Interest Expense by a fraction, the numerator
of which is 365 and the denominator of which is the number of days during the
period commencing on the date immediately following the Amendment No. 2
Effective Date through and including the calculation date; and
(b) for purposes of calculating EBITDA for the most recently
completed four fiscal quarters of the Borrowers ending on each of the following
dates, there shall be added to such EBITDA the amounts set forth next to such
dates (representing in each case estimated cost savings resulting from the AIG
Acquisition and the Nelson Adams Acquisition):
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Date Amount
---------------------------------------------------------------------
<S> <C>
September 30, 1999 $2,500,000
---------------------------------------------------------------------
December 31, 1999 $1,500,000
---------------------------------------------------------------------
March 31, 2000 $ 750,000
---------------------------------------------------------------------
10
<PAGE>
---------------------------------------------------------------------
June 30, 2000 $ 500,000
---------------------------------------------------------------------
September 30, 2000 $ 250,000
---------------------------------------------------------------------
</TABLE>
Section 8.3 FIXED CHARGE COVERAGE RATIO. Maintain as of the end of each
fiscal quarter of the Borrowers a Fixed Charge Coverage Ratio for the most
recently completed four fiscal quarters of the Borrowers of not less than the
following ratios for the requisite periods set forth below:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Four Fiscal Quarters ending on:
---------------------------------------------------------------------
<S> <C>
Each September 30, December 31, March 31 and June 30 1.15 to 1.0
after the Amendment No. 2 Effective Date and
continuing through (and including) September 30, 2003
---------------------------------------------------------------------
Each December 31, March 31, June 30 and September 30 1.10 to 1.0
commencing on December 31, 2003 and continuing
through (and including) September 30, 2005
---------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing: (a) (i) if any portion of the
period for which the Fixed Charge Coverage Ratio is being determined shall occur
prior to the Amendment No. 2 Effective Date, and in any event through the period
ending June 30, 2000 the aggregate amount of Interest Expense and taxes paid or
payable by the Borrowers and their Subsidiaries shall be calculated only for the
portion of such period commencing on the Amendment No. 2 Effective Date and
ending on the last day of such period (the "CALCULATION DATE") and shall then be
annualized by multiplying the amount of such Interest Expense or taxes by a
fraction, the numerator of which is 365 and the denominator of which is the
number of days during the period commencing on the day immediately following the
Amendment No. 2 Effective Date through and including the calculation date and
(ii) if any portion of the period for which the Fixed Charge Coverage Ratio is
being determined shall occur on or prior to September 30, 2000, the scheduled
amortization of Debt for such period shall be deemed to be $2,453,717.60 or
BEF43,601,707.11 (to be calculated in U.S. Dollars at the current exchange
rate.)
(b) for purposes of calculating EBITDA for the most recently
completed four fiscal quarters of the Borrowers ending on each of the following
dates, there shall be added to such EBITDA the amounts set forth next to such
dates (representing in each case estimated cost savings resulting from the AIG
Acquisition and the Nelson Adams Acquisition:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Date Amount
---------------------------------------------------------------------
<S> <C>
September 30, 1999 $2,500,000
---------------------------------------------------------------------
December 31, 1999 $1,500,000
---------------------------------------------------------------------
March 31, 2000 $ 750,000
---------------------------------------------------------------------
June 30, 2000 $ 500,000
---------------------------------------------------------------------
11
<PAGE>
---------------------------------------------------------------------
September 30, 2000 $ 250,000
---------------------------------------------------------------------
</TABLE>
1.23. Section 9.3, "EVENTS OF DEFAULT" is amended to insert
immediately after the reference to "5.21" the following: "or 5.22".
1.24. Section 11.4(b) is amended to add immediately following
the words "AIG Acquisition" the words "the Nelson Adams Acquisition."
1.25. Schedule I to the Credit Agreement is replaced by
Schedule I annexed hereto as EXHIBIT A.
1.26. The Schedules annexed hereto as part of Schedule 1 shall
be deemed respectively to replace the Schedules of the respective corresponding
number presently attached to the Credit Agreement.
1.27. Section 11.7(a)(i), "ASSIGNMENTS AND PARTICIPATIONS" is
amended and restated to read in its entirety as follows: "(i) each such
assignment shall be of a uniform, and not a varying, percentage of all rights
and obligations under and in respect of the respective Facility assigned;"
ARTICLE II.
ADDITION OF NEW LENDERS; CHANGES IN COMMITMENTS.
2.1. (a) The parties hereto hereby acknowledge and confirm
that immediately upon the Amendment No. 2 Effective Date (as defined in Article
V below) (i) each of Union Bank of California, N.A., Greater Bay Corporate
Finance, a division of Cupertino National Bank (hereinafter referred to as
"GREATER BAY") and SunTrust Bank, Atlanta (hereinafter referred to as
"SUNTRUST") (each of Union Bank of California, N.A., Greater Bay and SunTrust, a
"NEW LENDER" and together, the "NEW LENDERS"), shall become a party to the
Credit Agreement (including any amendments thereto) and shall have the rights
and obligations of a Lender thereunder .
(b) Each of the New Lenders (i) confirms that it has received
a copy of the Credit Agreement and all amendments thereto, together with copies
of such financial statements and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to become a
Lender under the Credit Agreement, (ii) agrees that it will independently and
without reliance upon the Administrative Agent or any Lender other than itself,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decision in taking or not taking action
under the Credit Agreement, (iii) acknowledges that neither the Administrative
Agent nor any Lender makes any representation or warranty nor does the
Administrative Agent or any Lender assume any
12
<PAGE>
responsibility with respect to (a) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other instrument or
document furnished pursuant thereto or (b) the financial condition of the
Borrowers or any other Loan Party, or the performance or observance by the
Borrowers or any other Loan Party of any of their Obligations under the Credit
Agreement or any other instrument or document furnished pursuant thereto, (iv)
appoints and authorizes the Administrative Agent to take such action as its
agent on its behalf and to exercise such powers under the Credit Agreement as
are delegated to the Administrative Agent by the terms thereof, together with
such powers as are reasonably incidental thereto, and (v) agrees that it will
perform in accordance with their terms all of the obligations which, by the
terms of the Credit Agreement, are required to be performed by it as a Lender.
2.2. (a) Commencing as of the Amendment No. 2 Effective Date,
the Term A Commitment of each of the Term A Lenders shall be changed, and
Schedule I to the Credit Agreement shall be deemed amended and restated to
reflect the respective new amounts set forth opposite the name of each of the
Term A Lenders on EXHIBIT A annexed hereto.
(b) Commencing as of the Amendment No. 2 Effective
Date, the Term B Commitment of each of the Term B Lenders shall be changed, and
Schedule I to the Credit Agreement shall be deemed amended and restated to
reflect the respective new amounts set forth opposite the name of each of the
Term B Lenders on EXHIBIT A annexed hereto.
(c) Commencing as of the Amendment No. 2 Effective
Date, the Revolving Credit and European Letter of Credit Commitment of each of
the Revolving Credit Lenders shall be changed, and Schedule I to the Credit
Agreement shall be deemed amended and restated to reflect the respective new
amounts set forth opposite the name of each of the Revolving Credit Lenders on
EXHIBIT A annexed hereto.
2.3 (a) The Borrowers shall, simultaneously with the execution
and delivery of this Amendment No. 2, execute and deliver in favor of (i) each
of Union Bank of California, N.A., Greater Bay and SunTrust, a Term A Note,
substantially in the form of Exhibit D to the Credit Agreement, in principal
amount equal to the Term A Commitment of such Lender as shown on EXHIBIT A
annexed hereto, and (ii) each of the Term A Lenders whose Term A Commitment is
changing, a substitute Term A Note substantially in the form of Exhibit D to the
Credit Agreement, (collectively, all of the above-described Term A Notes are
defined as the "NEW TERM A Notes"), whereupon each Term A Lender whose Term A
Commitment is changing shall return its existing Term A Note to the Borrowers
marked "Replaced by New Term A Note."
(b) The Borrowers shall, simultaneously with the
execution and delivery of this Amendment No. 2, execute and deliver in favor of
(i) each of Union Bank of California, N.A., Greater Bay and SunTrust, a Term B
Note, substantially in the form of Exhibit E to the Credit Agreement, in
principal amount equal to the Term B Commitment of such Lender as shown on
EXHIBIT A annexed hereto, and (ii) each of the Term B Lenders whose Term B
Commitment is changing, a substitute Term B Note substantially in the form of
Exhibit E to the
13
<PAGE>
Credit Agreement, (collectively, all of the above-described Term B Notes are
defined as the "NEW TERM B Notes"), whereupon each Term B Lender whose Term B
Commitment is changing shall return its existing Term B Note to the Borrowers
marked "Replaced by New Term B Note."
(c) In order to reflect the reallocation among the Lenders of
Revolving Credit Commitments and their percentage shares and relative
outstanding amounts of Revolving Credit Advances, and in order to evidence the
Revolving Credit Advances made by each of the Revolving Credit Lenders under the
Revolving Credit Commitment as amended hereby, the Borrowers shall execute and
deliver to each of the Revolving Credit Lenders a new note substantially in the
form attached to the Credit Agreement as Exhibit C, reflecting the Revolving
Credit Commitment of such Revolving Credit Lender as amended hereby, dated the
Amendment No. 2 Effective Date and otherwise duly completed (the "NEW REVOLVING
CREDIT NOTES"), whereupon each Revolving Credit Lender whose Revolving Credit
Note is being replaced shall return its existing Revolving Credit Note to the
Borrowers marked "Replaced by New Revolving Credit Note."
(d) In order to effect the foregoing, the Lenders shall, on
the Amendment No. 2 Effective Date, make appropriate adjustments among
themselves in order that the amount of Advances outstanding to the Borrowers
from any Lender under the Credit Agreement is, in principal amount (as of the
Amendment No. 2 Effective Date), in the same proportion to the outstanding
aggregate principal amount of all Advances of the respective type that such
Lender's respective Commitment for such type of Advances bears to the Aggregate
Commitments for such Advances, after giving effect to the amendments effected
hereby. Each Borrower and each of the other Loan Parties agrees and consents to
the terms of this paragraph. Any and all costs associated with any breakage of
interest periods in order to effectuate the transactions contemplated by this
Amendment shall be borne jointly and severally by the Borrowers.
2.4 All references in the Credit Agreement, Loan Documents and
all other instruments, documents and agreements executed and delivered pursuant
to any of the foregoing, to "the ratable benefit of the Lender Parties", "pro
rata", or terms of similar effect shall be deemed to refer to the ratable
interests of the Lender Parties, as their respective ratable interests shall be
adjusted to reflect the changes in the Term A Commitment, Term B Commitment,
Revolving Credit Commitment and the European Letter of Credit Commitment of each
of the Lenders as set forth on EXHIBIT A annexed hereto.
ARTICLE III.
CONSENT AND WAIVER.
3.1. Notwithstanding any provisions of the Credit Agreement to
the contrary, on the terms and conditions of this Amendment No. 2, the Lender
Parties and the Administrative Agent hereby consent to (a) the acquisition by
PolyVision of 100% of the issued and outstanding capital stock (the "ACQUIRED
STOCK") of Nelson Adams upon the terms and conditions set forth
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in the Nelson Adams Acquisition Documents (as defined in Section 1.1 hereof and
hereafter, the "NELSON ADAMS ACQUISITION DOCUMENTS") (the "NELSON ADAMS
ACQUISITION"); and (b) the Nelson Adams Merger upon the terms and conditions set
forth in the Nelson Adams Merger Documents, and subject, FURTHER, to the
fulfillment, to the satisfaction of the Lender Parties and the Administrative
Agent, of the conditions precedent set forth in Article V hereof.
3.2. The Administrative Agent and the Lender Parties
acknowledge that simultaneously with the execution and delivery of this
Amendment No. 2: (a) PolyVision has pledged and delivered to the Administrative
Agent, for the ratable benefit of the Lender Parties, stock certificates,
together with stock powers executed in blank, representing all of the
outstanding capital stock of Nelson Adams and (b) Nelson Adams has executed and
delivered to the Administrative Agent appropriate supplements to the Subsidiary
Guaranty, the Initial Security Agreement and the Intellectual Property Security
Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES.
The Borrowers jointly and severally represent and warrant to
the Administrative Agent and the Lender Parties that:
4.1. There exists no Default or Event of Default under the
Credit Agreement, as amended hereby, as of the date hereof.
4.2. Each and every one of the representations and warranties
set forth in Article 4 (before and after giving effect to the amendments thereto
effected by this Amendment No. 2) of the Credit Agreement is true in all
respects as if made on the date hereof, except (a) for changes in the ordinary
course of business not prohibited by the Credit Agreement, none of which, either
singly or in the aggregate, have had a Material Adverse Effect on the Borrowers
and their Subsidiaries taken as a whole provided that the exception set forth in
this clause (a) shall not be deemed to qualify the representations and
warranties made regarding Nelson Adams (as confirmed in the following clause
(b)); and (b) that certain amended Schedules to the Credit Agreement are
attached hereto as Schedule 1 to this Amendment No. 2, and, to the extent that
any of such representations or warranties apply to any Guarantor, whether as a
"Guarantor", a "Loan Party" or otherwise, each such representation and warranty
shall be deemed to apply to Nelson Adams (hereinafter called the "NEW
GUARANTOR").
4.3. Each Loan Party (a) to the extent it is a party thereto,
has all requisite corporate power and authority to execute and deliver this
Amendment No. 2, the New Term A Notes, the New Term B Notes, the New Revolving
Credit Notes (collectively, all of the foregoing Notes are referred to herein as
the "NEW NOTES"), the Subsidiary Guaranty, the Initial
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Security Agreement, the Intellectual Property Security Agreement (or supplements
to the foregoing, as applicable), the amendment to the Security Agreement
contemplated by Section 5.5 hereof, and each other agreement, instrument or
document contemplated to be executed or delivered by the Borrowers, the New
Guarantor or any other Loan Party pursuant to this Amendment No. 2 (all such
agreements, instruments and documents contemplated to be executed or delivered
in connection herewith by any Loan Party are sometimes hereinafter referred to
collectively, together with this Amendment No. 2, as the "NEW DOCUMENTS") and to
consummate the transactions contemplated hereby and thereby and (b) has taken
all action, corporate or otherwise, necessary to authorize the execution and
delivery of the New Documents and the consummation of the transactions
contemplated hereby and thereby (including by the Credit Agreement as amended
hereby).
4.4. Neither execution and delivery of the New Documents by
any Loan Party nor the consummation by it of the transactions contemplated
hereby and thereby (including by the Credit Agreement as amended hereby) (a)
conflict with, or result in any breach or violation of any provision of, the
certificate of incorporation or by-laws of any Loan Party, (b) conflict with or
result in any breach or violation of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in the creation of a Lien upon any of the properties or assets of any
Loan Party or any of its Subsidiaries (other than Liens granted or permitted by
the Collateral Documents or the Credit Agreement, as amended and supplemented to
date) under any of the terms, conditions or provisions of any loan agreement,
indenture, mortgage, deed of trust, lease or other material contract, instrument
or agreement binding on or affecting any Loan Party, any of its Subsidiaries or
any of their respective properties, or (c) violate any law (including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, and the Racketeer Influenced and Corrupt Organizations
Chapter of the Organized Crime Control Act of 1970), rule, regulation
(including, without limitation, Regulation T, U or X of the Board of Governors
of the Federal Reserve System), order, writ, judgment, injunction, decree,
determination or award.
4.5. No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or any
other third party is or will be required for (a) the due execution, delivery,
recordation, filing or performance by any Loan Party of the New Documents to
which it is or is to be a party, or for the consummation of the Nelson Adams
Transaction, (b) the grant by any Loan Party of the Liens granted by it pursuant
to the Collateral Documents, (c) the perfection or maintenance of the Liens
created by the Collateral Documents (including the first and only priority
nature thereof, subject to Permitted Liens) or (d) the exercise by the
Administrative Agent or any Lender Party of its rights under the Loan Documents
or the remedies in respect of the Collateral pursuant to the Collateral
Documents, except for the authorizations, approvals, actions, notices and
filings listed on SCHEDULE 4.4 to the Credit Agreement, as amended hereby, all
of which have been duly obtained, taken, given or made and are in full force and
effect. All applicable waiting periods in connection with the Transaction have
expired without any action having been taken by any competent authority
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restraining, preventing or imposing materially adverse conditions upon the
Transaction or the rights of the Loan Parties or their Subsidiaries freely to
transfer or otherwise dispose of, or to create any Lien on, any properties now
owned or hereafter acquired by any of them.
4.6. This Amendment No. 2, the New Notes and the other New
Documents have each been duly executed and delivered by each Loan Party that is
a party thereto and each of them and the Credit Agreement as amended hereby
constitutes the legal, valid and binding obligation of each Loan Party thereto,
enforceable against such Loan Party in accordance with its terms.
4.7. The Liens and security interests granted pursuant to the
Collateral Documents secure, without limitation, the indebtedness, liabilities
and obligations of the Borrowers to the Administrative Agent and the Lender
Parties under the Credit Agreement, as amended hereby, whether or not expressly
so stated in the Collateral Documents, and the terms "Obligations", "Debt" and
"Indebtedness" as used in such Collateral Documents (or any other term used
therein to describe or refer to the indebtedness, liabilities and obligations of
the Borrowers to the Administrative Agent and the Lender Parties) includes,
without limitation, the indebtedness, liabilities and obligations of the
Borrowers under the New Notes and the Credit Agreement as amended hereby. No new
filings or recordings are required in order to maintain the existing perfection
or priority of the Liens in favor of the Administrative Agent purportedly
granted by the Collateral Documents, or to secure the portions of the Advances
increased or refinanced pursuant to this Amendment No. 2.
4.8. (a) The Borrowers and each other Loan Party thereto has
the corporate power to execute and deliver each of the Nelson Adams Acquisition
Documents (defined in Section 1.1 hereof) and each of the Nelson Adams Merger
Documents (as defined in Section 1.1 hereof) to which it is or will be a party
and to perform such Nelson Adams Acquisition Documents and Nelson Adams Merger
Documents.
(b) Each Nelson Adams Acquisition Document to which
any Loan Party or any of its respective Subsidiaries is a party has been duly
executed and delivered by such Loan Party or such Subsidiary, as the case may
be, and, to the best knowledge of the Borrowers, each Nelson Adams Acquisition
Document has been duly executed and delivered by the parties thereto other than
the Borrowers and their Subsidiaries, and is in full force and effect. The
representations and warranties of any Loan Party and each of its respective
Subsidiaries contained in each Nelson Adams Acquisition Document to which such
Loan Party or such Subsidiary, as the case may be, is a party are true and
correct in all material respects on the date hereof and will be true and correct
in all material respects on the Closing Date and the Nelson Adams Acquisition
Date, as if made on each of such dates, and the Administrative Agent and each
Lender Party shall be entitled to rely upon such representations and warranties
with the same force and effect as if they were incorporated in this Agreement
and made to the
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Administrative Agent and each Lender Party directly as of the date hereof, the
Amendment No. 2 Effective Date, and the date of consummation of the Nelson Adams
Acquisition.
(c) The execution and delivery by any Loan Party of
each of the Nelson Adams Acquisition Documents and Nelson Adams Merger Documents
to which it is or will be a party and the performance by each such Loan Party
under each of the Nelson Adams Acquisition Documents and Nelson Adams Merger
Documents to which it is or will be a party does not (i) violate any law, rule
or regulation (including, without limitation, the Williams Act, Sections 13 and
14 of the Securities Exchange Act of 1934, and the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and Regulations T, U, and X of the Board of Governors
of the Federal Reserve System and the rules and regulations promulgated
thereunder) or (ii) conflict with or result in a breach of any order, writ,
injunction, ordinance, resolution, decree, or other similar document or
instrument of any governmental entity, or any certificate of incorporation or
by-laws of or applicable to any Loan Party or create (with or without the giving
of notice or lapse of time, or both) a default under or breach of or conflict
with any agreement, instrument, ordinance, resolution, decree, determination,
award, bond, note, indenture, mortgage, deed of trust, lease, writ, order or
judgment to which it is a party or by which it is bound, or any other agreement
or instrument by which any of the properties or assets owned by it or used in
the conduct of its business is affected (other than any agreement or other
instrument of any kind the assets, revenues or liabilities in respect of which
do not exceed $100,000 individually or $250,000 in the aggregate with respect to
all of the foregoing and the breach thereof or conflict therewith could not have
a Material Adverse Effect on Nelson Adams individually or on the Borrowers or
their Subsidiaries taken as a whole.), or result in the imposition of any Lien
of any nature whatsoever upon any of the properties or assets owned by or used
in connection with the business of any Loan Party or any of its Subsidiaries,
except for the Liens created and granted or permitted under the Collateral
Documents or Credit Agreement, as amended and supplemented to date.
(d) Upon consummation of the Nelson Adams
Acquisition, such Acquisition shall have been consummated pursuant to the terms
and conditions of the Nelson Adams Acquisition Documents and in compliance with
all applicable laws, ownership of all of the Acquired Stock shall have vested in
PolyVision free and clear of all Liens, other than those created or permitted by
the Collateral Documents or the Credit Agreement, each as amended and
supplemented to date. None of PolyVision or any of its Subsidiaries which are
parties to any of the Nelson Adams Acquisition Documents has waived compliance
by any of the other parties thereto with any term, covenant or condition
thereof, and no party thereto has breached any covenant set forth therein or
failed to perform any of its obligations thereunder which waiver, breach or
failure to perform is of a material term or condition or could reasonably be
expected to materially and adversely affect the Acquired Stock or otherwise have
a Material Adverse Effect.
(e) The copies of the merger plan and agreement
between Greensteel and Nelson Adams dated the date hereof (collectively, the
"NELSON ADAMS MERGER AGREEMENTS") and all agreements, instruments, and documents
executed and delivered in connection therewith, and all exhibits, annexes and
schedules annexed thereto, and all amendments and modifications to any of the
foregoing (collectively, all of the foregoing,
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including the Nelson Adams Merger Agreements, are referred to as the "NELSON
ADAMS MERGER DOCUMENTS") heretofore delivered by the Borrowers to the
Administrative Agent are true, complete and accurate copies thereof. None of the
parties to the Nelson Adams Merger Documents waived compliance by any of the
other parties thereto with any term, covenant or condition thereof, and no party
thereto has breached any covenant set forth therein or failed to perform any of
its obligations thereunder.
(f) Simultaneously with the execution and delivery of
this Amendment No. 2, the Nelson Adams Merger shall have been consummated
pursuant to the Nelson Adams Merger Documents and applicable law. Upon such
consummation all of the assets and properties of Nelson Adams shall have been
vested in Greensteel, subject to the liabilities of Nelson Adams. Neither the
execution and delivery of the Nelson Adams Merger Documents, nor the performance
by any party thereto or the Borrowers of any obligations thereunder, or of any
obligations of any party thereto incurred by any Borrower by virtue of the
Nelson Adams Merger, violate any provision of law or will conflict with or
result in a breach of or create (with or without the giving of notice or lapse
of time, or both) a default under any agreement to which any party to the Nelson
Adams Merger is a party or by which it is bound or any of its properties is
affected.
(g) Each Nelson Adams Acquisition Document and Nelson
Adams Merger Document to which any Loan Party or any of its respective
Subsidiaries is or is to be a party has been duly executed and delivered by such
Loan Party or such Subsidiary, as the case may be, and, to the best knowledge of
the Borrowers, each Nelson Adams Acquisition Document and Nelson Adams Merger
Document has been duly executed and delivered by the parties thereto other than
the Borrowers and their Subsidiaries, and is in full force and effect. The
representations and warranties of any Loan Party and each of its respective
Subsidiaries contained in each Nelson Adams Acquisition Document and Nelson
Adams Merger Document to which such Loan Party or such Subsidiary, as the case
may be, is or is to be a party are true and correct in all material respects on
the date hereof, and the Administrative Agent and each Lender Party shall be
entitled to rely upon such representations and warranties with the same force
and effect as if they were incorporated in this Agreement and made to the
Administrative Agent and each Lender Party directly as of the date hereof.
(h) True, correct and complete copies of each of the
Nelson Adams Acquisition Documents and Nelson Adams Merger Documents have been
delivered to the Administrative Agent, and as of the Amendment No. 2 Effective
Date, each of the Nelson Adams Acquisition and the Nelson Adams Merger shall
have been consummated in accordance therewith, and no party thereto shall have
waived any material term or condition contained therein.
(i) Each Nelson Adams Acquisition Document to which
any Loan Party or the Seller is a party, when duly executed and delivered by
such Loan Party and the Seller, constitutes the valid and legally binding
obligation of each such Loan Party or (to the best
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knowledge of the Borrowers) the Seller, as the case may be, enforceable in
accordance with its terms.
(j) Each Nelson Adams Merger Document to which any
Loan Party or Nelson Adams is a party, when duly executed and delivered by such
Loan Party and Nelson Adams, constitutes the valid and legally binding
obligation of each such Loan Party, enforceable in accordance with its terms.
(k) No Borrower and none of Borrower's Subsidiaries
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. Neither the making of any
Advances, nor the issuance of any Letters of Credit, nor the application of the
proceeds or repayment thereof by the Borrowers, nor the consummation of any of
the transactions contemplated by this Amendment No.2 or any Nelson Adams
Acquisition Document will violate any provision of such Act or any rule,
regulation or order of the Securities and Exchange Commission thereunder or any
takeover, disclosure or other federal, state or foreign securities law or
Regulations T, U or X of the Federal Reserve Board. No Borrower is subject to
regulation under any federal, state or foreign statute or regulation which
limits its ability to incur Debt.
4.9. FINANCIAL STATEMENTS. The consolidated balance sheets of
Nelson Adams as at the fiscal years ended 1996, 1997 and 1998 and the related
consolidated statements of income and statements of cash flows of Nelson Adams
for the Fiscal Year then ended, accompanied by an opinion of Arthur Andersen and
the unaudited Consolidated balance sheet of Nelson Adams as applicable as at
December 31, 1998, and the related unaudited Consolidated statement of income
and Consolidated statement of cash flows of Nelson Adams for the twelve months
ended June 30, 1999, duly certified by the chief financial officer of Nelson
Adams, copies of which have been furnished to each Lender Party, fairly present,
or when delivered, shall fairly present, subject, in the case of said interim
balance sheet, statements of income and cash flows, to normal year-end audit
adjustments, the Consolidated financial condition of Nelson Adams as at such
dates and the Consolidated results of the operations of Nelson Adams for the
period ended on such date, all in accordance with GAAP applied on a consistent
basis, and, since December 31, 1998 there has been no change which could
reasonably be expected to result in a Material Adverse Effect.
4.10. PRO FORMA FINANCIAL STATEMENTS; PROJECTIONS. (a) The
Consolidated pro forma balance sheet of the Borrowers and their Subsidiaries as
at June 30, 1999 and the related Consolidated pro forma statement of income and
cash flows of the Borrowers and their Subsidiaries for the period then ended,
certified by the chief executive officer or chief financial officer of each
Borrower, copies of which have been furnished to each Lender Party, fairly
present the Consolidated pro forma financial condition of the Borrowers and
their Subsidiaries as at such date and the Consolidated pro forma results of
operations of the Borrowers and their Subsidiaries for the period ended on such
date, in each case after giving effect to the Nelson
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Adams Acquisition, all in accordance with GAAP (to the extent that pro forma
information can comply with GAAP).
(b) The projections delivered on the Amendment No. 2 Effective
Date have been prepared on the basis of the assumptions accompanying them and
reflect as of the date thereof the Borrowers' good faith projections, after
reasonable analysis, of the matters set forth therein, based on such assumptions
(it being understood that projected financial information is not to be viewed as
facts and that the actual results during the period or periods covered thereby
may differ from the projected results and that the differences may be material).
4.11. ACCURATE INFORMATION. None of the information, exhibits
or reports furnished by any Loan Party or any of the European Borrowers to the
Administrative Agent or any Lender Party in connection with Amendment No. 2
contained any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements made therein not misleading.
ARTICLE V.
CONDITIONS.
The effectiveness of this Amendment No. 2 shall be subject to
the fulfillment by the Borrowers, in a manner satisfactory to the Administrative
Agent and the Lender Parties, of all of the conditions precedent set forth in
this Article V, and the date on which all such conditions shall have been
fulfilled to the satisfaction of the Administrative Agent and the Lender
Parties, and this Amendment No. 2 shall have become effective, shall be herein
called the "AMENDMENT NO. 2 EFFECTIVE DATE":
5.1. Each of the parties hereto shall have executed and
delivered this Amendment No. 2 to the Administrative Agent.
5.2. (a) The representations and warranties contained herein
and each other agreement, instrument, certificate or other writing delivered to
the Administrative Agent or any Lender Party pursuant hereto or to the Credit
Agreement shall be correct on and as of the date hereof after giving effect to
this Amendment No. 2 as though made on and as of such date except to the extent
modified hereby and (b) no Default or Event of Default shall have occurred and
be continuing on the Amendment No. 2 Effective Date or would result from the
taking effect of this Amendment No. 2, or the transactions contemplated hereby,
including the Nelson Adams Acquisition or the Nelson Adams Merger.
5.3. The Borrowers shall have:
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(a) executed and delivered to each of the Term A Lenders its
respective New Term A Note, in form and substance satisfactory to the
Administrative Agent and the Lender Parties;
(b) executed and delivered to each of the Term B Lenders its
respective New Term B Note, in form and substance satisfactory to the
Administrative Agent and the Lender Parties;
(c) executed and delivered to each of the Revolving Credit
Lenders its respective New Revolving Credit Note, in form and substance
satisfactory to the Administrative Agent and the Lender Parties;
(d) on the Amendment No. 2 Effective Date, paid to the
Administrative Agent, (i) for the ratable benefit of the Lender Parties
who were party to the Credit Agreement prior to the Amendment No. 2
Effective Date, a 0.25% fee that shall be payable to such Lender
Parties PRO RATA on any Commitments (including without limitation the
European Letter of Credit Commitments) as in effect immediately prior
to the effectiveness of this Amendment No. 2; and (ii) for the benefit
of KBC as lender under the KBC Loan Agreements, a 0.25% fee that shall
be payable to KBC (in U.S. Dollars and by payment made in New York) on
(A) the aggregate amount of KBC's Commitments under the KBC Loan
Agreements minus (B) the aggregate European Letter of Credit, in each
case as such Commitments are computed based on the Dollar Equivalent
thereof as of the date prior to the required payment date;
(e) paid to the Administrative Agent any and all fees payable
to the Administrative Agent pursuant to the terms of any separate
letter agreement with any Borrowers;
(f) paid all reasonable legal (U.S. and foreign) and other
out-of-pocket expenses incurred by Fleet in connection with the
transactions contemplated by or referred to in this Amendment No. 2,
and in connection with the merger of PolyVision Belgium N.V. with and
into Alliance Europe N.V. and amendments relating to the KBC Loan
Agreements, including, without limitation, out-of-pocket due diligence,
syndication (including printing, distribution and bank meetings),
transportation, computer, duplication, appraisal, audit, consultant,
search, filing and recording fees, as well as all expenses of the
Administrative Agent in connection with the administration of the loan
documentation;
(g) otherwise complied in all respects with the terms hereof
and of any other agreement, document, instrument or other writing to be
delivered by the Borrowers in connection herewith.
5.4. The Administrative Agent shall have received, on or
before the date hereof, the following, each in form and substance satisfactory
to the Administrative Agent:
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(a) copies of the resolutions of the Board of
Directors of the Borrowers and APV, certified by a Responsible Officer thereof,
authorizing (i) the execution, delivery and performance by the Borrowers and APV
of this Amendment No. 2 and the other New Documents; (ii) the Nelson Adams
Acquisition and the execution, delivery and consummation of the Nelson Adams
Acquisition Documents to which any of the Borrowers or APV is or is to be a
party, and (iii) the Nelson Adams Merger and the execution, delivery and
consummation of the Nelson Adams Merger Documents;
(b) long-form good standing certificates of recent
date for each of the Borrowers from the Secretary of State of its state of
incorporation and the state in which its chief executive office is located;
(c) a certificate signed on behalf of each of the
Borrowers and APV by a Responsible Officer and the Secretary or an Assistant
Secretary of each of the Borrowers and APV, certifying the names and true
signatures of the officers of such Borrower or APV authorized to sign the New
Documents, together with evidence of the incumbency of such authorized officers;
a compliance certificate executed by a Responsible Officer of each of the
Borrowers and APV dated the Amendment No. 2 Effective Date certifying that the
conditions set forth in Section 5.2 and otherwise in this Article V (as they
pertain to such Borrower or APV) have been satisfied.
5.5. With respect to the New Guarantor, the Administrative
Agent shall have received each of the following duly executed by the New
Guarantor, and otherwise in form and substance satisfactory to the
Administrative Agent:
(a) a Subsidiary Guaranty (or supplement or agreement
of joinder to the existing Subsidiary Guaranty) guarantying to the
Administrative Agent and the Lender Parties the prompt payment, when and as due,
of all Obligations of the Loan Parties under the Loan Documents, including all
obligations under any Hedge Agreements or other hedging agreements;
(b) a Security Agreement (or supplement or agreement
of joinder to the existing Initial Security Agreement) granting to the
Administrative Agent, for the ratable benefit of the Secured Parties, a first
and only (subject to Permitted Liens) priority security interest in all of the
personal property and assets of the New Guarantor, together with:
(i) proper, duly executed financing
statements under the Uniform Commercial Code of all jurisdictions that the
Administrative Agent may deem necessary or desirable in order to perfect and
protect the first and only (subject to Permitted Liens) priority Liens and
security interests created under the Initial Security Agreement, covering the
Collateral described in the Initial Security Agreement;
(ii) to the extent required by the
Administrative Agent, completed requests for information, dated on or before the
Amendment No. 2 Effective Date,
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listing all effective financing statements filed that name the New Guarantor as
debtor, together with copies of such financing statements;
(iii) evidence of the completion of all
other recordings and filings of or with respect to the Initial Security
Agreement that the Administrative Agent may deem necessary or desirable in order
to perfect and protect the Liens created thereby;
(iv) evidence of the insurance required by
the terms of the Initial Security Agreement;
(v) copies of the Assigned Agreements, if
any, referred to in the Initial Security Agreement, together with a consent (to
the extent required by the Administrative Agent) to such assignments, if any, in
substantially the form of Exhibit B to the Initial Security Agreement, duly
executed by each party to such Assigned Agreements other than the New Guarantor;
and
(vi) evidence that all other action that the
Administrative Agent may deem necessary or desirable in order to perfect and
protect the first and only (subject to Permitted Liens) priority liens and
security interests created under the Initial Security Agreement has been taken
by the New Guarantor, INCLUDING, without limitation payment of all necessary or
appropriate filing and recording fees and taxes;
(c) an Intellectual Property Security Agreement (or a
supplement or joinder to the existing Intellectual Property Security Agreement)
granting to the Administrative Agent for the ratable benefit of the Secured
Parties a first and only priority security interest in all of the New
Guarantor's owned intellectual property, together with evidence that all action
that the Administrative Agent may deem necessary or desirable in order to
perfect and protect the first and only priority Liens and security interests
created under the Intellectual Property Security Agreement has been taken;
(d) (1) mortgages and leasehold mortgages (as
applicable) on such owned and leased real property as the
Administrative Agent may require sufficient for recording in all places
to the extent necessary or desirable, in the reasonable judgment of the
Administrative Agent to create a valid and enforceable first priority
lien on each Mortgaged Property listed on Schedule 4.21 to the Credit
Agreement (as amended hereby) (subject only to Permitted Real Property
Encumbrances) in favor of the Administrative Agent (or a trustee
therefor) for the benefit of the Secured Parties; together with such
title insurance, reports, surveys and consents as the Administrative
Agent may require in connection therewith, together with evidence that
all action that the Administrative Agent may deem necessary or
desirable in order to perfect and protect the first and only priority
Liens and security interests created under such mortgages has been
taken;
(2) If required by the Administrative Agent,
mortgagee title insurance policies (or binding commitments to issue
such title insurance policies) which
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shall (1) be issued to the Administrative Agent for the benefit of the
Secured Parties by title insurance companies reasonably satisfactory to
the Administrative Agent (the "MORTGAGE POLICIES") in amounts
reasonably satisfactory to the Administrative Agent insuring that the
Mortgages are valid and enforceable first priority mortgage liens on
the respective Mortgaged Properties, free and clear of all defects,
encumbrances and other Liens except Permitted Real Property
Encumbrances, (2) be in form and substance reasonably satisfactory to
the Administrative Agent, (3) include, as appropriate, an endorsement
for future advances under this Agreement, the Notes and the Mortgages
and such other endorsements that the Administrative Agent in its
discretion may reasonably request, (4) not include an exception for
mechanics' liens, and (5) provide for affirmative insurance and such
reinsurance (including direct access agreements) as the Administrative
Agent in its discretion may reasonably request; and
(3) If required by the Administrative Agent,
surveys, in form and substance satisfactory to the Administrative
Agent, of each Mortgaged Property listed on SCHEDULE 4.21, dated a
recent date reasonably acceptable to the Administrative Agent,
certified by a licensed professional surveyor in a manner satisfactory
to the Administrative Agent for the benefit of the Lenders.
(e) certified copies of the bylaws of the New
Guarantor and of resolutions of the Board of Directors of the New Guarantor
approving the Credit Agreement and the Nelson Adams Merger, approving this
Amendment No. 2 and each other Loan Document to which it is or is to be a party,
and of all documents evidencing other necessary corporate action and
governmental and other third party approvals and consents, if any, with respect
to the Credit Agreement, this Amendment No. 2, the Nelson Adams Acquisition, the
Nelson Adams Merger and each other Loan Document;
(f) a copy of the charter of the New Guarantor and
each amendment thereto, certified (as of a date reasonably near the date of the
Amendment No. 2 Effective Date) by the Secretary of State of the jurisdiction of
its incorporation as being a true and correct copy thereof;
(g) a copy of a certificate of the Secretary of State
of the jurisdiction of the New Guarantor's incorporation, dated within twenty
(20) Business Days of the date of the Amendment No. 2 Effective Date, listing
the charter of the New Guarantor and each amendment thereto on file in its
office and certifying that (A) such amendments are the only amendments to the
New Guarantor's charter on file in its office, (B) to the extent obtainable,
that the New Guarantor has paid all franchise taxes to the date of such
certificate and (C) the New Guarantor is duly incorporated and in good standing
or existing, as the case may be, under the laws of the jurisdiction of its
incorporation;
(h) a copy of a certificate of the Secretary of State
of each State (if any) listed for the New Guarantor on Schedule 4.2 to the
Credit Agreement (as amended and restated in the form annexed hereto as part of
Schedule 1) dated reasonably near the Amendment No. 2 Effective Date, stating
that the New Guarantor is duly qualified and in good standing or
25
<PAGE>
existence as a foreign corporation in such State and has filed all annual
reports required to be filed to the date of such certificate;
(i) a certificate of the Secretary or an Assistant
Secretary of the New Guarantor certifying the names and true signatures of the
officers of the New Guarantor authorized to sign this Amendment No. 2, and each
other Loan Document to which it is or is to be a party; and
(j) such financial, business and other information
regarding the New Guarantor as any of the Lender Parties shall have reasonably
requested.
5.6. PolyVision shall have taken all action necessary to allow
the Administrative Agent to obtain a valid and enforceable, first and only
priority, perfected security interest in 100% of the outstanding capital stock
of the New Guarantor, and delivered or caused to be delivered to the
Administrative Agent certificates representing such pledged shares accompanied
by undated stock powers executed in blank and irrevocable proxies, and the
Initial Security Agreement shall have been amended to reflect the foregoing,
upon terms and conditions reasonably satisfactory to the Administrative Agent.
5.7. (a) The Administrative Agent shall have received copies
of the Nelson Adams Acquisition Documents which shall be certified as true,
correct and complete by a Responsible Officer of PolyVision, and shall be
satisfactory to the Administrative Agent and the Lender Parties in all respects;
(b) The Nelson Adams Acquisition shall have been
consummated (prior to or simultaneously with the Amendment No. 2 Effective Date)
pursuant to the terms and conditions of the Nelson Adams Stock Purchase
Agreement for an aggregate cash amount at the Amendment No. 2 Effective Date not
exceeding $24 million (before fees and expenses;
(c) Upon the Administrative Agent's request, the
Borrowers and Nelson Adams shall have delivered to the Administrative Agent the
original of all instruments, documents and chattel paper, and all other
Collateral of which the Administrative Agent determines it should have physical
possession in order to perfect its security interest therein, duly pledged,
endorsed or assigned to the Administrative Agent without restriction;
(d) (i) The Borrower and Nelson Adams shall have
obtained and delivered to the Administrative Agent landlord waivers, in form and
substance reasonably satisfactory to the Administrative Agent, with respect to
any Inventory or other tangible Collateral located at a location that is not
owned by the Borrowers or their Subsidiaries, (except in respect of immaterial
amounts as described by the Borrowers to the Administrative Agent in writing
prior to the Amendment No. 2 Effective Date); (ii) delivered to the
Administrative Agent warehouse receipts covering any portion of the Inventory or
other Collateral located in warehouses and for which warehouse receipts are
issued, (except in respect of immaterial amounts as described by the Borrowers
to the Administrative Agent in writing prior to the
26
<PAGE>
Amendment No. 2 Effective Date); and (iii) taken all such other actions and
obtained all such other agreements as the Administrative Agent may reasonably
deem necessary or desirable in respect of any Collateral, and otherwise complied
with the provisions of Section 5.13 of the Credit Agreement;
5.8. The Nelson Adams Merger shall be consummated on the
Amendment No. 2 Effective Date immediately after consummation of the Nelson
Adams Acquisition pursuant to the terms and conditions of the Nelson Adams
Merger Documents, and the Administrative Agent shall have received certified
copies of each of the Nelson Adams Merger Documents, each of which shall be
satisfactory to the Administrative Agent and in full force and effect.
5.9. PolyVision shall have issued to the Seller Series D
Convertible Preferred Stock of PolyVision as payment for $6 million of the
aggregate purchase price of the Acquired Stock and the terms of such Series D
Convertible Preferred Stock shall be satisfactory to the Administrative Agent
and the Lender Parties and shall prohibit payment of dividends on or redemption
of such Series D Convertible Preferred Stock (i) while any of the Commitments is
outstanding; (ii) while any Advance or Letter of Credit remains outstanding and
(iii) until full and complete performance of all of any Borrowers' or any other
Loan Party's other obligations arising under the Credit Agreement, as amended
hereby.
5.10. The Lender Parties shall have received the following all
of which shall be satisfactory in form and substance to the Lender Parties,
together with a compliance certificate executed by the Chief Financial Officer
of each of the Borrowers certifying compliance with financial covenants set
forth in the Credit Agreement:
(a) pro forma consolidated balance sheet and income
statement (for the preceding twelve months) of PolyVision and its Subsidiaries
and Nelson Adams as of June 30, 1999 as if giving effect to consummation of the
Nelson Adams Acquisition and the making of the Term A Borrowing and Term B
Borrowing on the Amendment No. 2 Effective Date and reflecting that no
indebtedness owed by Nelson Adams prior to the Nelson Adams Acquisition remains
outstanding except for capital leases and purchase money security interests;
(b) projections for the Borrowers and their
Subsidiaries commencing with the six-month period ending 12/31/99 through Fiscal
Year ended 12/31/06.
(c) A computation in detail of consolidated pro forma
trailing twelve-month EBITDA for PolyVision and all of its Subsidiaries and
Nelson Adams for the period ended June 30, 1999 which shall not be less than
$17.5 million (exclusive of any add-backs for cost savings (unless actually
realized during such period) associated with the Nelson Adams Acquisition, the
acquisition of AIG, and any non-recurring expenses); and
(d) A computation of the Consolidated Debt to EBITDA
Ratio, including in Consolidated Debt the debt evidenced by the Junior
Subordinated Note,
27
<PAGE>
demonstrating that such Ratio is not greater than 4.8:1 on the Amendment No. 2
Effective Date and a computation of the Consolidated Debt to EBITDA Ratio,
excluding the Junior Subordinated Note, demonstrating that such Ratio is not
greater than 4.5:1 on the Amendment No. 2 Effective Date (and in each case such
Ratio shall be calculated in the same manner as is set forth in Section 8.1 of
the Credit Agreement).
5.11. Alpine shall have contributed not less than Two Million
($2,000,000) Dollars cash to PolyVision to fund a portion of the Nelson Adams
Acquisition on terms and conditions satisfactory to the Administrative Agent.
5.12. All governmental and third party consents and approvals
necessary in connection with each aspect of the Nelson Adams Acquisition, the
Nelson Adams Merger and the Facilities shall have been obtained, including,
without limitation, the consent of holders of the Senior Subordinated Notes
(without the imposition of any conditions that are not acceptable to the Lender
Parties) and shall remain in effect; all applicable waiting periods shall have
expired without any adverse action being taken by any competent authority; and
no law or regulation shall be applicable in the judgment of the Lender Parties
that restrains, prevents or imposes materially adverse conditions upon any
aspect of the Nelson Adams Acquisition, the Nelson Adams Merger or the
Facilities.
5.13. There shall exist no action, suit, investigation,
litigation or proceeding pending or threatened in any court or before any
arbitrator or governmental or regulatory agency or authority that purports to
adversely affect any aspect of the Nelson Adams Acquisition or the Senior Credit
Facilities.
5.14. The Lender Parties shall have received all additional
financial, business and other information regarding the Borrowers and Nelson
Adams and their respective properties and assets as they shall have reasonably
requested, and environmental surveys and reports and assessments prepared by
third parties acceptable to the Administrative Agent and the Lender Parties, and
all of the foregoing shall be acceptable to the Lender Parties; the Borrowers
shall have demonstrated to the reasonable satisfaction of each Lender Party
that: (i) the operations of Nelson Adams and its Subsidiaries comply in all
material respects with applicable environmental, health and safety statutes and
regulations, including, without limitation, regulations promulgated under the
Federal Resource Conservation and Recovery Act, and (ii) such operations are not
the subject of any federal, state or local investigation evaluating the need for
remedial action involving an expenditure exceeding $100,000 in the aggregate to
respond to a release or threatened release of any toxic or hazardous waste or
substance into the environment.
5.15. The Borrowers shall have delivered a certificate, in
form and substance reasonably satisfactory to the Administrative Agent and the
Lender Parties, attesting to the
28
<PAGE>
Solvency of the Borrowers immediately before and immediately after giving effect
to the Nelson Adams Acquisition, from the chief financial officer of each of the
Borrowers.
5.16. Advances then outstanding under the Revolving Credit
Facility for the Borrowers minus the amount of cash of PolyVision (on a
consolidated basis including its Domestic Subsidiaries but not including Nelson
Adams) on the Amendment No. 2 Effective Date shall not exceed $4,000,000.
5.17. The Administrative Agent shall have received a favorable
written opinion of Greenberg Traurig, counsel to the Borrowers and APV, and of
Jeffrey Hartman, counsel to Nelson Adams, and of such other counsel (including
foreign counsel) as the Administrative Agent may reasonably require, as to such
matters relating to the transactions contemplated by this Amendment No. 2
(including the Nelson Adams Acquisition (and absence of any required
governmental consent in connection therewith) and the Nelson Adams Merger) and
the Collateral Documents executed by the New Guarantor in form and substance as
the Lender Parties may reasonably request.
5.18. Amendments to the KBC Loan Agreements, in form and
substance satisfactory to the Administrative Agent, shall have been duly
executed and delivered and all conditions precedent to the effectiveness thereof
shall have been satisfied.
5.19. All proceedings in connection with the transactions
contemplated by this Amendment No. 2 including each of the Nelson Adams
Acquisition and the Nelson Adams Merger, and all documents incidental thereto
shall be reasonably satisfactory to the Administrative Agent and the Lenders,
and each such Person shall have received all such information and such
counterpart originals or certified copies of documents as may have been
reasonably requested.
ARTICLE VI.
ACKNOWLEDGMENTS, CONFIRMATIONS AND GENERAL AMENDMENTS.
6.1. APV hereby (i) acknowledges and consents to this
Amendment No. 2 (whether or not its consent is required); (ii) confirms and
agrees that the Subsidiary Guaranty to which it is a party is, and shall
continue to be, in full force and effect and is hereby ratified and confirmed in
all respects, and all references in any such Subsidiary Guaranty to "the Credit
Agreement," "thereof," "thereunder" or words of like import referring to the
Credit Agreement shall mean the Credit Agreement as amended by this Amendment
No. 2; (iii) confirms and agrees that the "Guaranteed Obligations" as defined in
such Subsidiary Guaranty include the Obligations of the Borrowers to the Lender
Parties under the Credit Agreement as amended by this Amendment No. 2, and under
the New Notes; and (iv) confirms and agrees that the Liens
29
<PAGE>
and security interests granted by it pursuant to the Collateral Documents
secure, without limitation, the indebtedness, liabilities and obligations of APV
to the Lender Parties and the Administrative Agent under the Subsidiary
Guaranty, including without limitation, the Guaranteed Obligations which
obligations include the obligations of the Borrowers under the New Notes and the
Credit Agreement as amended hereby.
6.2. All references in the Credit Agreement and every other
agreement, instrument and document executed and delivered by each of the Loan
Parties in connection therewith, including, without limitation, any of the
Collateral Documents, to "Credit Agreement" and "Agreement", as applicable, and
also, in the case of the Credit Agreement to "this Agreement", shall be deemed
to refer to the Credit Agreement as amended and supplemented hereby.
6.3. All references in the Credit Agreement, the Collateral
Documents or any other agreement, instrument and document executed and delivered
in connection therewith to "Notes" shall be deemed to include, without
limitation, the New Term A Notes, the New Term B Notes and the New Revolving
Credit Notes.
6.4. All references in the Credit Agreement, the Collateral
Documents or any other agreement, instrument or document executed and delivered
in connection therewith to the "Term A Advances", "Term B Advances" or
"Advances" (or any other term or terms used in any of such documents to describe
or refer to Advances made by the Lender Parties to the Borrowers under the
Credit Agreement) shall be deemed to refer to Advances made by the Lender
Parties to the Borrowers pursuant to the Credit Agreement as amended and
supplemented hereby.
6.5. The Credit Agreement, the Collateral Documents and all
agreements, instruments and documents executed and delivered in connection with
any of the foregoing, shall each be deemed amended hereby to the extent
necessary, if any, to give effect to the provisions of this Amendment No. 2.
ARTICLE VII.
CONTINUED EFFECTIVENESS OF CREDIT AGREEMENT.
The Credit Agreement and the other agreements to which the
Borrowers are parties delivered in connection herewith or with the Credit
Agreement are, and shall continue to be, in full force and effect, and are
hereby ratified and confirmed in all respects except that on and after the date
hereof (a) all references in the Credit Agreement to "this Agreement", "hereto",
"hereof", "hereunder" or words of like import referring to the Credit Agreement
shall mean the Credit Agreement as amended and supplemented by this Amendment
No. 2 and (b) all references in the Credit Agreement and such other agreements
to which the Borrowers are parties to the "Credit Agreement", "thereto",
"thereof", "thereunder" or words of like import referring to the
30
<PAGE>
Credit Agreement shall mean the Credit Agreement as amended and supplemented by
this Amendment No. 2.
ARTICLE VIII.
MISCELLANEOUS.
8.1. Except as specifically amended herein, the Credit
Agreement shall remain in full force and effect in accordance with its terms.
8.2. This Amendment No. 2 shall be governed and construed in
accordance with the laws of the State of New York.
8.3. No modification or waiver of or with respect to any
provisions of this Amendment No. 2 and all other agreements, instruments and
documents delivered pursuant hereto or thereto, nor consent to any departure by
the Administrative Agent or the Lender Parties from any of the terms or
conditions thereof, shall in any event be effective unless it shall be in
writing and executed in accordance with the provisions of the Credit Agreement,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No consent to or demand on the Borrowers in
any case shall, of itself, entitle them to any other or further notice or demand
in similar or other circumstances. This Amendment No. 2, together with the
Credit Agreement, as amended, embodies the entire agreement and understanding
among the Borrowers, the Administrative Agent and the Lender Parties, and
supersedes all prior agreements and understandings, relating to the subject
matter hereof.
8.4. The provisions of this Amendment No. 2 are severable, and
if any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision in this Amendment No. 2 in any jurisdiction.
8.5. This Amendment No. 2 may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
8.6. This Amendment No. 2 shall be binding upon and inure to
the benefit of the Borrowers and their respective successors and to the benefit
of the Administrative Agent and the Lender Parties and their respective
successors and assigns. The rights and obligations of the Borrowers under this
Amendment No. 2 shall not be assigned or delegated without the prior written
consent of the Lender Parties, and any purported assignment or delegation
without such consent shall be void.
31
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to be duly executed on the date first above written.
POLYVISION CORPORATION
By: /s/ Joseph A. Menniti
-------------------------
Name: Joseph A. Menniti
Title: CEO
POSTERLOID CORPORATION
By /s/ Joseph A. Menniti
-------------------------
Name: Joseph A. Menniti
Title: President
GREENSTEEL, INC.
By /s/ Joseph A. Menniti
-------------------------
Name: Joseph A. Menniti
Title: President
<PAGE>
FLEET NATIONAL BANK,
as Administrative Agent, as European
Letter of Credit Bank, as Initial
Issuing Bank, as Swing Line Bank,
and as a Lender
By /s/ John A. Skrobe
---------------------
Name: John A. Skrobe
Title: Vice President
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
and as syndication agent
By: /s/ Hagop V. Jazmadarian
----------------------------
Name: Hagop V. Jazmadarian
Title: Vice President
<PAGE>
KBC BANK N.V.,
as a Lender under the Credit
KBC Agreement and each of the Loan
Agreements
By /s/ Ann E. Hardy
------------------------
Name: Ann E. Hardy
Title: Vice President
By /s/ Robert Snauffer
------------------------
Name: Robert Snauffer
Title: First Vice President
<PAGE>
SOVEREIGN BANK
By: /s/ Joseph Becker
---------------------
Name: Joseph Becker
Title: Vice President
<PAGE>
GREATER BAY CORPORATE FINANCE, A
DIVISION OF CUPERTINO NATIONAL BANK
By: /s/ Timothy E. Canevascini
------------------------------
Name: Timothy E. Canevascini
Title: Vice President
<PAGE>
SUNTRUST BANK, ATLANTA
By: /s/ Dyrc McLeod
-----------------------
Name: Dyrc McLeod
Title: Associate
SUNTRUST BANK, ATLANTA
By: /s/ Susan M. Hass
-----------------------
Name: Susan M. Hass
Title: Director
<PAGE>
THE UNDERSIGNED, WHETHER OR NOT CONSENT IS REQUIRED IN RESPECT OF ANY OF THE
FOREGOING, HEREBY CONFIRMS, AGREES TO AND ACCEPTS THE TERMS OF THIS AMENDMENT
NO. 2 AND CONFIRMS THE TRUTH AND ACCURACY OF THE REPRESENTATIONS AND WARRANTIES
RELATING TO ANY OF THE UNDERSIGNED.
APV, INC.
By /s/ Joseph A. Menniti
------------------------
Name: Joseph A. Menniti
Title: President
A. LAWER CORPORATION
By /s/ Joseph A. Menniti
------------------------
Name: Joseph A. Menniti
Title: President
<PAGE>
EXHIBIT A TO AMENDMENT AND
SUPPLEMENT NO. 2 TO THE CREDIT AGREEMENT
SCHEDULE I
TO CREDIT AGREEMENT
COMMITMENTS AND APPLICABLE LENDING OFFICES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REVOLVING CREDIT
COMMITMENT SWINGLINE
(LETTERS OF CREDIT EUROPEAN COMMITMENT DOMESTIC
ARE A TERM A TERM B LETTER OF CREDIT (A SUBLIMIT OF THE LENDING
NAME OF LENDER SUBLIMIT OF THE COMMITMENT COMMITMENT COMMITMENT REVOLVING CREDIT OFFICE
REVOLVING COMMITMENT)
CREDIT COMMITMENTS)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fleet National Bank $2,311,358.43 $3,734,602.83 $7,514,956.15 BEF $3,000,000 One Federal Street
80,813,700.50 Boston, Massachusetts
(LC = 24.3% x 02110
$5,000,000.00 = Fax: (617)
$1,215,000.00) 346-4375
Phone: (617)
346-4388
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------
EURODOLLAR
LENDING
NAME OF LENDER OFFICE
- ----------------------------------------------
<S> <C>
Fleet National Bank One Federal Street
Boston,
Massachusetts 02110
Fax: (617)
346-4375
Phone: (617)
346-4388
- ----------------------------------------------
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REVOLVING CREDIT
COMMITMENT SWINGLINE
(LETTERS OF CREDIT EUROPEAN COMMITMENT DOMESTIC
ARE A TERM A TERM B LETTER OF CREDIT (A SUBLIMIT OF THE LENDING
NAME OF LENDER SUBLIMIT OF THE COMMITMENT COMMITMENT COMMITMENT REVOLVING CREDIT OFFICE
REVOLVING COMMITMENT)
CREDIT COMMITMENTS)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
KBC Bank N.V. $1,273,331.46 $2,057,399.32 $4,140,002.67 BEF $0 125 West 55th Street
0 10th Floor
(LC = 13.4% x New York, New York
$5,000,000.00 = 10019
$670,000.00) Fax: (212) 541-0793
Phone: (212) 541-0704
- ------------------------------------------------------------------------------------------------------------------------------------
Sovereign Bank $1,720,044.00 $2,779,180.04 $5,592,406.23 BEF $0 50 Rowes Wharf
162,007,863.42 Suite 430
(LC = 18.1% x Boston, MA 02110
$5,000,000.00 = Fax: (617)
$905,000.00) Phone: (617)
- ------------------------------------------------------------------------------------------------------------------------------------
Greater Bay Corporate $1,078,782.72 $1,743,055.05 $3,507,463.27 BEF $0 1255 Treat Boulevard
Finance, a division of 101,608,611.39 Suite 160
Cupertino National Bank (LC = 11.4% x Walnut Creek, CA 94596
$5,000,000.00 = Fax: (925)-944-7035
$570,000.00) Phone: (925)-979-7255
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------
EURODOLLAR
LENDING
NAME OF LENDER OFFICE
- -----------------------------------------------
<S> <C>
KBC Bank N.V. 125 West 55th Street
10th Floor
New York, New York
10019
Fax: (212) 541-0793
Phone: (212)
541-0704
- -----------------------------------------------
Sovereign Bank 50 Rowes Wharf
Suite 430
Boston, MA 02110
Fax: (617)
Phone: (617)
- -----------------------------------------------
Greater Bay Corporate 1255 Treat Boulevard
Finance, a division of Suite 160
Cupertino National Bank Walnut Creek, CA
94596
Fax: (925)-944-7035
Phone: (925)-979-7255
- -----------------------------------------------
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REVOLVING CREDIT
COMMITMENT SWINGLINE
(LETTERS OF CREDIT EUROPEAN COMMITMENT DOMESTIC
ARE A TERM A TERM B LETTER OF CREDIT (A SUBLIMIT OF THE LENDING
NAME OF LENDER SUBLIMIT OF THE COMMITMENT COMMITMENT COMMITMENT REVOLVING CREDIT OFFICE
REVOLVING COMMITMENT)
CREDIT COMMITMENTS)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Union Bank of $1,558,241.70 $2,517,746.19 $5,066,335.84 BEF $0 445 South Figueroa
California, N.A. 146,767,994.23 Street
(LC = 16.4% x 18th Floor
$5,000,000.00 = Los Angeles, CA 90071
$820,000.00) Fax: (213)-236-7636
Phone: (213) 236-5562
- ------------------------------------------------------------------------------------------------------------------------------------
SunTrust Bank, Atlanta $1,558,241.70 $2,517,746.19 $5,066,335.84 BEF $0 25 Park Place
146,767,994.23 26th Floor
(LC = 16.4% x Atlanta, GA 30303
$5,000,000.00 = Fax: (404) 575-2693
$820,000.00) Phone: (404) 724-3446
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------
EURODOLLAR
LENDING
NAME OF LENDER OFFICE
- ----------------------------------------------
<S> <C>
Union Bank of 445 South Figueroa
California, N.A. Street
18th Floor
Los Angeles, CA 90071
Fax: (213)-236-7636
Phone: (213) 236-5562
- ----------------------------------------------
SunTrust Bank, Atlanta 25 Park Place
26th Floor
Atlanta, GA
30303
Fax: (404) 575-2693
Phone: (404) 724-3446
- ----------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.46
AMENDMENT NO. 1
TO
SENIOR SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT
This AMENDMENT NO. 1 (this "AMENDMENT NO. 1") is made as of
this 19th day of August, 1999, by and among POLYVISION CORPORATION, a New York
corporation (the "COMPANY"), POSTERLOID CORPORATION, a Delaware corporation
("POSTERLOID"), GREENSTEEL, INC., a Delaware corporation ("GREENSTEEL") (each of
Posterloid and Greensteel, a "GUARANTOR" and collectively, the "GUARANTORS") and
John Hancock Mutual Life Insurance Company, John Hancock Variable Life Insurance
Company and Hancock Mezzanine Partners L.P. (collectively, the "PURCHASERS").
WHEREAS:
(A) The Purchasers are collectively the holders of $25,000,000
in aggregate principal amount of the Company's 12.5% Senior Subordinated Notes
due December 30, 2006 (the "NOTES") issued by the Company under a Senior
Subordinated Note and Warrant Purchase Agreement dated as of December 30, 1998
(the "NOTE Agreement"). Under the Note Agreement, the Guarantors have guaranteed
the obligations of the Company under the Note Agreement and the Notes. Certain
defined terms used in this Amendment No. 1 have the meanings given in Section
1.1 hereof. Capitalized terms not otherwise defined in this Amendment No. 1 have
the meanings given therefor in the Note Agreement.
(B) The Company has requested and the Purchasers have agreed,
upon and subject to the terms and conditions set forth herein, (i) to permit the
Company to increase the amount of term Senior Debt under the Senior Credit
Facility by an aggregate principal amount of $22,000,000, to be used solely to
finance the acquisition by the Company of 100% of the issued and outstanding
capital stock of A. Lawer Corporation, a California corporation ("A. LAWER")
from the "Sellers" as identified in the Stock Purchase Agreement dated May 17,
1999, as amended on July 26, 1999, relating to such proposed transaction, (ii)
to amend the definition of Senior Debt under the Note Agreement to reflect such
additional term Senior Debt, and (iii) to permit the issuance by the Company of
$6,000,000 of its Series D Convertible Preferred Stock ("SERIES D PREFERRED") to
such sellers in connection with the acquisition of A. Lawer.
NOW, THEREFORE, the parties agree:
ARTICLE I.
AMENDMENTS TO NOTE AGREEMENT.
The Note Agreement is hereby amended, effective upon the
satisfaction of the conditions precedent set forth in Article IV hereof, as
follows:
1.1. Section 10.1, "Terms Defined", is amended:
(a) To insert the following new definitions in alphabetical
order:
<PAGE>
"A. LAWER"' means A. Lawer Corporation, a California
corporation that became a Wholly-Owned Subsidiary of the Company upon
the consummation of the Nelson Adams Acquisition and was
contemporaneously merged into Greensteel.
"AMENDMENT NO. 1" means Amendment No. 1 to this Agreement
dated as of August 19, 1999, among the Company, the Guarantors and the
Purchasers,
"AMENDMENT NO. 1 EFFECTIVE DATE" means the date set forth in
Amendment No. 1 as the "Amendment No. 1 Effective Date".
"FISCAL YEAR" means a fiscal year of the Company and its
Subsidiaries ending on December 31 in any calendar year.
"GREENSTEEL" means Greensteel, Inc., a Delaware corporation
and Wholly-Owned Subsidiary of the Company.
"NELSON ADAMS ACQUISITION" means the acquisition by the
Company of all of the issued and Outstanding capital stock of A. Lawer
pursuant to the Nelson Adams Stock Purchase Agreement.
"NELSON ADAMS ACQUISITION DOCUMENTS" means the Nelson Adams
Stock Purchase Agreement and each of the other agreements, instruments,
and documents executed or delivered by any of the parties thereto or
their respective Subsidiaries pursuant thereto or in connection
herewith, and all schedules and exhibits related to such agreement.
"NELSON ADAMS MERGER DOCUMENTS" The plan and agreement of
merger between Greensteel and A. Lawer dated August 19, 1999 and all
agreements, instruments, and documents executed and delivered in
connection therewith, and all exhibits, annexes and schedules annexed
thereto, and all amendments and modifications to any of the foregoing.
"NELSON ADAMS STOCK PURCHASE AGREEMENT" means the Stock
Purchase Agreement dated as of May 17, 1999, as amended on July 26,
1999, together with all schedules, exhibits and annexes thereto or
delivered as a part thereof.
"NELSON ADAMS TRANSACTION" means the transactions contemplated
by the Nelson Adams Acquisition Documents, the Nelson Adams Merger
Documents, Amendment No. 1, and the Amendment and Supplement No. 2 to
the Senior Credit Agreement dated August 19, 1999.
(b) To amend the following terms as follows:
(i) The definition of "SENIOR CREDIT AGREEMENT" is amended and
restated as follows:
2
<PAGE>
"SENIOR CREDIT AGREEMENT - means the Credit
Agreement, dated November 20, 1998, among the Company, the
banks, financial institutions and other institutional lenders
named therein, and Fleet National Bank, as Administrative
Agent, as Initial Issuing Bank and as Swing Line Bank, as
amended by an Amendment No. 1 dated as of December 30, 1998
and an Amendment and Supplement No. 2 dated as of August 19,
1999 and as thereafter amended in compliance with the
provisions of Section 7.16."
(ii) The phrase "Sixty Million Dollars" and the
amount "$60,000,000" are replaced, respectively, with the phrase
"Eighty-Two Million Dollars" and the amount "$82,000,000" each time
they appear in the definition of the "SENIOR DEBT".
(iii) Clause (b) of the definition of "RESTRICTED
INVESTMENT" is amended and restated as follows:
"(b) Investments in one or more Subsidiaries or any
corporation that concurrently with such Investment becomes a
Subsidiary provided at the time of such Investment (x) no
Default or Event of Default shall then exist or could
reasonably be expected to result therefrom and (y) on a pro
forma basis, the Company would be in compliance with its
financial covenants set forth in Sections 4.4 and 4.12"
(c) The definition of "DE-LEVERAGING TRANSACTION" is deleted.
1.2. A new Section 5.8 is added to the Note Agreement to read in its
entirety as follows:
"5.8 NELSON ADAMS FINANCIALS. The Company shall
provide the Holders on or before the date which is 75 days
following the consummation of the Nelson Adams Acquisition,
audited financial statements for A. Lawer's fiscal years ended
1996, 1997 and 1998 prepared by Arthur Andersen LLP, which
shall be in form and substance (excluding in immaterial
respects) satisfactory to the Required Holders."
1.3. Section 4.4, "CAPITAL EXPENDITURES", is amended to replace the
chart set forth therein with the following:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Fiscal Year ended December 31, 1999 $3,000,000.00
Fiscal Year ended December 31, 2000 $3,000,000.00
Each Fiscal Year thereafter $3,500,000.00
</TABLE>
3
<PAGE>
1.4. Section 4.5 "INCURRENCE OF DEBT AND ISSUANCE OF PREFERRED STOCK"
is amended as follows:
(a) The reference to the amount "$45.0 million" in clause (i)
of Section 4.5 is replaced with the amount "$67.0 million".
(b) Clause (ix) of Section 4.5 is deleted and clauses (x) and
(xi) of Section 4.5, and any cross references thereto, are renumbered as clauses
(ix) and (x).
(c) Clause (ix) (formerly clause (x)) of Section 4.5 is
amended and restated as follows:
"(ix) Acquired Debt not exceeding $5,000,000 in the
aggregate in connection with the Nelson Adams Acquisition."
1.5. Section 4.12 "FINANCIAL COVENANTS", is amended and restated in its
entirety to read as follows:
a. CONSOLIDATED DEBT TO EBITDA RATIO. Maintain as of the end
of each fiscal quarter of the Company and its Subsidiaries a
Consolidated Debt to EBITDA Ratio of not more than the ratio set forth
below:
<TABLE>
<CAPTION>
-------------------------------------------------------
Date of Determination: Maximum Ratio
-------------------------------------------------------
<S> <C>
September 30, 1999 5.30 to 1.0
-------------------------------------------------------
December 31, 1999 5.30 to 1 .0
-------------------------------------------------------
March 31, 2000 5.05 to 1.0
-------------------------------------------------------
June 30, 2000 5.05 to 1.0
-------------------------------------------------------
September 30, 2000 4.55 to 1.0
-------------------------------------------------------
December 31, 2000 4.55 to 1.0
-------------------------------------------------------
March 31, 2001 4.55 to 1.0
-------------------------------------------------------
June 30, 2001 4.55 to 1.0
-------------------------------------------------------
September 30, 2001 4.25 to 1.0
-------------------------------------------------------
December 31, 2001 4.25 to 1.0
-------------------------------------------------------
March 31, 2002 4.25 to 1.0
-------------------------------------------------------
June 30, 2002 4.25 to 1.0
-------------------------------------------------------
September 30, 2002 3.75 to 1.0
-------------------------------------------------------
December 31, 2002 3.75 to 1.0
-------------------------------------------------------
March 31, 2003 3.75 to 1.0
-------------------------------------------------------
June 30, 2003 3.75 to 1.0
-------------------------------------------------------
September 30, 2003 and thereafter 3.25 to 1.0
-------------------------------------------------------
</TABLE>
PROVIDED, HOWEVER, that for purposes of calculating EBITDA for
the most recently completed four fiscal quarters of the Company and its
Subsidiaries ending on each of the following dates, there shall be added to such
EBITDA the amounts set forth next to such dates
4
<PAGE>
(representing in each case estimated cost savings resulting from the AIG
Acquisition and the Nelson Adams Acquisition):
<TABLE>
<CAPTION>
-------------------------------------------------------
Date Amount
-------------------------------------------------------
<S> <C>
September 30, 1999 $2,500,000
-------------------------------------------------------
December 31, 1999 $1,500,000
-------------------------------------------------------
March 31, 2000 $ 750,000
-------------------------------------------------------
June 30, 2000 $ 500,000
-------------------------------------------------------
September 30, 2000 $ 250,000
-------------------------------------------------------
</TABLE>
b. INTEREST COVERAGE RATIO. Maintain as of each date set forth
below, a ratio of (i) EBITDA for the most recently completed four
fiscal quarters of the Company and its Subsidiaries to (ii)
Consolidated Interest Expense (to the extent paid in cash during such
period) for such period of not less than the ratio set forth below for
such period:
<TABLE>
<CAPTION>
-------------------------------------------------------
Date of Determination: Minimum Ratio
-------------------------------------------------------
<S> <C>
September 30, 1999 1.70 to 1.0
-------------------------------------------------------
-------------------------------------------------------
December 31,1999 1.90 to 1.0
-------------------------------------------------------
-------------------------------------------------------
March 31, 2000 1.90 to 1.0
-------------------------------------------------------
-------------------------------------------------------
June 30, 2000 1.90 to 1.0
-------------------------------------------------------
-------------------------------------------------------
September 30, 2000 2.20 to 1.0
-------------------------------------------------------
-------------------------------------------------------
December 31, 2000 2.20 to 1.0
-------------------------------------------------------
-------------------------------------------------------
March 31, 2001 2.20 to 1.0
-------------------------------------------------------
-------------------------------------------------------
June 30, 2001 2.20 to 1.0
-------------------------------------------------------
-------------------------------------------------------
September 30, 2001 2.20 to 1.0
-------------------------------------------------------
-------------------------------------------------------
December 31, 2001 2.70 to 1.0
-------------------------------------------------------
-------------------------------------------------------
March 31, 2002 2.70 to 1.0
-------------------------------------------------------
-------------------------------------------------------
June 30, 2002 2.70 to 1.0
-------------------------------------------------------
-------------------------------------------------------
September 30, 2002 and thereafter 3.00 to 1.0
-------------------------------------------------------
</TABLE>
Notwithstanding the foregoing: (1) if, as at any date (a
"CALCULATION DATE"), fewer than four complete fiscal quarters
have elapsed subsequent to the Amendment No. 1 Effective Date,
Interest Expense shall be calculated only for the portion of
such period commencing on the Amendment No. 1 Effective Date
and ending on the calculation date and shall then be
annualized by multiplying the amount of such Interest Expense
by a fraction, the numerator of which is 365 and the
denominator of which is the number of days during the period
commencing on the date immediately following the Amendment No.
1 Effective Date through and including the calculation date;
and
(2) for purposes of calculating EBITDA for the most
recently completed four fiscal quarters of the Company and its
Subsidiaries ending on each of the following dates, there
shall be added to such EBITDA the amounts set forth next
5
<PAGE>
to such dates (representing in each case estimated cost
savings resulting from the AIG Acquisition and the Nelson
Adams Acquisition):
<TABLE>
<CAPTION>
-------------------------------------------------------
Date Amount
-------------------------------------------------------
<S> <C>
September 30, 1999 $2,500,000
-------------------------------------------------------
December 31, 1999 $1,500,000
-------------------------------------------------------
March 31, 2000 $ 750,000
-------------------------------------------------------
June 30, 2000 $ 500,000
-------------------------------------------------------
September 30, 2000 $ 250,000
-------------------------------------------------------
</TABLE>
c. FIXED CHARGE COVERAGE RATIO. Maintain as of the end of each
fiscal quarter of the Company and its Subsidiaries a Fixed Charge
Coverage Ratio for the most recently completed four fiscal quarters of
the Company and its Subsidiaries of not less than the following ratios
for the requisite periods set forth below:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Four Fiscal Quarters ending on:
-------------------------------------------------------------------------
<S> <C>
Each September 30, December 31, March 31 and June 30 .05 to 1.0
after the Amendment No. 1 Effective Date and continuing
through (and including) September 30, 2003
-------------------------------------------------------------------------
Each December 31, March 31, June 30 and September 30 .00 to l.0
commencing on December 31, 2003 and thereafter
-------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing: (1) (i) if any portion of the
period for which the Fixed Charge Coverage Ratio is being
determined shall occur prior to the Amendment No. 1 Effective
Date, and in any event through the period ending June 30, 2000
the aggregate amount of Interest Expense and taxes paid or
payable by the Company and its Subsidiaries shall be
calculated only for the portion of such period commencing on
the Amendment No. 1 Effective Date and ending on the last day
of such period (the "CALCULATION DATE") and shall then be
annualized by multiplying the amount of such Interest Expense
or taxes by a fraction, the numerator of which is 365 and the
denominator of which is the number of days during the period
commencing on the day immediately following the Amendment No.
1 Effective Date through and including the calculation date
and (ii) if any portion of the period for which the Fixed
Charge Coverage Ratio is being determined shall occur on or
prior to September 30, 2000, the scheduled amortization of
Debt for such period shall be deemed to be $2,453,717.60 or
BEF43,601,707.11 (to be calculated in U.S. Dollars at the
current exchange rate.); and
(2) for purposes of calculating EBITDA for the most
recently completed four fiscal quarters of the Company and its
Subsidiaries ending on each of the following dates, there
shall be added to such EBITDA the amounts set forth next
6
<PAGE>
to such dates (representing in each case estimated cost
savings resulting from the AIG Acquisition and the Nelson
Adams Acquisition:
<TABLE>
<CAPTION>
--------------------------------------------------------
Date Amount
--------------------------------------------------------
<S> <C>
September 30, 1999 $2,500,000
--------------------------------------------------------
December 31,1999 $1,500,000
--------------------------------------------------------
March 31, 2000 $ 750,000
--------------------------------------------------------
June 30, 2000 $ 500,000
--------------------------------------------------------
September 30, 2000 $ 250,000
--------------------------------------------------------
</TABLE>
1.6. A new Section 4.14 is added as follows:
"4.14 LOYALTY PAYMENTS AND INCENTIVE PLAN PAYMENTS.
The Company will not, and will not permit any Subsidiary, to
(a) make any "Loyalty Payments", as such term is defined in
Section 11 of the amendment to the Nelson Adams Stock Purchase
Agreement dated July 26, 1999, Nelson Adams (the "Nelson Adams
Amendment") or (b) make any payments pursuant to the existing
Nelson Adams Incentive Plan including, without limitation, any
payments described in Section 5 of the Nelson Adams Amendment
unless (i) no Default or Event of Default would exist after
making any such Loyalty Payments or Incentive Plan payments
and (ii) the Company is then in compliance with the financial
covenants set forth in Section 4.12 and the reporting
requirements set forth in Section 5.1(a) and (b)."
1.7. A new Section 4.15 is added as follows:
"4.15 CHARTER AMENDMENTS. From and after the
consummation of the Nelson Adams Acquisition, the Company will
not amend any provision of its charter relating to any class
of its Preferred Stock without the prior consent of the
Required Holders."
1.8. Section 6.1, "EVENTS OF DEFAULT" is amended to insert immediately
after the reference to "3.7" the following: "or 5.8".
1.9. Section 12.6(d) is amended to add the words "and the Nelson Adams
Transaction" at the end of clause (i) thereof.
ARTICLE II.
CONSENT TO NELSON ADAMS ACQUISITION
2.1. Solely for the purposes of Section 4.4 "CAPITAL EXPENDITURES", of
the Note Agreement, the Purchasers hereby consent to the treatment of
the Nelson Adams Acquisition as a "permitted acquisition" under such
Section 4.4. Such consent shall not constitute a waiver of any Default
or Event of Default under the Note Agreement arising as a result of, or
in connection with, the Nelson Adams Acquisition or a waiver of any
7
<PAGE>
other term or condition of the Note Agreement (as amended hereby)
required to be complied with in connection with the Nelson Adams
Acquisition.
ARTICLE III.
REPRESENTATION AND WARRANTIES; ADDITIONAL COVENANTS.
The Company and the Guarantors jointly and severally
represent, warrant to and covenant and agree with the Purchasers that
(with any such representation or warranty applying to Greensteel being
deemed to apply to Greensteel both before and after giving effect to
the merger with A. Lawer):
3.1. No Default or Event of Default exists under the Note Agreement as
of the date hereof or will exist after giving effect to the Nelson
Adams Transaction.
3.2. Each of the representations and warranties set forth in Section 8
of the Note Agreement is true in all respects as if made on the date
hereof and will be true as of the Amendment No. 1 Effective Date,
except (a) for changes in the ordinary course of business not
prohibited by the Note Agreement, none of which, either singly or in
the aggregate, have had a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole; and (b) as set forth the amended
Schedules to the Note Agreement attached hereto as Schedule 1 to this
Amendment No. 1 (provided no such disclosure shall constitute a waiver
of any breach of any such representation or warranty existing as of the
Closing Date).
3.3. Each Loan Party (a) to the extent it is a party thereto, has all
requisite corporate power and authority to execute and deliver this
Amendment No. 1, and each other agreement, instrument or document
contemplated to be executed or delivered by any Loan Party pursuant to
this Amendment No. 1 (collectively, together with this Amendment No. 1,
the "AMENDMENT NO. 1 DOCUMENTS") and to consummate the transactions
contemplated hereby and thereby and (b) has taken all action, corporate
or otherwise, necessary to authorize the execution and delivery of the
Amendment No. 1 Documents to which it is a party and the consummation
of the transactions contemplated hereby and thereby.
3.4. Neither the execution and delivery of the Amendment No. 1
Documents by any Loan Party nor the consummation by it of the
transactions contemplated hereby and thereby (a) conflict with, or
result in any breach or violation of any provision of, the charter or
by-laws of any Loan Party, (b) conflict with or result in any breach or
violation of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required by, or
result in the creation of a Lien upon any of the properties or assets
of any Loan Party or any of its Subsidiaries (other than Liens
permitted by the Note Agreement) under any of the terms, conditions or
provisions of any loan agreement, indenture, mortgage, deed of trust,
lease or other material contract, instrument or agreement binding on or
affecting any Loan Party, any of its Subsidiaries or any of their
respective properties, or (c) violate any law (including, without
limitation, the Securities Act, the
8
<PAGE>
Exchange Act, and the Racketeer Influenced and Corrupt Organizations
Chapter of the Organized Crime Control Act of 1970), rule, regulation
(including, without limitation, Regulation T, U or X of the Board of
Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award applicable to such Loan
Party or any of its Subsidiaries.
3.5. No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any
other third party is or will be required for (a) the due execution,
delivery, recordation, filing or performance by any Loan Party of any
Amendment No. 1 Document to which it is a party, or (b) the exercise by
the Purchasers of their rights under the Transaction Documents.
3.6. Each Amendment No. 1 Document has been duly executed and delivered
by each Loan Party that is a party thereto and each of them, and the
Note Agreement as amended hereby constitutes the legal, valid and
binding obligation of each Loan Party thereto, enforceable against each
such Loan Party in accordance with its terms,
3.7. (a) Each party thereto has all necessary power and authority to
execute, deliver and perform each of the Nelson Adams Acquisition
Documents and each of the Nelson Adams Merger Documents.
(b) Each Nelson Adams Acquisition Document and Nelson Adams
Merger Document has been duly executed and delivered by each party
thereto, is in full force and effect and enforceable against the
parties thereto in accordance with its terms. The representations and
warranties of each party thereto contained in each Nelson Adams
Acquisition Document and Nelson Adams Merger Document are true and
correct in all material respects on the date hereof and will be true
and correct in all material respects on the closing of the Nelson Adams
Acquisition, as if made on such date, and each Purchaser shall be
entitled to rely upon such representations and warranties with the same
force and effect as if they were incorporated in this Amendment No. 1
directly.
(c) The execution, delivery and performance of each of the
Nelson Adams Acquisition Documents and Nelson Adams Merger Documents by
the parties thereto does not (i) violate any law, rule or regulation
(including, without limitation, the Williams Act, Sections 13 and 14 of
the Exchange Act, and the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, and Regulations T, U, and X of the Board of Governors of the
Federal Reserve System and the rules and regulations promulgated
thereunder) or (ii) conflict with or result in a breach of any order,
writ, injunction, ordinance, resolution, decree, or other similar
document or instrument of any governmental entity, or any certificate
of incorporation or by-laws of or applicable to any such party or
create (with or without the giving of notice or lapse of time, or both)
a default under or breach of or conflict with any agreement,
instrument, ordinance, resolution, decree, determination, award, bond,
note, indenture, mortgage, deed of trust, lease, writ, order or
judgment to which any Loan Party is a party or is bound, or any other
agreement or instrument by which any of the properties or assets owned
by any Loan
9
<PAGE>
Party or used in the conduct of its business is affected (other than
any agreement or other instrument of any kind the assets, revenues or
liabilities in respect of which do not exceed $100,000 individually or
$250,000 in the aggregate and the breach thereof or conflict therewith
does not have and could not reasonably be expected to have a Material
Adverse Effect) or result in the imposition of any Lien of any nature
whatsoever upon any of the properties or assets owned by or used in
connection with the business of any Loan Party or any of its
Subsidiaries or A. Lawer, except for the Liens permitted under the Note
Agreement.
(d) True, complete and correct executed copies of the Nelson
Adams Acquisition Documents have been delivered to the Purchasers. The
Nelson Adams Acquisition shall be consummated pursuant to the term and
conditions of the Nelson Adams Acquisition Documents in the form
previously delivered to the Purchasers and in compliance with all
applicable laws. Upon such consummation, ownership of all of the
capital stock of A. Lawer shall be vested in the Company free and clear
of all Liens, other than those permitted by the Note Agreement. No Loan
Party or any of their Subsidiaries has waived compliance by any of the
other parties to the Nelson Adams Acquisition Documents with any term,
covenant or condition thereof, and no party thereto has breached any
covenant set forth therein or failed to perform any of its obligations
thereunder which breach or failure to perform is of a material term or
condition thereof or could reasonably be expected to have a Material
Adverse Effect.
(e) The Nelson Adams Merger Documents heretofore delivered by
the Company to the Purchasers are true, complete and correct executed
copies thereof. The merger of A. Lawer with and into Greensteel shall
be consummated solely pursuant to the terms of the Nelson Adams Merger
Documents. None of the parties to the Nelson Adams Merger Documents
have waived compliance by any of the other parties thereto with any
term, covenant or condition thereof, and no party thereto has breached
any covenant set forth therein or failed to perform any of its
obligations thereunder.
(f) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party is or will be required for the due execution,
delivery, recordation, filing or performance by any party thereto of
any Nelson Adams Acquisition Document or Nelson Adams Merger Document
other than the filing of the Certificate of Merger with the Secretaries
of State of the States of Delaware and California.
(g) True, complete, and correct executed copies of the
Amendment and Supplement No, 2 to the Senior Credit Agreement dated as
of August 19, 1999 and all other documents, instruments or agreement
executed in connection therewith (the "SENIOR CREDIT DOCUMENTS") have
been delivered to the Purchasers. The transactions contemplated by the
Senior Credit Documents shall be consummated solely pursuant to the
terms and conditions of such Senior Credit Documents and the proceeds
thereof shall be used solely to finance the Nelson Adams Acquisition.
None of the parties to the Senior Credit Documents have waived
compliance by any of the other parties thereto
10
<PAGE>
with any term, covenant or condition thereof, and no party thereto has
breached any covenant set forth therein or failed to perform any of its
obligations thereunder.
(h) The merger of A. Lawer with and into Greensteel shall be
consummated simultaneously with the closing of the Nelson Adams
Acquisition. Upon such consummation all of the assets and properties of
A. Lawer shall be vested in Greensteel, subject to the liabilities of
A. Lawer.
(i) No Loan Party nor any Loan Party's Subsidiaries nor A.
Lawer 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. No Loan Party nor A. Lawer is subject to regulation under any
federal, state or foreign statute or regulation which limits its
ability to incur Debt.
3.8. The Nelson Adams Acquisition, on a pro forma basis (calculated as
if the Nelson Adams Acquisition had occurred at the beginning of the
applicable four-quarter reference period) results in (i) the ratio of
Consolidated Debt to EBITDA as at June 30, 1999 being lower and (ii)
the Fixed Charge Coverage Ratio as at June 30, 1999 being higher, than
if the Nelson Adams Acquisition is not consummated. Acquired Debt
incurred in connection with the consummation of the Nelson Adams
Acquisition shall not exceed $5,000,000.
3.9. The consolidated pro forma balance sheet of the Company and its
Subsidiaries as at June 30, 1999 and the related consolidated pro forma
statement of income and cash flows of the Company and its Subsidiaries
for the period then ended, certified by the chief executive officer or
chief financial officer of the Company, copies of which have been
finished to each Purchaser, fairly present the consolidated pro forma
financial condition of the Company and its Subsidiaries as at such date
and the consolidated pro forma results of operations of the Company and
its Subsidiaries for the period ended on such date, in each case after
giving effect to the Nelson Adams Acquisition, all in accordance with
GAAP (to the extent that pro forma information can comply with GAAP).
3.10. The projections to be delivered pursuant to Section 4.10 shall be
prepared on the basis of the assumptions accompanying them and reflect
as of the date thereof the Company's good faith projections, after
reasonable analysis, of the matters set forth therein, based on such
assumptions (it being understood that projected financial information
is not to be viewed as facts and that the actual results during the
period or periods covered thereby may differ from the projected results
and that the differences may be material).
3.11. None of the information, exhibits or reports furnished by any
Loan Party to any Purchaser in connection with this Amendment No. 1
contained any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements made therein not
misleading.
11
<PAGE>
ARTICLE IV.
CONDITIONS.
The effectiveness of this Amendment No. 1 shall be subject to
the fulfillment of each of the conditions set forth in this Article IV. The date
on which all such conditions shall have been fulfilled and this Amendment No. 1
shall have become effective, is the "Amendment No. 1 Effective Date":
4.1. Each of the parties hereto shall have executed and delivered this
Amendment No. 1.
4.2. The representations and warranties contained herein and each other
agreement, instrument, certificate or other writing delivered to the
Purchasers pursuant hereto shall be correct on and as of the date
hereof and the Amendment No. 1 Effective Date after giving effect to
this Amendment No. 1 as though made on and as of such dates except to
the extent modified hereby. No Default or Event of Default shall have
occurred and be continuing on the Amendment No. 1 Effective Date.
4.3. The Company shall have paid all reasonable legal (U.S. and
foreign) and other out-of-pocket expenses incurred by the Purchasers in
connection with the transactions contemplated by or referred to in this
Amendment No. 1, including, without limitation, out-of-pocket due
diligence, transportation, computer, duplication, appraisal, audit and
consultant fees.
4.4. The Loan Parties shall have otherwise complied in all respects
with the terms hereof and of any other agreement, document, instrument
or other writing to be delivered by any Loan Party in connection
herewith.
4.5. The Purchasers shall have received the following, each in form and
substance satisfactory to them:
(a) copies of the resolutions of the Board of Directors of
each Loan Party, certified by a Senior Officer thereof, authorizing, to
the extent a party thereto, the execution, delivery and performance by
such Loan Party of this Amendment No. 1 and the other Amendment No. 1
Documents;
(b) long-form good standing certificates of recent date for
each Loan Party and A. Lawer (prior to its merger into Greensteel) from
the Secretary of State of its state of incorporation and the state in
which its chief executive office is located;
(c) a certificate signed on behalf of each Loan Party by a
Senior Officer and the Secretary or an Assistant Secretary of each Loan
Party, certifying the names and true signatures of the officers of such
Loan Party authorized to sign the Amendment No. 1 Documents, together
with evidence of the incumbency of such authorized officers; and
certifying that the other conditions set forth in this Article IV have
been satisfied.
12
<PAGE>
4.6. The Nelson Adams Acquisition shall have been consummated pursuant
to the terms and conditions of the Nelson Adams Acquisition Documents
for an aggregate cash amount not exceeding $24 million (before fees and
expenses) and not more than $6 million in Series D Preferred.
4.7. The merger of A. Lawer with and into Greensteel shall have been
consummated contemporaneously with the consummation of the Nelson Adams
Acquisition pursuant to the terms and conditions of the Nelson Adams
Merger Documents, and the Purchasers shall have received Certificates
of Merger certified by the Secretaries of State of the States of
California and Delaware evidencing such merger.
4.8. The Nelson Adams Acquisition Documents, the Nelson Adams Merger
Documents and the Senior Credit Documents shall be satisfactory in form
and substance to the Purchasers in their sole discretion.
4.9. The terms of the Company's Series D Preferred shall be
satisfactory to the Purchasers in their sole discretion and shall
prohibit payment of dividends on or redemption of such Series D
Preferred (i) until 180 days after none of the Notes are outstanding;
and (ii) until full and complete performance of all of the Company's or
any other Loan Party's other obligations arising under the Notes and
the Note Agreement.
4.10. The Purchasers shall have received the following all of which
shall be satisfactory in form and substance to the Purchasers,
certified by the chief financial officer of the Company:
(a) pro forma consolidated balance sheet and income statement
(for the preceding twelve months) of the Company and its Subsidiaries
and A. Lawer as of June 30, 1999 as if giving effect to consummation of
the Nelson Adams Transaction as of such date and reflecting that no
indebtedness owed by A. Lawer prior to the Nelson Adams Acquisition
remains outstanding except for capital leases and purchase money
security interests aggregating less than $5,000,000;
(b) projections for the Company and its Subsidiaries
commencing with the six-month period ending 12/31/99 through Fiscal
Year ended 12/31/06;
(c) A computation in detail of consolidated pro forma trailing
twelve-month EBITDA for the Company and its Subsidiaries and A. Lawer
for the period ended June 30, 1999 which shall not be less than $17.5
million (exclusive of any add-backs for cost savings (unless actually
realized during such period) associated with the Nelson Adams
Acquisition, the AIG Acquisition, and any non-recurring expenses); and
(d) A computation of the Consolidated Debt to EBITDA Ratio,
including in Consolidated Debt the Debt evidenced by the Notes,
demonstrating that such ratio is not greater than 4.8:1 on the
Amendment No. 1 Effective Date and a computation of the Consolidated
Debt to EBITDA Ratio, excluding the Debt evidenced by the Notes,
demonstrating that such ratio is not greater than 4.5:1 on the
Amendment No. 1 Effective
13
<PAGE>
Date (and in each case such ratio shall be calculated in the same
manner as is set forth in Section 4.12(a) of the Note Agreement).
4.11. Alpine shall have contributed not less than Two Million
($2,000,000) Dollars in cash to the company to fund a portion of the
Nelson Adams Acquisition on terms and conditions satisfactory to the
Purchasers in their sole discretion.
4.12. All governmental and third party consents and approvals necessary
in connection with the Nelson Adams Transaction shall have been
obtained, including, without limitation, the consent of holders of the
Senior Debt (without the imposition of any conditions that are not
acceptable to the Required Holders) and shall remain in effect; all
applicable waiting periods shall have expired without any adverse
action being taken by any competent authority; and no law or regulation
shall be applicable in the judgment of the Required Holders that
restrains, prevents or imposes materially adverse conditions upon any
of the Nelson Adams Transaction or the Note Agreement.
4.13. There shall exist no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator
or governmental or regulatory agency or authority that purports to
adversely affect any aspect of the Nelson Adams Transaction or the Note
Agreement.
4.14. The Purchasers shall have received all financial, business and
other information regarding A. Lawer and its properties and assets as
they shall have reasonably requested, and all of the foregoing shall be
acceptable to the Purchasers in their sole discretion.
4.15. The Company shall have delivered a certificate, in form and
substance reasonably satisfactory to the Purchasers, attesting to the
Solvency of the Company and its Subsidiaries, individually and on a
consolidated basis immediately before and immediately after giving
effect to the Nelson Adams Transaction, from the chief financial
officer of the Company.
4.16. Revolving credit advances then outstanding under the Senior
Credit Facility less the amount of cash of the Company (on a
Consolidated basis but excluding A. Lawer) on the Amendment No. 1
Effective Date shall not exceed $4,000,000.
4.17. The Purchaser shall have received a favorable written opinion of
Greenberg Traurig, counsel to the Company as to such matters as the
Purchasers may reasonably require relating to the Nelson Adams
Transactions (including the absence of any required governmental
consents in connection therewith) and the Amendment No. 1 Documents in
form and substance as the Purchasers may reasonably request.
4.18. True, correct and complete copies of any amendments to the KBC
Loan Agreements shall have been delivered to the Purchaser and shall be
in form and substance satisfactory to the Purchasers in their sole
discretion.
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4.19. All proceedings in connection with the Nelson Adams Transaction,
and all documents incidental thereto shall be reasonably satisfactory
to the Purchasers, and each Purchaser shall have received all such
information and such counterpart originals or certified copies of
documents as may have been reasonably requested.
ARTICLE V.
CONFIRMATION OF GUARANTY.
5.1. Each Guarantor hereby (i) acknowledges and consents to this
Amendment No. 1 (whether or not its consent is required); (ii) confirms
and agrees that its guaranty as set forth in Section 11 of the Note
Agreement is, and shall continue to be, in full force and effect and is
hereby ratified and confirmed in all respects, and all references in
the Note Agreement shall mean the Note Agreement as amended by this
Amendment No. 1; and (iii) confirm and agree that the obligations
guaranteed by such Guarantor in such Section 11 include the obligations
of the Company to the Holders under the Note Agreement and the Notes as
amended by this Amendment No. 1.
ARTICLE VI.
CONTINUED EFFECTIVENESS OF NOTE AGREEMENT.
Except as specifically amended herein, the Note Agreement and the other
Transaction Documents are, and shall remain, in full force and effect, and are
hereby ratified and confirmed in all respects except that on and after the
Amendment No. 1 Effective Date all references to the Note Agreement shall mean
the Note Agreement as amended and supplemented by this Amendment No. 1.
ARTICLE VII.
MISCELLANEOUS.
7.1. This Amendment No. 1 shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without
regard to any conflicts of law rules which would require the
application of the laws of any other jurisdiction.
7.2. No modification or waiver of or with respect to any provisions of
this Amendment No. 1 or any other agreements, instruments and documents
delivered pursuant hereto nor consent by the Purchasers to any
departure by the Company or either Guarantor from any of the terms or
conditions thereof, shall in any event be effective unless it shall be
in writing and executed in accordance with the provisions of the Note
Agreement, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No consent
to or demand on the Company or either Guarantor in any case shall, of
itself, entitle them to any other or further notice or demand in
similar or other circumstances. This Amendment No. 1, together with the
Note Agreement, as so amended, and the other Transaction Documents
embodies the entire agreement and understanding among the Loan Parties
and the Purchasers, and supersedes all prior agreements and
understandings, relating to the subject matter hereof.
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7.3. The provisions of this Amendment No. 1 are severable, and if any
clause or provision shall be held invalid or unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision
in this Amendment No. 1 in any jurisdiction.
7.4. This Amendment No. 1 may be signed in any number of counterparts
with the same effect as if the signatures thereto and hereto were upon
the same instrument.
7.5. This Amendment No. 1 shall be binding upon and inure to the
benefit of the Loan Parties and their respective successors and to the
benefit of the Purchasers, any Holder and their respective successors
and assigns. The rights and obligations of the Loan Parties under this
Amendment No. 1 shall not be assigned or delegated without the prior
written consent of the Required Holders, and any purported assignment
or delegation without such consent shall be void.
SIGNATURES FOLLOW ON NEXT PAGE
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be
duly executed on the date first above written.
LOAN PARTIES: POLYVISION CORPORATION
By: /s/ JOSEPH A. MENNITI
----------------------------------
Name: Joseph A. Menniti
Title: Chief Executive Officer
POSTERLOID CORPORATION
By: /s/ JOSEPH A. MENNITI
----------------------------------
Name: Joseph A. Menniti
Title: President
GREENSTEEL, INC.
By: /s/ JOSEPH A. MENNITI
----------------------------------
Name: Joseph A. Menniti
Title: President
17
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PURCHASERS: JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By: /s/ ANTHONY C. URICK
---------------------------------
Name: Anthony C. Urick
Title: Second Vice President
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By: /s/ ANTHONY C. URICK
---------------------------------
Name: Anthony C. Urick
Title: Vice President - Investments
HANCOCK MEZZANINE PARTNERS L.P.
BY: HANCOCK MEZZANINE INVESTMENTS
LLC, its General Partner
BY: John Hancock Mutual Life Insurance
Company, as Investment Manager
By: /s/ ANTHONY C. URICK
---------------------------------
Name: Anthony C. Urick
Title: Authorized Officer
Consented to:
FLEET NATIONAL BANK
as Administrative Agent under the Senior Credit Agreement
referenced herein on behalf of the Lenders
By: /s/ ANTHONY C. URICK
-------------------------------------
Name: Anthony C. Urick
Title: Assistant Vice President
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Exhibit 10.47
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of August 19, 1999, between PolyVision
Corporation, a New York corporation ("PolyVision"), and The Alpine Group, Inc.,
a Delaware corporation ("Alpine").
R E C I T A L S
The Boards of Directors of each of the parties hereto, deeming
it advisable for the benefit of each of the parties hereto and their respective
stockholders that Alpine subscribe for and purchase shares of preferred stock of
PolyVision.
THEREFORE, for and in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
SUBSCRIPTION FOR AND PURCHASE OF PREFERRED STOCK
1.01 SUBSCRIPTION FOR SHARES. Subject to and in accordance
with the terms and conditions of this Agreement, on the date hereof, Alpine
hereby subscribes for and agrees to purchase, and PolyVision hereby agrees to
issue and sell to Alpine, 40,000 duly authorized, validly issued, fully paid and
nonassessable shares of Series C Convertible Preferred Stock, par value $.01 and
liquidation value $50.00 per share (the "Series C Preferred Stock"), of
PolyVision, convertible into shares of PolyVision's Common Stock, par value
$.001 per share (the "PolyVision Common Stock"), and having the other terms and
conditions set forth in the Certificate of Amendment of the Certificate of
Incorporation of PolyVision attached as EXHIBIT A hereto, at a purchase price of
$50.00 per share, or an aggregate purchase price of $2,000,000, payable in cash.
1.02 THE CLOSING. The closing of the subscription for and
purchase of the Series C Preferred Stock described in Section 1.01 (the
"Closing") shall take place at the offices of Alpine on the date hereof. At the
Closing, PolyVision shall deliver to Alpine one certificate registered in the
name of Alpine representing 40,000 shares of Series C Preferred Stock.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ALPINE
Alpine represents and warrants to, and agrees with, PolyVision
as follows:
2.01 VALIDITY OF TRANSACTION. Alpine has all requisite power
and authority to execute, deliver, and perform this Agreement. All necessary
corporate proceedings of Alpine have been duly taken to authorize the execution,
delivery, and performance of this Agreement.
<PAGE>
This Agreement has been duly authorized, executed, and delivered by Alpine, is
the legal, valid, and binding obligation of Alpine, and is enforceable as to
Alpine in accordance with its terms. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with, any
Federal, state, local, or other governmental authority or of any court or other
tribunal is required by Alpine for the execution, delivery, or performance of
this Agreement by Alpine. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which Alpine is a
party, or by which any of its properties or assets is bound, is required for the
execution, delivery, or performance by Alpine of this Agreement, except for such
consents as have been obtained at or prior to the date of this Agreement; and
the execution, delivery, and performance of this Agreement by Alpine will not
violate, result in a breach of, conflict with, or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate or call a
default under any such contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a breach of any term of
the Certificate of Incorporation or by-laws of Alpine, or violate, result in a
breach of, or conflict with any law, rule, regulation, order, judgment, or
decree binding on Alpine or to which any of its operations, business,
properties, or assets is subject.
2.02 FINDER OR BROKER. Neither Alpine nor any person acting on
behalf of Alpine has negotiated with any finder, broker, intermediary, or
similar person in connection with the transactions contemplated hereby.
2.03 ACCREDITED INVESTOR. Alpine is an "accredited investor,"
as that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933 (the "Securities Act").
2.04 INVESTMENT INTENT. Alpine is acquiring the shares of
Series C Preferred Stock pursuant hereto for its own account for investment and
not with a view to, or for sale in connection with, any public distribution
thereof in violation of the Securities Act. Alpine understands that such shares
of Series C Preferred Stock are "restricted securities" and have not been
registered for sale under the Securities Act or qualified under applicable state
securities laws and that the Series C Preferred Stock will be delivered to
Alpine pursuant to one or more exemptions from the registration or qualification
requirements of such securities laws and that the representations and warranties
contained in this Article II are given with the intention that PolyVision may
rely thereon for purposes of claiming such exemptions. Alpine understands that
it must bear the economic risk of its investment in PolyVision for an indefinite
period of time, as the Series C Preferred Stock cannot be sold unless registered
under the Securities Act and qualified under state securities laws, unless an
exemption from such registration and qualification is available.
2.05 TRANSFER OF SHARES. Alpine will not sell or otherwise
dispose of any Series C Preferred Stock or PolyVision Common Stock issuable upon
conversion of the Series C Preferred Stock unless (a) a registration statement
with respect thereto has become effective under the Securities Act and such
shares have been qualified under applicable state securities laws or (b) there
is presented to PolyVision notice of the proposed transfer and, if PolyVision so
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<PAGE>
requests, there is also presented to PolyVision a legal opinion reasonably
satisfactory to PolyVision that such registration and qualification are not
required. Alpine consents that the transfer agent for the Series B Preferred
Stock and PolyVision Common Stock may be instructed not to transfer the Series B
Preferred Stock or PolyVision Common Stock acquired pursuant hereto unless it
receives satisfactory evidence of compliance with the foregoing provisions, and
that there may be endorsed upon any certificate representing the Series C
Preferred Stock or PolyVision Common Stock acquired pursuant hereto (and any
certificates issued in substitution therefor) the following legend calling
attention to the foregoing restrictions on transferability and stating in
substance:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR QUALIFIED UNDER ANY STATE SECURITIES
LAW. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES OR
BLUE SKY LAWS OR AN EXEMPTION IS AVAILABLE."
PolyVision shall, upon the request of any holder of a certificate bearing the
foregoing legend and the surrender of such certificate, issue a new certificate
without such legend if (i) the security evidenced by such certificate has been
effectively registered under the Securities Act and qualified under any
applicable state securities law and sold by the holder thereof in accordance
with such registration and qualification or (ii) such holder shall have
delivered to Alpine a legal opinion reasonably satisfactory to Alpine to the
effect that the restrictions set forth herein are no longer required or
necessary under the Securities Act or any applicable state law.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF POLYVISION
PolyVision represents and warrants to, and agrees with, Alpine
as follows:
3.01 VALIDITY OF TRANSACTION. PolyVision has all requisite
power and authority to execute, deliver, and perform this Agreement and to issue
and sell to Alpine the shares of Series C Preferred Stock. All necessary
corporate proceedings of PolyVision have been duly taken to authorize the
execution, delivery, and performance of this Agreement, and the issuance and
sale to Alpine of the shares of Series C Preferred Stock. This Agreement has
been duly authorized, executed, and delivered by PolyVision, is the legal,
valid, and binding obligation of PolyVision, and is enforceable as to PolyVision
in accordance with its terms. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with, any
Federal, state, local, or other governmental authority or of any court or other
tribunal or stock exchange is required by PolyVision for the execution,
delivery, or performance of this
3
<PAGE>
Agreement by PolyVision. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which PolyVision is
a party, or by which any of its properties or assets is bound, is required for
the execution, delivery, or performance by PolyVision of this Agreement, except
for such consents as have been obtained at or prior to the date of this
Agreement; and the execution, delivery, and performance of this Agreement by
PolyVision will not violate, result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time or both) entitle any party
to terminate or call a default under any such contract, agreement, instrument,
lease, license, arrangement, or understanding, or violate or result in a breach
of any term of the Certificate of Incorporation or by-laws of PolyVision, or
violate, result in a breach of, or conflict with any law, rule, regulation,
order, judgment, or decree binding on PolyVision or to which any of its
operations, business, properties, or assets is subject. The shares of Series C
Preferred Stock and PolyVision Common Stock issuable upon conversion of the
Series C Preferred Stock have been duly authorized and, upon receipt by
PolyVision from Alpine of payment therefor pursuant to this Agreement and
Exhibit A hereto, will be validly issued, fully paid, and nonassessable, will
not have been issued in violation of any preemptive right of stockholders or
rights of first refusal, and Alpine will receive good title to the shares of
Series C Preferred Stock and PolyVision Common Stock, free and clear of all
liens, security interests, pledges, charges, encumbrances, stockholders
agreements, and voting trusts (other than any created by Alpine).
3.02 FINDER OR BROKER. Neither PolyVision nor any person
acting on behalf of PolyVision has negotiated with any finder, broker,
intermediary, or similar person in connection with the transactions contemplated
herein.
3.03 FULL DISCLOSURE. All documents filed by PolyVision
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since December 31, 1993 (i) were prepared in accordance with the
requirements of the Exchange Act and the rules and regulations thereunder, (ii)
did not at the time they were filed contain any untrue statement of a material
fact, and (iii) did not at the time they were filed omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. From the date as of which
information is given in the most recent report filed by PolyVision under the
Exchange Act to the date of this Agreement, there has not been any material
adverse change in, or any adverse development which materially affects, the
business, results of operations, or financial condition of PolyVision and its
subsidiaries taken as a whole.
ARTICLE IV
COVENANTS OF POLYVISION
4.01 REGISTRATION OF THE POLYVISION COMMON STOCK. PolyVision
will use its best efforts to effect the registration under the Securities Act of
the PolyVision Common Stock issuable upon conversion of the Series C Preferred
Stock as requested by Alpine from time to time, but not sooner than 90 days
after the Closing Date. In addition, PolyVision shall advise Alpine by written
notice at least thirty days prior to the filing of any registration statement
under
4
<PAGE>
the Securities Act covering securities of PolyVision (except with respect to
registration statements on Form S-4, Form S-8 or similar forms) and will, upon
the request of Alpine, include in any such registration statement such
information as may be required to permit a public offering of the PolyVision
Common Stock, subject to any restrictions imposed by any managing underwriter in
connection with an underwritten public offering on behalf of PolyVision. In
connection therewith, PolyVision will:
(a) promptly prepare and file with the Securities and
Exchange Commission (the "SEC") a registration statement with respect to the
PolyVision Common Stock and use its best efforts to cause such registration
statement to become effective;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
current for a period sufficient to enable Alpine to complete the distribution of
the PolyVision Common Stock covered by such registration statement, and comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by Alpine thereof as set
forth in such registration statement;
(c) furnish to Alpine such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus),
and such other documents as Alpine may reasonably request in order to facilitate
the disposition of the PolyVision Common Stock owned by Alpine;
(d) use its best efforts to register or qualify the
PolyVision Common Stock under the securities or blue sky laws of such
jurisdictions of the United States as Alpine may reasonably request and do any
other related acts which may be reasonably necessary to enable Alpine to
consummate the disposition in such jurisdictions of the PolyVision Common Stock
owned by Alpine; PROVIDED, HOWEVER, that PolyVision will not be required to (i)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 4.02(d); (ii) subject itself to
taxation in any jurisdiction; or (iii) consent to general service of process in
any such jurisdiction;
(e) notify Alpine at any time when a prospectus
relating to the PolyVision Common Stock is required to be delivered under the
Securities Act, of the happening of any event as a result of which, or the fact
that, the prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading, and, at the request of Alpine, PolyVision will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of PolyVision Common Stock, such prospectus will not contain any
untrue statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading;
5
<PAGE>
(f) use its best efforts to cause the PolyVision
Common Stock to be listed or quoted on each securities exchange or interdealer
quotation system on which similar securities issued by PolyVision are then
listed or quoted;
(g) provide a transfer agent for all such PolyVision
Common Stock not later than the effective date of such registration statement;
(h) enter into such customary agreements (including
underwriting agreements on customary terms) and take all such other actions as
Alpine may reasonably request in order to expedite or facilitate the disposition
of the PolyVision Common Stock; and
(i) make available for inspection by Alpine or any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant, or any other agent retained by Alpine
or any such underwriter, all financial and other records, pertinent corporate
documents and properties of PolyVision, and cause PolyVision's officers,
directors, and employees to supply all information reasonably requested by
Alpine, any such underwriter, attorney, accountant, or agent in connection with
such registration statement.
4.02 REGISTRATION EXPENSES. All expenses ("Registration
Expenses") incident to PolyVision's performance of or compliance with this
Article IV with respect to any registration of the PolyVision Common Stock will
be borne by PolyVision, including, without limitation, all registration and
filing fees, fees and expenses of compliance with securities or blue sky laws,
printing expenses, messenger and delivery expenses, the expense of any audit,
and the expenses and fees for listing or quoting the securities to be registered
on each securities exchange or interdealer quotation system on which similar
securities issued by PolyVision are then listed or quoted. Notwithstanding the
foregoing, however, all underwriters' discounts and commissions in respect of
the sale of PolyVision Common Stock and the fees and disbursements of counsel
for Alpine, shall be paid by Alpine.
4.03 PRECONDITIONS TO PARTICIPATION IN UNDERWRITTEN
REGISTRATIONS. Alpine may not participate in any underwritten registration
hereunder unless it (i) agrees to its securities on the basis provided in any
customary underwriting arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents required under the terms of such underwriting arrangements.
4.04 INDEMNIFICATION AND CONTRIBUTION.
(a) PolyVision shall indemnify and hold harmless
Alpine and each of its officers, directors, employees, agents, partners, legal
counsel, and accountants, and each controlling person of each of the foregoing
(within the meaning of the Securities Act) against any losses, claims, damages,
or liabilities, joint or several (or actions in respect thereof), including any
of the foregoing incurred in the settlement of any litigation, commenced or
threatened, to which any of them may be subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out
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of or are based upon (i) any untrue statement (or alleged untrue statement) of
any material fact contained in any registration statement under which the
PolyVision Common Stock was registered under the Securities Act or in any
preliminary prospectus or final prospectus contained therein, or in any
amendment or supplement thereto, (ii) any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any other violation by
PolyVision of the Securities Act or any state securities law in connection with
any such registration, and shall reimburse each such person entitled to
indemnification under this Section 4.04(a) for any legal or other expenses
reasonably incurred by such person in connection with investigating or defending
any such loss, claim, damage, liability, or action, as and when such expenses
are incurred; PROVIDED, HOWEVER, that PolyVision shall not be liable to any such
person in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon any untrue statement or omission made
in such registration statement, preliminary prospectus, or amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to PolyVision by such person, specifically for use therein.
(b) Alpine shall indemnify PolyVision and each of its
officers, employees, agents, directors, legal counsel, and accountants, and each
controlling person of each of the foregoing (within the meaning of the
Securities Act) against any losses, claims, damages, or liabilities (or actions
in respect thereof), including any of the foregoing incurred in the settlement
of any litigation, commenced or threatened, joint or several, to which any of
them may be subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement (or alleged
untrue statement) of any material fact contained in any registration statement
under which the PolyVision Common Stock was registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or in any
amendment or supplement thereto or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) was
made in such registration statement, preliminary prospectus, or amendment or
supplement thereto solely in reliance upon and in conformity with written
information furnished to PolyVision by Alpine specifically for use therein, and
to reimburse such persons for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability, or action, as and when such expenses are incurred.
(c) If (i) an indemnified party makes a claim for
indemnification pursuant to this Section 4.04 (subject to the limitations
hereof) but it is found in a final judicial determination, not subject to
further appeal, that such indemnification may not be enforced in such case or
(ii) an indemnified party seeks contribution under the Securities Act, the
Exchange Act, or otherwise, then PolyVision (including for this purpose any
contribution made by or on behalf of any director of PolyVision, any officer of
PolyVision who signed the registration statement, and any controlling person of
PolyVision) as one entity and Alpine (including for this purpose any
contribution by or on behalf of a person who would be indemnified by PolyVision)
as a second entity, shall contribute to the losses, liabilities, claims,
damages, and expenses
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whatsoever to which any of them may be subject, so that PolyVision and Alpine
are each responsible for the proportion thereof which reflects as nearly as
possible the relative fault of Alpine and PolyVision in connection with the
facts which resulted in such losses, liabilities, claims, damages, or expenses.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by Alpine or by PolyVision, and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement, alleged statement, omission, or alleged omission. No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation. Anything in this Section
4.04 to the contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without its
written consent. This Section 4.04 is intended to supersede any right to
contribution under the Securities Act, the Exchange Act or otherwise.
(d) Each party entitled to indemnification under this
Section 4.04 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has knowledge of the commencement of any action, proceeding,
or investigation in respect of which indemnity or reimbursement may be sought as
provided above; PROVIDED, HOWEVER, that the failure of such Indemnified Party to
notify the Indemnifying Party with respect to a particular action, proceeding,
or investigation shall not relieve the Indemnifying Party from any obligation or
liability (i) which it may have pursuant to this Agreement to the extent that
the Indemnifying Party is not prejudiced by the failure to notify or (ii) which
it may have otherwise than pursuant to this Agreement. The Indemnifying Party
shall promptly assume the defense of any Indemnified Party with counsel
reasonably satisfactory to such Indemnified Party, and the fees and expenses of
such counsel shall be at the sole cost and expense of the Indemnifying Party.
The Indemnified Party will cooperate with the Indemnifying Party in the defense
of any action, proceeding, or investigation for which the Indemnifying Party
assumes the defense. Notwithstanding the foregoing, any such Indemnified Party
shall have the right to employ separate counsel of its own selection in any such
action, proceeding, or investigation and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (x) the Indemnifying Party has agreed to pay such fees
and expenses, (y) the Indemnifying Party shall have failed promptly to assume
the defense of such action, proceeding, or investigation and employ counsel
reasonably satisfactory to such Indemnified Party, or (z) in the reasonable
judgment of such Indemnified Party there may be one or more defenses available
to such Indemnified Party which are not available to the Indemnifying Party in
respect of such action, proceeding, or investigation, in which case the
Indemnifying Party shall not have the right to assume the defense of such
action, proceeding, or investigation on behalf of such Indemnified Party. An
Indemnifying Party who is not entitled to, or elects not to, assume the defense
of an action, proceeding, or investigation shall not be obligated to pay the
fees and expenses of more than one counsel and appropriate local counsel for all
parties indemnified by such Indemnifying Party pursuant to this Section 4.04
with respect to the same action, proceeding, or investigation, unless in the
reasonable judgment of any such Indemnified
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Party a conflict of interest may exist between such Indemnified Party and any
other such Indemnified Party with respect to such action, claim, or proceeding.
The Indemnifying Party shall not be liable for the settlement by any Indemnified
Party of any action, proceeding, or investigation effected without its consent,
which consent shall not be unreasonably withheld. The Indemnifying Party shall
not enter into any settlement in any action, suit, or proceeding to which an
Indemnified Party is party unless such settlement includes a general release of
the Indemnified Party, with no payment by the Indemnified Party of
consideration.
ARTICLE V
MISCELLANEOUS
5.01 NOTICES. All notices or other communications hereunder
shall be in writing and shall be given by registered or certified mail (postage
prepaid and return receipt requested), by an overnight courier service which
obtains a receipt to evidence delivery, or by facsimile transmission (provided
that written confirmation of receipt is provided), addressed to the appropriate
party at the following addresses (or such other address as any party may
designate to the other in accordance with the aforesaid procedure):
(a) if to Alpine:
The Alpine Group, Inc.
1790 Broadway
New York, New York 10019
Attention: Stewart H. Wahrsager, Esq.
Fax: (212) 757-3423
(b) if to PolyVision:
PolyVision Corporation
48-62 36th Street
Long island City, NY 11101
Attention: Joseph A. Menniti,
Chief Executive Officer
Fax: (718) 786-9310
All notices and other communications sent by overnight courier service shall be
deemed to have been given as of the second Business Day after delivery thereof
to such courier service, those given by facsimile transmission shall be deemed
given when sent, and all notices and other communications sent by mail shall be
deemed given as of the fifth Business Day after the date of deposit with the
United States Postal Service. As used herein, "Business Day" shall mean any day
other than Saturday, Sunday, or any other day when banks in New York City are
required or permitted by law or other governmental actions to be closed.
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5.02 BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement
shall become binding on and inure to the benefit of Alpine and PolyVision upon
execution by such parties. This Agreement shall be binding on each party hereto
and any successor of a party in accordance with the following sentence. Neither
Alpine nor PolyVision may sell, assign, transfer, or otherwise convey any of its
rights or delegate any of its duties under this Agreement, except to a
corporation which has succeeded to substantially all of the business and assets
of such party and has assumed in writing its obligations under this Agreement.
Without limiting the generality of the foregoing, any transferee of PolyVision
Common Stock shall have the rights set forth in Article IV, and such rights
shall be enforceable against PolyVision by such transferees as third party
beneficiaries.
5.03 AMENDMENTS AND WAIVERS. Neither this Agreement nor any
term hereof may be changed or waived (either generally or in a particular
instance and either retroactively or prospectively) absent the written consent
of Alpine and PolyVision.
5.04 EXPENSES. Each of Alpine and PolyVision will be
responsible for the payment of all expenses incurred by it in connection with
the preparation, execution, and delivery of this Agreement, any other documents
relating to the transactions contemplated by this Agreement, and the
consummation of the transactions herein described, except that PolyVision shall
reimburse Alpine on demand for Alpine's reasonable costs and expenses in
connection with the preparation and negotiation of this Agreement and such other
documents, including legal fees and expenses and the cost of any fairness
opinion obtained by Alpine in connection with the transactions contemplated
hereby.
5.05 SURVIVAL OF REPRESENTATIONS, ETC. The representations,
warranties, covenants, and agreements made herein or in any certificate or
document executed in connection herewith shall survive the execution and
delivery of this Agreement and the consummation of the transactions herein
described, regardless of any investigation made at any time by or on behalf of
any of the parties hereto.
5.06 DELAYS OR OMISSIONS; WAIVER. No delay or omission to
exercise any right, power, or remedy accruing to either Alpine or PolyVision
upon any breach or default by the other under this Agreement shall impair any
such right, power, or remedy nor shall it be construed to be a waiver of any
such breach or default, or any acquiescence therein or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring.
5.07 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and all
prior negotiations, discussions, commitments, and understandings heretofore had
between them with respect thereto are merged herein.
5.08 COUNTERPARTS; GOVERNING LAW. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together
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shall constitute one and the same instrument. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
giving effect to conflicts of laws rules or principles.
5.09 FURTHER ACTIONS. At any time and from time to time, each
party agrees, without further consideration, to take such actions and to execute
and deliver such documents as may be reasonably necessary to effectuate the
purposes of this Agreement.
This Agreement has been duly executed on the date hereinabove
set forth.
THE ALPINE GROUP, INC.
By: /s/ BRAGI F. SCHUT
---------------------------
Bragi F. Schut
Executive Vice President
POLYVISION CORPORATION
By: /s/ JOSEPH A. MENNITI
---------------------------
Joseph A. Menniti
Chief Executive Officer
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Exhibit 99.1
FOR IMMEDIATE RELEASE:
POLYVISION CONTACT:
Joseph A. Menniti
Chief Executive Officer
718-433-2170
POLYVISION CORPORATION ANNOUNCES
THE ACQUISITION OF THE NELSON ADAMS COMPANY
* * *
August 20, 1999 - POLYVISION CORPORATION (AMEX: PLI) today
announced the completion of the acquisition of A. Lawer Corporation, also known
as Nelson Adams, a privately-held subchapter S corporation with headquarters in
Corona, California. As previously reported, Nelson Adams is a leading designer
and supplier of visual display and related products primarily for the
educational products market. Nelson Adams maintains design and production
facilities in Corona, California, Clymer, Pennsylvania and Pompano Beach,
Florida, and sales and distribution offices throughout the United States. For
the year ended December 31, 1998, Nelson Adams recorded sales of approximately
$27.0 million and anticipates sales of approximately $32.0 million in 1999.
Joseph A. Menniti, CEO of PolyVision, commented, "We are
pleased to welcome Nelson Adams to the PolyVision family. This acquisition fits
precisely into PolyVision's growth strategy and significantly enhances our
production capability and market position for visual display products in the
educational market. Nelson Adams will be merged with our Greensteel subsidiary,
a premier developer and manufacturer of visual display products and casework
also for the educational market. The merger will broaden our presence in the
important California and Florida markets and, with the addition of Mark A.
Lawer, President of Nelson Adams, enhance our senior management team. The merger
will also result in significant cost savings through the consolidation of
production, marketing and general and administrative functions.
Commenting further, Mr. Menniti stated, "This acquisition,
coupled with our acquisition of Alliance International Group in November 1998,
places PolyVision at or very near the top of the nation's suppliers of visual
display products and ceramic-on-steel material to the educational market. These
markets are healthy and growing, and our company is in an excellent position to
increase shareholder value."
Mark A. Lawer, President of Nelson Adams, commented, "As an
integral part of PolyVision, we feel that we can contribute significantly to
both sales of visual display products and the bottom line of PolyVision. I look
forward to the opportunity to be part of the Greensteel/Nelson Adams management
team and becoming a part of the PolyVision group."
Fleet National Bank led a group of banks in providing the
financing for the acquisition.
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Headquartered in Long Island City, New York, PolyVision is a
leading manufacturer and supplier of visual communication products for the
educational and institutional markets, and point-of-sale display products for
the fast food and financial services markets. The stock of the company is traded
on the American Stock Exchange (symbol: PLI).
EXCEPT FOR THE HISTORICAL INFORMATION HEREIN, THE MATTERS DISCUSSED IN THIS NEWS
RELEASE INCLUDE FORWARD-LOOKING STATEMENTS THAT MAY INVOLVE A NUMBER OF RISKS
AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY SIGNIFICANTLY BASED ON A NUMBER OF
FACTORS, INCLUDING, BUT NOT LIMITED TO, RISKS IN PRODUCT AND TECHNOLOGY
DEVELOPMENT, MARKET ACCEPTANCE OF NEW PRODUCTS AND CONTINUING PRODUCT DEMAND,
THE IMPACT OF COMPETITIVE PRODUCTS AND PRICING, CHANGING ECONOMIC CONDITIONS,
INCLUDING CHANGES IN SHORT TERM INTEREST RATES AND FOREIGN CURRENCY FLUCTUATIONS
AND OTHER RISK FACTORS DETAILED IN THE POLYVISION'S MOST RECENT ANNUAL REPORT
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934 AND OTHER FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION
2
