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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) December 10, 1997
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-25634 87-0365268
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
755 Boardman-Canfield Road, Building G West, Boardman, Ohio 44512
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (330) 965-9910
Not applicable.
(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITIONS
On December 10, 1997, American Architectural Products Corporation, a
Delaware corporation (the "Company"), consummated four separate acquisition
transactions (collectively, the "Acquisitions"), as described below. The
following are summaries of the principal terms of the Acquisitions, and
reference is made to the definitive acquisition agreements, copies of which are
filed as exhibits to this Current Report.
1. Pursuant to a Plan and Agreement of Merger dated as of November 10,
1997 among the Company, Binnings Building Products, Inc. ("Binnings") and BBPI
Acquisition Corporation, a wholly-owned subsidiary of the Company, as amended by
a Supplemental Agreement dated December 3, 1997, the Company acquired all of the
outstanding capital stock and equity rights of Binnings. The total consideration
paid by the Company to acquire Binnings was $26,500,000, including $19,593,195
to repay and redeem all of Binnings' secured indebtedness. Contingent on the
level of Binnings' earnings for the fiscal year ending December 31, 1997, as set
forth in the Plan and Agreement of Merger, the Company may be required to pay an
additional purchase price of up to $500,000.
Binnings manufactures aluminum and vinyl windows as well as patio
doors for use in both new residential construction and remodeling as well as in
light commercial and public construction projects. Binnings operates
manufacturing facilities in Lexington, North Carolina and Miami, Florida and
distribution facilities in several Florida locations. Binnings achieved sales of
approximately $43.1 million in 1996. Upon completion of the merger, Binnings
became a wholly-owned subsidiary of the Company.
2. Pursuant to an Asset Purchase Agreement, dated as of November 10,
1997, by and among DCI/DWC Acquisition Corporation, a wholly-owned subsidiary of
the Company, Danvid Company, Inc. ("Danvid") and Danvid Window Company
("Window"), DCI/DWC Acquisition Corporation acquired substantially all of the
assets of Danvid and Window. The total consideration paid by the DCI/DWC
Acquisition Corporation for the assets included $15,831,411 in cash, 384,615
restricted shares of the Company's common stock, the assumption of certain
liabilities, and additional future payments with a present value of
approximately $2,151,000.
Danvid and Window manufacture aluminum and vinyl windows and patio
doors for use in both new residential construction and remodeling in Texas and
the Southeast. Danvid and Window, located in Carrollton, Texas, recorded sales
of approximately $42.0 million in the fiscal year ended July 27, 1997.
3. Pursuant to an Asset Purchase Agreement, dated as of December 10,
1997, by and among American Glassmith, Inc. ("American Glassmith"), American
Glassmith Acquisition Corporation, and American Architectural Products
Corporation, the Company
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acquired substantially all of the assets of American Glassmith. The total
consideration paid by the Company to acquire the assets consisted of $375,000 in
cash plus $3.0 million representing the net book value of acquired assets and
the assumption of specified liabilities subject to adjustment as set forth in
the Asset Purchase Agreement.
American Glassmith produces decorative glass lites, which are used in
windows, doors, transoms and other interior applications. In addition, American
Glassmith, headquartered in Columbus, Ohio, manufactures Sumiglass, a laminated
glass product used in a variety of interior decorating applications. American
Glassmith recorded sales of approximately $4.3 million for the period beginning
March 26 through December 31, 1996.
4. Pursuant to an Agreement, dated as of December 10, 1997, by and
among Modern Window Acquisition Corporation, a wholly-owned subsidiary of the
Company, Modern Window Corporation ("Modern"), and Modern's shareholders (the
"Shareholders"), the Company acquired substantially all of the assets of Modern.
The total consideration paid by the Company to acquire Modern consisted of (i)
$800,000 in cash, (ii) issuance of options to Modern and the Shareholders to
purchase up to 40,000 shares of common stock of the Company at an exercise price
of $6.50 per share, subject to adjustment, and (iii) the assumption of certain
obligations and liabilities of Modern, including repayment of indebtedness of
$1.3 million.
Modern, located in Oak Park, Michigan, produces vinyl windows and
doors for used in both new residential construction and remodeling, primarily in
the Midwest. Modern recorded sales of approximately $5.9 million in 1996.
DESCRIPTION OF TERMS OF FINANCING
11 3/4% Senior Notes Due 2007
The cash portion of the costs of acquiring Binnings, Danvid, American
Glassmith, and Modern, including the repayment of the secured indebtedness of
Binnings and Modern, was financed through the private placement by the Company
of $125 million of its 11 3/4% Senior Notes due 2007 (the "Notes"). The Notes
were issued on December 10, 1997. The Notes are senior unsecured obligations of
the Company and rank pari passu in right of payment with all existing and future
senior indebtedness of the Company and will rank senior in right of payment to
all subordinated obligations of the Company. The Notes are unconditionally
guaranteed (the "Note Guarantees"), jointly and severally, by each of the
Company's subsidiaries on the issue date of the Notes and by each subsidiary
(excluding unrestricted subsidiaries) of the Company acquired thereafter
(collectively, the "Subsidiary Guarantors"). The Note Guarantees are senior
unsecured obligations of each Subsidiary Guarantor and will rank pari passu in
right of payment with all other existing and future Guarantor senior
indebtedness of the Subsidiary Guarantors and senior in right of payment to all
existing and future subordinated obligations of the Subsidiary Guarantors and
may be released in certain circumstances. The Notes and the Note Guarantees will
be effectively subordinated to any secured debt of the Company and the
Subsidiary Guarantors to the extent of the assets serving as security therefor.
The Notes provide for the
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payment of interest semi-annually on June 1 and December 1 of each year,
commencing June 1, 1998, and mature on December 1, 2007.
The Company may redeem the Notes, in whole or in part, at any time on
or after December 1, 2002 at redemption prices of 105% for the 12 months
commencing December 1, 2002, 103.333% for the 12 months commencing December 1,
2003, 101.667% for the 12 months commencing December 1, 2004 and 100% at any
time on or after December 1, 2005, together with accrued and unpaid interest, if
any, to the date of redemption. In addition, at any time and from time to time
on or prior to December 1, 2000, the Company may, subject to certain
requirements, redeem up to 35% of the aggregate principal amount of the Notes
with the cash proceeds of one or more equity offerings at a redemption price
equal to 110% of the principal amount to be redeemed, together with accrued and
unpaid interest, if any, to the date of redemption, provided, that, with respect
to a redemption of Notes, at least $82 million of the aggregate principal amount
of the Notes remains outstanding immediately after each such redemption. The
Notes are not subject to any sinking fund requirement.
Upon the occurrence of certain specified events deemed to result in a
change of control of the Company, the Company will be required to make an offer
to repurchase the Notes at a price equal to 101% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
repurchase.
The indenture under which the Notes were issued (the "Indenture")
contains certain covenants that, among other things, limit (i) the incurrence of
additional indebtedness by the Company and its subsidiaries, (ii) the payment of
dividends on, and redemption of, capital stock of the Company and the redemption
of certain subordinated obligations of the Company, (iii) investments, (iv)
sales of assets and subsidiary stock, (v) transactions with affiliates and (vi)
consolidations, mergers and transfers of all or substantially all of the assets
of the Company. The Indenture also prohibits certain restrictions on
distributions from subsidiaries. However, all of these limitations and
prohibitions are subject to a number of important qualifications and exceptions.
The Company has agreed to use its best efforts to (i) file, within 60
days after the date of original issuance of the Notes (the "Issue Date"), a
registration statement (the "Notes Exchange Offer Registration Statement") with
respect to an offer to exchange the Notes (the "Notes Exchange Offer") for a
series of notes of the Company with terms substantially identical to the Notes
(the "Exchange Notes"), (ii) cause such Notes Exchange Offer Registration
Statement to be declared effective within 150 days after the Issue Date and
(iii) consummate the Notes Exchange Offer within 180 days after the Issue Date.
Such Exchange Notes, if issued, will bear interest at the rate of 11 3/4%. In
the event that the Company does not comply with certain covenants set forth in
the Exchange and Registration Rights Agreement between the Company and NatWest
Capital Markets Limited and McDonald & Company Securities, Inc., dated as of
December 10, 1997, the Company will be obligated to pay additional interest on
the Notes as liquidated damages to the holders thereof. The Company expects to
file the Notes Exchange Offer Registration Statement in December 1997.
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In addition to financing the cash portion of the purchase price of the
Acquisitions, approximately $33.1 million of the proceeds of the Notes offering
was used to repay substantially all of the outstanding indebtedness of the
Company and its subsidiaries. The Company's management intends to use the
remainder of the proceeds for working capital and general corporate purposes,
including future acquisitions.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Pursuant to Item 7(a)(4) of Form 8-K, any required financial statements of
Binnings, Danvid, Glassmith and Modern, and any required pro forma financial
information, will be filed pursuant to an amendment to this Form 8-K as soon
as practicable (but not later than 60 days following the date on which this
report was required to have been filed).
(b) Pro Forma Financial Information.
See (a) above.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of November 10, 1997, by
and among American Architectural Products Corporation, BBPI
Acquisition Corporation and Binnings Building Products, Inc.
2.2 Asset Purchase Agreement, dated as of November 10, 1997, by
and among DCI/DWC Acquisition Corporation, Danvid Company, Inc.
and Danvid Window Company.
2.3 Shareholders Agreement in Support of Asset Purchase Agreement,
dated as of November 10, 1997, by and among Daniel Crawford,
Karen Crawford, David Crawford, Paul Comer and DCI/DWC
Acquisition Corporation.
2.4 Asset Purchase Agreement, dated as of December 10, 1997, by
and among American Architectural Products Corporation, American
Glassmith Acquisition Corporation and American Glassmith, Inc.
2.5 Agreement, dated as of December 10, 1997, by and among American
Architectural Products Corporation, Modern Window Acquisition
Corporation and Modern Window Corporation.
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99.1 Indenture dated as of December 10, 1997 with respect to 11 3/4%
Senior Notes due 2007 among American Architectural Products
Corporation, as issuer, American Glassmith Acquisition
Corporation, BBPI Acquisition Corporation, DCI/DWC Acquisition
Corporation, Eagle & Taylor Company, Forte, Inc., Modern Window
Acquisition Corporation, Thermetic Glass, Inc., and Western
Insulated Glass, Co., as subsidiary guarantors, and United States
Trust Company of New York, as trustee.
99.2 Exchange and Registration Rights Agreement, dated as of December
10, 1997, by and among American Architectural Products
Corporation, American Glassmith Acquisition Corporation, BBPI
Acquisition Corporation, DCI/DWC Acquisition Corporation, Eagle &
Taylor Company, Forte, Inc., Modern Window Acquisition
Corporation, Thermetic Glass, Inc., Western Insulated Glass, Co.,
NatWest Capital Markets Limited and McDonald & Company
Securities, Inc.
99.3 Purchase Agreement, dated as of December 4, 1997, by and among
American Architectural Products Corporation, NatWest Capital
Markets Limited and McDonald & Company Securities,
Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
AMERICAN ARCHITECTURAL
PRODUCTS CORPORATION
Date: December 23, 1997 By /s/ Frank J. Amedia
------------------------
Frank J. Amedia
President and Chief Executive Officer
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Exhibit 2.1
PLAN AND AGREEMENT OF MERGER
Dated as of November 10, 1997
by and among
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION,
BBPI ACQUISITION CORPORATION,
and
BINNINGS BUILDING PRODUCTS, INC.
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1. Definitions.......................................................... 1
ARTICLE II
PLAN OF MERGER; CLOSING
2.1. Effective Time; Effect of Merger..................................... 8
2.2. Conversion of Capital Stock.......................................... 9
2.3. Exchange of Certificates............................................. 11
2.4. Stock Transfer Books................................................. 12
2.5. No Further Ownership Rights in Company Shares........................ 12
2.6. Lost, Stolen or Destroyed Certificates............................... 12
2.7. Dissenters' Rights................................................... 13
2.8. Closing.............................................................. 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
3.1. Company Corporate Existence and Power................................ 14
3.2. Non-Contravention; Due Authorization; Governmental Filings;
Consents; Binding Effect.................................... 14
3.3. Capitalization....................................................... 15
3.4. Subsidiaries; Other Investments...................................... 15
3.5. Financial Statements................................................. 16
3.6. Absence of Certain Changes........................................... 16
3.7. Properties; Assets................................................... 18
3.8. No Undisclosed Material Liabilities.................................. 19
3.9. Litigation........................................................... 20
3.10. Business Activities.................................................. 20
3.11. Tax Matters.......................................................... 21
3.12. Employee Benefits.................................................... 23
3.13. Material Contracts................................................... 25
3.14. Licenses............................................................. 26
3.15. Insurance............................................................ 26
(i)
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3.16. Compliance with Laws................................................. 27
3.17. Patents, Trademarks, etc............................................. 27
3.18. Environmental Matters................................................ 28
3.19. Labor Matters........................................................ 29
3.20 Disclosure........................................................... 29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
4.1. Corporate Existence and Power........................................ 30
4.2. Corporate Authorization.............................................. 30
4.3. Governmental Authorization........................................... 30
4.4. Non-Contravention.................................................... 30
4.5. Binding Effect....................................................... 30
4.6 Finders' Fees........................................................ 30
4.7. Litigation........................................................... 30
ARTICLE V
COVENANTS OF THE COMPANY
5.1. Conduct of the Company............................................... 31
5.2. Access to Information................................................ 33
5.3. Other Offers......................................................... 33
5.4. Notices of Certain Events............................................ 34
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUB
6.1. Confidentiality...................................................... 34
6.2. Breakup Fee.......................................................... 35
ARTICLE VII
COVENANTS OF COMPANY, PARENT AND MERGER SUB
7.1. Best Efforts......................................................... 35
7.2. Certain Filings...................................................... 35
7.3. Public Announcements................................................. 36
7.4. Agreement to Take Necessary and Desirable Actions.................... 36
(ii)
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ARTICLE VIII
TERMINATION OF AGREEMENT
8.1. Termination of Agreement............................................. 36
8.2. Effect of Termination: Right to Proceed.............................. 37
ARTICLE IX
CONDITIONS TO THE CLOSING
9.1. Conditions to Obligations of Parent and Merger Sub................... 37
9.2. Conditions to Obligations of the Company............................. 39
ARTICLE X
SURVIVAL AND REMEDY; INDEMNIFICATION
10.1. Survival; Remedy for Breach.......................................... 40
10.2. Indemnification by the Stockholders.................................. 40
10.3. Indemnification by Parent............................................ 40
10.4. Procedures........................................................... 41
ARTICLE XI
MISCELLANEOUS
11.1. Notices.............................................................. 42
11.2. Expenses............................................................. 43
11.3. Successors and Assigns............................................... 43
11.4. Entire Agreement; Amendments......................................... 44
11.5. Counterparts......................................................... 44
11.6. Severability......................................................... 44
11.7. Captions............................................................. 44
11.8. Governing Law........................................................ 44
11.9. Stockholders' Representative......................................... 44
(iii)
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Exhibit A-1 Action in Writing by Approving Stockholders
Exhibit A-2 Form of Notice to Non-Approving Shareholders
Exhibit B September Balance Sheet
Exhibit C Restated Certificate of Incorporation
Exhibit D Form of Escrow Agreement
Exhibit E Opinion of Olshan Grundman Frome & Rosenzweig LLP
Exhibit F Opinions of Squire, Sanders & Dempsey L.L.P.
Schedule 3.3. Capitalization
Schedule 3.6. Absence of Certain Changes
Schedule 3.7. Properties; Assets
Schedule 3.10. Business Activities
Schedule 3.11. Tax Matters
Schedule 3.12. Employee Benefits
Schedule 3.13. Material Contracts
Schedule 3.15. Insurance
Schedule 3.17. Patents, Trademarks, etc.
Schedule 3.18. Environmental Matters
(iv)
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PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER dated as of November 10, 1997, between
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION, a Delaware corporation ("Parent"),
BBPI ACQUISITION CORPORATION, a Delaware corporation ("Merger Sub") and wholly
owned subsidiary of Parent, and BINNINGS BUILDING PRODUCTS, INC., a Delaware
corporation (the "Company").
RECITALS
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have determined that it is advisable and in the best interests of their
respective stockholders for Parent and Merger Sub to enter into a business
combination with the Company upon the terms and subject to the conditions set
forth herein; and
WHEREAS, in furtherance of such combination, the Boards of Directors of
Parent, Merger Sub and the Company have each approved the merger of the Merger
Sub with and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth herein, in accordance with applicable provisions of the
Delaware General Corporation Law (the "DGCL"); and
WHEREAS, in furtherance of such combination, the requisite percentage
of stockholders of the Company have executed and delivered the Action in Writing
of Stockholders of the Company attached hereto as Exhibit A-1 approving the
Merger pursuant to Section 228 of the DGCL (including the holders of not less
than 67% of the Company Series A Shares (as defined herein), and the holders of
not less than 67% of the Company Series B Shares (as defined herein)), and the
Company has provided the prompt notice of such action to the holders of the
balance of the Company Shares pursuant to Section 228 of the DGCL, a copy of
which is attached hereto as Exhibit A-2.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. The following terms, as used herein, have the
following meanings:
"Accounting Referee" has the meaning set forth in Section 2.2(b).
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"Acquisition Proposal" has the meaning set forth in Section 5.3.
"Adjusted Net Merger Consideration" means the Net Merger Consideration
and the Supplemental Merger Consideration, if any.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. After the Effective Time, Parent's Affiliates shall include the
Company and its Subsidiaries.
"Approving Stockholders" means the holders of the requisite percentage
of the Company Shares which approved the Merger as described in the third
recital.
"Capital Appreciation Rights" means the "Appreciation Rights" granted
pursuant to Capital Appreciation Right and Put Option Agreement dated as of
September 1, 1995, as the same may have been amended, modified or supplemented.
"Certificate of Merger" has the meaning set forth in Section 2.1.
"Certificates" has the meaning set forth in Section 2.3.
"Closing" has the meaning set forth in Section 2.8.
"Closing Date" has the meaning set forth in Section 2.8.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Common Consideration" has the meaning set forth in Section 2.2(a).
"Company Common Shares" has the meaning set forth in Section 2.2(a).
"Company Securities" has the meaning set forth in Section 3.3.
"Company Series A Shares" has the meaning set forth in Section 2.2(a).
"Company Series B Shares" has the meaning set forth in Section 2.2(a).
"Company Shares" has the meaning set forth in Section 2.2(a).
"Company's Accountant" means Arthur Andersen L.L.P.
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"Company's Lenders" means the Lenders as defined in the Company's Loan
Agreement and the Trustee for the benefit of the holders of the Secured Notes
issued pursuant to the Indenture.
"Company's Loan Agreement" means that certain Loan and Security
Agreement dated as of October 16, 1991, between the Company and ReliaStar Life
Insurance Company f/k/a Northwestern National Life Insurance Company, pursuant
to which the Company's revolving credit loans are outstanding.
"Constituent Corporation" has the meaning set forth in Section 2.1.
"DGCL" has the meaning set forth in the second recital.
"Dissenting Shares" has the meaning set forth in Section 2.7.
"EBITDA" means the sum, for the Company (determined on a consolidated
basis without duplication) of the following: (a) net income (or loss) after
taxes for such period plus (b) amounts deducted from net revenues in determining
such net income (or loss) on account of (i) interest expense (including, without
limitation, the amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligation, the interest component of any capitalized lease, imputed interest
with respect to sale-leaseback transactions and net payments pursuant to hedging
transactions) and (ii) federal, state or foreign income taxes minus (c)
non-recurring gains for such period plus (d) non-recurring losses for such
period (including up to $100,000 in nonrecurring transaction expenses payable by
the Company relating to the Merger and other transactions contemplated hereby)
plus (e) depreciation, amortization and other non-cash expenses (including any
allocation of Parent overhead), in each case determined in accordance with GAAP
consistently applied and consistent with the prior year's financial statements.
"EBITDA Computation" has the meaning set forth in Section 2.2(b).
"Effective Time" has the meaning set forth in Section 2.1.
"Employee Benefit Plan" means any (a) deferred compensation or
retirement bonus, stock option or similar plan or arrangement, (b) defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) defined benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan, (d) Multiemployer Plan, or (e) Employee Welfare Benefit
Plan.
"Employee Pension Benefit Plan" has the meaning set forth in Section
3(2), but excludes a Multiemployer Plan.
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
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"Environmental Claims" has the meaning set forth in Section 3.18.
"Environmental Laws" has the meaning set forth in Section 3.18.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means each entity which is treated as a single
employer with the Company for purposes of Code Section 414.
"Escrow Agent" has the meaning set forth in Section 2.2(d).
"Escrow Claim Expiration Date" shall mean (i) April 30, 1998, if the
Closing occurs on or before December 31, 1997, or (ii) that date which is the
120th day after the Closing if the Closing occurs on or after January 1, 1998.
"Escrow Fund" has the meaning set forth in Section 2.2(d).
"Escrow Payment" means $2,000,000.
"Exchange Fund" has the meaning set forth in Section 2.3.
"Expense Allocation" has the meaning set forth in Section 2.2(a).
"Extension Option Payment" has the meaning set forth in Section 2.2(c).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date hereof.
"GLI" means GLI, Inc., a Delaware corporation, and its successors and
assigns.
"Gross Merger Consideration" means $26,500,000, plus the Extension
Option Payment, if any.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976 as amended, and the regulations promulgated thereunder.
"Indenture" means that certain Indenture dated as of April 29, 1986
between the Company and Fleet National Bank, f/k/a Shawmut Bank Connecticut,
National Association, a national banking association (the "Trustee"), as amended
by the First Supplemental Indenture dated as of January 9, 1991, the Second
Supplemental Indenture dated September 16, 1991, the
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Third Supplemental Indenture dated as of January 27, 1993, the Fourth
Supplemental Indenture dated as of April 29, 1993, the Fifth Supplemental
Indenture dated as of July 30, 1993, the Sixth Supplemental Indenture dated as
of September 1, 1996, the Seventh Supplemental Indenture dated as of November 1,
1996, and the Eighth Supplemental Indenture dated as of February 28, 1997.
"Intellectual Property Rights" has the meaning set forth in Section
3.17.
"IRS" has the meaning set forth in Section 3.12.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, option or encumbrance of any kind in respect of such
asset.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), business, assets, liabilities,
capitalization, financial position, operations, results of operations or
prospects of the Company and the Subsidiaries, taken as a whole.
"Materials of Environmental Concern" has the meaning set forth in
Section 3.18.
"Merger" has the meaning set forth in the second recital.
"Miami Report" has the meaning set forth in Section 3.18.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Net Merger Consideration" means the Gross Merger Consideration, less
the sum of the Payoff Amount.
"1997 EBITDA" has the meaning set forth in Section 2.2(b).
"Parent Disclosure Documents" means the documents used by Parent in
connection with obtaining the financing required to consummate the transactions
contemplated by this Agreement and to provide funds to Parent for other
purposes, and any amendments or supplements thereto.
"Parent Indemnitee" has the meaning set forth in Section 10.4.
"Parent's Accountant" means BDO Seidman LLP.
"Payoff Amount" means the amounts required by the Company's Lenders to
release the Company from all of its indebtedness under and pursuant to the
Company's Loan Agreement, and the amounts required to redeem the Company's
Secured Notes, including without limitation a release of all liens on assets of
the Company relating thereto.
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"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a corporation, a partnership, an
association, a joint stock company, a trust, a limited liability company, a
joint venture, an unincorporated organization or any other entity or
organization, including without limitation a governmental entity or political
subdivision or an agency or instrumentality thereof.
"Plan" has the meaning set forth in Section 3.12.
"ReliaStar Holders" means ReliaStar Life Insurance Company (f/k/a
Northwestern National Life Insurance Company), Northern Life Insurance Company
and ReliaStar Bankers Security Life Insurance Company (as successor by merger to
The North Atlantic Life Insurance Company of America).
"ReliaStar Payment" means the payment of $1,100,000 to the ReliaStar
Holders in exchange for the purchase, retirement and cancellation of all of the
Company Shares and Company Securities owned by the ReliaStar Holders (consisting
of their Company Common Stock and the Capital Appreciation Rights).
"Returns" has the meaning set forth in Section 3.11.
"SEC" means the Securities and Exchange Commission.
"Secured Notes" means the following promissory notes issued pursuant to
the Indenture: (i) the 9.25% Secured Note due September 1, 2005, in the original
principal amount of $6,000,000 payable to Northwestern National Life Insurance
Company; (ii) the 9.25% Secured Note due September 1, 2005, in the original
principal amount of $2,500,000 payable to Northern Life Insurance Company; (iii)
the 9.25% Secured Note due September 1, 2005, in the original principal amount
of $1,500,000 payable to The North Atlantic Life Insurance Company of America;
(iv) the 9% Secured Note due September 1, 2000, in the original principal amount
of $500,000 payable to TMG Life Insurance Company, Inc.; (v) the 9.25% Secured
Note due September 1, 2005, in the original principal amount of $857,000 payable
to Northwestern National Life Insurance Company; (vi) the 9.25% Secured Note due
September 1, 2005, in the original principal amount of $357,150 payable to
Northern Life Insurance Company; (vii) the 9.25% Secured Note due September 1,
2005, in the original principal amount of $214,350 payable to The North Atlantic
Life Insurance Company of America; (viii) the 9% Secured Note due September 1,
2000, in the original principal amount of $71,400 payable to TMG Life Insurance
Company, Inc.; (ix) the 9.25% Secured Note due September 1, 2005, in the
original principal amount of $685,680 payable to Northwestern National Life
Insurance Company; (x) the 9.25% Secured Note due September 1, 2005, in the
original principal amount of $285,720 payable to Northern Life Insurance
Company; (xi) the 9.25% Secured Note due September 1, 2005, in the original
principal amount of $171,480 payable to The North Atlantic Life Insurance
Company of America; (xii) the 9% Secured Note due September 1, 2000, in the
original principal amount of $57,120 payable to TMG Life Insurance Company,
Inc.; (xiii) the
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<PAGE> 12
9.25% Secured Note due September 1, 2005, in the original principal amount of
$700,000 payable to Northwestern National Life Insurance Company; (xiv) the
9.25% Secured Note due September 1, 2005, in the original principal amount of
$291,666.67 payable to Northern Life Insurance Company; (xv) the 9.25% Secured
Note due September 1, 2005, in the original principal amount of $175,000 payable
to The North Atlantic Life Insurance Company of America; and (xvi) the 9%
Secured Note due September 1, 2000, in the original principal amount of
$58,333.33 payable to TMG Life Insurance Company, Inc.
"September Balance Sheet" means the unaudited balance sheet of the
Company as of September 30, 1997, a copy of which is attached hereto as Exhibit
B.
"Series A Consideration" means $10.00 per Company Series A Share
(including the stock dividends payable up to but not including the Closing
Date).
"Series B Consideration" means $10.00 per Company Series B Share
(including the stock dividends payable up to but not including the Closing
Date).
"Stockholder Indemnitee" has the meaning set forth in Section 10.4.
"Stockholders" means the holders of the Company Shares whose ultimate
share of the Net Merger Consideration is dependent upon the disposition of the
Escrow Fund.
"Stockholders' Representative" means Salvatore J. Zizza, or such other
person designated from time to time by GLI; provided, however, that the
designation of such replacement shall not be effective until Parent receives
notice of such replacement pursuant hereto, and Parent may at all times rely on
representations and instruments delivered by any Stockholders' Representative
prior to receipt of notice of any change in the identity of the Stockholders'
Representative, and any representations and instruments made or delivered by a
Stockholders' Representative shall be binding upon any successor Stockholders'
Representative.
"Subsidiary" means any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions are directly or
indirectly owned by the Company.
"Subsidiary Securities" has the meaning set forth in Section 3.4.
"Supplemental Merger Consideration" means a dollar amount, if positive,
equal to the amount determined by the following formula (subject to the cap set
forth in Section 2.2(b)(iii)):
1997 EBITDA
- $4,500,000
--------------------------------------
Supplemental Merger Consideration
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<PAGE> 13
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Tax" or "Taxes" has the meaning set forth in Section 3.11.
ARTICLE II
PLAN OF MERGER; CLOSING
2.1. Effective Time; Effect of Merger.
(a) Upon the terms and subject to the conditions set forth herein,
Merger Sub shall be merged into and with the Company. The Company shall be the
surviving corporation (the "Surviving Corporation") of the Merger and shall
continue to exist and be governed by the laws of the State of Delaware. The
Merger shall become effective (the "Effective Time") upon the filing of a
certificate of merger with the Secretary of State of the State of Delaware in
accordance with the DGCL (the "Certificate of Merger").
(b) At the Effective Time, (i) the separate corporate existence of
Merger Sub shall cease; (ii) the Certificate of Incorporation and Bylaws of the
Company shall be the Certificate of Incorporation and Bylaws of the Surviving
Corporation (provided, however, that the Certificate of Incorporation of the
Company shall be amended and restated in its entirety at the Effective Time to
read as set forth in Exhibit C), until duly amended in accordance with their
terms and the DGCL; (iii) the directors and officers of Merger Sub shall be the
initial directors and officers of the Surviving Corporation, to serve in
accordance with the Bylaws; and (iv) the Surviving Corporation shall become a
wholly owned subsidiary of Parent. Upon the consummation of the Merger, the
Surviving Corporation shall thereupon and thereafter possess all assets and
property of every description, and every interest therein, wherever located, and
the rights, privileges, immunities, powers, franchises and authority, of a
public as well as of a private nature, of each of the Company and Merger Sub
(the "Constituent Corporations" and each a "Constituent Corporation"), and all
obligations belonging to or due each of the Constituent Corporations shall be
vested in the Surviving Corporation without further act or deed. Title to any
real estate or any interest therein vested in any Constituent Corporation shall
not revert or in any way be impaired by reason of the Merger. The Surviving
Corporation shall thenceforth be liable for all the obligations of each
Constituent Corporation, including any liability to holders of Dissenting
Shares. Any claim existing, or action or proceeding pending, by or against any
Constituent Corporation, may be prosecuted to judgment, with right of appeal, as
if the Merger had not taken place, or the Surviving Corporation may be
substituted in place of any Constituent Corporation. All the rights of creditors
of each Constituent Corporation shall be preserved unimpaired, and all liens
upon the property of any Constituent Corporation shall be preserved unimpaired
but only as to the property affected by such liens immediately prior to the
Effective Time. The Merger shall have the effects set forth in Section 259 of
the DGCL. At the Effective Time, all existing stock repurchase obligations,
stock appreciation rights, stock
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<PAGE> 14
options, warrants, capital appreciation rights, and stockholder agreements
between the Company and any holder(s) of the Company Shares or other Persons
holding such rights, obligations and options shall be deemed to have been
terminated and shall have no further force or effect.
2.2. Conversion of Capital Stock. The following will occur at the
Effective Time, by virtue of the Merger and without any further action on the
part of Parent, Merger Sub, the Company or the holders of any of the following
securities.
(a) Merger Consideration. The Gross Merger Consideration shall be
reduced by the amount of the Payoff Amount in order to determine the Net Merger
Consideration. The shares of common stock, $.01 par value, of the Company (the
"Company Common Shares"), the shares of Preferred Stock, Series A, $1.00 par
value, of the Company (the "Company Series A Shares") and the shares of
Preferred Stock, Series B, $1.00 par value, of the Company (the "Company Series
B Shares") issued and outstanding immediately prior to the Effective Time
(collectively, the "Company Shares") and the Capital Appreciation Rights shall
be converted into the right to receive the Net Merger Consideration plus the
additional amount of consideration, if any, payable pursuant to Section 2.2(b)
(the "Supplemental Merger Consideration", and, together with the Net Merger
Consideration, the "Adjusted Net Merger Consideration"), subject to the escrow
provisions contained in Section 2.2(d). The Net Merger Consideration shall be
allocated in the following manner: (i) first, the ReliaStar Payment, (ii)
second, the Escrow Payment, (iii) third, $1 million to the Stockholders'
Representative to pay certain unallocated fees and expenses in connection with
the Merger (the "Expense Allocation"); (iv) fourth, the Series B Consideration
to the holders of the Company Series B Shares, (v) fifth, the Series A
Consideration to the holders of the Company Series A Shares and (vi) sixth, the
balance to the holders of the Company Common Shares, on a per share, pro rata
basis (the "Common Consideration").
(b) Supplemental Merger Consideration.
(i) As soon as practicable but in any event not later than 45 days
after the later of (i) the Closing Date or (ii) December 31, 1997, the
Company shall, at the Company's expense, cause to be prepared and
delivered to the Company's Accountant and Stockholders' Representative
a computation of EBITDA (the "EBITDA Computation") of the Company and
the Subsidiaries for the year ended December 31, 1997 (the "1997
EBITDA"). Stockholders' Representative and Company's Accountant shall
have the right, at Stockholders' Representative's expense, to review
all work papers and procedures used to prepare the EBITDA Computation,
and shall have the right to perform any other procedures they deem
necessary to satisfy themselves as to the accuracy thereof.
(ii) Unless Stockholders' Representative within 10 days after
delivery of the EBITDA Computation notifies Parent in writing that it
objects to Parent's EBITDA Computation, specifying with reasonable
particularity the items giving rise to such objection, Parent's EBITDA
Computation shall be binding upon all of the
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<PAGE> 15
parties hereto. If Stockholders' Representative delivers to Parent any
such notice of objection within such 10-day period, then Stockholders'
Representative and Parent shall negotiate in good faith and use their
best efforts to resolve such items and to reach an agreement as to
Parent's EBITDA Computation, if any. If Stockholders' Representative
and Parent are unable to reach such an agreement within 5 days after
receipt by Parent of any such notice of objection, Company's Accountant
and Parent's Accountant shall select another nationally recognized
independent accounting firm which has and has had no material
relationship with any holder of Company Common Shares or to the Merger
Sub or Parent or their respective Affiliates (the "Accounting Referee")
to resolve the disputed items and to determine the amount of 1997
EBITDA. Such determination shall be binding upon all of the parties
hereto. The costs, expenses and fees of any Accounting Referee shall be
shared equally by (i) Stockholders' Representative and (ii) Parent.
(iii) If 1997 EBITDA exceeds $4,500,000, then Parent shall pay, or
cause to be paid, the Supplemental Merger Consideration, if any, in
accordance with the provisions of this Agreement. In no event shall the
Supplemental Merger Consideration exceed $500,000. The Supplemental
Merger Consideration shall be paid by or on behalf of Parent not later
than the later of (i) the Escrow Claim Termination Date or (ii) 30 days
after final determination of the 1997 EBITDA.
(c) Extension Option. If the Closing Date does not occur on or
before December 31, 1997, due to the inability of Parent to satisfy the
financial condition referred to in Section 9.1(vi), and Parent and Merger Sub
elect, on or before such date, to extend the cut-off date of this Agreement
beyond December 31, 1997, then the cut-off date shall be extended to a date on
or before March 31, 1998, selected by Parent. In consideration of such
extension, the Gross Merger Consideration to be payable at the Effective Time
shall be increased by an amount of $500,000 in cash (the "Extension Option
Payment").
(d) Escrow Fund. At or before the Effective Time (as hereinafter
defined), as security for the general obligations of the Stockholders arising
under this Agreement, the Escrow Payment shall be delivered to Gleacher NatWest
Inc., as escrow agent (the "Escrow Agent"), to be held in a separate account
(the "Escrow Fund") pursuant to an escrow agreement to be entered into at the
Closing in substantially the form attached hereto as Exhibit D (the "Escrow
Agreement") and shall be deposited and held in escrow for a period expiring not
later than the third business day after the Escrow Claim Expiration Date (unless
a claim is made on or prior to the Escrow Claim Expiration Date, in which case
the disposition of the Escrow Fund, or the disputed portion thereof, shall be
governed by the terms of the Escrow Agreement).
(e) Cancellation. Each Company Share held in the treasury of the
Company and each Company Share owned by Parent, Merger Sub or any direct or
indirect wholly owned subsidiary of the Company or Parent immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof,
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<PAGE> 16
automatically cease to be outstanding, be canceled and be retired without
payment of any consideration therefor and cease to exist.
(f) Capital Stock of Merger Sub. Each share of capital stock of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted to an issued and outstanding share of capital stock of the
Surviving Corporation.
(g) Antidilution Adjustments to Merger Consideration. The Adjusted
Net Merger Consideration payable with respect to each Company Share shall be
adjusted to reflect fully the effect of any reclassification, recapitalization,
stock split, reverse split, exchange or readjustment of shares, stock dividend
or other like change with respect to the Company Shares occurring after the date
hereof and prior to the Effective Time; provided, however, that any such change
with respect to the Company Shares shall be subject to the provisions of Section
5.1(xi).
2.3. Exchange of Certificates.
(a) At or prior to the Effective Time, Parent shall deposit or
cause to be deposited, for exchange in accordance with this Section 2.3, cash in
an aggregate amount sufficient to pay an amount equal to the difference, if
positive, between (i) the Net Merger Consideration and (ii) the Escrow Payment,
such difference being hereinafter referred to collectively as the "Exchange
Fund". Such deposit shall be held by the Surviving Corporation. After the
Effective Time and in accordance with the provisions of Section 2.2(b), Parent
shall deposit, or cause to be deposited, the Supplemental Merger Consideration,
and such amounts shall be added to the Exchange Fund. Any interest, dividends or
other income earned on the investment of cash or other property held in the
Exchange Fund shall be for the account of and payable to Parent.
(b) Exchange Procedures. Promptly after the Effective Time, Parent
will instruct the Surviving Corporation to mail to each holder of record of the
Company Shares (i) a letter of transmittal, which shall specify that delivery
shall be effected, and risk of loss and title to the certificates evidencing
Company Shares (the "Certificates") shall pass, only upon proper delivery of the
Certificates to the Surviving Corporation and shall be in such form and have
such other provisions as Parent may reasonably specify, (ii) instructions to
effect the surrender of the Certificates in exchange for the Adjusted Net Merger
Consideration, and (iii) such other documentation as is customary for
transactions of this type. Upon surrender of a Certificate for cancellation to
the Surviving Corporation together with such letter of transmittal, which shall
be duly executed, and such other customary documents as may be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in exchange thereto cash in respect of the Net Merger Consideration
(which cash shall be disbursed by wire transfer upon receipt by the Surviving
Corporation of the documents described above and appropriate wire transfer
instructions from a holder, net of any wire transfer charges), in accordance
with the distribution priority set forth in Section 2.2(a) and the Certificate
so surrendered shall forthwith be canceled. The holder of a Certificate
evidencing Company Shares shall also be entitled to receive a distribution of
the holder's share of (i) the Supplemental Merger
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<PAGE> 17
Consideration as soon as practicable following the date the Surviving
Corporation receives the Supplemental Merger Consideration, and (ii) the Escrow
Fund, to the extent such amounts are not required to satisfy claims by Parent
against the Escrow Fund, in accordance with the distribution priority set forth
in Section 2.2(a).
(c) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Company Shares as of the date
which is six months after the Effective Time shall be delivered to Parent, upon
demand, and thereafter such holders of Company Shares who have not theretofore
complied with this Section 2.3 shall be entitled to look only to Parent for
payment of the Adjusted Net Merger Consideration to which they are entitled
pursuant hereto.
(d) No Liability. Except as required by applicable law, none of
Parent, Merger Sub or the Company shall be liable to any holder of Company
Shares for any Adjusted Net Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e) Withholding Rights. Parent or the Surviving Corporation shall
be entitled to deduct and withhold from the Adjusted Net Merger Consideration
otherwise payable pursuant to this Agreement to any holder of Company Shares
such amounts as Parent or the Surviving Corporation is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Surviving Corporation, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Company Shares in respect of which such deduction and withholding was made
by Parent or the Surviving Corporation
2.4. Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers of the Company Shares thereafter on the records of the Company with
respect to the Company Shares.
2.5. No Further Ownership Rights in Company Shares. The Net Merger
Consideration (and Supplemental Merger Consideration, if any) delivered upon the
surrender for exchange of Company Shares in accordance with the terms hereof
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such Company Shares, and there shall be no further registration of
transfers of Company Shares which were outstanding immediately prior to the
Effective Time on the records of the Surviving Corporation. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article II.
2.6. Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Surviving
Corporation shall deliver in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder
thereof, such cash as may be required pursuant to Section 2.2; provided,
however, that Parent
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<PAGE> 18
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Parent or the Company with respect to the Certificates
alleged to have been lost, stolen or destroyed.
2.7. Dissenters' Rights. Notwithstanding anything in this Agreement to
the contrary, any Company Shares which are issued and outstanding immediately
prior to the Effective Time and which are held by stockholders of the Company
who shall not have voted such Company Shares in favor of the adoption of the
Merger and who shall have delivered a written demand for the appraisal of such
Shares in the manner provided in Section 262 of the DGCL ("Dissenting Shares")
shall not be converted as described in Section 2.2 hereof but instead shall
become the right to receive payment of the appraisal value of such shares in
accordance with the provisions of Section 262 of the DGCL; provided, however,
that (i) if any holder of Dissenting Shares shall subsequently withdraw such
holder's demand for payment of the appraisal value of such Company Shares
(within sixty (60) days of the Effective Time or with the consent of the
Surviving Corporation by its directors), (ii) if any holder fails to comply with
such Section 262 (unless the Surviving Corporation by its directors waives such
failure), (iii) if the Parent abandons or is finally enjoined or prevented from
carrying out the Merger, (iv) if the Surviving Corporation and any holder of
Dissenting Shares will not have come to an agreement as to the appraisal value
of such holder's Dissenting Shares, and neither such holder of Dissenting Shares
nor the Surviving Corporation has filed or joined in a petition demanding a
determination of the appraisal value of all Dissenting Shares within the period
provided in Section 262 of the DGCL or (v) if any holder of Dissenting Shares
otherwise loses (through failure to perfect or otherwise) the right to appraisal
of the Dissenting Shares, the right and obligation of such holder or holders (as
the case may be) to receive such appraisal value and to sell such Dissenting
Shares shall terminate, and such Dissenting Shares shall thereupon be deemed to
have been extinguished and to have been converted, as of the Effective Time of
the Merger, into the right to receive the Adjusted Net Merger Consideration to
which such holder would have otherwise been entitled, without interest (except
for any interest to which such holder would be entitled pursuant to distribution
of the Escrow Fund). Persons who have perfected statutory rights with respect to
Dissenting Shares as aforesaid shall not be paid by the Surviving Corporation as
provided in this Agreement and shall have only such rights as are provided by
Section 262 of the DGCL with respect to such Company Shares and Adjusted Net
Merger Consideration.
2.8. Closing. (a) The closing (the "Closing") of the Merger shall take
place at the offices of Squire, Sanders & Dempsey L.L.P., 350 Park Avenue, New
York, New York, at 10:00 A.M., local time, not later than December 10, 1997, or
as soon as practicable after the conditions set forth in Article IX have been
satisfied or at such other time and place upon which the Company, Parent and
Merger Sub may agree (the time and date of the Closing being hereinafter called
the "Closing Date"). All transactions consummated at the Closing shall be deemed
to have taken place simultaneously and shall be deemed to be effective as of the
close of business of the Company on the Closing Date.
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<PAGE> 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to Parent that:
3.1. Company Corporate Existence and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except in those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect. The Company has heretofore delivered to Parent true and
complete copies of the Company's charter and bylaws and made available for
Parent's inspection the Company's minute books, which minute books contain a
true and complete record of all meetings, and consents in lieu of a meeting, of
the Company's board of directors (and any committee thereof) and of the
Company's stockholders held or executed since the Company's incorporation, and
such records accurately reflect all transactions referred to therein.
3.2. Non-Contravention; Due Authorization; Governmental Filings;
Consents; Binding Effect. (a) The execution, delivery and performance by the
Company of this Agreement and the consummation of the Merger do not and will not
contravene or constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of the Company or the
Subsidiary or to a loss of any benefit to which the Company is entitled under
any provision of applicable law or regulation (assuming compliance with any
applicable provisions of the HSR Act) or of the charter or bylaws or operating
agreement of the Company or the Subsidiary or of any agreement, judgment,
injunction, order, decree, administrative interpretation, award or other
instrument binding upon the Company or the Subsidiary or result in the creation
or imposition of any Lien on any asset of the Company or the Subsidiary.
(b) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby are within the Company's powers and have been duly authorized by all
necessary corporate and stockholder action.
(c) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby require no action by or in respect of, or filing with, any governmental
body, agency, official or authority (other than compliance with the applicable
requirements under the HSR Act and the filing of the Certificate of Merger).
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<PAGE> 20
(d) No consent, approval, waiver or other action by any Person
under any material contract, agreement, indenture, lease, instrument or other
document to which the Company or the Subsidiary is a party or by which any of
them in bound is required or necessary for the execution, delivery and
performance of this Agreement by the Company or the consummation of the
transactions contemplated hereby.
(e) This Agreement constitutes a valid and binding agreement of
the Company, enforceable in accordance with its terms except as limited by
bankruptcy, insolvency or other similar laws affecting the rights of creditors
generally and the application of equitable principles.
3.3. Capitalization. The authorized capital stock of the Company
consists of 1,000,000 shares of Company Common Shares, 500,000 shares of Company
Series A Shares and 500,000 shares of Company Series B Shares. There are
outstanding 217,700 shares of Company Common Shares consisting of 158,176 shares
without put rights and 59,524 shares with put rights, 149,158 shares of Company
Series A Shares, and 30,000 shares of Company Series B Shares. All outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth in this Section
and on Schedule 3.3, there are outstanding (i) no shares of capital stock or
other voting securities of the Company or capital appreciation rights, stock
options, warrants, stock appreciation rights or other phantom equity rights
based on the value of the Company's capital stock or other voting securities,
(ii) no securities of the Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company, and (iii) no options or other
rights to acquire from the Company, and no obligation of the Company to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company
(collectively, "Company Securities"). There are no outstanding obligations of
the Company or any Subsidiary to repurchase, redeem or otherwise acquire any
Company Securities. The approval of the Approving Stockholders constitutes the
requisite stockholder approval of the transactions contemplated by this
Agreement. Schedule 3.3 contains a true and complete list of all holders of the
Company Shares and the Company Securities and their respective ownership
percentages as of the date hereof and as of the Effective Time, including
without limitation the stock dividends payable to the holders of the Series A
Shares and the Series B Shares on or before the Closing Date, in detail
sufficient to determine the precise allocation of the payment of the Net Merger
Consideration to the holders of the Company Shares.
3.4. Subsidiaries; Other Investments. (a) The Company has no
Subsidiaries as of the date of this Agreement and will have no Subsidiaries as
of the Closing Date except for the Subsidiary identified in Section 5.1(b).
(b) If formed, at the Effective Time, the Subsidiary will be a
corporation duly organized, validly existing and in good standing under the laws
of Delaware, has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and is duly qualified to do business as a
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<PAGE> 21
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
make such qualification necessary, except in those jurisdictions where failure
to be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. If formed, the Subsidiary will have delivered to Parent true and
complete copies of the Subsidiary's certificate of incorporation and bylaws and
made available for Parent's inspection the Subsidiary's minute book which minute
book contains a true and complete record of all meetings, and consents in lieu
of a meeting, of the Subsidiary's board of directors and stockholder held or
executed since the Subsidiary's formation, any such records accurately reflect
all transactions referred to therein.
(c) If formed, at the Effective Time, all of the capital stock in
the Subsidiary will be owned by the Company, directly or indirectly, free and
clear of any Lien and any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock). There are outstanding (i) no securities of the Company or the Subsidiary
convertible into or exchangeable for capital stock in the Subsidiary, (ii) no
options or other rights to acquire from the Company or the Subsidiary, and no
other obligation of the Company or the Subsidiary to issue, any capital stock
in, or any securities convertible into or exchangeable for any capital stock in,
the Subsidiary or phantom equity interest; and (iii) no other securities of the
Subsidiary (collectively, "Subsidiary Securities"). There are no outstanding
obligations of the Company or the Subsidiary to repurchase, redeem or otherwise
acquire any outstanding Subsidiary Securities.
(d) Except for the Subsidiary identified in Section 5.1(b) and the
TeamPro Joint Venture, neither the Company nor the Subsidiary has an equity
interest in any other Person.
3.5. Financial Statements. The unaudited financial statements of the
Company as of and for the nine-month period ended September 30, 1997, and the
audited financial statements of the Company for the years ended December 31,
1996, 1995, 1994 and 1993 previously delivered to Parent have been prepared in a
manner that reports the financial condition and results of operations of the
Company in accordance with GAAP, consistently applied, and fairly present, in
all material respects, the financial condition and results of operations of the
Company at such dates or for the periods then ended except, in the case of the
unaudited financial statements, for normal year-end adjustments and the absence
of footnotes.
3.6. Absence of Certain Changes. (a) Since December 31, 1996, the
Company and the Subsidiary have conducted their business in the ordinary course
and there has not been:
(i) any event or any change in the business or condition
(financial or otherwise) of the Company or the Subsidiary that has had
or may have a Material Adverse Effect;
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<PAGE> 22
(ii) any amendment or alteration in any material term of any
outstanding security, option, warrant or phantom equity interest of the
Company or the Subsidiary except as described in Schedule 3.3;
(iii) any (A) incurrence, assumption or guarantee by the Company
or the Subsidiary of any debt for borrowed money other than in the
ordinary course of business or with any Person other than those
identified on Schedule 3.6(b), (B) issuance or sale of any securities
of the Company or the Subsidiary convertible into or exchangeable for
debt securities of the Company or the Subsidiary, or (C) issuance or
sale of options or other rights to acquire from the Company or the
Subsidiary debt securities of the Company or the Subsidiary or any
securities convertible into or exchangeable for any such debt
securities;
(iv) any creation, assumption or incurrence by the Company or the
Subsidiary of any Lien on any material asset, other than in the
ordinary course of business or as permitted by Section 3.7 and Section
5.1(a)(iii);
(v) any assumption, guarantee, endorsement or other action by the
Company or the Subsidiary to become liable for the obligations of any
Person;
(vi) any making of any loan, advance or capital contribution to or
investment in any Person other than loans, advances or capital
contributions or investments made in the ordinary course of business or
as required under Section 5.1(b), any issue or sale of Company Shares
or Company Securities, issue or sale of any Subsidiary Securities, or
redemption, repurchase or other acquisition of shares of capital stock
or other equity interests in or other securities of the Company or the
Subsidiary, or any dividend or other distribution with respect thereto,
other than as described in Section 5.1(b) or Schedule 3.3;
(vii) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the
Company or the Subsidiary which, individually or in the aggregate, has
had or may have a Material Adverse Effect;
(viii) any transaction or commitment made, or any contract or
agreement entered into, by the Company or the Subsidiary relating to
its assets or business (including the acquisition or disposition of any
substantial assets) or any relinquishment by the Company or the
Subsidiary of any contract or other right, in either case, material to
the Company and the Subsidiary taken as a whole, other than
transactions and commitments in the ordinary course of business or
contemplated by this Agreement;
(ix) any grant of any severance or termination pay to any officer
or employee of the Company or the Subsidiary, any entering into of any
employment
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agreement with any officer or employee of the Company or the Subsidiary
or any increase in compensation or benefits payable under any existing
severance or termination pay policies or employment agreements other
than grants, agreements, merit increases or cost-of-living increases in
the ordinary course of business consistent with past practice; or
(x) any agreement or arrangement made by the Company or the
Subsidiary to take any action which if taken prior to the date hereof
would have made any representation or warranty in this Article untrue
or incomplete.
(b) Schedule 3.6(b) sets forth the identity of all of the Persons
to which the Company and/or the Subsidiary are indebted for borrowed money and
the document(s) pursuant to which such debt has been incurred and the respective
amounts outstanding to such Person as reflected on the September Balance Sheet.
3.7. Properties; Assets. (a) Schedule 3.7 sets forth the address of the
principal executive office of the Company and the Subsidiary and the location of
all real property owned or leased by the Company and the Subsidiary and the
functions thereof, as well as the locations of all inventory of the Company and
the Subsidiary.
(b) The Company and the Subsidiary have, or prior to the Closing
will have, good and (in the case of real property) marketable title to, or in
the case of leased property valid and subsisting leasehold interests in, all
properties and assets (whether real or personal but excluding intangible assets)
reflected on the September Balance Sheet or acquired after September 30, 1997,
except for properties and assets sold since September 30, 1997, in the ordinary
course of business consistent with past practice or as set forth in Schedule
3.7. None of such properties or assets is subject to any Liens except:
(i) Liens disclosed in Schedule 3.7;
(ii) Liens for taxes not yet due or being contested in good faith
(and for which adequate reserves have been established on the September
Balance Sheet); or
(iii) Liens which do not materially detract from the value of such
property or assets as now used or materially interfere with any present
or intended use of such property or assets.
(c) There is no violation of any law, regulation or ordinance
(including without limitation laws, regulations or ordinances relating to
zoning, environmental, city planning or similar matters) relating to the
properties and assets of the Company and the Subsidiary except for such
violations as would not in the aggregate have a Material Adverse Effect.
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<PAGE> 24
(d) There are no pending or, to the knowledge of the Company after
due inquiry threatened, condemnation proceedings, lawsuits, or administrative
actions relating to the property or other matters affecting materially and
adversely the current use, occupancy, or value thereof.
(e) The legal description for each real estate parcel owned by the
Company or the Subsidiary and contained in the deed thereof, true and complete
copies of which are contained in Schedule 3.7, describes such parcel fully and
adequately, the buildings and improvements are located within the boundary lines
of the described parcels of land and do not encroach on any easement which may
burden the land.
(f) There are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties the right of
use or occupancy of any portion of the parcel of real property.
(g) Except as set forth in Schedule 3.7, there are no outstanding
options or rights of first refusal to purchase the parcel of real property, or
any portion thereof or interest therein.
(h) The amount of the Company's working capital as of the Closing
Date will not be materially less than the amount reflected on the September
Balance Sheet as measured on a basis consistent with the basis used in the
preparation of the September Balance Sheet and excluding the effect of the
Loans. None of the inventory in the possession of the Company is held on
consignment, and none of the inventory of the Company is consigned to third
parties.
(i) The buildings, machinery, equipment, and other tangible assets
that the Company owns and leases and which are used in its business as presently
conducted are free from material defects (patent and latent), have been
maintained in accordance with normal industry practice, and are in good
operating condition and repair (subject to normal wear and tear).
3.8. No Undisclosed Material Liabilities. There are no liabilities of
the Company or the Subsidiary of any kind whatsoever, whether accrued,
contingent, absolute or conditional, and whether or not the amount thereof is
determinable, that are in the aggregate material to the Company and the
Subsidiary taken as a whole, and there is no existing condition, situation or
set of circumstances which could reasonably be expected to result in such a
liability, other than:
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<PAGE> 25
(i) liabilities disclosed or provided for in the September
Balance Sheet; and
(ii) liabilities incurred in the ordinary course of business
since September 30, 1997.
3.9. Litigation. (a) There is no action, suit, investigation or
proceeding pending against or affecting, or to the knowledge of the Company
threatened against or affecting, the Company or the Subsidiary or any of their
respective properties before any court or arbitrator or any governmental body,
agency or official which, if determined or resolved adversely to the Company or
the Subsidiary, may have a Material Adverse Effect or which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the Merger and
there is no unsatisfied judgment, order, stipulation, injunction, decree or
award to which the Company or the Subsidiary or any of their properties is
subject.
(b) Neither the Company nor the Subsidiary has received notice of
any claim or allegation of personal death or material personal injury, property
or economic damage, any claim for punitive or exemplary damages, any material
claim for contribution or indemnification, or any claim for injunctive relief in
connection with any product sold or distributed or any service provided by it,
except for routine warranty claims.
3.10. Business Activities. (a) There is no agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or the
Subsidiary which has or could reasonably be expected to have the effect of
prohibiting any business practice of the Company or the Subsidiary, any
acquisition of property by the Company or the Subsidiary or the conduct of
business by the Company or the Subsidiary either before or after the Closing
Date.
(b) The customers, suppliers and sales representatives list
attached hereto as Schedule 3.10 contains a listing of: (i) the twenty largest
customers (in dollar volume); (ii) the twenty largest suppliers (in dollar
volume); and (iii) all sales representatives of the Company for the twelve
months ended September 30, 1997.
(c) To the knowledge of the Company, none of such customers or
suppliers have canceled or otherwise terminated its relationship with the
Company, or made any written threat to cancel or terminate its relationship with
the Company, for any reason, including the consummation of the transactions
contemplated hereby.
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<PAGE> 26
(d) [Intentionally Omitted]
(e) [Intentionally Omitted]
(f) Schedule 3.10 sets forth a true and complete list of each
financial institution with which the Company or the Subsidiary has an account
(giving the account number therefor) or safe deposit box and the names of the
persons authorized at the date hereof to draw thereon or to have access thereto
and all powers of attorney granted or executed on behalf of the Company and the
Subsidiary.
(g) Schedule 3.10 sets forth the current status of the Dade
Metals Company arrangement originally set forth in agreements dated as of
September 19, 1994.
3.11. Tax Matters. (a) Except as disclosed on Schedule 3.11:
(i) all Returns for any Tax period required to be filed by the
Company or the Subsidiary prior to the Closing have been or will be filed when
due in timely fashion and are complete and accurate in all material respects,
except where the failure to file such Returns or any incompleteness or
inaccuracy therein has not had, and could not have, a Material Adverse Effect;
(ii) all Taxes with respect to the businesses of the Company and
the Subsidiary, or as to which the Company or the Subsidiary is or may be
liable, that are required to be paid, collected, or withheld prior to the
Closing have been or will be timely paid or collected or withheld and remitted
to the appropriate governmental agency, except for those Taxes that are being
contested in good faith (and for which adequate provision has been made in
accordance with GAAP);
(iii) no material deficiencies for Taxes relating to the income,
properties, operations, or businesses of the Company or the Subsidiary have been
claimed, proposed, or assessed by any governmental authority prior to the
Closing; there is no pending or, to the best knowledge of the Company after due
inquiry, or the Company's counsel and tax advisers, threatened action, suit,
proceeding, investigation, audit, or claim for or relating to any liability in
respect of such Taxes, and there are no matters under discussion with any
governmental authorities with respect to Taxes that could result in a material
additional amount of such Taxes; audits of federal, state, and local Returns for
such Taxes have been completed by the relevant governmental authorities for each
period set forth in Schedule 3.11 and, except as set forth in such Schedule,
neither the Company nor the Subsidiary has been notified that any governmental
authority intends to audit any Return for any other period;
(iv) neither the Company nor any Subsidiary has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency;
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<PAGE> 27
(v) all material elections with respect to Taxes affecting the
Company or the Subsidiary as of the date hereof are set forth in Schedule 3.11;
neither the Company nor the Subsidiary (i) has consented at any time under
Section 341(f)(1) of the Code to have the provisions of Section 341(f)(2) of the
Code apply to any disposition of any assets of the Company or the Subsidiary,
(ii) has agreed, or is required, to make any adjustment under Section 481(a) of
the Code by reason of a change in accounting method or otherwise that will
affect the liability of the Company or any Subsidiary, (iii) has made an
election, or is required, to treat any asset as owned by another person pursuant
to the provisions of Section 168(f) of the Code or as "tax-exempt bond financed
property" or "tax-exempt use property" within the meaning of Section 168 of the
Code, (iv) has been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code, or (v) has made any of the foregoing
elections or is required to apply any of the foregoing rules under any
comparable state or local tax provision;
(vi) neither the Company nor the Subsidiary is or has ever been
an includible corporation in an affiliated group of corporations, within the
meaning of Section 1504 of the Code;
(vii) neither the Company nor any Subsidiary has ever been a
party to, or has otherwise been obligated under, a tax-sharing agreement or
similar arrangement;
(viii) neither the Company nor the Subsidiary has made or become
obligated to make, or will, as a result of any event connected with the
acquisition of the Company by Parent or any other transaction contemplated
herein, make or become obligated to make, any "excess parachute payment," as
defined in Section 280G of the Code (without regard to subsection (b)(4)
thereof);
(ix) there are no liens for Taxes (other than for current Taxes
that are not yet due and payable or are being contested in good faith) upon the
assets of the Company or the Subsidiary;
(x) all joint ventures, partnerships, or other arrangements or
contracts to which the Company or the Subsidiary is a party and that could be
treated as a partnership for federal income tax purposes are set forth in
Schedule 3.11;
(xi) the basis for federal income tax purposes of the assets of
the Company shown on the September Balance Sheet is set forth in Schedule 3.11;
(xii) the amount of the "net operating loss carryovers," within
the meaning of Section 172 of the Code, of the Company and the Subsidiary, and
the years in which the indicated amount of such net operating loss carryovers
expire under Section 172 of the Code, are as indicated on Schedule 3.11; and
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<PAGE> 28
(xiii) the use by the Company of its net operating loss
carryovers is not subject to any limitations under Section 382 of the Code or
any other provision of federal or state law, and the Company has not experienced
an "ownership change" within the meaning of Section 382 of the Code that would
affect the use of any of its net operating loss carryovers.
(b) "Tax" or "Taxes" means any federal, state, local or foreign
income, gross receipts, gross income, profits, franchise, transfer, sales, use,
payroll, occupation, property (real or personal), excise and similar taxes,
assessments, and governmental charges (including interest, penalties or
additions to such taxes). "Returns" means all returns, reports, estimates,
information returns and statements of any nature with respect to Taxes.
3.12. Employee Benefits.
(a) Schedule 3.12 lists each Employee Benefit Plan that any ERISA
Affiliate or the Company or any Subsidiary maintains, participates in or
contributes to for the benefit of employees or former employees of the Company
or any Subsidiary.
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract or fund) at all times has been maintained and
administered in compliance with its terms and has complied in form and
in operation in all respects with the applicable requirements of all
laws, regulations and rulings, including but not limited to ERISA and
the Code.
(ii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been timely
paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
(iii) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan and intended to be qualified under the Code has
received a determination letter from the Internal Revenue Service
("IRS") to the effect that it meets the requirements of Code Section
401(a) as amended by the Tax Reform Act of 1986 and subsequent
legislation for which the remedial amendment period (as defined by
regulations and rulings of the IRS) has not expired.
(iv) The Company does not participate in, and has never
participated in, any defined benefit Employee Pension Benefit Plan.
(v) The Company has delivered or caused to be delivered to Parent
true and complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from the
IRS, the most recent five (5) Form 5500 Annual Reports, all related
trust agreements, insurance contracts and other funding agreements
which implement each such Employee Benefit Plan, the most recent
actuarial valuations, and all information dated within the prior two
years regarding any plan funding waiver requests, IRS letter rulings
and requests therefor, requests
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<PAGE> 29
for technical advice, or other outstanding issue involving such
Employee Benefit Plan with the IRS, the Department of Labor, or the
PBGC.
(vi) No Reportable Event, "prohibited transaction" (as such term
is used in Section 406 of ERISA or Section 4975 of the Code) or
"accumulated funding deficiency" (as such term is used in Section 412
or Section 4971 of the Code) has heretofore occurred with respect to
any Employee Benefit Plan which is an Employee Pension Benefit Plan
that could give rise to liability to the Company or the Subsidiary.
(vii) None of the ERISA Affiliates, the Company or any Subsidiary
has contributed to or been required to contribute to any Multiemployer
Plan for the benefit of employees or former employees of the Company or
any Subsidiary during the prior six years.
(viii) (i) None of the ERISA Affiliates, or the Company or the
Subsidiary is providing or has an obligation to provide post-retirement
medical or life benefits to any employees or former employees of the
Company or the Subsidiary, exclusive of any obligations imposed by
COBRA, and (ii) there are no restrictions on the rights of any ERISA
Affiliate or the Company or the Subsidiary to amend or terminate any
post-retirement medical or life benefits without incurring any
liability therefor and no communications have been made to participants
with respect to guaranteeing any such benefits.
(ix) Consummation of the transactions contemplated by this
Agreement will not directly or indirectly result in an increase in the
amount of compensation or benefits or accelerate the vesting or timing
of payment of any benefits or compensation payable to or in respect of
any current or former employee of the Company or any Subsidiary under
the terms of existing agreements and/or arrangements the Company or any
Subsidiary.
(b) With respect to each Employee Benefit Plan that the Company
or any Subsidiary or any ERISA Affiliate maintains or has maintained during the
prior six (6) years or to which any of them contributes, or has been required to
contribute during the prior six (6) years:
(i) No action, claim, suit, proceeding, hearing, governmental
audit or investigation with respect to any such Employee Benefit Plan
or their assets (other than routine claims for benefits) is pending or
threatened.
(ii) Neither the Company nor any Subsidiary has incurred any
liability, and no event has occurred or is expected to occur which
could give rise to liability to the Company or the Subsidiary, to the
PBGC (other than PBGC premium payments) or otherwise under Title IV of
ERISA (including any withdrawal liability) with respect
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<PAGE> 30
to any Multiemployer Plan or any Employee Benefit Plan which is an
Employee Pension Benefit Plan.
3.13. Material Contracts.
(a) Except for agreements, contracts, plans, leases, arrangements
or commitments reflected on the September Balance Sheet, disclosed in Schedule
3.12 or disclosed to Parent pursuant to Schedule 3.13, neither the Company nor
the Subsidiary is a party to or subject to:
(i) any union contract or any employment contract or arrangement,
written or oral, with any officer, consultant, director or employee
providing for future annual compensation to such Person of $75,000 or
more;
(ii) any plan, contract or arrangement, written or oral, with any
employee providing for bonuses, pensions, deferred compensation,
retirement payments, profit-sharing or the like;
(iii) any lease providing for annual gross rentals (including
without limitation insurance, maintenance and taxes payable by the
Company and the Subsidiary pursuant to any net leases) of $200,000 or
more;
(iv) any sales, distribution or other similar agreement, which is
not terminable by the Company or the Subsidiary on 90 days' notice or
less, providing for the sale by the Company or the Subsidiary of
materials, supplies, goods, services or equipment and providing for
annual payments to the Company or the Subsidiary of $50,000 or more;
(v) any partnership, joint venture, or other similar contract,
arrangement or agreement;
(vi) any contract relating to indebtedness for borrowed money or
the deferred purchase price of property (whether incurred, assumed,
guaranteed or secured by any asset) other than such contracts providing
for the deferral of payment for 60 days or less and other than such
contracts providing for aggregate payments by the Company or the
Subsidiary of up to $100,000;
(vii) any license agreements, franchise agreements or agreements
in respect of similar rights granted to or held by the Company or the
Subsidiary; or
(viii) any contract with the United States, any other
governmental entity or political subdivision, or any agency or
instrumentality thereof;
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<PAGE> 31
(ix) any contract, commitment or arrangement for the purchase of
products from a single source supplier or in the nature of a
noncompetition agreement which in any way restricts the right of the
Company and the Subsidiary to conduct any business activity; or
(x) any other contract or commitment not made in the ordinary
course of business which is material to the Company and the Subsidiary
taken as a whole.
(b) All agreements, contracts, plans, leases, arrangements and
commitments disclosed in Schedule 3.13 or disclosed or required to be disclosed
pursuant to Section 3.12 or which are otherwise material to the Company and the
Subsidiary taken as a whole are valid and binding agreements of the Company or
the Subsidiary, are in full force and effect, and neither the Company, the
Subsidiary nor, to the knowledge of the Company any other party thereto is in
default in any material respect under the terms of any such agreement, contract,
plan, lease, arrangement or commitment or, at any time since December 31, 1996,
would have been in default but for a valid and effective waiver. True and
complete copies of all written contracts and summaries of all oral or implied
contracts listed on Schedule 3.13 have been delivered to Parent.
(c) Finders' Fees. Neither the Company nor, to the best of the
Company's knowledge any stockholder of the Company, has employed any investment
banker, broker, finder or other intermediary who might be entitled to any fee or
commission in connection with the transactions contemplated by this Agreement
which is payable by the Company or the Subsidiary.
3.14. Licenses. No license, franchise, permit or other similar
authorization held by the Company or the Subsidiary will be terminated or
impaired as a result of the transactions contemplated by this Agreement, except
such terminations or impairments as would not have a Material Adverse Effect.
3.15. Insurance. Schedule 3.15 lists, and the Company has furnished to
Parent true and complete copies of, all insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, employees,
officers and directors of the Company and the Subsidiary (including without
limitation workers' compensation policies). There is no claim by the Company or
the Subsidiary pending under any of such policies or bonds as to which coverage
has been questioned, denied or disputed by the underwriters of such policies or
bonds. All premiums payable under all such policies and bonds are current and
the Company and the Subsidiary are otherwise in compliance in all material
respects with the terms and conditions of all such policies and bonds. Such
policies of insurance and bonds (or other policies and bonds providing
substantially similar insurance coverage) are in full force and effect. Policies
of insurance and bonds are of the type and in amounts customarily carried by
persons conducting businesses similar to those of the Company and the
Subsidiary. The Company does not know
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<PAGE> 32
of any threatened termination of or premium increase with respect to any of such
policies or bonds.
3.16. Compliance with Laws. Except for violations which do not have and
will not have, individually or in the aggregate, a Material Adverse Effect,
neither the Company nor the Subsidiary is in violation of any applicable
provisions of any laws, statutes, ordinances or regulations.
3.17. Patents, Trademarks, etc. (a) Schedule 3.17 lists all patents and
trade and service marks which have been granted or registered, or for which an
application for grant or registration is pending, in each case which is owned
and is used or held for use by the Company or the Subsidiary (the "Intellectual
Property Rights") specifying as to each as applicable: (i) the nature of such
Intellectual Property Right; (ii) the owner of such Intellectual Property Right;
(iii) the jurisdictions by or in which such Intellectual Property Right has been
issued or registered or in which an application for such issuance or
registration has been filed, including the respective registration or
application numbers; and (iv) material licenses, sublicenses and other
agreements as to which the Company or any of its Affiliates is a party and
pursuant to which any Person is authorized to use such Intellectual Property
Right including the identity of all parties thereto, a description of the nature
and subject matter thereof, the royalty provided and the term thereof. The
Company is the sole and exclusive owner of, with all right, title and interest
in and to, free and clear of any Lien except for Liens in favor of the Company's
Lenders, the Intellectual Property Rights described in such list and has sole
and exclusive right (without being contractually obligated to pay in the future
compensation to any third party in respect thereof) to the use thereof or the
material covered thereby in connection with the services or products in respect
of which they are being used.
(b) Neither the Company nor the Subsidiary has any writings for
which a claim for copyright has been recorded or is pending.
(c) Neither the Company nor the Subsidiary (i) since January 1,
1995 has been sued or charged in writing with or been a defendant in any claim,
suit, action or proceeding relating to the business of the Company or the
Subsidiary not finally terminated prior to the date hereof involving a claim of
infringement of any patents, trademarks, service marks or copyrights, (ii) has
knowledge of any such charge or claim, or (iii) has knowledge of any
infringement since such date by any other person or any of the Intellectual
Property Rights. No Intellectual Property Right is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting the use thereof by
the Company or the Subsidiary or restricting the licensing thereof by the
Company or the Subsidiary to any Person. Neither the Company nor the Subsidiary
has entered into any agreement to indemnify any other person against any charge
of infringement of any patent, trademark, service mark or copyright.
(d) The consummation of the transactions contemplated by this
Agreement will not contravene or constitute a default under, require the consent
of any person pursuant to
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<PAGE> 33
or otherwise result in the termination or impairment of (or permit any Person to
terminate or otherwise impair) any Intellectual Property Right.
(e) Schedule 3.17 lists the legal names used by the Company and
the Subsidiary in all states where such names are not Binnings Building
Products, Inc.
3.18. Environmental Matters. (a) Except as described in the Selected
Soil Remedial Action Alterations and Estimated Cost Summary Report prepared by
M.P. Brown & Associates, Inc. for the Company's property located at 2805 N.E.
185th Street, Miami, Florida, dated August 1997 (the "Miami Report"), the
Company and its Subsidiaries have been for the past 8 years and is in compliance
with all applicable federal, state and local laws and regulations relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), including, without limitation, laws, standards and regulations relating
to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances, or
conditions, petroleum and petroleum products ("Materials of Environmental
Concern"), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, "Environmental Laws"), which compliance
includes, but is not limited to, the possession by the Company and its
Subsidiary of all material permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof. Except as described in the Miami Report, Neither the Company
nor any Subsidiary has received any communication (written or oral), whether
from a governmental authority, citizens group, employee or otherwise, that
alleges that the Company or any Subsidiary is not in such full compliance, and,
to the knowledge of the Company after due inquiry, there are no circumstances
that may prevent or interfere with such full compliance in the future. All
permits and other governmental authorizations currently held by the Company
pursuant to the Environmental Laws are identified in Schedule 3.18(a).
(b) Except as described in the Miami Report, there is no claim,
action, cause of action, investigation or notice (written or oral) by any person
or entity alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resource damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting for the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by the Company or the Subsidiary (collectively,
"Environmental Claims"), pending or threatened against the Company or any
Subsidiary or, to the knowledge of the Company after due inquiry, against any
person or entity whose liability for any Environmental Claim the Company or any
Subsidiary has retained or assumed either contractually or by operation of law.
(c) Except as described in the Miami Report, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that could form the basis of
any Environmental Claim against the Company or, to the knowledge
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<PAGE> 34
of the Company after due inquiry, against any person or entity whose liability
for any Environmental Claim the Company or any Subsidiary has retained or
assumed either contractually or by operation of law.
(d) Without in any way limiting the generality of the foregoing,
(i) all on-site and off-site locations where the Company or any Subsidiary has
released, disposed or arranged for the disposal of Materials of Environmental
Concern are identified in Schedule 3.18(d), (ii) all underground storage tanks,
and the capacity and contents of such tanks, located on property owned or leased
by the Company or any Subsidiary are identified in Schedule 3.18(d), (iii)
except as set forth in Schedule 3.18(d), there is no asbestos contained in or
forming part of any building, building component, structure or office space
owned or leased by the Company or any Subsidiary, and (iv) except as set forth
in Schedule 3.18(d), no polychlorinated biphenyls (PCB's) or PCB-containing
items are used or stored at an property owned or leased by the Company or any
Subsidiary.
3.19. Labor Matters. (a) Neither the Company nor the Subsidiary is a
party to any collective bargaining agreement and there is no election or
proceeding pending to recognize a union for any employees of the Company or the
Subsidiary, in each case as of the date hereof. There are no unfair labor
practice or other administrative or court proceedings pending, or to the
knowledge of the Company threatened, between the Company or the Subsidiary and
its employees and there has not occurred within the past two years any material
work stoppage or strike or any significant labor troubles at the facilities of
the Company or the Subsidiary.
(b) No present or former employee of the Company or any
Subsidiary has a pending claim against the Company or the Subsidiary (whether
under federal or state law) under any employment agreement, or otherwise, on
account of or for (i) overtime pay, other than overtime pay for the current
payroll period, (ii) wages or salary for any period other than the current
payroll period, (iii) vacation or time off (or pay in lieu thereof), other than
that earned in respect of the previous twelve months, or (iv) any violation of
any statute, ordinance or regulation relating to minimum wages or maximum hours
of work.
(c) As of the date hereof, no person has a pending claim against
the Company or the Subsidiary arising out of any material breach or violation of
any statute, ordinance or regulation relating to discrimination in employment or
employment practices or occupational safety and health standards (including
without limitation, the Occupational Safety and Health Act, the Fair Labor
Standards Act, Title VII of the Civil Rights Act of 1964, or the Age
Discrimination in Employment Act of 1967).
3.20 Disclosure. The Company has disclosed to Parent and Merger Sub any
and all facts which could have a Material Adverse Effect. No representation or
warranty by the Company in Section 3.1 through Section 3.20 of this Agreement or
any Schedule or Exhibit hereto or other document previously disclosed to Parent,
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements made herein or therein, in light
of the circumstances under which they were made, not misleading.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent and the Merger Sub represent and warrant that:
4.1. Corporate Existence and Power. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. Each of Parent and Merger Sub has
heretofore delivered to the Company true and complete copies of its charter and
bylaws.
4.2. Corporate Authorization. The execution, delivery and performance
by Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby are within the corporate
powers of Parent and Merger Sub, respectively, and have been duly authorized by
all necessary corporate action.
4.3. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated hereby require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority other than compliance with any applicable requirements of the HSR Act
and the filing of the Certificate of Merger.
4.4. Non-Contravention. The execution, delivery and performance by
Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby do not and will not
contravene or constitute a default under any provision of applicable law or
regulation (assuming compliance with the matters referred to in Section 4.3) or
of the charter or bylaws of Parent or Merger Sub or of any agreement, judgment,
injunction, order, decree, administrative interpretation, award or other
instrument binding upon Parent or Merger Sub.
4.5. Binding Effect. This Agreement constitutes, and when executed the
Escrow Agreement will constitute, a valid and binding agreement of Parent and
Merger Sub, as the case may be, enforceable in accordance with its terms except
as limited by bankruptcy, insolvency or other similar laws affecting the rights
of creditors generally and the application of equitable principles.
4.6 Finders' Fees. Parent and Merger Sub have not employed any
investment banker, broker, finder or other intermediary who might be entitled to
any fee or commission in connection with the transactions contemplated by this
Agreement which is not the obligation of Parent or Merger Sub.
4.7. Litigation. There is no action, suit, investigation or proceeding
pending against or affecting, or, to the knowledge of Parent or Merger Sub,
threatened against or
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affecting, Parent or Merger Sub or any of their Affiliates or any of their
respective properties before any court or arbitrator or any governmental body,
agency or official which in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the Merger.
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees that:
5.1. Conduct of the Company. (a) From the date hereof until the Closing
Date, the Company shall, and shall cause the Subsidiary to, conduct their
business in the ordinary course consistent with past practice and to use their
best efforts to preserve intact their business organization and relationships
with third parties and to keep available the services of their present officers
and key employees. Without limiting the generality of the foregoing, from the
date hereof until the Closing Date the Company shall not and shall not permit
the Subsidiary to take any of the following actions:
(i) amend or alter any material term of any outstanding security,
stock option, warrant, stock appreciation right, or other phantom
equity interest of the Company or the Subsidiary except as identified
on Schedule 3.3:
(ii) (A) incur, assume or guarantee any debt for borrowed money
other than borrowings under Company's Loan Agreement and up to $25,000
of borrowings to finance capital expenditures made in the ordinary
course of business; (B) issue or sell any securities convertible into
or exchangeable for debt securities of the Company or the Subsidiary;
or (C) issue or sell any options or other rights to acquire from the
Company or the Subsidiary any debt securities of the Company or the
Subsidiary or any securities convertible into or exchangeable for any
such debt securities;
(iii) create, assume or incur any Lien on any material asset of
the Company or the Subsidiary except for (A) Liens in favor of
Company's Lenders created pursuant to Company's Loan Agreement, (B)
Liens for taxes not yet due or being contested in good faith (and for
which adequate reserves shall be established), and (C) Liens on assets
securing debt not to exceed an aggregate of $25,000 incurred or assumed
for the purpose of financing all or any part of the cost of acquiring
such assets, provided that any such Liens attach to any such asset
concurrently with or within 30 days after the acquisition thereof;
(iv) assume, guarantee, endorse or otherwise become liable for,
the obligations of any other Person;
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(v) make any loan, advance to or investment in any Person other
than loans, advances or contributions to or investments made in the
ordinary course of business or as required under Section 5.1(b);
(vi) issue or sell Company Shares or Company Securities, issue or
sell any Subsidiary Securities or redeem, repurchase or otherwise
acquire shares of capital stock or other equity interests in or other
securities of the Company or the Subsidiary or pay or make any dividend
or other distribution with respect thereto other than as described in
Section 5.1(b);
(vii) enter into any transaction, contract or agreement, make any
commitment relating to its assets or business (including the
acquisition or disposition of any assets with an aggregate value of
$25,000 or greater), relinquish any contract or other right of the
Company or the Subsidiary or make any change in its operations that, in
each case, is material to the Company and the Subsidiary taken as a
whole, other than those contemplated by this Agreement, made in the
ordinary course of business or approved by Parent;
(viii) adopt any significant change in any method of accounting or
accounting practice used by the Company or the Subsidiary other than by
reason of a concurrent change in GAAP;
(ix) (A) grant or make any severance or termination payments to
any officer, director or employee of the Company or the Subsidiary, (B)
enter into any employment, deferred compensation or other similar
agreement (or enter into any amendment to any such existing agreement)
with any officer, director or employee of the Company or the
Subsidiary, (C) increase benefits payable under any existing severance
or termination pay policies or employment agreements or (D) pay or
provide for any increase in compensation, bonus, or other benefits
payable to officers, directors or employees of the Company or the
Subsidiary except, in each case, in the ordinary course of business
consistent with past practice and with respect to which Parent has
received advance notice;
(x) adopt any new pension, profit sharing, incentive, bonus,
deferred compensation, stock purchase, stock option, group insurance,
severance, retirement, collective bargaining or other employee benefit
plan, agreement or arrangement other than renewals of any such plans,
agreements or arrangements already in effect;
(xi) change the outstanding Company Shares or capital stock or
other ownership interests (phantom or otherwise) in or the
capitalization of the Company or the Subsidiary, whether by reason of a
reclassification, recapitalization, stock split or combination,
exchange or readjustment of shares, stock dividend or otherwise, except
as described on Schedule 3.3;
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(xii) amend its charter or bylaws;
(xiii) merge or consolidate with any Person, acquire any stock or
other ownership interest in any Person (except as described in Section
5.1(b)) or the assets of any business as an entirety or liquidate,
dissolve or otherwise reorganize or seek protection from creditors,
except through the Merger;
(xiv) take, or omit to take, any action, the effect of which would
reasonably be expected to cause any of the representations and
warranties in Article III to be inaccurate at or as of any time prior
to the Closing Date; and
(xv) agree or commit to do any of the foregoing.
(b) Prior to the Effective Time, and only if requested by Parent not
less than one business day prior to the proposed Closing Date, the Company shall
contribute its real property located at 2805 N.E. 185th Street, Miami, Florida,
through a quit-claim deed to a newly formed, wholly owned subsidiary in the form
of a Delaware corporation with the Company as its sole stockholder. If Parent
makes such request, then Parent shall be responsible for the payment of any
transfer taxes associated with such transaction.
5.2. Access to Information. The Company shall give Parent, its counsel,
financial advisors, auditors, prospective lenders, investment bankers and their
agents and other authorized representatives full access to the offices,
properties, books and records of the Company and the Subsidiary, will furnish to
Parent, its counsel, financial advisors, auditors, prospective lenders,
investment bankers and their agents and authorized representatives such
financial and operating data and other information as such persons may
reasonably request (including access to workpapers of the Company's Accountants
and information relating to the Company's business and products and the
financial statements and other financial information of the Company for use by
Parent and Merger Sub in connection with the efforts to obtain financing to
consummate the transactions contemplated hereby) and will instruct the Company's
employees, counsel and financial advisors, and the employees, counsel and
financial advisors of the Company and the Subsidiary, to cooperate with such
persons in their investigation of the business of the Company and the
Subsidiary; provided that no investigation pursuant to this Section shall affect
any representation or warranty given by the Company.
5.3. Other Offers. From the date hereof until the termination hereof,
neither the Company, GLI nor the officers, directors, employees or other agents
of such Person will, directly or indirectly, (i) take any action to solicit,
initiate or encourage any offer or indication of interest from any Person with
respect to any Acquisition Proposal (as hereinafter defined) or (ii) engage in
negotiations with, or disclose any nonpublic information relating to the Company
or the Subsidiary or afford access to the properties, books or records of the
Company or the Subsidiary to, any Person that may be considering making, or has
made, an offer with respect to an Acquisition Proposal. The Company will
promptly notify Parent and Merger Sub after receipt of any offer or indication
that any Person in considering making an offer with respect
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to an Acquisition Proposal or any request for nonpublic information relating to
the Company or the Subsidiary or for access to the properties, books or records
of the Company or any Subsidiaries by any Person that may be considering making,
or has made, an offer with respect to an Acquisition Proposal and will keep
Parent fully informed of the status and details of any such offer, indication or
request. "Acquisition Proposal" means any proposal for the acquisition of, or
merger or other business combination involving, the Company or the Subsidiary or
the sale of the Company Shares or a substantial portion of the assets of the
Company or the Subsidiary, other than the transactions contemplated by this
Agreement. Neither the stockholders of the Company nor the Company have
conducted any discussions or negotiations with any Person (other than Parent and
Merger Sub) relating to any Acquisition Proposal since September 24, 1997.
5.4. Notices of Certain Events. The Company shall promptly notify
Parent and Merger Sub of:
(i) any notice or other communication received by the Company or
GLI from any Person alleging that the consent of such Person is or may
be required in connection with the transactions contemplated by this
Agreement;
(ii) any notice or other communication received by the Company or
GLI from any governmental or regulatory agency or authority in
connection with the transactions contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the knowledge of the Company after due inquiry
threatened against, relating to or involving or otherwise affecting the
Company or the Subsidiary which, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to
Section 3.9 or which relate to the consummation of the transactions
contemplated by this Agreement; and
(iv) any material adverse change in the condition (financial or
otherwise), business, assets, liabilities, capitalization, financial
position, operations, results of operations or prospects of the Company
and the Subsidiary.
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUB
Parent and Merger Sub covenant and agree that:
6.1. Confidentiality. They will hold, and will cause its officers,
directors, employees, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents
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and information concerning the Company and the Subsidiary furnished to Parent or
Merger Sub in connection with the transactions contemplated by this Agreement,
except to the extent that such information can be shown to have been (i)
previously known on a nonconfidential basis by Parent or Merger Sub, (ii) in the
public domain through no fault of Parent or Merger Sub or (iii) later lawfully
acquired by Parent or Merger Sub or from sources other than the Company;
provided that Parent and Merger Sub may disclose such information to their
officers, directors, agents, lenders and other investors in connection with the
transactions contemplated by this Agreement so long as such persons are informed
by Parent or Merger Sub of the confidential nature of such information and are
directed by Parent and Merger Sub to treat such information confidentially.
Parent and Merger Sub's obligations to hold any such information in confidence
shall be satisfied if they exercise the same care with respect to such
information as it would take to preserve the confidentiality of its own similar
information. If this Agreement is terminated, such confidence shall be
maintained and Parent and Merger Sub will, and will cause its officers,
directors, employees, consultants, advisors, lenders and agents to, destroy or
deliver to the Company, upon request, all documents and other materials, and all
copies thereof, obtained by Parent or Merger Sub or on its behalf from the
Company in connection with this Agreement that are subject to such confidence.
The provisions of this Section 6.1 shall expire as of the Closing Date.
6.2. Breakup Fee. If on or before December 31, 1997, (i) Parent
completes a public offering which includes (on a pro forma basis) the financial
results of the Company, (ii) the Company satisfies all of the conditions set
forth in Section 9.1(i), (ii), (iii), (iv), (vii), (viii), (ix), (x), (xi) and
(xii), (iii) Parent and Merger Sub are not entitled to terminate this Agreement
pursuant to Section 8.1(iv), and (iv) the Effective Time has not occurred nor
been extended pursuant to Section 2.2(c), then Parent shall pay the Company a
breakup fee of $625,000, and such fee shall be due and payable not later than
March 31, 1998.
ARTICLE VII
COVENANTS OF COMPANY, PARENT AND MERGER SUB
The parties hereto agree that:
7.1. Best Efforts. Subject to the terms and conditions of this
Agreement each party will use its best efforts to take or cause to be taken all
action and to do or cause to be done all things necessary proper or advisable
under applicable laws and regulations to consummate the transactions
contemplated by this Agreement.
7.2. Certain Filings. The Company, Parent and Merger Sub shall
cooperate with one another (i) in connection with the preparation of Parent
Disclosure Documents, (ii) in determining whether any other action by or in
respect of or filing with a governmental body, agency or official, or authority
or any actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts in connection with the consummation of the
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transactions contemplated by this Agreement and (iii) in seeking any such
actions, consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Parent Disclosure
Documents and seeking timely to obtain any such actions, consents, approvals or
waivers.
7.3. Public Announcements. The Company will consult with Parent before
issuing any press release or making any public statement with respect to this
Agreement and the transactions contemplated hereby. Parent is authorized, to the
extent required by applicable law or to facilitate the consummation of the
transactions contemplated by this Agreement, to issue any such press release or
make any such public disclosure after providing the Company with at least 48
hours notice prior to issuing any such press release or making any such public
disclosure.
7.4. Agreement to Take Necessary and Desirable Actions. The Company,
and Parent and Merger Sub agree, to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be necessary or desirable in order to consummate or implement expeditiously
the transactions contemplated by this Agreement.
ARTICLE VIII
TERMINATION OF AGREEMENT
8.1. Termination of Agreement. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing:
(i) Mutual Consent. By mutual written consent of the Company,
Parent and Merger Sub duly authorized by their respective Boards of
Directors.
(ii) Cut-Off Date. By the Company or Parent and Merger Sub if the
Closing Date shall not have occurred on or before December 31, 1997,
unless Parent and Merger Sub extend the cut-off date pursuant to
Section 2.2(c) or the Company, Parent and Merger Sub agree to a
different date in writing.
(iii) Court Order, etc. By the Company or Parent if (A) the
consummation of the transactions contemplated hereby shall violate any
nonappealable final order, decree or judgment of any court or
governmental body having competent jurisdiction or (B) there shall be a
statute, rule or regulation which makes the consummation of the
transactions contemplated hereby illegal or otherwise prohibited.
(iv) Material Adverse Change. By Parent and Merger Sub if in their
reasonable judgment there has been any material adverse change in the
business,
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assets, liabilities, financial position, operation, results of
operations or prospects of the Company and the Subsidiary taken as a
whole since December 31, 1996.
8.2. Effect of Termination: Right to Proceed. In the event that this
Agreement shall be terminated pursuant to Section 8.1 or because of the failure
to satisfy any of the conditions specified in Article IX, all further
obligations of the Company to Parent and Merger Sub, or of Parent and Merger Sub
to the Company, under this Agreement shall terminate without further liability
of the Company or Parent or Merger Sub (except to the extent that the failure to
satisfy any of such conditions is the result of a breach by the Company of its
obligations under Section 7.1 or a breach by Parent or Merger Sub of its
obligations under Section 7.1), except for the obligations of the Parent and
Merger Sub under Section 6.1 and Section 6.2. Nevertheless, anything in this
Agreement to the contrary notwithstanding, if any of the conditions to the
obligations of the Company or of Parent or Merger Sub specified in Section 9.2
or Section 9.1, respectively, have not been satisfied, the Company or Parent or
Merger Sub, as the case may be, in addition to any other rights which may be
available to it, shall have the right to waive such conditions and to proceed
with, and to require the other parties hereto (subject to the satisfaction of
the respective conditions to their obligations under Article IX) to proceed
with, the Closing and the consummation of the other transactions contemplated
hereby.
ARTICLE IX
CONDITIONS TO THE CLOSING
9.1. Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub hereunder are subject to the satisfaction
at or prior to the Closing of the following conditions:
(i) Performance. The Company shall have performed in all material
respects each of the acts and undertakings of the Company to be
performed at or before the Closing pursuant to this Agreement and
Parent and Merger Sub shall have received a certificate signed by the
Company and dated the Closing Date to such effect.
(ii) Representations and Warranties True. Each of the
representations and warranties of the Company contained herein and in
any certificate or other writing delivered by the Company pursuant
hereto or in connection herewith shall be true on and as of the Closing
Date with the same effect as though made on and as of such date and
Parent and Merger Sub shall have received a certificate signed by the
chief executive officer and the chief financial officer of the Company
and dated the Closing Date to such effect.
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(iii) Corporate Existence. Parent and Merger Sub shall have
received all documents it may reasonably request relating to the
existence of the Company and the Subsidiary and the authority of the
Company to enter into this Agreement.
(iv) Opinion of Company Counsel. Parent and Merger Sub shall have
received an opinion of Olshan Grundman Frome & Rosenzweig LLP, counsel
to the Company, dated the Closing Date, substantially in the form of
Exhibit E hereto. In rendering its opinion, Olshan Grundman Frome &
Rosenzweig LLP may rely, as to matters of fact, upon the
representations of the Company contained in this Agreement and upon
certificates of public officials and of officers of the Company and the
Subsidiary.
(v) No Violation of Statutes, Orders, etc. There shall not be any
statute, rule or regulation which makes it illegal for Parent or Merger
Sub to consummate the transactions contemplated hereby or any order,
decree or judgment enjoining Parent or Merger Sub from consummating the
transactions contemplated hereby.
(vi) Financing. Parent and Merger Sub shall have received on terms
and conditions satisfactory to them financing needed to consummate the
transactions contemplated hereby.
(vii) Lender Approval. The Company shall have obtained any
necessary approval of this Agreement and the Merger from the Company's
Lenders.
(viii) Material Contracts, Approvals, Permits and Leases. Parent
shall be reasonably satisfied that it or Merger Sub may assume all
material contracts, approvals, permits and leases of the Company and
the Subsidiary and that no such contracts or leases will conflict with
or result in a material breach or default under any material contract,
approval, permit or agreement of Parent.
(ix) HSR Act. The filing and waiting period requirements of the
HSR Act relating to the Merger shall have been complied with.
(x) Recapitalization. Parent shall have received evidence, in form
and substance satisfactory to Parent, that the steps described in
Schedule 3.3 with respect to changes in the capital structure of the
Company shall have been agreed to by all affected parties (including
without limitation the agreement by the ReliaStar Holders to exchange
all of its interest in Company Shares and Company Securities in
exchange for the ReliaStar Payment).
(xi) Payoff Letters. Parent shall have examined executed copies of
the releases of the security interests of the Company's Lenders and
other evidence of the satisfaction of the Loans and Secured Notes, with
assurance from the Company's Lenders that the releases of the Company
from all outstanding owing to the
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Company's Lenders will be delivered upon payment of amounts not to
exceed the Payoff Amount.
(xii) General. All actions to be taken by the Company in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Parent.
9.2. Conditions to Obligations of the Company. The obligations of the
Company and the holders of the Company Shares hereunder are only subject to the
satisfaction at or prior to the Closing to the following conditions.
(i) Performance. Parent and Merger Sub shall have performed in all
material respects each of the acts and undertakings of Parent and
Merger Sub to be performed at or before the Closing pursuant hereto and
the Company shall have received a certificate dated the Closing Date
and signed by an authorized representative of Parent and Merger Sub to
such effect.
(ii) Representations and Warranties True. Each of the
representations and warranties of Parent and Merger Sub contained in
this Agreement and in any certificate or other writing delivered
pursuant hereto or in connection with the transactions contemplated
hereby shall be true on and as of the Closing Date with the same effect
as though made on and as of such date and the Company shall have
received a certificate dated the Closing Date and signed by an
authorized representative of Parent and Merger Sub to such effect.
(iii) Opinion of Special Counsel to Parent. The Company shall have
received an opinion of Squire, Sanders & Dempsey L.L.P., special
counsel to Parent and Merger Sub, substantially in the form of Exhibit
F hereto. In rendering such opinion such counsel may rely as to matters
of fact upon certificates of public officials and of officers of Parent
and Merger Sub.
(iv) No Violation of Statutes, Orders etc. There shall not be any
statute, rule or regulation which makes it illegal for the Company to
consummate the transactions contemplated hereby or any order decree or
judgment which enjoins the Company from consummating the transactions
contemplated hereby.
(v) HSR Act. The filing and waiting period requirements of the HSR
Act relating to the Merger shall have been complied with.
(vi) General. All actions to be taken by the Parent and Merger Sub
in connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the
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transactions contemplated hereby will be reasonably satisfactory in
form and substance to the Company.
ARTICLE X
SURVIVAL AND REMEDY; INDEMNIFICATION
10.1. Survival; Remedy for Breach. The representations and warranties
of the parties hereto contained herein or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall survive the Closing
only through the Escrow Claim Expiration Date and shall be limited to the amount
of the Escrow Fund. Notwithstanding the preceding sentence, any representation
or warranty in respect of which indemnity may be sought under Section 10.2 shall
survive the time at which it would otherwise terminate pursuant to such
sentence, if notice of the inaccuracy thereof giving rise to such indemnity
shall have been given to the party against whom such indemnity may be sought,
prior to such time, provided, however, that the procedures for making claims
pursuant to Section 10.2 shall be governed by the Escrow Agreement. All
covenants and other agreements included in this Agreement shall survive the
Closing except as indicated therein.
10.2. Indemnification by the Stockholders. Subject to the terms and
conditions of the Escrow Agreement, the Stockholders hereby indemnify each
Parent Indemnitee against and agree to hold each Parent Indemnitee harmless, to
the extent of the Escrow Fund, from any and all damage, loss, liability,
penalty, expense, assessment, settlement or judgment (including, without
limitation, reasonable expenses of investigation and attorneys' fees and
expenses in connection with any action, suit or proceeding brought by or against
any such Parent Indemnitee) incurred or suffered by any such Parent Indemnitee
arising out of (i) the inaccuracy of any of the representations or warranties
made by the Company or the breach of any covenant or agreement of the Company,
if and to the extent that such damage, loss, liability, expense, assessment,
settlement or judgment exceeds amounts expressly reserved for such matters on
the September Balance Sheet or (ii) the information provided by the Company or
the Subsidiary for use in the Parent Disclosure Documents to the extent such
information contained an untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statement made, in light of the
circumstances under which they were made, not misleading; provided, however,
that any claims hereunder must be made in accordance with the provisions of the
Escrow Agreement and shall be limited to the amounts contained in the Escrow
Fund, and provided further that no claim hereunder may be made until the
aggregate amount of all claims by Parent Indemnitees hereto exceed $100,000.
10.3. Indemnification by Parent. Parent hereby indemnifies each
Stockholder Indemnitee (as hereinafter defined) against and agrees to hold each
Stockholder Indemnitee harmless from any and all damage, loss, liability,
expense, assessment, settlement or judgment (including, without limitation,
reasonable expenses of investigation and attorneys' fees and
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expenses in connection with any action, suit or proceeding brought against any
such Stockholder Indemnitee) incurred or suffered by any such Stockholder
Indemnitee arising out of (i) the inaccuracy of any of the representations or
warranties made by Parent or Merger Sub in Article IV or any breach of any
covenant or agreement of Parent or Merger Sub, and (ii) information about the
Company, its Stockholders and agents contained in the Parent Disclosure
Documents filed with the SEC (other than any such damage, loss, liability,
expense, assessment, settlement or judgment caused by any statement in such
Parent Disclosure Document based upon information supplied by the Company
specifically for use in such Parent Disclosure Document which contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statement made, in light of the circumstances
under which they were made, not misleading). Parent's obligation to provide the
indemnity pursuant to this Section 10.3 shall expire on the first anniversary of
the Closing.
10.4. Procedures. (a) For purposes of this Article X, the term "Parent
Indemnitee" shall include Parent and any of its Affiliates and, effective at the
Closing, the Company and the Subsidiary. For purposes of this Article X, the
term "Stockholder Indemnitee" shall include each holder of Company Shares. The
procedures for handling claims of any Parent Indemnitee are set forth in the
Escrow Agreement. For purposes of this Section 10.4, the term "Indemnifying
Party" shall mean Parent, and "Indemnified Party" shall mean a Stockholder
Indemnitee.
(b) Each Indemnified Party shall give prompt notice to the
Indemnifying Party of the assertion of any claim, or the commencement of any
suit, action or proceeding in respect of which indemnity may be sought hereunder
and of any damage, loss, liability or expense which the Indemnified Party deems
to be within the ambit of this Section 10.4, specifying with reasonable
particularity the basis therefor and will give the Indemnifying Party such
information with respect thereto as the Indemnifying Party may reasonably
request. The Indemnifying Party may, at its own expense, (i) participate in and,
(ii) upon notice to the Indemnified Party, assume the defense of any such suit,
action or proceeding; provided that (i) the Indemnifying Party's counsel is
reasonably satisfactory to the Indemnified Party, (ii) the Indemnifying Party
shall thereafter consult with the Indemnified Party upon the Indemnified Party's
reasonable request for such consultation from time to time with respect to such
suit, action or proceeding and (iii) the Indemnifying Party shall not, without
the Indemnified Party's consent, agree to any settlement with respect to any Tax
if the effect of such settlement would be an increase in the liability of the
Indemnified Party with respect to any Tax for any period beginning after the
Closing. If the Indemnifying Party assumes such defense, the Indemnified Party
shall have the right (but not the duty) to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed by
the Indemnifying Party. The Indemnifying Party shall be liable for the fees and
expenses of counsel employed by the Indemnified Party for any period during
which the Indemnifying Party has not assumed the defense thereof. Whether or not
the Indemnifying Party chooses to defend or prosecute any claim, all of the
parties hereto shall cooperate in the defense or prosecution thereof.
(c) No Indemnifying Party shall be liable under this Section 10.4
for any settlement, effected without its consent or resulting from a proceeding
in which such Indem-
- 41 -
<PAGE> 47
nifying Party was not permitted an opportunity to participate, of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder.
No investigation by any Indemnified Party at or prior to the Closing shall
relieve any Indemnifying Party of any liability under this Article XI. No
Indemnified Party shall make any claim for indemnification if any Indemnified
Party had or the Company actual knowledge that the basis for such claim existed
prior to the Closing.
(d) Any claim of any Stockholder Indemnitee under this Section
10.4 may be made and enforced by the Stockholder affiliated with such
Stockholder Indemnitee on behalf of any such Stockholder Indemnitee.
ARTICLE XI
MISCELLANEOUS
11.1. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if sent by telecopier or by
registered or certified mail, postage prepaid, addressed as follows:
To Parent and Merger Sub (and to the Company/Surviving Corporation
after the Effective Time):
c/o American Architectural Products Corporation
755 Boardman-Canfield Road
South Bridge Executive Park
Building G West
Boardman, Ohio 44512
Attention: President
Telecopy: (330) 965-9915
with copies to:
Alan N. Waxman
Squire, Sanders & Dempsey L.L.P.
350 Park Avenue
New York, New York 10022
Telecopy: (212) 872-9815
To the Company (prior to the Effective Time) and Stockholders'
Representative:
- 42 -
<PAGE> 48
Binnings Building Products, Inc.
c/o Lehigh Group
810 Seventh Avenue
27th Floor
New York, New York 10019
Attention: Mr. Salvatore J. Zizza
Telecopy: (212) 397-5832
with copies to:
Ilan K. Reich, Esq.
Olshan, Grundman, Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
Telecopy: (212) 935-1782
or such other addresses as shall be furnished by like notice by such party. Any
such notice or communication given by mail shall be deemed to have been given
four days after the date so mailed, and any such notice or communication given
by telecopy shall be deemed to have been given when transmitted.
11.2. Expenses. Except as otherwise provided herein, all legal and
other costs and expenses incurred in connection with this Agreement and the
transactions contemplated thereby shall be paid by the party incurring such
expenses (whether or not such costs and expenses exceed the Expense Allocation);
provided that for purposes of this Section any such costs and expenses incurred
by a holder of Company Shares or Company Securities (other than normal business
expenses of Company personnel) shall be deemed to have been incurred by the
holder of Company Shares or Company Securities and not by the Company or any
other party hereto, and the Company shall not be liable for transaction expenses
in excess of $100,000 (including without limitation the fees and expenses of any
counsel paid for by the Company or its Subsidiary), and to the extent the amount
of transaction expenses exceeds such amount, the Adjusted Net Merger
Consideration shall be reduced through a claim by Parent against the Escrow
Fund.
11.3. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns, provided, however, that neither this Agreement nor any right hereunder
may be assigned by any party without the consent of the other parties hereto,
except that (i) prior to the Closing Date, Parent or Merger Sub may assign its
rights and obligations to an Affiliate of Parent so long as Parent, or Merger
Sub, as the case may be, remains liable for such assignee's performance
hereunder and (ii) on or after the Closing Date, Parent may assign its rights
and obligations hereunder to any purchaser(s) the business acquired hereunder or
in connection with a collateral assignment of this Agreement to any lender or
group of lenders, or one or more agents therefor, or to any
- 43 -
<PAGE> 49
trustee serving on behalf of holders of debt securities (including without
limitation any assignment to a purchaser in connection with the foreclosure on
or other disposition by such lender or trustee of such collateral).
11.4. Entire Agreement; Amendments. This Agreement, including the
Schedules and Exhibits hereto, and the other instruments and agreements referred
to herein, embody the entire agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior agreements with respect thereto
including, without limitation, the letter agreement between the Company and the
Parent dated September 24, 1997 and the five-page binding agreement dated
November 10, 1997. This Agreement may be amended but only in a writing signed by
Parent, Merger Sub and the Company.
11.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall together constitute one and the same instrument
and shall become effective when one or more counterpart, have been signed by
Parent and Merger Sub and delivered to the Company and one or more counterparts
have been signed by the Company and delivered to Parent and Merger Sub.
11.6. Severability. If any term, provision, covenant or restriction of
this Agreement or the application thereof to any person or circumstance should
be held by an administrative agency or court of competent jurisdiction to be
invalid, void, or unenforceable, then the remainder of this Agreement and the
application of such term, provision, covenant, or restriction to other persons
or circumstances shall not be affected thereby, but rather shall be enforced to
the greatest extent permitted by law. Further, it is the intent of the parties
that if any term, provision, covenant, or restriction of the Agreement should be
held to be invalid, void, or unenforceable as applied to any person or
circumstance, then such term, provision, covenant, or restriction shall be
modified to the extent necessary in order to render the same enforceable,
consistent with the expressed objectives of the parties hereto for entering into
this Agreement.
11.7. Captions. The captions herein are inserted for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
11.8. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York (without regard to conflict
of law principles).
11.9. Stockholders' Representative. (a) The Stockholders'
Representative has been appointed by the holders of the Company Shares and is
hereby appointed as the agent for such holders (i) to receive any notices from
Parent or Merger Sub after the Effective Time under this Agreement and the
Escrow Agreement; and (ii) to act as the representative of holders of the
Company Shares in the computation of 1997 EBITDA and pursuant to the Escrow
Agreement; and (iii) the Stockholders' Representative is authorized to take any
action deemed by it to be appropriate or necessary to carry out the provisions
of, and to determine the rights of holders of Company Shares under, this
Agreement and the Escrow Agreement. Parent and Merger Sub and the other holders
of the Company Shares shall be entitled to rely on any representations and
- 44 -
<PAGE> 50
instruments made or executed by the Stockholders' Representative and any notice
to be sent hereunder with respect to matters relating to the scope of
Stockholders' Representative's services shall be sufficiently delivered to the
Stockholders' Representative when sent to the Stockholders' Representative in
accordance with Section 11.1.
(c) The Stockholders' Representative shall be compensated for its
services under this Agreement and the Escrow Agreement, including its
out-of-pocket expenses incurred in connection with this Agreement and the Escrow
Agreement, solely and exclusively from the funds available through the Expense
Allocation, and the Stockholders' Representative shall have no claim against the
Company, Parent or Merger Sub for any fees or expenses.
(d) The Stockholders' Representative (i) shall not be liable to any
holders of Company Shares for any error in judgment, acts done or omitted by it
in good faith, or mistake of fact or law unless caused by negligence or willful
misconduct; (ii) shall be entitled to treat as genuine any letter or other
document furnished by any Parent Indemnitee, any holder of the Company Shares,
the Escrow Agent or Parent or Merger Sub and believed by the Stockholders'
Representative to be genuine and to have been signed and presented by the proper
party or parties; and (iii) shall be promptly reimbursed from the Expense
Allocation for attorneys' fees and other reasonable out-of-pocket expenses
incurred by it in connection with this Agreement and the Escrow Agreement.
[SIGNATURE PAGE FOLLOWS]
- 45 -
<PAGE> 51
IN WITNESS WHEREOF, this Agreement has been executed on behalf of each
of the parties hereto as of the day and year first above written.
AMERICAN ARCHITECTURAL PRODUCTS
CORPORATION
By /s/ Frank J. Amedia
-----------------------------
Title: President
BBPI ACQUISITION CORPORATION
By /s/ Frank J. Amedia
-----------------------------
Title: President
BINNINGS BUILDING PRODUCTS, INC.
By /s/ Salvatore J. Zizza
-----------------------------
Title: Chairman of the Executive Committee
I hereby acknowledge and accept my appointment as Stockholders'
Representative pursuant to the foregoing Agreement as of the date first above
written.
/s/ Salvatore J. Zizza
- ----------------------
SALVATORE J. ZIZZA
- 46 -
<PAGE> 52
The following schedules to the Plan and Agreement of Merger have been
omitted from this Exhibit 2.1. The Company agrees to furnish supplementally a
copy of any omitted schedule to the Securities and Exchange Commission upon
request.
Exhibit A-1 Action in Writing by Approving Stockholders
Exhibit A-2 Form of Notice to Non-Approving Shareholders
Exhibit B September Balance Sheet
Exhibit C Restated Certificate of Incorporation
Exhibit D Form of Escrow Agreement
Exhibit E Opinion of Olshan Grundman Frome & Rosenzweig LLP
Exhibit F Opinions of Squire, Sanders & Dempsey L.L.P.
Schedule 3.3. Capitalization
Schedule 3.6. Absence of Certain Changes
Schedule 3.7. Properties; Assets
Schedule 3.10. Business Activities
Schedule 3.11. Tax Matters
Schedule 3.12. Employee Benefits
Schedule 3.13. Material Contracts
Schedule 3.15. Insurance
Schedule 3.17. Patents, Trademarks, etc.
Schedule 3.18. Environmental Matters
<PAGE> 1
Exhibit 2.2
ASSET PURCHASE AGREEMENT
AMONG
DCI/DWC ACQUISITION CORP.
(BUYER)
AND
DANVID COMPANY, INC.
AND
DANVID WINDOW COMPANY
(SELLERS)
NOVEMBER 10, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Definitions........................................................ 1
2. Purchase and Sale of Danvid and DWC Assets......................... 7
(a) Basic Transaction......................................... 7
(b) Purchase Price............................................ 7
(c) The Closing, Pre-Closing.................................. 11
(d) Deliveries at the Closing................................. 11
3. Representations and Warranties Concerning the Transaction.......... 11
(a) Representations and Warranties of the Sellers............. 11
(b) Representations and Warranties of the Buyer............... 13
4. Representations and Warranties Concerning Danvid and DWC........... 14
(a) Organization, Qualification, and Corporate Power.......... 14
(b) Capitalization............................................ 14
(c) Noncontravention.......................................... 15
(d) Brokers' Fees............................................. 15
(e) Title to Assets........................................... 15
(f) Subsidiaries.............................................. 16
(g) Financial Statements...................................... 16
(h) Events Subsequent to Most Recent Fiscal Year End.......... 16
(i) Undisclosed Liabilities................................... 18
(j) Legal Compliance.......................................... 18
(k) Tax Matters............................................... 18
(l) Real Property............................................. 20
(m) Intellectual Property..................................... 20
(n) Tangible Assets........................................... 21
(o) Inventory................................................. 22
(p) Contracts................................................. 22
(q) Notes and Accounts Receivable............................. 23
(r) Powers of Attorney........................................ 24
(s) Insurance................................................. 24
(t) Litigation................................................ 24
(u) Product Warranty.......................................... 25
(v) Product Liability......................................... 25
(w) Employees................................................. 25
(x) Employee Benefits......................................... 25
(y) Guaranties................................................ 25
(z) Environment, Health, and Safety........................... 25
(aa) Certain Business Relationships with Danvid................ 26
(ab) Disclosure................................................ 26
(ac) Schedules................................................. 26
i
<PAGE> 3
5. Pre-Closing Covenants.............................................. 26
(a) General................................................... 26
(b) Notices and Consents...................................... 26
(c) Operation of Business..................................... 27
(d) Preservation of Business.................................. 27
(e) Full Access............................................... 27
(f) Notice of Developments.................................... 27
(g) Exclusivity............................................... 27
6. Incidental Transactions and Post-Closing Covenants................. 28
(a) General................................................... 28
(b) Litigation Support........................................ 28
(c) Transition................................................ 28
(d) Confidentiality........................................... 29
(e) Covenant Not to Compete................................... 29
(f) Sellers' Cessation of Business............................ 30
(g) Nature of Transactions, Payments to Creditors............. 30
7. Conditions to Obligation to Close.................................. 31
(a) Conditions to Obligation of the Buyer..................... 31
(b) Conditions to Obligation of the Sellers................... 34
(a) Survival of Representations and Warranties................ 34
(b) Indemnification Provisions for Benefit of the Buyer....... 34
(c) Indemnification Provisions for Benefit of the Sellers..... 35
(d) Matters Involving Third Parties........................... 35
(e) Determination of Adverse Consequences..................... 36
(f) Escrow Arrangement and Right to Setoff.................... 36
(g) Other Indemnification Provisions.......................... 37
9. Tax Matters........................................................ 37
(a) Tax Returns............................................... 37
(b) Certain Taxes............................................. 37
10. Termination........................................................ 38
(a) Termination of Agreement.................................. 38
(b) Effect of Termination..................................... 38
11. Miscellaneous...................................................... 38
(a) Nature of Certain Obligations............................. 38
(b) Press Releases and Public Announcements................... 38
(c) No Third Party Beneficiaries.............................. 39
(d) Entire Agreement.......................................... 39
(e) Succession and Assignment................................. 39
(f) Counterparts.............................................. 39
(g) Headings.................................................. 39
(h) Notices................................................... 39
ii
<PAGE> 4
(i) Governing Law............................................. 40
(j) Amendments and Waivers.................................... 40
(k) Severability.............................................. 40
(l) Expenses.................................................. 41
(m) Construction.............................................. 41
(n) Incorporation of Exhibits, Annexes, and Schedules......... 41
(o) Specific Performance...................................... 41
(p) Stockholders of Sellers Bound............................. 41
(q) Good Faith................................................ 41
iii
<PAGE> 5
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into on November 10, 1997, by
and among DCI/DWC Acquisition Corp., a Delaware corporation in formation (the
"Buyer"), Danvid Company, Inc., a Texas corporation ("Danvid"), and Danvid
Window Company, a Texas corporation ("DWC"). The Buyer, Danvid, DWC, and the
Stockholders are referred to collectively herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will
purchase from Danvid and DWC, and Danvid and DWC will sell to the Buyer, all of
the assets of Danvid and DWC in return for cash and the other consideration
referred to herein. Danvid and DWC may be referred to herein collectively as the
"Sellers."
NOW, THEREFORE, in consideration of the premises and the mutual
promises in this Agreement, and in consideration of the representations,
warranties, and covenants in this Agreement, and other good, valuable and
adequate consideration the Parties agree as follows.
1. Definitions.
"Accredited Investor" has the meaning set forth in Rule 501 adopted as
part Regulation D promulgated under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504.
"Applicable Rate" means the corporate base rate of interest announced
from time to time by Banc One Ohio, N.A.
"Acquired Assets" or "Assets" means all right, title, and interest in
and to all of the assets of Danvid and DWC, specifically, for example, all of
their respective (a) real property interests, leaseholds and subleaseholds
therein, improvements, fixtures, and fittings thereon, and easements,
right-of-way, and other appurtenants thereto (such as appurtenant rights in and
to public streets), including the real property which is identified on the Real
Property Schedule, (b) tangible personal property (such as machinery, equipment,
inventories of raw materials and supplies, manufactured and purchased parts,
goods in process and finished goods, furniture, automobiles, trucks, tractors,
trailers, tools, jigs, and dies), including, by way of example, the inventory
and equipment identified on the Inventory Schedule and Equipment Schedule,
respectively, (c) Intellectual Property, goodwill associated therewith, licenses
and sublicenses granted and obtained with respect thereto, and rights
thereunder, remedies against infringements
<PAGE> 6
thereof, and rights to protection of interests therein under the laws of all
jurisdictions, (d) leases, subleases, and rights thereunder, (e) agreements,
contracts, indentures, mortgages, instruments, Security Interests, guaranties,
other similar arrangements, and rights thereunder, including those set forth on
the Schedule of Material Contracts, (f) accounts, notes, and other receivables,
including those set forth on the Receivable Schedule, (g) securities, (h)
claims, deposits, prepayments, refunds, causes of action, choses in action,
rights of recovery, rights of set off, and rights or recoupment (including any
such item relating to the payment of Taxes), (i) franchises, approvals, permits,
licenses, orders, registrations, certificates, variances, and similar rights
obtained from governments and governmental agencies, and (j) files, documents,
correspondence, lists, plats, architectural plans, drawings, and specifications,
creative materials, advertising and promotional materials, studies, reports, and
other printed or written materials; provided, however, that the Acquired Assets
shall not include (i) the corporate charter, qualifications to conduct business
as a foreign corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification numbers, seals, minute
books, stock transfer books, blank stock certificates, and other documents
relating to the organization, maintenance, and existence of Danvid or DWC as a
corporation, (ii) any of the rights of Danvid or DWC under this Agreement, or
(iii) any assets of Danvid or DWC to be excluded by election of the Buyer, such
excluded assets shall be identified by Buyer prior to the Closing and all
identified on the "Schedule of Excluded Assets" to be completed prior to and
delivered at the Closing by Buyer (the "Excluded Assets").
"Assumed Liabilities" has the meaning set forth in Section 2(b) hereof.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer Securities" has the meaning set forth in Section 2(b) below.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Balance Sheet" shall mean a balance sheet of each of Danvid
and DWC to be complete and accurate as of the Closing and to be dated as of the
Closing Date showing all the assets and liabilities of each of Danvid and DWC.
"Closing Date" has the meaning set forth in Section 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of Buyer, Danvid or DWC that is not already generally
available to the public.
2
<PAGE> 7
"DWC" has the meaning set forth in the preface above.
"Danvid" has the meaning set forth in the preface above.
"Discharged Liabilities" has the meaning set forth in Section 6(g)
below.
"Disclosure Schedule" has the meaning set forth in Section 4 below.
"Employee Benefit Plan" means with respect to Danvid, DWC, and all
ERISA Affiliates, any (a) nonqualified deferred compensation or retirement plan
or arrangement which is an Employee Pension Benefit Plan, (b) qualified
retirement plan or arrangement which is an Employee Pension Benefit Plan, (c)
Multiemployer Plan, or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"Equipment Schedule" means the Schedule of the items of equipment used
in the businesses of Danvid and DWC and to be assigned and conveyed to Buyer at
the Closing and which Equipment Schedule shall be prepared by the Sellers, be in
form, content and substance acceptable to Buyer, and delivered at the Closing,
together with possession of the equipment identified thereon.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to Danvid and DWC, any person
engaged in a trade or business (whether or not incorporated) that is part of the
same control group, or in under common control with, or part of an affiliate
service group that includes Danvid and DWC within the meaning of Code Section
414 and/or Code Section 4001(a)(14).
3
<PAGE> 8
"Escrow Agreement" has the meaning set forth in Section 8(f) herein.
"Excluded Assets" are those assets owned by Sellers or in which
Stockholders assert an interest relating to the business of Danvid or DWC which
are not being transferred pursuant to this Agreement, which assets are described
on Schedule of Excluded Assets.
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statement" has the meaning set forth in Section 4(g) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
"Indemnifying Party" has the meaning set forth in Section 8(d) below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium); including in each
case, by way of example, those items of Danvid and DWC described on Schedule of
I.P.
"Inventory Schedule" means the schedule of all of the inventory of the
Sellers to be assigned and conveyed to the Buyer hereunder, which schedule shall
set forth in very general terms and by category substantially all of the items
of inventory of the Sellers to be transferred to the Buyer hereunder, the value
thereof on a first-in first-out basis, and which Inventory Schedule shall be
prepared by Sellers and be delivered in form, content and substance acceptable
to the Buyer at the Closing.
4
<PAGE> 9
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability or other obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section
4(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
4(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4(g)
below.
"Multiemployer Plan" has the meaning set forth in ERISA Sections
3(37)(A) and 4001.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Purchase Price" has the meaning set forth in Section 2(b) below.
"Real Property Schedule" means the Schedule of all real property
interests to be assigned and conveyed to the Buyer by the Sellers at the Closing
pursuant to this Agreement, including all leaseholds, easements, rights of way,
and other real estate interests to be assigned at the Closing as part of the
Acquired Assets, and which Real Property Schedule shall be prepared by the
Seller, in form, content and substance acceptable to the Buyer, and delivered at
the Closing.
"Receivable Schedule" means schedule of all accounts receivable and
other obligations for the payment of money owing to the Sellers and which
receivables are to be assigned to the Buyer at the Closing pursuant to the terms
and conditions of this Agreement, and which Receivable Schedule shall be
prepared by the Sellers, in form, content and substance acceptable to the Buyer,
and delivered to the Buyer at the Closing.
"Reconciliation" shall have the meaning set forth in Section 2(b)
below.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
5
<PAGE> 10
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable [or for Taxes
that the taxpayer is contesting in good faith through appropriate proceedings],
(c) purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Schedule of Excluded Assets" means that schedule to be prepared by the
Buyer and acknowledged by the Sellers and to be delivered at the Closing setting
forth in reasonable detail those assets belonging to the Sellers or either of
them that are not to be acquired by the Buyer under this Agreement.
"Schedule of IP" means the schedule of intellectual property to be
assigned at the Closing by Sellers, which Schedule shall be prepared by Sellers
and be in form, content and substance acceptable to Buyer and delivered by
Sellers at the Closing.
"Schedule of Material Contracts" means that schedule of all contracts
with third parties binding on or inuring a benefit to the Sellers that are
intended to be assigned as part of the Acquired Assets hereunder, which Schedule
of Material Contracts shall be prepared by the Sellers, in form, content and
substance acceptable to the Buyer, and delivered to the Buyer by the Sellers at
the Closing.
"Sellers" means Danvid and DWC.
"Stockholder" or "Stockholders" means the Stockholders of Sellers,
Daniel P. Crawford, Karen J. Crawford, David A. Crawford and Paul G. Comer; and
such reference shall in each instance include the respective spouses of the
Stockholders.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
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"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8(d) below.
2. Purchase and Sale of Danvid and DWC Assets.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from each of the Sellers, and each
of the Sellers agrees to sell to the Buyer, all of the Acquired Assets, free and
clear of all liens and encumbrances, for the consideration specified below in
this Section 2; in the aggregate the Sellers shall at the Closing sell under
this Agreement and for the consideration set forth in Section 2(b) hereof any
and all of the assets, both tangible and intangible, of Danvid and DWC except
only the Excluded Assets. The consideration set forth in Section 2(b) below
shall include all consideration payable for the Assets of Danvid and DWC and
whether belonging to either Danvid or DWC, and such consideration shall be
allocated among the Assets and to the respective Sellers in the manner
designated by Buyer, subject to Sellers' approval, which approval will not be
unreasonably withheld, which allocations shall be set forth in a Schedule 2(a)
to be completed by Buyer and approved by Sellers not less than three business
days prior to Closing.
(b) Purchase Price. At the Closing, in full and complete
consideration for the Acquired Assets, the Buyer shall pay, deposit or deliver
the items described in (i) through (iv) below:
(i) an amount of cash shall be payable by wire transfer to accounts
designated by Sellers on Schedule 2(b)(i) -- which Schedule 2(b)(i)
shall be delivered by Sellers to Buyer not less than three days prior
to Closing and will be consistent with Schedule 2(a) -- less the amount
to be paid into escrow with the Escrow Agent as set forth in Section
2(b)(ii), computed as follows:
The cash portion of the Purchase Price shall be comprised of two
separate components, referred to as the "Primary Cash Amount" and
the "Additional Cash Payment," respectively.
First, an amount of cash will be paid to the Sellers (the "Primary
Cash Amount") that is an amount equal to $14 million, minus the
amount of cash reflected on the Closing Balance Sheet, and minus the
amount of all expenditures incurred by Sellers (either paid by
Seller or required to be assumed by Buyer) for any expense other
than ordinary and necessary expenses from and after September 30,
1997 (including, by way of example, any bonuses, capital
expenditures, estimated tax payments or other extraordinary
expenses). At the Closing, a certificate acknowledging the
computation of the Primary Cash Amount shall be executed and
delivered by Buyer and Sellers.
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<PAGE> 12
The second component of the cash portion of the Purchase Price shall
be referred to as the "Additional Cash Payment" which Additional
Cash Payment shall be a function of a factor of the "Tentative Gain"
and shall be an amount determined as follows:
The Tentative Gain is an amount equal to the Primary Cash Amount,
plus the dollar amount of the Assumed Liabilities, plus the amount
reflected on the Closing Balance Sheet as the accrued liability for
federal corporate income tax and Texas Franchise taxes for the
period commencing August 1, 1997 for Danvid and commencing January
1, 1997 for DWC (provided that such amount shall in no event exceed
an aggregate of $500,000), plus the "Buyer Securities Value," minus
the value of the Acquired Assets, adjusted to reflect the federal
income tax basis of the Sellers in such Acquired Assets.
The Additional Cash Payment will equal an amount determined by
multiplying the Tentative Gain times .38, and then dividing that sum
by .62.
For purposes of the foregoing, the "Buyer Securities Value" shall be
determined by multiplying the 384,615 shares of Common Stock comprising the
Buyer Securities (described below) by two-thirds of the average closing sale
price of such stock in the over the counter market during the twenty (20)
consecutive trading days preceding the Closing Date.
(ii) From the amount of cash determined to be payable as part of the
Purchase Price pursuant to the computations set forth in Section 2(b)(i) above
(i.e., out of the Primary Cash Amount and the Additional Cash Payment), an
amount of $10 million shall be deposited into escrow, pursuant to an Escrow
Agreement to be executed at Closing with an escrow agent to be selected by the
Buyer and reasonably acceptable to the Sellers (the "Escrow Agent"). The funds
on deposit in the escrow shall, as to $8,500,000 be retained by the Escrow Agent
for a period commencing on the Closing Date and continuing until the date 45
days following the Closing, with the balance of the funds deposited in escrow to
be retained by the Escrow Agent for 150 days following the Closing Date.
The escrow is intended to secure the obligations for indemnity set
forth in this Agreement and particularly the obligation to indemnify for any
Taxes, tax liability, lien or claim associated with the transfer of the Assets
or encumbering any of the Assets and also to provide a ready source for the
payment of the indemnification obligations of Sellers for the breach of any
representation, warranty or covenant set forth herein in the manner contemplated
by Section 8 of this Agreement.
The transactions contemplated by this Agreement involve the preparation
of a Closing Balance Sheet intended to set forth, as of the Closing, all of the
assets and liabilities of the Sellers at that time. The parties acknowledge
that, as a practical matter, the Closing Balance Sheet (although subject to the
Seller's Warranty as to its reasonable accuracy as of the Closing
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<PAGE> 13
Date) may omit certain assets or misstate their value, or may omit or
underestimate the amount of liabilities (including contingent claims or
liabilities) that will have to be discharged in order to effect the transfer of
the Acquired Assets free and clear of all liens and encumbrances and to provide
the net value upon which Buyer is relying as presented in the Closing Balance
Sheet. In this regard, the Buyer shall, with the good faith, diligent assistance
of the Sellers following the Closing, attempt to complete a true, complete and
accurate pro-forma balance sheet for each of Danvid and DWC to reconcile and
correct the Closing Balance Sheet prepared and submitted by the Sellers at the
Closing. This reconciliation process (the "Reconciliation") shall be completed
within 120 days of the date of the Closing and Buyer shall have the authority
and right to draw upon amounts deposited with the Escrow Agent to fund the
credits owing by reason of the Reconciliation as determined in the following
manner. In this regard, to the extent that the assets reflected on the Closing
Balance Sheet delivered at the Closing do not have a value equal or exceeding
those actually transferred to the Buyer, or to the extent that any such assets
are subject to any lien or encumbrance not disclosed on the Closing Balance
Sheet required to be discharged in order to render the Acquired Assets free and
clear of any and all liens, or to the extent there is any liability or
obligation not disclosed on the Closing Balance Sheet, upon completion of the
Reconciliation, Buyer shall be entitled to a dollar for dollar credit from the
Purchase Price (which may be drawn from escrow) for the asset deficiency and the
excessive liabilities, as applicable.
(iii) 384,615 shares of the common stock of American Architectural
Products Corp. ("AAPC"), subject to adjustment in the manner described
below.
As to the AAPC Common Stock to be issued as part of the Purchase Price,
the Buyer has agreed if, either (i) as of the expiration of the period ending 18
months following the date of Closing (the "18th Month Date") the asking price
for shares of the Common Stock of AAPC does not meet or exceed the price of
$6.50 per share, or (ii) if the average closing share price for the 20 days
prior to and including the 18th Month Date does not equal or exceed $6.50 per
share, then additional shares of AAPC Common Stock shall be issued according to
the following formula, or, at Seller's option (to be exercised within 10 days of
the expiration of the 18th Month Date) an amount of cash equal to 384,615 times
the deficiency in value from a price of $6.50 per share to the highest price of
either (x) the closing sale price on the 18th Month Date or (y) the average
closing sale price for the 20 trading days prior to and including the 18th Month
Date shall be paid to Sellers. The numerical formula for determining the number
of additional shares of the Common Stock of the Buyer to be issued in accordance
with the foregoing, if applicable, shall be as follows:
($6.50 - P) 384,615 = S
-------------------
R
WHERE:
P = The greater of (i) the average closing sale price
for AAPC's Common Stock during the 20 trading days
prior to and including the expiration of the
applicable 18-month
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<PAGE> 14
period (i.e., the 18th Month Date) or (ii) the
closing sale price on the date of expiration of the
18th Month Date.
R = The average closing sale price of AAPC's Common
Stock on the immediately preceding 20 consecutive
trading days prior to the expiration of the
applicable 12 month period.
S = The number of additional shares of AAPC's Common
Stock to be issued.
The Common Stock of AAPC to be issued in connection with this Agreement
shall from time to time be referred to herein as the "Buyer Securities." The
Buyer Securities shall be subject to a "Lock-Up Agreement" to be executed and
delivered at the Closing restricting any sale, pledge or hypothecation of the
Buyer Securities for a period of 18 months following the Closing and otherwise
including standard provisions - for a lock-up arrangement of this character.
Notwithstanding the foregoing, the Buyer may at any time during the
18-month period following Closing, purchase from Sellers all of the Buyer
Securities at a price of $6.50 per share and upon payment of such amount all
other claims and rights of Sellers under this Section 2(b)(iii) shall be
terminated. This option to Buyer shall be set forth in the Lock-up Agreement.
(iv) Buyer shall at Closing assume the liabilities described
on Schedule 2(b)(iv), which Schedule 2(b)(iv) shall be conformed and
adjusted as of the Closing and initialed by the Parties to set forth
the specific obligations to be assumed by Buyer (the liabilities set
forth on Schedule 2(b)(iv) as conformed for the Closing shall be
referred to herein as the "Assumed Liabilities") which Assumed
Liabilities shall be paid by Buyer or provision for satisfaction made,
in Buyer's reasonable discretion, as the same become due.
Buyer does not assume or agree to be bound by any obligations or liabilities of
Sellers of any kind or nature, known, unknown, contingent or otherwise, except
the Assumed Liabilities. In furtherance, and not in limitation, of the
foregoing, it is understood that Buyer does not assume, undertake or accept any
obligations, duties, responsibilities or liabilities of Sellers (a) to or under
any Employee Benefit Plan, (b) to employees or former employees of Sellers or
any of their beneficiaries, heirs or assignees, including, without limitation,
any liability with respect to accrued pension or welfare benefits under any such
Employee Benefit Plan for such employees' or former employees' service with
Sellers, whether or not any such employees or former employees are offered
employment by, or become employees of, Buyer, or to PBGC, any Union or any
similar organization, arising out of such employees' or former employees'
employment by Sellers or out of the transactions contemplated by this Agreement
or arising by virtue of any collective bargaining relationship or agreement or
pursuant to the National Labor Relations Act or any other labor relations law,
or any obligation to arbitrate any disputes arising under any collective
bargaining relationship or agreement between Sellers and any labor organization
and/or Sellers' employees or former employees; (c) for any income, profits,
excise, ad valorem, or
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<PAGE> 15
other Taxes of any kind or character; (d) any claims for personal injuries,
property damages or consequential damages relating to products sold by Sellers;
or (e) liabilities under any statute, rule or regulation, including, but not
limited to, those related to civil rights, health, safety, labor, discrimination
and the environment.
The consideration described in the foregoing parts (i) through (iv) of
this Section 2(b), which is subject to adjustments, holdbacks and indemnity
claims set forth herein, shall be referred to from time to time as the "Purchase
Price."
Buyer reserves the right to make payment or delivery of the Purchase
Price directly into a single account for the benefit of Sellers or to deliver
the Purchase Price to Sellers in a manner consistent with the allocation
Schedule 2(a).
(c) The Closing, Pre-Closing. The execution and delivery of all
documents and instruments necessary to effect the transfer of the Assets, and
the other transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Shafer, Ramsey and Mueller, 4514 Cole Avenue, 2nd Floor,
Dallas, Texas, commencing at 9:00 a.m. local time on the second business day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as the Buyer and the Sellers may mutually
determine (the "Closing Date"); provided, however, that the Closing Date shall
be no later than December 15, 1997.
Notwithstanding the foregoing, the Parties shall meet at 11:00 a.m. on
November 17, 1997 or, if not at such date, at Buyer's election another date on
or before November 19, 1997 at a place within the Continental U.S. designated by
Buyer and reasonably acceptable to Sellers to review all reasonably anticipated
documents necessary to effect the transactions and to "pre-close" the
transactions, subject to the continuing effect of each condition to Closing set
forth herein (the "Pre-closing"). At the Pre-closing, preliminary copies of all
documents necessary to effect the Closing on the Closing Date shall be prepared
by the party responsible therefor and reviewed and approved by the Parties with
the right to approve the form and substance of the document or instrument to be
delivered as though the Closing were then occurring. Among the documents to be
prepared in substantially final form at the Pre-closing shall be all Schedules
and Exhibits hereto that are required to be delivered at or prior to the
Closing, the Escrow Agreement, Lock-Up Agreement, a Non-Competition Agreement
for Daniel Crawford, UCC-1's, all necessary releases and estoppels, all bills of
sale, title documents and other forms of assignment, legal opinions, and all
other documents necessary to effect the transactions at the Closing.
(d) Deliveries at the Closing. At the Closing, (i) the Sellers
will deliver to the Buyer the various transfer documents, bills of sale,
assignments, certificates, instruments, and documents referred to in Section
7(a) below and all Schedules to be completed and delivered at or prior to the
Closing by Sellers, and all other documents necessary to effect the transactions
contemplated hereby; (ii) the Buyer will deliver to the Sellers the various
certificates, instruments, and documents referred to in Section 7(b) below and
other documents necessary to effect the transaction, (iii) each of the Sellers
will deliver to the Buyer possession and title to
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<PAGE> 16
the Assets, and (iv) the Buyer will deliver to the Sellers the consideration
specified in Section 2(b) above.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Sellers. Each of the
Sellers represents and warrants to the Buyer that the statements contained in
this Section 3(a) are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(a)), except as set forth in Schedule 3(a) attached
hereto.
(i) Authority, Binding Effect. Each of Danvid and DWC has the power
under the laws of the State of Texas and their respective jurisdictions
of incorporation, and the corporate authority to execute and deliver
this Agreement and the other instruments and documents required or
contemplated herein ("Related Agreements"), to perform its obligations
hereunder and thereunder and to consummate the transactions provided
for herein and therein. The execution, performance and consummation of
this Agreement and Related Agreements by each of Danvid and DWC have
been duly authorized by all necessary action on the part of each of
Danvid and DWC and will not contravene the articles of incorporation or
bylaws of either Danvid or DWC or conflict with, result in a breach of,
or entitle any party to terminate, or call a default with respect to,
any agreement or instrument to which either Danvid or DWC is a party or
by which any of their respective properties or assets are bound in any
manner which would have a material adverse affect on the transactions
contemplated herein. The execution, performance and consummation by
each of Danvid and DWC of this Agreement and the Related Agreements
will not result in any violation by either Danvid or DWC of any law,
rule or regulation applicable to them or the Assets in any manner.
Danvid and DWC are not a party to, nor subject to or bound by, any
judgment, injunction or decree of any court or governmental authority
which may restrict or interfere with the performance of this Agreement
or the Related Agreements. This Agreement and the Related Agreements
executed and delivered by each of Danvid and DWC constitute the valid
and binding obligations of them enforceable in accordance with their
respective terms.
(ii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Sellers are subject or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which either of the Sellers or any
of their affiliates is a party or by which any of them are bound or to
which any of their respective assets are subject.
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<PAGE> 17
(iii) Brokers' Fees. The Sellers have no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
the Buyer could become liable or obligated.
(iv) Investment. The Sellers (A) understand that the Buyer
Securities have not been, and will not be, registered under the
Securities Act, or under any state securities laws, and are being
offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, and will be "restricted
securities" and will not be capable of being freely resold under either
applicable law or the lock-up Agreements, (B) are acquiring the Buyer
Securities solely for his or its own respective account for investment
purposes, and not with a view to the distribution thereof, (C) are each
a sophisticated investor with knowledge and experience in business and
financial matters, (D) have each received certain information
concerning the Buyer and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks
inherent in holding the Buyer Securities, and (E) are each able to bear
the economic risk and lack of liquidity inherent in holding the Buyer
Securities.
(b) Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Sellers that the statements contained in this
Section 3(b) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(b)), except as set forth in Schedule 3(b) attached
hereto.
(i) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions. The
Buyer need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement, except as provided.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Buyer is subject or any provision of its charter or bylaws or (B)
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to
which any of its assets is subject.
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<PAGE> 18
(iv) Brokers' Fees. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which any Seller
could become liable or obligated.
(v) Buyer Securities. When issued at the Closing, the Buyer
Securities will be fully paid, validly issued and non-assessable. The Buyer
Securities are being offered and sold pursuant to exemptions from the
registration requirements of the Securities Act of 1933 and similar state
securities laws. Although not registered, based on the representations of the
Sellers and the manner of sale, Buyer believes the securities are not required
to be registered to be issued to the Sellers, although the Buyer Securities may
not be freely resold in the absence of such registration or another exemption
from applicable securities laws and in compliance with the Lock-up Agreement.
4. Representations and Warranties Concerning Danvid and DWC. The
Sellers represent and warrant to the Buyer that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the Disclosure Schedule delivered by the
Sellers to the Buyer on the date hereof (the "Disclosure Schedule").
Nothing in the Disclosure Schedule shall be deemed adequate to disclose
an exception to a representation or warranty made herein, however, unless the
Disclosure Schedule identifies the exception with particularity and describes
the relevant facts in detail. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other item itself).
The Disclosure Schedule will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 4.
(a) Organization, Qualification, and Corporate Power. Each of Danvid
and DWC is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Texas. Each of Danvid and DWC is duly authorized
to conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required (provided Danvid is not qualified in
Florida, and directs sales in that state through one employee). Each of Danvid
and DWC has full corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the businesses in which they are
respectively engaged and in which Danvid or DWC presently proposes to engage and
to own and use the properties owned and used by them. Section 4(a) of the
Disclosure Schedule lists the directors and officers of Danvid and DWC. The
Sellers have delivered to the Buyer correct and complete copies of the charter
and bylaws Danvid and DWC (each as amended to date). The minute books
(containing the records of meetings of the stockholders, the board of directors,
and any committees of the board of directors), the stock certificate books, and
the stock record books of Danvid and DWC are correct and complete. Neither
Danvid nor DWC is in default under or in violation of any provision of their
respective charter or bylaws.
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(b) Capitalization. The entire authorized capital stock of Danvid
consists of 4,500 shares of Common Stock, no par value. The power to vote all
issued and outstanding shares of Sellers is in the aggregate vested in the
Stockholders. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to Danvid. There are
no voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of Danvid, except those empowering the
Stockholders.
Mr. Comer is the owner of all of the issued and outstanding capital
stock of DWC, and all of such issued and outstanding capital stock is duly
authorized and validly issued, fully paid and nonassessable. The Sellers
represent and warrant that DWC performs customer-related functions for Danvid,
owns no substantial assets other than contractual rights and relationships with
certain of the customers of Danvid and other relationships with persons for whom
Danvid provides products and services, and has no liabilities of any character,
save and except liabilities owing to Mr. Comer and ordinary and necessary
business expenses incurred in the regular conduct of business.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Danvid or DWC is subject or any provision
of the charter or bylaws of Danvid or DWC or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Danvid or DWC is a party or by which either is bound or to
which any of their respective assets are subject (or result in the imposition of
any Security Interest upon any of their respective assets). Neither Danvid nor
DWC is required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement on the terms hereof; except the notices required under
Hart-Scott-Rodino.
(d) Brokers' Fees. Danvid does not have any Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
(e) Title to Assets. Each of Danvid and DWC has good and marketable
title to, or a valid leasehold interest in, the properties and assets used by
them, located on their premises, or shown on the Most Recent Balance Sheet,
acquired after the date thereof or shown on the Closing Balance Sheet, free and
clear of all Security Interests, except for properties and assets disposed of in
the Ordinary Course of Business since the date of the Most Recent Balance Sheet.
At the Closing, Danvid and DWC will convey to Buyer good, valid, and
marketable title to all the Assets, subject to no mortgage, Security Interest,
pledge, valid or enforceable lien, conditional sales agreement, claim,
restriction, reservation, covenant, encumbrance or charge, or restraint on
transfer, except for the obligations described on the Disclosure Schedule, which
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<PAGE> 20
obligations will be discharged and liens released as of the Closing and except
obligations relating to the Assumed Liabilities.
Neither Danvid nor DWC has signed, or authorized the filing of, any
financing statement under the Uniform Commercial Code or otherwise or granted
any security agreement authorizing any secured party thereunder to file any such
financing statement with respect to any of the Assets, except that in favor of
the persons described in the Disclosure Schedule.
(f) Subsidiaries. Neither Danvid nor DWC own subsidiaries, nor any
interest in any other business entity.
(g) Financial Statements. Attached hereto as Exhibit 4(g) are the
following financial statements (collectively the "Financial Statements"): (i)
audited balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended July 31, 1995, July
31, 1996 and July 31, 1997 (the "Most Recent Fiscal Year End") for Danvid; (ii)
unaudited balance sheets and statements of income, changes in stockholders
equity, and cash flow as of and for the fiscal years ended July 31, 1992, July
31, 1993, and July 31, 1994; and (iii) unaudited balance sheets and statements
of income, changes in stockholders' equity, and cash flow (the "Most Recent
Financial Statements") as of and for the two months ended September 30, 1997
(the "Most Recent Fiscal Month End") for Danvid. The Balance Sheet set forth in
the Most Recent Financial Statements shall be referred to herein as the "Most
Recent Balance Sheet."
The Financial Statements (including the notes thereto) present fairly
in all material respects the financial condition of Danvid as of such dates and
the results of operations of Danvid for such periods, are correct and complete,
and are consistent with the books and records of Danvid (which books and records
are correct and complete).
At the Closing, Sellers shall deliver the Closing Balance Sheets from
each of Danvid and DWC which shall each be complete and correct as of the
Closing to show all assets (reflecting their then fully depreciated net book
value), and any liabilities of each of Danvid and DWC, subject only to
immaterial changes necessitated by delivery or billing process ordinary for the
businesses.
Prior to the date hereof, Sellers have delivered stand-alone financial
statements for DWC for the last three fiscal years and for the most recent
quarterly period ended (September 30, 1997). These DWC financial statements are
true and complete in all material respects, were prepared in accordance with
GAAP, and present fairly the financial condition and results of operations of
DWC for the periods indicated.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any adverse change in the business,
financial condition, operations, results of operations, or future prospects of
Danvid or DWC and the Closing Balance Sheet of Danvid and DWC will not vary
materially from the balance sheet presented as of the Most Recent Fiscal Month
End. Without limiting the generality of the foregoing, since the Most Recent
Fiscal Year End, Danvid or DWC have:
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(i) not sold, leased, transferred, or assigned any of its assets,
tangible or intangible, other than for fair consideration in the
Ordinary Course of Business;
(ii) not entered into any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) either
involving more than $25,000 or otherwise outside the Ordinary Course of
Business;
(iii) not allowed any circumstance to exist under which any party
has and no party (including Danvid or DWC) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses)
involving more than $10,000 to which Danvid or DWC is a party or by
which either is bound;
(iv) not imposed any Security Interest upon any of their assets,
tangible or intangible;
(v) not made any capital expenditure (or series of related capital
expenditures) either involving more than $25,000 or outside the
Ordinary Course of Business;
(vi) not made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person;
(vii) not issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation;
(viii) not delayed or postponed the payment of accounts payable and
other Liabilities outside the Ordinary Course of Business;
(ix) not canceled, compromised, waived, or released any right or
claim (or series of related rights and claims) outside the ordinary
course of business;
(x) not issued, sold, or otherwise disposed of any capital stock, or
granted any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its capital
stock;
(xi) not declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(xii) not experienced any damage, destruction, or loss (whether or
not covered by insurance) to its property outside the ordinary course
of business;
(xiii) not made any loan to, or entered into any other transaction
with, any of their respective directors, officers, and employees
outside the Ordinary Course of Business;
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(xiv) not granted any increase in the base compensation of any of
their respective directors, officers, and employees outside the
Ordinary Course of Business;
(xv) not adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of their respective directors,
officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan);
(xvi) not made or pledged to make any charitable or other capital
contribution outside the Ordinary Course of Business; and
(xvii) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving Danvid or DWC.
(i) Undisclosed Liabilities. Except as set forth on Section 4(i) of
the Disclosure Schedule, (a) Danvid does not have any Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet and, as of the Closing, set forth in the Danvid
Closing Balance Sheet (rather than in any notes thereto) and (ii) Liabilities
which have arisen after the Most Recent Fiscal Month End in the Ordinary Course
of Business and as of the Closing set forth in the Closing Balance Sheet (none
of which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law) and (b) DWC does not have any Liabilities, except as set forth
on the Closing Balance Sheet. A complete listing of all payables (in form
acceptable to Buyer) has been provided to Buyer and a then current payable
listing (in such form as is acceptable to Buyer) will be provided at the Closing
(the "Closing Liability Schedule").
(j) Legal Compliance. Danvid, DWC and their respective predecessors
and Affiliates have complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply.
(k) Tax Matters.
(i) Danvid, DWC and each of their respective Affiliates have filed
all Tax Returns that it or they were required to file. All such Tax
Returns were correct and complete in all respects. All Taxes owed by
Danvid, DWC and each of their respective Affiliates (whether or not
shown on any Tax Return) have been paid. Except an extension for
federal income taxes for the 1996 fiscal year, neither Danvid nor DWC
is currently the beneficiary of any extension of time within which to
file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where Danvid or DWC does not file Tax Returns that it is
or may be subject to taxation by that jurisdiction and none of the
Sellers
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or Stockholders is aware of any Basis for any such claim. There are no
Security Interests on any of the assets of Danvid or DWC that arose in
connection with any failure (or alleged failure) to pay any Taxes.
(ii) Danvid and DWC, in each case, has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(iii) No Seller or director or officer (or employee responsible for
Tax matters) of Danvid or DWC expects any authority to assess any
additional Taxes for any period for which Tax Returns have been filed.
There is no dispute or claim concerning any Tax Liability of Danvid or
DWC either (A) claimed or raised by any authority in writing or (B) as
to which any of the Sellers and the directors and officers (and
employees responsible for Tax matters) of Danvid or DWC has Knowledge
based upon personal contact with any agent of such authority. Section
4(k)(iii) of the Disclosure Schedule lists all federal, state, local,
and foreign income Tax Returns filed with respect to Danvid and DWC for
taxable periods ended on or after September 30, 1990, indicates those
Tax Returns that have been audited, and indicates those Tax Returns
that currently are the subject of audit. The Sellers have delivered to
the Buyer correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies assessed
against or agreed to by Danvid or DWC since September 30, 1990.
(iv) Neither Danvid nor DWC has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
(v) Neither Danvid nor DWC has made or is obligated to make any
payments that are not deductible under Code Section 280G, or is a party
to any agreement that under any circumstances could obligate it to make
any payments that will be not deductible under Code Section 280G and
none of the Assumed Liabilities is an obligation to make a payment that
is not deductible under such Code Section 280G. Danvid and DWC each has
disclosed on their respective federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code Section 6662. Neither
Danvid nor DWC is a party to any Tax allocation or sharing agreement or
any other agreement or undertaking under which it has or may have
Liability for the Taxes of any Person other than itself. Danvid has not
been a member of an Affiliated Group filing a consolidated federal
income Tax Return nor has any Liability for the Taxes of any Person
(other than itself) under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(vi) Section 4(k)(vi) of the Disclosure Schedule sets forth the
following information as of the most recent practicable date (as well
as on an estimated pro forma basis as of the Closing giving effect to
the consummation of the transactions contemplated hereby): (A) the
basis of Danvid and DWC in their respective assets; and (B) the amount
of any net operating loss, net capital loss, unused investment or other
credit, unused foreign tax, or excess charitable contribution allocable
to Danvid or DWC.
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(vii) The unpaid Taxes of Danvid or DWC, in each case, (A) did not,
as of the Most Recent Fiscal Month End, exceed the reserve for Tax
Liability (other than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on
the face of the Most Recent Balance Sheet (rather than in any notes
thereto) and (B) do not exceed that reserve as adjusted for the passage
of time through the Closing Date in accordance with the past custom and
practice of Danvid or DWC, in each case, in filing their Tax Returns.
(l) Real Property.
(i) Section 4(l)(i) of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to Danvid or DWC. The
Sellers have delivered to the Buyer correct and complete copies of the
leases and subleases listed in Section 4(l)(i) of the Disclosure
Schedule (as amended to date). With respect to each lease and sublease
listed in Section 4(l)(i) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated
hereby;
(C) no party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification,
or acceleration thereunder;
(D) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(E) with respect to each sublease, the representations and
warranties set forth in subsections (A) through (D) above are true
and correct with respect to the underlying lease;
(F) Danvid or DWC, in each applicable case, has not assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold;
(G) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations; and
(H) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of
said facilities.
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(m) Intellectual Property.
(i) Danvid and DWC, respectively, own or has the right to use
pursuant to license, sublicense, agreement, or permission all
Intellectual Property necessary or desirable for the operation of the
businesses of Danvid and DWC as presently conducted. Each item of
Intellectual Property owned or used by Danvid and DWC, respectively,
immediately prior to the Closing hereunder will be owned or available
for use by Buyer on identical terms and conditions immediately
subsequent to the Closing hereunder. Danvid and DWC has each taken all
necessary action to maintain and protect each item of Intellectual
Property that they own or use.
(ii) Neither Danvid nor DWC has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and none of the Sellers and the
directors and officers (and employees with responsibility for
Intellectual Property matters) of Danvid or DWC has ever received any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation.
(iii) Section 4(m)(iii) of the Disclosure Schedule identifies each
patent or registration which has been issued to Danvid or DWC with
respect to any of its Intellectual Property, identifies each pending
patent application or application for registration Danvid or DWC has
made with respect to any of its Intellectual Property, and identifies
each license, agreement, or other permission which Danvid or DWC has
granted to any third party with respect to any of its Intellectual
Property (together with any exceptions). The Sellers have delivered to
the Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as
amended to date). Section 4(m)(iii) of the Disclosure Schedule also
identifies each trade name or unregistered trademark used by Danvid or
DWC in connection with any of their respective businesses. With respect
to each item of Intellectual Property required to be identified in
Section 4(m)(iii) of the Disclosure Schedule:
(A) Danvid and DWC in each case possesses all right, title,
and interest in and to the item, free and clear of any Security
Interest, license, or other restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge; and
(C) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge
of any of the Sellers or Stockholders, is threatened which
challenges the legality, validity, enforceability, use, or ownership
of the item.
(iv) Section 4(m)(iv) of the Disclosure Schedule identifies each
item of Intellectual Property that any third party owns and that Danvid
or DWC uses pursuant to license, sublicense, agreement, or permission.
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(n) Tangible Assets. Danvid and DWC, in each case, owns or leases
all buildings, machinery, equipment, and other tangible assets, including those
described on the Equipment Schedule and all others to be assigned under this
Agreement, necessary for the conduct of its business as presently conducted.
Each such tangible asset (exclusive of inventory which is subject to other
representations and warranties hereunder) is free from defects (patent and
latent), has been maintained in accordance with normal industry practice, is in
good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used and presently is
proposed to be used. The Equipment Schedule to be delivered at the Closing will
set forth substantially all items of equipment, furniture, computers, and other
tangible assets (except inventory work in process and supplies to be held for
resale) owned by Sellers and to be assigned at the Closing as part of the
Assets.
(o) Inventory. The inventory of Danvid and DWC consists of raw
materials and supplies, manufactured and purchased parts, goods in process, and
finished goods, all of which is merchantable and fit for the purpose for which
it was procured or manufactured, and none of which is slow-moving, obsolete,
damaged, or defective, subject only to the reserve for inventory writedown set
forth on the face of the Most Recent Balance Sheet (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date. The
Inventory Schedule to be delivered at the Closing will set forth a categorical
description, including numbers of units and location of substantially all items
of inventory, material, and supplies, work in process, parts, and other goods
held for resale and owned by the Sellers as of the Closing Date. The Inventory
Schedule to be delivered at the Closing will be full, fair and complete and will
reflect accurate values based on a "first in, first out" basis for the inventory
reflected thereon, all of which shall be assigned to the Buyer by the Sellers,
together with any and all other inventory, raw materials, supplies and other
goods in process and finished goods owned by the Sellers, as of the Closing
Date. The Sellers' mix of inventory and goods and the dollar value of inventory
shall be substantially similar to that disclosed to the Buyer as of the Most
Recent Balance Sheet Date, subject to ordinary course adjustments, and, in all
events, the inventory shall consist of items with a value (on a first in, first
out basis) of not less than 90 percent of that on the Most Recent Balance Sheet
as of the Closing.
(p) Contracts. Section 4(p) of the Disclosure Schedule (which
incorporates by reference the Schedule of Material Contracts) lists the
following contracts and other agreements to which Danvid or DWC is a party:
(i) any agreement for the lease of personal property to or from any
Person;
(ii) any agreement for the purchase or sale of raw materials,
commodities, supplies, products, or other personal property, or for the
furnishing or receipt of services, the performance of which will extend
over a period of more than three months, result in a loss to Danvid or
DWC or involve consideration in excess of $10,000;
(iii) any agreement creating or concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any
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capitalized lease obligation, or under which it has imposed a Security
Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement with any of the Sellers, Stockholders and their
Affiliates;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis;
(x) any agreement under which it has advanced or loaned any amount
to any of its directors, officers, and employees outside the Ordinary
Course of Business;
(xi) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of Danvid; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $20,000.
The Sellers have delivered to the Buyer a correct and complete copy of each
written agreement listed in Section 4(p) of the Disclosure Schedule (as amended
to date) and a written summary setting forth the terms and conditions of each
oral agreement referred to in Section 4(p) of the Disclosure Schedule. With
respect to each such agreement, except as set forth in the Disclosure Schedule:
(A) the agreement is legal, valid, binding, enforceable, and in full force and
effect; (B) the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (C) no party is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement.
(q) Notes and Accounts Receivable. A complete list of substantially
all accounts receivable of Danvid and DWC and the aging thereof has been
furnished to Buyer, and a then current and complete aging report will be
furnished at the Closing (as defined hereunder, the "Receivable Schedule"). As
of the Closing the fully collectible receivables of Sellers will not be less
than 90 percent of the amount of receivables reflected on the Most Recent
Balance Sheet. All notes and accounts receivable of Danvid and DWC are reflected
properly on its books and records, are valid receivables subject to no setoffs
or counterclaims (except ordinary course customer credits for minor product
failures or defects), are current and collectible, and will be fully collected
in accordance with their terms at their recorded amounts, subject only to
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the reserve for bad debts set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto).
(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Danvid or DWC.
(s) Insurance. Section 4(s) of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which Danvid or DWC has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
within the past five years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate)
of coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) neither Danvid nor any other party to the policy is in breach or
default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; (D) no party to the policy has repudiated any
provision thereof; and (E) none of such policies involve any retroactive premium
adjustments. Danvid has been covered during the past 10 years by insurance in
scope and amount customary and reasonable for the businesses in which it has
engaged during the aforementioned period. Section 4(s) of the Disclosure
Schedule describes any self-insurance arrangements, including Danvid's
self-insurance of workers' compensation.
(t) Litigation. Section 4(t) of the Disclosure Schedule sets forth
each instance in which Danvid, DWC or any of their Affiliates, (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
is a party or, to the Knowledge of any of the Sellers, Stockholders and the
directors and officers (and employees with responsibility for litigation
matters) of Danvid or any of its Affiliates, is threatened to be made a party to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any
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arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in Section 4(t) of the Disclosure Schedule could result
in any material adverse change in the business, financial condition, operations,
results of operations, or future prospects of Danvid or DWC. None of the
Sellers, Stockholders and the directors and officers (and employees with
responsibility for litigation matters) of Danvid has any reason to believe that
any such action, suit, proceeding, hearing, or investigation may be brought or
threatened against Danvid or DWC.
(u) Product Warranty. Each product manufactured, sold, leased, or
delivered by Danvid or DWC has been in conformity with all applicable
contractual commitments and all express and implied warranties, and Danvid and
DWC have no Liability (and there is no Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand
against any of them giving rise to any Liability) for replacement or repair
thereof or other damages in connection therewith (except minor claims arising in
the ordinary course of business). Section 4(u) of the Disclosure Schedule
includes copies of the standard terms and conditions of sale or service for
Danvid (containing applicable guaranty, warranty, and indemnity provisions).
(v) Product Liability. Danvid and DWC have no Liability (and there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by Danvid or DWC.
(w) Employees. Danvid is not a party to or bound by any collective
bargaining agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. Danvid has not
committed any unfair labor practice. None of the Sellers and the directors and
officers (and employees with responsibility for employment matters) of Danvid
has any Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of
Danvid.
(x) Employee Benefits. Danvid and DWC have neither maintained nor
contributed to any Employee Benefit Plan, except a profit sharing plan for which
Danvid and DWC shall remain wholly responsible.
(y) Guaranties. Neither Danvid nor DWC is a guarantor or otherwise
is liable for any Liability or obligation (including indebtedness) of any other
Person.
(z) Environment, Health, and Safety.
(i) Each of Danvid, DWC and their respective predecessors and
Affiliates has complied with all Environmental, Health, and Safety
Laws, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply. Without limiting the
generality of the preceding sentence, each such person has obtained and
been in compliance with all of the terms and conditions of all permits,
licenses, and other
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authorizations which are required under, and has complied with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in, all Environmental, Health, and Safety Laws.
(ii) None of Danvid, DWC and their respective predecessors and
Affiliates has handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to
any substance or condition, or owned or operated any property or
facility in any manner that could form the Basis for any present or
future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against Danvid or DWC for damage to any
site, location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual, or
for any reason under any Environmental, Health, and Safety Law.
(iii) All properties and equipment used in the business of Danvid
and DWC have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-trans-dichloroethylene, dioxins, dibenzofurans,
and Extremely Hazardous Substances.
(aa) Certain Business Relationships with Danvid. None of the
Stockholders and their Affiliates has been involved in any business arrangement
or relationship with Danvid within the past 12 months, and none of the
Stockholders or their Affiliates owns any asset, tangible or intangible, which
is used in the business of Danvid or DWC.
(ab) Disclosure. The representations and warranties contained in
this Section 4 do not contain any untrue statement of fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 4 not misleading.
(ac) Schedules. Each and every Schedule (except those to be prepared
solely by Buyer) attached to this Agreement or to be provided at or prior to
Closing is, or shall be when provided, true, correct and complete in all
respects. This Agreement contemplates the provision of certain Schedules
following the execution and delivery of the Agreement, certain of which are to
be provided at the Closing. As to any Schedule to be provided following the date
of this Agreement, including those to be provided at the Closing, each such
Schedule shall be deemed incorporated by reference herein and each such
Schedule, when prepared and delivered by the Sellers shall be true, complete and
correct in all respects and shall not omit to set forth any information that
would render the description of the items reflected by the applicable Schedule
misleading.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the Closing conditions set forth in
Section 7 below) and the preparation of accurate and completed Schedules and
other documents.
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(b) Notices and Consents. Danvid and DWC will give any notices to
third parties, and the Stockholders will cause Danvid and DWC to use their
respective best efforts to obtain any third party consents, that are necessary
to effect the transactions contemplated by this Agreement or that the Buyer may
request. Each of the Parties will (and the Sellers will cause Danvid and DWC to)
give any notices to, make any filings with, and use its best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies necessary to effect these transactions or the terms of this Agreement.
Without limiting the generality of the foregoing, each of the Parties will file
any Notification and Report Forms and related material that he or it may be
required to file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice under the Hart-Scott-Rodino Act, will
use its best efforts to obtain an early termination of the applicable waiting
period, and will make any further filings pursuant thereto that may be
necessary, proper, or advisable in connection therewith.
(c) Operation of Business. Danvid and DWC will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business; except the payment of bonuses to certain principals and
employees, the payment of estimated taxes, and contributions to the Danvid
Profit Sharing Plan (all of which shall be deducted from the Primary Cash Amount
in accordance with the formula set forth in Section 2(b)(i) of this Agreement).
By way of example and not of limitation, Danvid and DWC will only expend funds
in a manner typical and ordinary for the regular conduct of their businesses and
will forego the expenditure of any funds or other capital for any extraordinary
item. Specifically, other than ordinary payroll, no payments of cash or other
distributions will be made to any of the Stockholders or to any other insider or
affiliate and no transaction involving the expenditure of funds for capital
improvements, or other extraordinary expenditures shall be undertaken by the
Sellers without the prior written approval of the Buyer and an adjustment to the
Purchase Price calculation to reflect the diminishing value in the equity of the
Sellers and the reduction in cash.
(d) Preservation of Business. Danvid and DWC will and the
Stockholders will cause Danvid and DWC to keep their business and properties
substantially intact, including their respective present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, customers, and employees.
(e) Full Access. Each of the Sellers will permit representatives of
the Buyer to have full access to all premises, properties, personnel, books,
records (including Tax records), contracts, and documents of or pertaining to
Danvid or DWC.
(f) Notice of Developments. The Sellers will give prompt written
notice to the Buyer of any material adverse development causing a breach of any
of the representations and warranties in Section 4 above.
(g) Exclusivity. This Agreement is binding on the Parties and may be
considered an option in favor of Buyer for which consideration has been given
and is, therefore, specifically enforceable. None of the Sellers or Stockholders
will (i) solicit, initiate, or encourage the submission of any proposal or offer
from any Person relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets of, Danvid
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or DWC (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. None of the Stockholders will vote their shares of stock
of Danvid or DWC in favor of any such acquisition structured as a merger,
consolidation, asset sale, or share exchange. The Sellers will notify the Buyer
immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing. In addition to specific performance, a
violation of this covenant shall entitle Buyer to all actual and consequential
damages suffered by Buyer, and Sellers and the Stockholders shall be jointly and
securely liable therefor.
6. Incidental Transactions and Post-Closing Covenants. The Parties
agree as follows with respect to certain matters incident to these transactions
and the period following the Closing.
(a) General. In case at any time after the Closing any further
action is necessary or in Buyer's discretion desirable to carry out the purposes
of this Agreement, each of the Parties will take such further action (including
the execution and delivery of such further instruments and documents) as any
other Party may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Section 8 below). From and after the Closing the Sellers will be entitled to
possession of all documents, books, records (including Tax records), agreements,
and financial data of any sort relating to Danvid or DWC. Notwithstanding the
foregoing, Sellers shall retain and preserve all documents, books, records
(including tax records), and financial data of any sort relating to Danvid or
DWC for a period of not less than eight years following the date of this
Agreement. Additionally, Buyer, at Buyer's discretion and upon request, shall be
afforded reasonable access to all such books and records. Sellers shall not
destroy any such books and records without providing at least thirty days'
written notice of their intent to do so to Buyer, and prior to such destruction,
Buyer may take possession of such books and records proposed to be destroyed by
the Sellers.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Danvid or DWC, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 8 below).
(c) Transition. None of the Sellers will take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business relation of Danvid or DWC from maintaining
the same business relationships with Buyer after the Closing as it maintained
with Danvid or DWC prior to the Closing. Each of the
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Sellers will refer all customer inquiries relating to the business of Danvid or
DWC to the Buyer from and after the Closing. Promptly upon the Closing, each of
the Sellers will undertake such acts, including the filing of appropriate
documents with the Secretary of State of the State of Texas, to change their
business names to new names that do not include reference to "Danvid" or any
other name that would be confusing or similar to the names Danvid Company,
Danvid Window Company or any of the names reflected in the Schedule of IP
delivered pursuant to this Agreement. Each of the Sellers and Stockholders will
cooperate in all manner requested by the Buyer to assist the Buyer in changing
its corporate name and business trade name to "Danvid Company" or such other
similar name as Buyer may select, including the execution, delivery and filing
of all documents necessary to enable Buyer to begin to conduct business under a
name employing the word "Danvid" as of the Closing.
(d) Confidentiality. Each of the Sellers and Stockholders will treat
and hold as such all of the Confidential Information, refrain from using any of
the Confidential Information except in connection with this Agreement, and
deliver promptly to the Buyer or destroy, at the request and option of the
Buyer, all tangible embodiments (and all copies) of the Confidential information
which are in his or its possession. In the event that any of the Sellers or
Stockholders is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, that person will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 6(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, any of the Sellers or
Stockholders is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, that
person may disclose the Confidential Information to the tribunal; provided,
however, that the disclosing person shall use his or its best efforts to obtain,
at the request of the Buyer, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information
required to be disclosed as the Buyer shall designate. The foregoing provisions
shall not apply to any Confidential Information which is generally available to
the public immediately prior to the time of disclosure.
(e) Covenant Not to Compete. Other than for AAPC or Buyer, for a
period of ten years from and after the Closing Date, none of the Sellers or
Stockholders will engage directly or indirectly in any business that Danvid or
DWC conducts as of the Closing Date in the continental United States or any
geographic area in which Danvid or DWC conducts that business as of the Closing
Date; provided, however, that no owner of less than 1% of the outstanding stock
of any publicly traded corporation shall be deemed to engage solely by reason
thereof in any of its businesses. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 6(e) is invalid
or unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
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In consideration for the foregoing covenant, Mr. Daniel Crawford,
subject to the full and complete enforceability of the covenant not to compete
described hereinabove and subject to Mr. Crawford's forbearance from undertaking
any act in contravention of the foregoing covenant, regardless of its
enforceability, shall be paid within thirty days of the end of each calendar
year following the first anniversary of the date of this Agreement, an amount
equal to $350,000 per year. Mr. Crawford shall, at the Closing, execute and
deliver a separate Non-Competition Agreement restricting competition with Buyer,
in form and substance acceptable to Buyer.
The foregoing covenants not to compete are reasonable and necessary in
order to protect the legitimate and valid business interests of the Buyer and
are reasonable and necessary for that purpose. The consideration contemplated by
the Purchase Price and the additional payment to Mr. Crawford set forth herein
are full, complete and adequate consideration for the foregoing covenant and the
Sellers and Stockholders acknowledge and agree that they are not by reason of
such conditions and compliance therewith precluded from undertaking activity
necessary for making a living.
(f) Sellers' Cessation of Business. As of the close of business on
the Closing Date, each Seller shall cease active business operations.
Particularly, each Seller shall as of such date (i) stop all marketing, sale,
and other activity ordinarily conducted by Seller in connection with the
operation of its business; (ii) each Seller shall, effective at the close of
business on the Friday preceding the Closing Date, cease and terminate as
employees each and every of Sellers' employees, notifying each of Seller's
employees that they shall have the opportunity to apply for employment with
Buyer in accordance with Buyer's ordinary business practices; and (iii) notify
each employee of any severance obligation owing, and that provision for payment
of such severance obligation shall be made by the applicable Seller at or upon
the Closing, Sellers acknowledging that such severance obligations shall not be
Assumed Liabilities. Notwithstanding the foregoing, Buyer shall retain complete
freedom in the selection of employees for its own business operations and shall
not be obligated to employ any of the Sellers' employees. Any such employee
proposed to be employed by Buyer shall be employed only in accordance with
Buyer's ordinary practices for hiring and subject to the limitations on hiring
imposed upon Buyer's employees generally. Buyer shall not assume or in any way
be liable or responsible for existing liabilities or obligations of either
Seller of any nature whatsoever to any employee. Sellers shall provide all
required "COBRA" notices to Seller's employees on the Closing Date or such
earlier date as may be required by law.
(g) Nature of Transactions, Payments to Creditors. The parties
acknowledge that the transactions contemplated hereby have been negotiated in
good faith and at arm's length and that the price for the Assets represents
reasonably equivalent value for the Assets in the context in which they are
being sold. Sellers acknowledge that in connection with the cessation of their
respective businesses they will effect an orderly distribution of its assets
among their creditors and agree that they shall pay when due each and every
obligation reflected by the financial statements or that is otherwise owing to
any third party prior to the distribution of any funds to any insider or
affiliate of the Seller or to any stockholder of either Seller.
Sellers and Stockholders represent and warrant that the net proceeds of
the sale of the Assets available after payment to the creditors identified in
Schedule 6(g) each of whom shall
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be paid in full at the time of Closing (the "Discharged Liabilities"), will be
adequate to discharge each and every of the Sellers' obligations, except those
owing to insiders and shareholders and except the Assumed Liabilities. In this
regard, Sellers and Stockholders acknowledge that they do not foresee the need
to seek any form of protection under Bankruptcy laws or any other law affecting
creditors' rights generally, and Sellers covenant and agree that neither Danvid
nor DWC shall undertake any bankruptcy filing for a period of 91 days following
the date of this Agreement. To the extent Sellers undertake any bankruptcy
filing during the 91-day period following the Closing Date, the Stockholders and
Sellers shall indemnify the Buyer for each and every loss, liability, or
obligation associated with the bankruptcy filing, including reimbursement of all
payments or the loss of any of the Assets or the proceeds thereof by Buyer and
shall indemnify Buyer for any and all costs associated with the defense of any
action or proceeding brought by any debtor-in-possession, trustee, or other
party representing the Seller or any creditor of Seller arising out of any
insolvency proceeding. Further, in light of the foregoing representations,
Sellers and Stockholders stipulate and agree that any such filing would operate
as a fraud upon Buyer and shall be conclusively stipulated to be undertaken in
bad faith.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions at the Closing is subject to satisfaction
of the following conditions:
(i) the representations and warranties set forth in Section 3(a) and
Section 4 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) the Sellers and Stockholders shall have performed and complied
with all of their covenants hereunder in all material respects through
the Closing;
(iii) Danvid and DWC shall have procured in form acceptable to
Buyer, all of the third party consents necessary to effect these
transactions, as are required hereunder or as Buyer reasonably
requests;
(iv) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation,
or (C) affect adversely the right of the Buyer to own the Assets;
(v) each liability set forth on Schedule 6(g) (the Discharged
Liabilities) shall have been fully paid or discharged or provision
acceptable to Buyer shall have been made;
(vi) the Sellers shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in Section
7(a)(i)-(v) is satisfied in all respects;
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(vii) all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated and the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies necessary to effect the transactions;
(viii) the relevant parties shall have entered into agreements in
form and substance acceptable to Buyer to effect all incidental
transactions contemplated by this Agreement, including by way of
example, the execution and delivery of an Escrow Agreement consistent
with Section 8(f), and an acceptable form of non-competition agreement
for Mr. Daniel Crawford, and the same shall be in full force and
effect;
(ix) the Buyer shall have received from counsel to the Sellers an
opinion in form set forth in Exhibit 7(a)(ix) attached hereto,
addressed to the Buyer, and dated as of the Closing Date;
(x) the Buyer shall have received all title documents, assignments
and other documents necessary to effect the transfer of the Assets free
and clear of all liens and encumbrances, except those relating to the
Assumed Liabilities, in form acceptable to Buyer;
(xi) the Buyer shall have been fully satisfied with the results of
its due diligence investigation, in the Buyer's sole, complete and
absolute discretion;
(xii) there shall be no material variance in the dollar amount or
concentration or makeup of the receivables and payables owing by or to
Danvid or DWC, from the presentation of the receivables and payables
provided to the Buyer for the period ended as of the Most Recent
Balance Sheet date;
(xiii) Danvid shall have conducted its business only in the ordinary
course of business and shall not have undertaken any capital
expenditure in excess of $50,000 without the prior approval of the
Buyer. Danvid shall not have suffered any material adverse change in
the financial condition of the property or business; and there shall
have been no increase in wages, salaries or benefits, except for
regularly scheduled increases previously described to the Buyer;
(xiv) The Sellers shall deliver at the Closing:
(A) Certified copies of the resolutions which have been duly
adopted by the Boards of Directors and shareholders of each Seller, and
are in full force and effect and which authorize the execution and
delivery of this Agreement and the Related Agreements to be executed by
each Seller and the consummation of the transactions provided for
herein and therein;
(B) Sellers shall each deliver a certificate duly executed by
the president of each Seller and each of the Stockholders indicating
that the representations, and warranties, including the Exhibits
hereto, are, as of the
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Closing, complete and accurate in all material respects and that all
agreements and covenants to be performed prior to or at the Closing
have been performed;
(C) Seller shall execute and deliver such UCC-1 Financing
Statement forms and related documents necessary to effect as a public
record the transfer of the Sellers' Receivables and shall endorse such
other documents necessary to effect the assignment of the Receivables
that are included every the Assets;
(D) Sellers shall deliver a full and complete release from
each and every obligation owing by the Sellers to any third party and
such other documents and instruments necessary to release, as a public
record, each and every lien, claim, or encumbrance against the Assets
by any creditor asserting a lien, claim or encumbrance (including, as
examples, UCC-3 forms to release any UCC lien placed on the Assets),
except liens securing the Assumed Liabilities;
(E) Each of the schedules to be delivered at the Closing in
accordance herewith, including the Inventory Schedule, Equipment
Schedule, Receivable Schedule, Schedule of Material Contracts, Real
Property Schedule and all other schedules to be incorporated in this
Agreement shall be delivered in accordance with the requirements of
this Agreement;
(F) Possession and title of all of the Assets purchased by
Purchaser hereunder, in the manner designated by Buyer and at Seller's
cost and expense.
(xv) Buyer's Board of Directors shall have, after being informed of
the terms and conditions of the transactions, approved the acquisition
on the terms set forth in this Agreement;
(xvi) The Pre-Closing shall have occurred and the documents required
to be delivered in preliminary form thereat shall be in a form
acceptable to Buyer or Sellers shall have, prior to Closing, conformed
such documents so as to satisfy Sellers' delivery obligations on the
terms hereof;
(xvii) the Buyer shall have obtained on terms and conditions
satisfactory to it, in its sole and absolute discretion, all of the
financing it needs in order to consummate the transactions contemplated
hereby and fund the working capital requirements of a business to be
conducted with the Assets after the Closing; and
(xviii) all actions to be taken by the Sellers or Stockholders in
connection with consummation of the transactions contemplated hereby
will have been taken or capable of being taken at the Closing, and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby, including, by way of
example, those described in Section 6 hereof, will be satisfactory in
form and substance to the Buyer.
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The Buyer may waive any condition specified in this Section 7(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in Section 3(b)
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation
(and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iv) the Buyer shall have delivered to the Sellers a certificate to
the effect that each of the conditions specified above in Section
7(b)(i)-(iii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated; and
(vi) the Sellers shall have received from counsel to the Buyer an
opinion to the effect that Buyer is duly organized and existing and has
requisite corporate authority to enter into this Agreement.
The Sellers may waive any condition specified in this Section 7(b) if they
execute a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect forever thereafter (subject to any applicable
statutes of limitations).
(b) Indemnification Provisions for Benefit of the Buyer.
(i) In the event any of the Sellers breaches (or in the event any
third party alleges facts that, if true, would mean any of the Sellers
or Stockholders has breached) any of their representations, warranties,
and covenants contained herein, then each of the Sellers
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agrees to jointly and severally indemnify the Buyer from and against
the entirety of any Adverse Consequences the Buyer may suffer through
and after the date of the claim for indemnification resulting from,
arising out of, relating to, in the nature of, or caused by the breach
(or the alleged breach). Notwithstanding the foregoing, Sellers shall
not have any obligation to indemnify the Buyer from and against any
Adverse Consequences resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or alleged breach) of any
representation or warranty of the Sellers and Stockholders (except
those in Section 4(d)(i)(k) and (aa), in which case such indemnity
shall be unlimited) until the Buyer has suffered Adverse Consequences
by reason of all such breaches (or alleged breaches) in excess of a
$50,000 aggregate threshold (at which point the Sellers and
Stockholders will be obligated to indemnify the Buyer from and against
all such Adverse Consequences relating back to the first dollar).
(ii) Each of the Sellers agrees to, jointly and severally, indemnify
the Buyer from and against the entirety of any Adverse Consequences the
Buyer may suffer resulting from, arising out of, relating to, in the
nature of, or caused by any Liability of Buyer or Danvid for the unpaid
Taxes of any Person, including, by way of example, under Treas. Reg.
Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
(c) Indemnification Provisions for Benefit of the Sellers. In the
event the Buyer breaches (or in the event any third party alleges facts that, if
true, would mean the Buyer has breached) any of its representations, warranties,
and covenants contained herein, then the Buyer agrees to indemnify each of the
Sellers from and against the entirety of any Adverse Consequences the Seller may
suffer through and after the date of the claim for indemnification resulting
from, arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 8, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party
in notifying any indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 10
days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party
from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence
acceptable to the
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Indemnified Party that the indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (C) the Third Party Claim
involves only money damages and does not seek an injunction or other
equitable relief, (D) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith judgment of
the Indemnified Party, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of the
Indemnified Party, and (E) the Indemnifying Party conducts the defense
of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 8(d)(ii) above, (A)
the Indemnified Party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party Claim,
(B) the Indemnified Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party (not to be
withheld unreasonably but which may be conditioned on satisfactory
assurances respecting the financial capacity to discharge all of the
applicable Adverse Consequences), and (C) the Indemnifying Party will
not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent
of the Indemnified Party (not to be withheld unreasonably but which may
be conditioned on satisfactory assurances respecting the financial
capacity to discharge all of the applicable Adverse Consequences).
(iv) In the event any of the conditions in Section 8(d)(ii) above is
or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including fees and expenses), and (C)
the Indemnifying Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this Section 8.
(e) Determination of Adverse Consequences. The Parties shall take
into account the time cost of money (using the Applicable Rate as the discount
rate) in determining Adverse Consequences for purposes of this Section 8. All
indemnification payments under this Section 8 shall be deemed adjustments to the
Purchase Price.
(f) Escrow Arrangement and Right to Setoff. Simultaneously with the
Closing, a part of the cash portion of the Purchase Price will be deposited in
escrow with the Escrow Agent pursuant to the terms and conditions of an Escrow
Agreement to be satisfactory to the Buyer and the Escrow Agent and to be
approved at the Pre-Closing and executed and delivered at the Closing. The
Escrow Agreement shall be consistent with the provisions hereof and contain
other customary terms for an escrow of this type. The funds deposited with the
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Escrow Agent shall be held in an interest-bearing account with interest accruing
for the benefit of the Sellers (but subject to Buyer's claims for indemnity),
all of which interest shall be held in and retained in the escrow account until
the escrow arrangement is terminated by its term which shall be not less than 18
months and will otherwise be subject to the indemnity claims for which the
escrow arrangement is being established and will be used to compensate Buyer for
any Liability associated with the businesses conducted by the Sellers prior to
the Closing or arising out of any breach of any representation, warranty or
covenant set forth herein, and for the diminution in the value of the assets
described on the Closing Balance Sheet and schedules to be delivered by the
Sellers at the Closing. The Escrow Agreement shall also authorize the Buyer to
draw upon the escrow to satisfy any deficiency in net asset value or
responsibility for any liability upon Reconciliation of the Closing Balance
Sheet in the matter contemplated by Section 2(b) hereof. In the event Buyer
alleges, at any time within the period commencing on the Closing Date and
continuing until 150 days thereafter, any claim for indemnity or other form of
liability or obligation of Sellers or Stockholders under this Agreement or any
of the related Transaction Documents, the Escrow Agent shall withhold such funds
and maintain them in the Escrow Agent's possession pending resolution of the
applicable claim for indemnity.
(g) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of any
representation, warranty, or covenant.
9. Tax Matters. The following provisions shall govern the allocation of
responsibility as between Buyer and Sellers for certain tax matters following
the Closing Date:
(a) Tax Returns. Except taxes paid as an Assumed Liability, Sellers
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns for Danvid and DWC for all periods and shall pay or cause to be paid any
amount shown to be due on such Tax Returns and any amounts that may subsequently
be found to be due with respect to such periods and such Tax Returns. In
addition to the indemnity in Section 8 hereof, Sellers shall indemnify and
reimburse Buyer for any Taxes of Danvid or DWC that Buyer may pay or be assessed
with respect to any period. Seller shall pay such reimbursement to Buyer within
fifteen (15) days after payment by Buyer of such Taxes.
(b) Certain Taxes. Buyer will pay all transfer taxes associated with
the transfer of any vehicles or other assets that require a license or
certificate of title. All other transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by Sellers
when due, and Sellers will, at their own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and, if required by
applicable law, Buyer will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation, but Sellers and
Stockholders agree to indemnify and reimburse Buyer for any liability that it
may incur as a result of joining in the execution of any such Tax Returns or
other documentation and to pay any such reimbursement to Buyer within fifteen
(15) days after payment by Buyer of any such amounts.
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10. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Buyer and the Sellers may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written notice
to the Sellers prior to or at the Closing if any condition to the
Buyer's obligation to Close is not satisfied or if Buyer is not
satisfied with the results of its continuing business, legal, and
accounting due diligence regarding Danvid;
(iii) the Buyer may terminate this Agreement by giving written
notice to the Sellers at any time prior to the Closing (A) in the event
any of the Sellers has breached any material representation, warranty,
or covenant contained in this Agreement in any material respect, and
the Buyer has notified the Sellers of the breach, or (B) if the Closing
shall not have occurred on or before December 15, 1997, by reason of
the failure of any condition precedent under Section 7(a) hereof
(unless the failure results primarily from the Buyer itself breaching
any representation, warranty, or covenant contained in this Agreement);
and
(iv) the Sellers may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing of the failure of
any of Sellers conditions to Closing or in the event the Buyer has
breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, any of the Sellers has
notified the Buyer of the breach.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach). Buyer will return all
Confidential Information and trade secrets to Danvid upon any such termination
and will forego attempting to exploit any trade secrets of Danvid thereafter.
11. Miscellaneous.
(a) Nature of Certain Obligations. The representations, warranties,
and covenants of the Sellers in this Agreement are joint and several
obligations. This means that each Seller and Stockholder will be responsible to
the extent provided in Section 8 above for the entirety of any Adverse
Consequences the Buyer may suffer as a result of any breach thereof.
(b) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of the
Buyer and the Sellers; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in
38
<PAGE> 43
which case the disclosing Party will use its reasonable best efforts to advise
the other Parties prior to making the disclosure). AAPC may refer to Danvid and
DWC and use, in AAPC's reasonable discretion, any and all information provided
to AAPC about Danvid and DWC (including financial statements) in AAPC's offering
circular for the notes to provide the financing for this (among other)
transactions.
(c) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Buyer and the Requisite Sellers; provided, however, that
the Buyer may (i) assign any or all of its rights and interests hereunder to one
or more of its Affiliates and (ii) designate one or more of its Affiliates to
perform its obligations hereunder (in any or all of which cases the Buyer
nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which taken
together will constitute one and the same instrument. Additionally, signatures
transmitted by facsimile shall be effective and delivery deemed made when
received by facsimile transmission; facsimile signatures shall be followed by
next-day delivery of original counterparts.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Sellers or Stockholders:
c/o Ms. Paulette Mueller
Shafer, Ramsey & Mueller
4514 Cole Avenue, 2nd Floor
Dallas, TX 75205-4159
39
<PAGE> 44
If to the Buyer:
American Architectural Products Corp.
755 Boardman-Canfield Road
Southbridge Executive Park
Building G West
Boardman, OH 44512
Attn: Mr. Frank Amedia
with a copy to:
Mr. Jeffrey D. Warren
Squire, Sanders & Dempsey L.L.P. and at
40 North Central Avenue 6250 Texas Commerce Tower
Suite 2700 600 Travis Street
Phoenix, AZ 85004 Houston, Texas 77002
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Texas without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Texas or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of Texas. Jurisdiction and venue in any
action arising hereunder shall be in a court of competent subject matter
jurisdiction in Dallas County, Texas, and each of the Parties consents to
jurisdiction therein.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Requisite Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
40
<PAGE> 45
(l) Expenses. Each of the Parties will bear his or its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. The Sellers agree that
Danvid has not borne and will not bear any of the Sellers' costs and expenses
(including any of their legal fees and expenses) in connection with this
Agreement or any of the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(n) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter [(subject to the provisions set
forth in Section 10(i) above), in addition to any other remedy to which they may
be entitled, at law or in equity.
(p) Stockholders of Sellers Bound. Simultaneously with the execution
and delivery of this Agreement, the Stockholders are executing and delivering a
separate Agreement in Support of Asset Purchase Agreement (the "Stockholders
Agreement") that provides for the Stockholders to be bound to the agreements,
representations, warranties and covenants of the Seller as though a party
hereto. Under the Stockholders Agreement the Stockholders will be jointly and
severally bound with the Sellers for all obligations under this Agreement and
all Related Agreements, including the indemnity in Section 8 hereof.
(q) Good Faith. Each of the parties hereto shall, in good faith,
undertake their reasonable best efforts to complete the documentation necessary
to be completed prior to the Pre-closing and to be executed and delivered at
the Closing. Further, by way of example, Buyer shall undertake to do all acts
and things reasonably necessary to obtain the financing that is
41
<PAGE> 46
necessary for Buyer to effect the transactions contemplated by this Agreement
and to satisfy the condition to Closing set forth in Section 7(a)(xvii).
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
"BUYER"
DCI/DWC ACQUISITION, CORP. [IN FORMATION]
By: /s/ Frank J. Amedia
-------------------------------------
Title: President and CEO
----------------------------------
"SELLERS"
DANVID COMPANY, INC.
By: /s/ Dan Crawford
-------------------------------------
Title: President
----------------------------------
DANVID WINDOW COMPANY
By: /s/ Dan Crawford
-------------------------------------
Title: President
----------------------------------
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<PAGE> 47
The following schedules to the Asset Purchase Agreement have been omitted
from this Exhibit 2.2. The Company agrees to furnish supplementally a copy of
any omitted schedule to the Securities and Exchange Commission upon request.
Disclosure Schedule
Section 4(a) Directors and Officers of Danvid and DWC
Section 4(e) Title to Assets
Exhibit 4(g) Financial Statements
Section 4(i) Undisclosed Liabilities
Section 4(k)(iii) Tax Returns
Section 4(k)(vi) Basis in Assets
Section 4(l)(i) Leased Real Property
Section 4(m)(iii) Intellectual Property Patents, Registrations,
Trademarks and Trade Names
Section 4(m)(iv) Third-Party Intellectual Property Licensed to
Danvid and DWC
Section 4(p) Contracts and other Agreements
Section 4(s) Insurance Policies
Section 4(t) Litigation
Section 4(u) Product Warranty
Real Property Schedule
Inventory Schedule
Equipment Schedule
Material Contracts Schedule
Receivable Schedule
Excluded Assets Schedule
Intellectual Property Schedule
Closing Balance Sheet
Schedule 2(a) Allocation of Consideration
Schedule 2(b)(i) Wire Transfer Instructions
Schedule 2(b)(iv) Assumed Liabilities
Schedule 6(g) Creditors paid at Closing
Exhibit 7(a)(ix) Form of Sellers' counsel's opinion
<PAGE> 1
Exhibit 2.3
AGREEMENT IN SUPPORT OF ASSET PURCHASE AGREEMENT
This Agreement in Support of Asset Purchase Agreement ("Agreement") is
hereby made and entered this 10th day of November, 1997 by and among the
undersigned Daniel Crawford, Karen Crawford, David Crawford and Paul Comer
(collectively, the "Stockholders," and severally as the context requires a
"Stockholder"), and DCI/DWC Acquisition Corp., a Delaware corporation (the
"Buyer"), who agree as follows:
WHEREAS, Buyer is simultaneously entering into that certain Asset
Purchase Agreement (the "Asset Purchase Agreement") among Buyer and Danvid
Company, Inc. ("Danvid") and Danvid Window Company ("DWC") pursuant to which
Buyer will acquire substantially all the assets of Danvid and DWC;
WHEREAS, the Stockholders are all of the Stockholders of Danvid and DWC
and have acknowledged the direct benefit to be received by them by reason of the
transactions contemplated by the Asset Purchase Agreement; and
WHEREAS, Buyer is entering into the Asset Purchase Agreement in
reliance on the representations, warranties and covenants of Stockholders in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, Buyer's
reliance, the benefits inuring to the Stockholders by reason of the Asset
Purchase Agreement, and other full, fair and adequate consideration, it is
agreed as follows:
1. DEFINITIONS. All terms appearing herein as defined terms and not
expressly defined herein shall have the same meaning assigned to them in the
Asset Purchase Agreement.
2. JOINT AND SEVERAL LIABILITY. The Stockholders have agreed that they
shall be jointly and severally liable, together with the Sellers and each of the
other Stockholders, for each and every representation, warranty, covenant and
agreement made by the Sellers in the Asset Purchase Agreement as though a
signatory party thereto. Each of the Stockholders acknowledge full, fair,
complete and adequate consideration for the obligation to be bound to each of
the representations, warranties, covenants and agreements of the Sellers set
forth in the Asset Purchase Agreement and agree to be bound thereby.
Without limiting the generality of the foregoing, each of the
Stockholders, jointly and severally with the Sellers, makes each of the
representations, warranties and covenants of the Sellers set forth in Sections
3(a), 4, 5 and 6 of the Asset Purchase Agreement and agree that each of the
Stockholders is jointly and severally bound, together with the Sellers, for each
and every of the indemnity obligations of the Sellers set forth in Section 8 of
the Asset Purchase Agreement. The Stockholders acknowledge that certain of the
representations and warranties speak as of the date hereof and are to be
affirmed and effectively reconfirmed as accurate as of the Closing. Each of the
Stockholders has reviewed the Disclosure Schedule and represents and warrants
that the Disclosure Schedule sets forth all of the qualifications to
<PAGE> 2
the representations and warranties of Section 4 of the Asset Purchase Agreement
in accordance with the terms thereof.
3. TAX MATTERS. Notwithstanding the generality of the foregoing,
Stockholders acknowledge that they shall be jointly and severally liable,
together with the Sellers, for any and all Liabilities for Taxes of Danvid and
DWC incurred by the Buyer and any and all Adverse Consequences associated with
any Taxes imposed on or relating to the business of Danvid, DWC or any of the
Stockholders, except liabilities expressly assumed by the Buyer pursuant to the
Asset Purchase Agreement and included among the Assumed Liabilities.
4. NATURE OF OBLIGATIONS. The representations, warranties, and
covenants of the Sellers and the Stockholders in the Asset Purchase Agreement
and, in turn, this Agreement, are joint and several obligations. Each
Stockholder acknowledges that the Stockholder will be responsible for the
entirety of any Adverse Consequences the Buyer may suffer as a result of any
breach of the Asset Purchase Agreement by the Sellers.
5. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the state of Texas without regard to the
effect of any choice of law provision or rule (whether of the state of Texas or
any other jurisdiction) that would cause the application of laws of any
jurisdiction other than the state of Texas. Jurisdiction and venue in any action
arising hereunder shall be in a court of competent subject matter jurisdiction
in Dallas County, Texas, and each of the parties consents to jurisdiction
therein.
6. NOTICES. All notices, requests, demands, claims, and other
communications under this Agreement will be in writing. Any notice, request,
demand, claim or other communication hereunder shall be deemed duly given if
personally delivered or, two days after mailing if mailed by Registered or
Certified Mail, return receipt requested, postage prepaid and addressed to the
intended recipient at the address set forth beneath their signatures below.
7. CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.
8. INCORPORATION BY REFERENCE. This Agreement incorporates by reference
all the terms and conditions of the Asset Purchase Agreement for purposes of
enforcing the rights and obligations of the Buyer against the Stockholders set
forth in this Agreement. Each of the Stockholders has reviewed a final copy of
the Asset Purchase Agreement and acknowledges a full, complete and clear
understanding of the obligations in the Asset Purchase Agreement based on
consultation with counsel of their own choosing.
9. REMEDIES AVAILABLE. All remedies set forth in the Asset Purchase
Agreement intended to be available to the Buyer, in addition to all other
remedies available at law or in
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<PAGE> 3
equity, shall be made available to the Buyer against the Stockholders to the
same extent available against the Sellers.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together will constitute one and the same instrument. Additionally, signatures
transmitted by facsimile shall be effective and delivery deemed made when
received by facsimile transmission; facsimile signatures shall be followed by
next-day delivery of original counterparts.
EXECUTED this 10th day of November, 1997.
DCI/DWC ACQUISITION CORP.
By /s/ Frank J. Amedia
--------------------------
Address for Notice:
- -----------------------------
- -----------------------------
- -----------------------------
DANIEL CRAWFORD
/s/ Daniel Crawford
- -----------------------------
Signature
Address for Notice:
727 Country Glen Ct.
- -----------------------------
Highland Village, TX 75067
- -----------------------------
- -----------------------------
KAREN CRAWFORD
/s/ Karen Crawford
- -----------------------------
Signature
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<PAGE> 4
Address for Notice:
620 Timber Crest
- -----------------------------
Highland Village, TX 75067
- -----------------------------
- -----------------------------
DAVID CRAWFORD
/s/ David Crawford
- -----------------------------
Signature
Address for Notice:
1371 Daffodil
- -----------------------------
Lewisville
- -----------------------------
Texas 75067
- -----------------------------
PAUL COMER
/s/ Paul Comer
- -----------------------------
Signature
Address for Notice:
5103 Ambergate Ln.
- -----------------------------
Dallas, TX 75287
- -----------------------------
- -----------------------------
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<PAGE> 1
Exhibit 2.4
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into by and
between AMERICAN GLASSMITH, INC., an Ohio corporation ("Seller"), and AMERICAN
GLASSMITH ACQUISITION CORPORATION, a Delaware corporation ("Buyer") and AMERICAN
ARCHITECTURAL PRODUCTS CORPORATION, a Delaware corporation ("AAPC"; but only as
to the provisions of Section 11.01(a)(v) of this Agreement).
RECITALS
A. Seller is engaged in the manufacture and sale of decorative glass at
its facilities located in Columbus, Ohio (the "Purchased Business").
B. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, substantially all of the assets owned by Seller and used in the Purchased
Business.
PROVISIONS
NOW, THEREFORE, in consideration of the above Recitals and the
provisions contained in this Agreement, Seller and Buyer agree as follows:
ARTICLE I
SALE OF ASSETS
SECTION 1.01. SALE OF ASSETS. Pursuant to the provisions set forth in
this Agreement, at the Closing (as defined in Section 3.01 of this Agreement)
Seller shall sell, convey, transfer, assign and deliver to Buyer, and Buyer
shall purchase and acquire from Seller, all of the assets, properties and rights
(other than the Excluded Assets defined below in Section 1.02 of this Agreement)
owned by Seller and used or held for use solely in the operation of the
Purchased Business of every kind, character and description, whether tangible,
intangible, personal or mixed, and wheresoever located, whether carried on the
books of Seller or not carried on the books of Seller, due to expense, full
depreciation or otherwise (the "Purchased Assets") including, but not limited
to:
(a) all rights, title and interests in, to and under the
leased real property (the "Leased Real Property") listed in Schedule
4.05 of the schedules attached to or accompanying this Agreement and
any supplement to this Agreement (the "Disclosure Schedules");
(b) all machinery and equipment, computer hardware, supplies,
spare parts, tools, jigs, patterns, trade fixtures, dies, molds,
vehicles (whether titled or untitled), furniture, designs and drawings
(the "Equipment");
<PAGE> 2
(c) cash and cash equivalents on hand in banks, certificates
of deposit, commercial paper and securities (except for the lockbox
account of Seller at First Bank, St. Paul, Minnesota, Account No. 170
2254 7660, which is an Excluded Asset);
(d) all accounts and notes receivable (except for Seller's
intercompany accounts with affiliates (the "Intercompany Accounts")
which are an Excluded Asset);
(e) all inventory, raw materials, components, work-in-process,
finished goods, service parts and supplies, packaging materials and
other similar items (whether new or used) (the "Inventory");
(f) all rights, title and interests in, to and under all
leases of tools, furniture, machinery, supplies, vehicles, equipment
and other items of personal property listed in Schedule 4.06 of the
Disclosure Schedules; provided, however, that to the extent the
assignment of any such lease or any claim or right or any benefit
arising under or resulting from such lease(s) shall require the consent
of another party, this Agreement shall not constitute an assignment of
such lease(s) if an attempted assignment would constitute a breach of
such lease(s) and, in lieu of such consent, Seller shall cooperate with
Buyer in any reasonable arrangement designed to provide Buyer the
benefits under, or any claim or right arising under such lease(s) (the
"Third Party Leases");
(g) all rights in, to and under all contracts, agreements,
purchase orders, customer orders and work orders listed in Schedule
4.09 of the Disclosure Schedules; provided, however, that to the extent
the assignment of, or any claim or right or any benefit arising under
or resulting from, any such contract, agreement, purchase order,
customer order or work order shall require the consent or approval of
another party to such contract, agreement, purchase order, customer
order or work order, this Agreement shall not constitute an assignment,
if an attempted assignment would constitute a breach of such contract,
agreement, purchase order, customer order or work order and, in lieu of
such consent, Seller shall cooperate with Buyer in any reasonable
arrangement designed to provide Buyer with the benefits under such
contract, agreement, purchase order, customer order or work order, or
any claim or right arising thereunder;
(h) all prepaid expenses, deposits and other similar items,
other than prepaid expenses, deposits and other similar items relating
to the Excluded Assets (as defined in Section 1.02 of this Agreement);
(i) to the extent legally assignable, all franchises,
licenses, permits, certificates, approvals and other governmental
authorizations necessary to own or lease and operate the Purchased
Assets and to conduct the Purchased Business as it has been conducted
by Seller;
(j) all of Seller's rights, title and interests in the trade
names, trademarks, trademark applications, service marks, service mark
applications, copyrights, copyright
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<PAGE> 3
applications, patents, patent applications, inventions, trade secrets,
know-how, business plans and strategies, proprietary processes and
formulae, data bases, telephone numbers and all other proprietary
technical information, whether patentable or unpatentable, related to
the products, services or operations of the Purchased Business as
presently conducted;
(k) all books and records including, but not limited to,
property records, production records, engineering records,
environmental compliance records, purchase and sales records, credit
data, personnel and payroll records, accounting records, customer
lists, customer records and information, supplier lists, parts lists,
manuals, correspondence, files and any similar items;
(l) except for the computer software system of Seller provided
by J.D. Edwards and referenced as an Excluded Asset, all computer
programs and a copy of the source code and object code of all such
programs, together with all additions, modifications, updates and
enhancements thereto; all design specifications including, but not
limited to, program descriptions, system flow charts, file layouts,
report layouts, screen layouts and all other computer program
documentation, all user's manuals, training manuals, sales literature
and other system and operations documentation relating to such computer
programs;
(m) all rights, claims and choses in action against third
parties including, but not limited to, all rights against suppliers
under warranties covering any of the Inventory or Equipment;
(n) all stationery, forms, labels, shipping materials,
brochures, art work, photographs, advertising materials and any similar
items;
(o) all other tangible and intangible assets of Seller
relating solely to the Purchased Business, whether or not carried at
value or listed on the books and records of Seller, and whether or not
in the possession of Seller or others.
SECTION 1.02. EXCLUDED ASSETS. Seller shall not sell or deliver to
Buyer, and Buyer shall not purchase or acquire, the following assets owned by
Seller (the "Excluded Assets"):
(a) the minute books and stock records of Seller;
(b) Seller's insurance policies;
(c) all claims and rights to deposits and prepaid expenses
relating to any of the other Excluded Assets;
(d) Seller's lockbox account more particularly described in
Section 1.01;
(e) the Intercompany Accounts; and
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<PAGE> 4
(f) the computer software system of Seller provided by J.D.
Edwards.
SECTION 1.03. ASSUMPTION OF OBLIGATIONS OR LIABILITIES. Buyer shall
assume and agree to pay or perform only the obligations and liabilities of
Seller expressly set forth below (the "Assumed Obligations"). Except for the
Assumed Obligations, Buyer shall not assume and shall not be responsible for any
other obligation or liability of Seller, direct or indirect, known or unknown,
choate or inchoate, absolute or contingent (the "Excluded Liabilities"). The
Assumed Obligations are:
(a) the Current Liabilities (as defined below); and
(b) the obligations or liabilities of Seller in, to and under
the leases, contracts, agreements, purchase orders, customer orders and
work orders included in the Purchased Assets pursuant to Section 1.01
of this Agreement.
"Current Liabilities" as used in the Agreement shall mean all current
liabilities of Seller (including, but not necessarily limited to, accrued
expenses and accounts payable) reflected in the Current Year Financial
Statements.
SECTION 1.04. TRANSFER OF TITLE TO THE PURCHASED ASSETS. The sale,
assignment, conveyance, transfer and delivery by Seller of the Purchased Assets
shall be made at the Closing by such bills of sale, assignments, licenses,
endorsements and other appropriate instruments of transfer as shall be necessary
to vest in Buyer, as of the Closing Date, good and marketable title to the
Purchased Assets, free and clear of any liens, charges and encumbrances, except
for the Assumed Obligations.
ARTICLE II
PURCHASE PRICE
SECTION 2.01. THE PURCHASE PRICE. Subject to the adjustment provisions
of Section 2.03 of this Agreement, as consideration for the purchase of the
Purchased Business, Buyer shall pay to Seller an amount equal to the net book
value of the Purchased Assets, adjusted to the Closing Date, plus Three Hundred
Seventy-Five Thousand Dollars ($375,000.00) (the "Cash Purchase Price"), plus
the assumption of the Assumed Obligations (the "Purchase Price"), allocated as
set forth on Schedule 2.01 of the Disclosure Schedules.
SECTION 2.02. PAYMENT OF THE PURCHASE PRICE. The Purchase Price shall
be paid to Seller as follows:
(a) At the Closing, Seller shall deliver to Buyer a closing
statement as of the Closing Date (which shall be attached to this
Agreement as Schedule 2.02(a)) setting forth
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<PAGE> 5
in detail Seller's good faith estimate of the net book value of the
Purchased Assets as of the Closing Date and the Purchase Price based
thereon.
(b) At the Closing, Buyer shall pay to Seller a cash closing
payment (the "Closing Payment") equal to the Cash Purchase Price.
Payment shall be made by wire transfer at the time of Closing on the
Closing Date.
(c) Within ten (10) business days following the determination
of the Final Purchase Price (as defined in Section 2.03(a) below),
Buyer shall pay to Seller, by wire transfer or other method of payment
acceptable to Seller, an amount equal to the excess, if any, of the
Final Purchase Price over the Closing Payment; provided, however, if
the Final Purchase Price is less than the Closing Payment, Seller shall
pay to Buyer, by wire transfer or other method of payment acceptable to
Buyer, within ten (10) business days, the amount by which the Final
Purchase Price is less than the Closing Payment. If Buyer or Seller, as
the case may be, shall fail to pay the amount due and owing in
accordance with this Section 2.02(c), such unpaid amount shall bear
interest at the rate of twelve percent (12%) per annum from the due
date of such payment until paid in full.
SECTION 2.03. CALCULATION OF THE FINAL PURCHASE PRICE.
(a) Within sixty (60) calendar days of the Closing Date,
Seller shall deliver to Buyer a balance sheet of the Purchased Business
as of November 30, 1997 (the "Final Balance Sheet"), prepared in the
same format as the Current Year Financial Statements. Along with the
Final Balance Sheet, Seller shall deliver to Buyer Sellers' calculation
of the final Purchase Price based upon the Final Balance Sheet, setting
forth the amount of the aggregate net book value of the Purchased
Assets as of the Closing Date, based upon the Final Balance Sheet (the
"Final Purchase Price"). For purposes of determining the Final Purchase
Price, the net book value of the Purchased Assets shall be determined
in a manner consistent with past practices of Seller.
(b) Unless Buyer shall deliver to Seller a written statement
of Buyer's objections to the Final Balance Sheet or Seller's
determination of the Final Purchase Price (collectively, the "Closing
Information") within sixty (60) calendar days after receipt by it of
the Closing Information, the Closing Information shall be deemed to be
final and binding for all purposes of this Agreement. If Buyer and
Seller are unable to agree upon the Closing Information, each party
shall, within fifteen (15) calendar days after expiration of the sixty
(60) day period referred to above, submit proposed Closing Information
to Deloitte Touche or such other party as the parties may mutually
select (the "Accounting Arbitrator"), together with any other such
documentation each such party determines to be necessary. The
Accounting Arbitrator shall prepare the Closing Information in
accordance with the provisions of this Agreement (and shall not be
constrained by the Closing Information submitted to it by the parties
hereto, except to the extent that the parties have agreed on a
particular matter) within twenty-five (25) calendar days of the
submission of the above materials to it. Any decision
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rendered by the Accounting Arbitrator pursuant hereto shall be final
and binding between the parties for the purpose of determining the
Closing Information (including the Final Purchase Price). The parties
shall equally split the fees and expenses of the Accounting Arbitrator;
provided, however, in the event a party did not pursue its position in
the disputed matter in good faith, the fees and expenses of the
Accounting Arbitrator may be allocated solely to such party acting in
bad faith, at the sole discretion of the Accounting Arbitrator.
(c) The parties to this Agreement, each at its own expense,
shall cooperate fully in any audit performed by the Accounting
Arbitrator in connection with Buyer's review of the Closing Information
and shall make available to the Accounting Arbitrator all working
papers, data and such other information as may be reasonably necessary
or desirable in connection with such audit.
SECTION 2.04. TAXES. Seller shall pay all income and transfer taxes, if
any, arising out of the sale of the Purchased Business to Buyer, if any.
ARTICLE III
CLOSING
SECTION 3.01. THE CLOSING. Subject to the provisions of Article XI of
this Agreement, the consummation of the transactions contemplated by this
Agreement (the "Closing") shall occur at the offices of American Architectural
Products Corporation, c/o 812 Huron Road, East, No. 880, Cleveland, Ohio, on or
before December 15, 1997, or as otherwise agreed to by Buyer and Seller (the
"Closing Date"). Upon mutual agreement of the parties, the Closing may take
place by facsimile; in which case a facsimile signature shall be deemed an
original of such signature. In the event of a facsimile closing, each party
agrees to execute an original counterpart of each Closing document immediately
following the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, Seller represents
and warrants to Buyer as follows:
SECTION 4.01. ORGANIZATION; POWER. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of Ohio and is
qualified as a foreign corporation and in good standing in every other state
where the failure to so qualify would have a material adverse effect on the
financial condition, business, assets or results of operations of the Purchased
Business taken as a whole (a "Material Adverse Effect"). Seller has all of the
requisite corporate power and authority to own, lease and operate its assets and
to carry on its business as it is now being conducted.
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SECTION 4.02. AUTHORITY, NO VIOLATION, ETC.
(a) This Agreement and the other agreements and documents to be
executed and delivered by Seller pursuant to the provisions of this Agreement
constitute legal, valid and binding obligations of Seller, enforceable against
Seller in accordance with their respective provisions, except as enforceability
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles of general
application affecting the rights of creditors and (ii) general principles of
equity affecting the right to specific enforceability of any of the remedies
contained herein and therein. Except as set forth on Schedule 4.02(a) of the
Disclosure Schedules, the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement and compliance
by Seller with the provisions of this Agreement will not:
(i) result in a default or give rise to any right of
termination, cancellation or acceleration under any of the provisions
of any note, lien, bond, mortgage, indenture, license, lease, agreement
or other instrument or obligation to which Seller is a party or by
which Seller may be bound, except for such breach or default as to
which valid waivers or consents shall be obtained prior to Closing;
(ii) violate any judgment, order, writ, injunction or decree
of any court, administrative agency or governmental body applicable to
Seller; or
(iii) cause, or give any person grounds to cause (with or
without notice, the passage of time or both), the maturity of any
liability or obligation of Seller to be accelerated or increased.
(b) Except as set forth on Schedule 4.02(b) of the Disclosure
Schedules, the execution and delivery of this Agreement by Seller, the
consummation by Seller of the transactions contemplated by this Agreement and
compliance by Seller with the provisions of this Agreement will not:
(i) conflict with or result in a breach of any provision of
the organizational documents of Seller or result in a default or give
rise to any right of termination, cancellation or acceleration under
any of the provisions of any note, lien, bond, mortgage, indenture,
license, lease, agreement or other instrument or obligation to which
the Seller is a party or by which the Purchased Business, any of its
assets or its business may be bound, except for such conflict, breach
or default as to which valid waivers or consents shall be obtained
prior to Closing;
(ii) violate any judgment, order, writ, injunction or decree
of any court, administrative agency or governmental body applicable to
the Purchased Business or the Purchased Assets; or
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(iii) cause, or give any person grounds to cause (with or
without notice, the passage of time, or both), the maturity of any
liability or obligation of the Purchased Business to be accelerated or
increased.
(c) Except as set forth on Schedule 4.02(c), all filings, consents and
approvals of third parties and governmental authorities required in connection
with the execution and delivery by Seller of this Agreement and the consummation
by Seller of the transactions contemplated by this Agreement (including any
consents required under any contracts, agreements, permits, licenses, leases,
notes or other instruments of Seller in connection with the change of ownership
of the Purchased Business resulting from such transactions) have been obtained.
SECTION 4.03. TAX MATTERS. Since March 25, 1996, Seller has accurately
prepared in good faith and has duly filed with the appropriate Federal, state,
local or foreign governmental agencies all tax returns or reports required to be
filed by Seller as relate to the Purchased Business and the Purchased Assets.
Except as set forth on Schedule 4.03 of the Disclosure Schedules, since March
25, 1996, all taxes due and payable by the Seller with respect to the Purchased
Business and the Purchased Assets to any governmental authority for or with
respect to the periods covered by such returns and reports or with respect to
any period (or portions thereof) ending on or before the Closing Date and all
interest, penalties, assessments and deficiencies connected therewith, have been
paid in full or the Seller has adequately reserved for or made accruals with
respect to all taxes due and payable. Except as set forth on Schedule 4.03,
Seller has not executed or filed with any taxing authority any agreement
extending the period for assessment or collection of any such taxes. Except as
set forth on Schedule 4.03, Seller is not a party to any tax sharing agreement
or to any pending action or proceeding nor is any such action or proceeding
threatened by any governmental authority for the assessment or collection of
taxes and no deficiency notices or reports have been received by Seller with
respect to any of the tax returns of Seller. Except as set forth on Schedule
4.03, since March 25, 1996, Seller has not been subject to any Federal, state,
local or foreign tax dispute or audit.
SECTION 4.04. COMPLIANCE WITH LAWS; NO DEFAULT OR LITIGATION.
(a) Seller is not in default or violation under (i) any
contract, agreement, lease, consent, order or other commitment of the
Purchased Business or (ii) any law, rule, regulation, writ, injunction,
order or decree of any court or any foreign, Federal, state, local or
other governmental department, commission, board, bureau, agency or
instrumentality applicable to the Purchased Business or the Purchased
Assets;
(b) there are no actions, suits, claims, investigations or
legal, arbitration or administrative proceedings in progress, pending
or, to the best knowledge of Seller, threatened against the Seller with
respect to the consummation of the transactions contemplated by this
Agreement; and
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(c) no action, suit, or proceeding has been instituted or, to
the best knowledge of Seller, is threatened to restrain or prohibit or
otherwise challenge the legality or validity of the transactions
contemplated by this Agreement.
SECTION 4.05. LEASED REAL PROPERTY. Schedule 4.05 of the Disclosure
Schedules contains a true and complete list and copies of all leases under which
Seller is a lessee of real property (the "Leased Real Property"). The leases
comprising Schedule 4.05 are in full force and effect and there are no defaults
thereunder on the part of Seller or, to the best knowledge of Seller, any other
party thereto, nor has any event occurred which, with notice or lapse of time or
both, would constitute a default thereunder by Seller.
SECTION 4.06. LEASED PERSONAL PROPERTY. Schedule 4.06 of the Disclosure
Schedules contains a true and complete list and copies of all leases and other
agreements under which the Seller is a lessee (including, but not limited to,
tools, furniture, machinery, vehicles, equipment, or other personal property)
owned by any other person (the "Leased Personal Property"). Except as set forth
on Schedule 4.06, each of the leases listed in Schedule 4.06 are in full force
and effect and there are no defaults thereunder on the part of the Seller or, to
the best knowledge of Seller, any other party thereto, nor has any event
occurred which, with notice or lapse of time or both, would constitute a default
thereunder by the Seller.
SECTION 4.07. FINANCIAL STATEMENTS. Seller has furnished to Buyer true
and complete copies of the following financial statements of Seller
(collectively referred to as the "Financial Statements"), copies of which are
attached as Schedule 4.07 of the Disclosure Schedules:
(a) The unaudited internally prepared balance sheets and
income statements of Seller for the period commencing March 25, 1996
through December 31, 1996 (the "Prior Year Financial Statements"). The
Prior Year Financial Statements have been prepared from the books and
records of Seller on a consistent basis with prior periods and fairly
present the revenues and expenses of Seller for the period then ended
(except for usual, recurring year-end adjustments).
(b) The unaudited internally prepared balance sheet and income
statement of Seller as of October 31, 1997, for the ten (10) month
period ended October 31, 1997 (collectively, the "Current Year
Financial Statements"). Except as set forth on Schedule 4.07, the
Current Year Financial Statements have been prepared from the books and
records of Seller on a consistent basis with prior periods and fairly
present the revenues and expenses of Seller (except for normal,
recurring year-end adjustments) and fairly present the results of
operations of Seller for the periods then ended.
Except as set forth on Schedule 4.07, Seller has no liabilities or
obligations, fixed, contingent, accrued or otherwise which should be but are not
reflected in its October 31, 1997 balance sheet, except for liabilities or
obligations incurred since October 31, 1997, in the ordinary
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and normal course of its business consistent with prior practice and which will
not have a Material Adverse Effect.
SECTION 4.08. INVENTORIES. Except as set forth on Schedule 4.08 of the
Disclosure Schedules or as Seller may have reserved against in the Current Year
Financial Statements, no material portion of the Inventory consists of items
which are not merchantable or which are not suitable and usable for the
production or completion of merchantable products for sale within a reasonable
period of time in the ordinary course of its business as determined in
accordance with GAAP and no material portion of the Inventory consists of any
items which are slow-moving, obsolete or of below-standard quality. The
quantities of all lines of the Inventory are reasonable and appropriate in the
present circumstances of the Purchased Business. The raw materials and component
parts portions of the Inventory are sufficient to satisfy all of the business
needs of the Purchased Business, consistent with the historical sales trends of
the Purchased Business.
SECTION 4.09. MATERIAL CONTRACTS.
(a) Schedule 4.09(a) of the Disclosure Schedules lists and
includes copies (except no copies of purchase orders in an amount less
than Ten Thousand Dollars ($10,000) shall be included) of all
contracts, leases (other than those described in Schedule 4.05 or
Schedule 4.06 of the Disclosure Schedules, which are incorporated by
reference into Schedule 4.09(a)), agreements, commitments, purchase
orders, work orders, customer orders and other arrangements, including
all amendments thereto, to which Seller is a party, except for those
contracts, leases, commitments, purchase orders, work orders and
agreements (i) which were entered into in the ordinary course of
business and (ii) under which the obligations of Seller have been or
shall be fully discharged within ninety (90) days from the date such
obligation was entered into and (iii) which individually involve an
obligation or liability on the part of Seller in any amount less than
Ten Thousand Dollars ($10,000) (the "Material Contracts").
(b) All of the Material Contracts are valid and binding
obligations of Seller and, except as set forth on Schedule 4.02(c), do
not require the consent of any other party thereto to the sale of the
Purchased Business or the Purchased Assets to Buyer hereunder to
continue to be valid and binding, except as enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles of general
application affecting the rights of creditors and (ii) general
principles of equity affecting the right to specific enforceability of
any of the remedies contained therein. Except as set forth in Schedule
4.09(b), (i) none of the payments required to be made by Seller under
any of the Material Contracts has been prepaid more than thirty (30)
days prior to the due date of such payment thereunder and (ii) to the
best knowledge of Seller, there is not any existing default or event
which, with notice or lapse of time or both, would constitute a default
under any of the Material Contracts.
(c) Except as set forth on Schedule 4.09(c), Seller is not a
party to any of the following:
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(i) any indenture, mortgage, note, guaranty, letter
of credit, installment obligation, agreement or other
instrument relating to the borrowing of money or the
guaranteeing of any obligation for the borrowing of money;
(ii) any agreement, contract or other commitment that
would limit the ability of the Purchased Business (or any
manager or officer thereof) to compete in any line of business
or with any person or in any geographic area or otherwise to
conduct the Purchased Business as presently conducted or to
use or disclose any information in the possession of the
Purchased Business;
(iii) any license agreement, including any agreement
with respect to any manufacturing rights granted to or by the
Purchased Business; or
(iv) any joint venture partnership or similar
agreement.
(d) Commencing March 25, 1996, all contracts, leases,
agreements and instruments of Seller have been performed in all
material respects by Seller and the Purchased Business has no material
unfulfilled obligations thereunder.
(e) Commencing March 25, 1996, none of the Material Contracts
which require the production of products or the provision of services
has had or may have associated with it a negative gross or net margin,
as determined in accordance with GAAP.
SECTION 4.10. ACCOUNTS AND NOTES RECEIVABLE. Schedule 4.10 of the
Disclosure Schedules contains a true and complete list of all third party unpaid
accounts and notes receivable of Seller as of October 31, 1997. Except as
otherwise set forth in Schedule 4.10 or as Seller may have reserved against in
the Current Year Financial Statements, all of the accounts and notes receivable
as of the date of this Agreement constitute valid claims which arose in the
ordinary course of the Purchased Business and, except as set forth on Schedule
4.10, there is:
(a) no account or note receivable debtor who has refused or,
to the best knowledge of Seller, threatened to refuse to pay its
obligations for any reason;
(b) no account or note receivable debtor who is, to the best
knowledge of Seller, insolvent, unable to pay its debts as they become
due, or in bankruptcy; and
(c) no account or note receivable pledged to any third party.
SECTION 4.11. CERTAIN TRANSACTIONS; ADVERSE CHANGE. Except as set forth
on Schedule 4.11 of the Disclosure Schedules, since October 31, 1997, the
Purchased Business has been operated in the ordinary course and has not:
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(a) sold or in any way transferred or otherwise disposed of
any of its assets or property, except for sales of inventory in the
ordinary course of its business or the disposition of other assets or
property in the ordinary course of business, consistent with past
practice;
(b) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except
liabilities and obligations incurred in the ordinary course of its
business which will not have a Material Adverse Effect;
(c) suffered any casualty, damage, destruction, loss or any
material interruption in use of any material assets or property
(whether or not covered by insurance) on account of fire, flood, riot,
strike or other hazard or Act of God;
(d) entered into any material agreement or made any material
commitment;
(e) received any notice of termination of any Material
Contract, lease or other agreement;
(f) made or suffered any change in its financial condition,
its assets or any aspect of the business having a Material Adverse
Effect;
(g) waived any right or canceled or compromised any debt or
claim, other than in the ordinary course of the business;
(h) made (or committed to make) capital expenditures in an
amount which exceeds $10,000 in the aggregate;
(i) had any actual or overtly threatened employee strikes,
work stoppages, slow-downs, lock-outs or had any material change in its
relationship with any of its employees, salesmen, distributors, sales
representatives or independent contractors or any other person working
on behalf of the Purchased Business;
(j) made any change in the rate of compensation, commission,
benefits, bonus or other remuneration payable or paid or agreed to pay
any bonus, extra compensation, pension, severance, vacation or other
benefit to any shareholder, director, officer, employee, salesman or
distributor of the Purchased Business, other than regularly scheduled
increases, bonuses or benefits about which Buyer has received prior
written notice;
(k) declared or paid any dividend or made any distribution or
other payment to Seller; or
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(l) without limitation by the enumeration of any of the
foregoing, except for the execution of this Agreement, entered into any
transaction other than in the ordinary course of its business.
SECTION 4.12. CUSTOMERS AND SUPPLIERS. Except as set forth on Schedule
4.12 of the Disclosure Schedules, Seller has no knowledge of any intention of or
indication by a "Significant Customer" (as defined below) or a "Significant
Supplier" (as defined below) to terminate its business relationship with the
Purchased Business or to limit or alter its business relationship with the
Purchased Business in any material respect. As used in this Agreement, (a)
"Significant Customer" means any of the twenty (20) largest customers, by sales
revenue, of the Purchased Business during the twelve (12) month period ending
September 30, 1997, and (b) "Significant Supplier" means any of the fifteen (15)
largest suppliers, by dollar volume, of the Purchased Business during the twelve
month period ending September 30, 1997. Schedule 4.12 of the Disclosure
Schedules contains a true and correct list of all of the Significant Customers
and Significant Suppliers of the Purchased Business as of September 30, 1997.
SECTION 4.13. WARRANTIES. Except as set forth on Schedule 4.13 of the
Disclosure Schedules, Seller has made no oral or written warranties with respect
to the quality or absence of defects of its products or services which are
currently in force. Except as set forth on Schedule 4.13, there are no claims
pending or, to the best of Seller's knowledge, anticipated or threatened against
the Purchased Business with respect to the quality or absence of defects in such
products or services.
SECTION 4.14. LICENSES AND PERMITS.
(a) Seller possesses all franchises, licenses, permits,
certificates, approvals and other authorizations necessary to own or
lease and operate its assets and to conduct the business presently
conducted by the Purchased Business (the "Permits"). Schedule 4.14 of
the Disclosure Schedules contains a true and complete list and copies
of each of the Permits.
(b) Seller has fulfilled and performed its obligations under
each of the Permits in all material respects, and no event has occurred
which constitutes or, after notice or lapse of time or both, would
constitute a breach or default under any of the Permits or would permit
revocation or termination of any of the Permits.
(c) Except as set forth on Schedule 4.02(c), no consent is
required from the issuer of any Permit for such Permit to continue in
full force and effect following the transfer of the Purchased Business
and the Purchased Assets to Buyer.
SECTION 4.15. PROPRIETARY INFORMATION. Seller owns or possesses the
right to use the trade names, trademarks, trademark applications, copyrights,
copyright applications, patents, patent applications, inventions, trade secrets,
proprietary processes and formulae and all other proprietary technical
information, whether patentable or unpatentable, directly or indirectly related
to its products, services or operations or necessary to conduct the Purchased
Business as presently
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conducted (collectively, the "Intellectual Property"). Schedule 4.15 of the
Disclosure Schedules contains a true and complete list and copies of each of the
patents, copyrights, trademarks, tradenames and service marks registrations and
any and all pending applications therefor, owned or licensed by the Seller
(along with a designation as to whether owned or licensed).
Seller has no knowledge of any claim and has no reason to believe that
any third party asserts ownership rights in any of the Intellectual Property of
Seller. Seller has no knowledge of any claim nor has any reason to believe that
use of any of the Intellectual Property by the Purchased Business infringes upon
any right of any third party. Seller has no knowledge nor has any reason to
believe that any third party is infringing upon any of the rights of the
Purchased Business in any of the Intellectual Property.
SECTION 4.16. TITLE TO THE ASSETS OF THE PURCHASED BUSINESS;
COMPLETENESS AND CONDITION OF ASSETS. Except (i) as may be specifically
disclosed in the Current Year Financial Statements, (ii) for any lien for
current taxes not yet delinquent or which are being contested in good faith by
appropriate proceedings and have been adequately reserved for in the Current
Year Financial Statements, (iii) for pledges to secure deposits of states,
municipalities or fiduciary customers undertaken in the ordinary course of the
Purchased Business and (iv) as set forth on Schedule 4.16 of the Disclosure
Schedules, Seller owns the Purchased Assets free and clear of all mortgages,
liens, pledges, charges, security interests, encumbrances, easements,
encroachments, rights of third parties or other interests of any kind or
character (collectively, the "Claims"). Except as disclosed on Schedule 4.16,
the Purchased Assets include all of the assets and properties which are
necessary to conduct the Purchased Business as presently conducted and to
perform, in all material respects, all of the contracts, leases, agreements,
commitments, purchase orders, work orders, customer orders and other
arrangements of the Purchased Business. All of the Equipment regularly used in
the Purchased Business is in good operating condition, ordinary wear and tear
excepted.
SECTION 4.17. ENVIRONMENTAL MATTERS. Schedule 4.17 of the Disclosure
Schedules contains (a) a description of (i) all licenses, permits and compliance
schedules and, to the best of Seller's knowledge, all regulatory plans which
relate to the Purchased Business, together with the durations and renewal dates
thereof, and (ii) all litigation, investigations, inquiries and other
proceedings, rulings, orders or citations pending involving the Purchased
Business of which Seller has received notice or, to the best of Seller's
knowledge, threatened by government officials with respect to the Purchased
Business, as the result of any actual or alleged failure of the Purchased
Business to comply with any requirement of any Environmental Laws (as
hereinafter defined) and (b) a complete list of all solid waste dumps and
hazardous waste disposal, treatment and storage facilities which are presently
or, to the best of Seller's knowledge, were used by the Purchased Business at
any time since March 25, 1996 for disposal of hazardous waste as that term is
defined in RCRA (as hereinafter defined).
Except as disclosed on Schedule 4.17:
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(A) Seller has received all material permits and
approvals, kept all material records and made all material
filings required by applicable Federal, state or local laws
with respect to emissions into the environment (including
solids, liquids, and gases) and the proper disposal of such
materials (including solid waste materials);
(B) Seller is not the subject of any Federal, state
or local investigation evaluating whether any Remedial Action
(as hereinafter defined) is needed to respond to a Release (as
hereinafter defined) of any Contaminant (as hereinafter
defined) into the environment;
(C) since March 25, 1996, Seller has not filed, nor
has Seller been required to file, any notice under Federal,
state or local laws indicating past or present treatment,
storage or disposal of a hazardous waste as defined under 40
C.F.R., Parts 260-270, or any state equivalent or reporting a
spill or Release of a Contaminant at, on, under or about any
property leased or used by the Purchased Business;
(D) except for discharges in accordance with
applicable Environmental Laws, since March 25, 1996, Seller
has not disposed of any hazardous waste or substance by
placing it in or on the ground or waters of any property now
or previously owned, leased or used by the Purchased Business;
(E) no underground storage tanks or surface
impoundments are located at, on or under any property now
owned or leased by Seller; and
(F) no lien in favor of any governmental authority
for (1) any liability under any Environmental Laws or (2) to
the best of Seller's knowledge, damages arising from or costs
incurred by such governmental authority in response to a
Release of a Contaminant into the environment has been filed
or attached to the property leased by the Seller.
For purposes of this Agreement:
(a) "Contaminant" means those substances which are regulated
by or form the basis of liability under any Environmental Laws
including, but not limited to, asbestos and polychlorinated biphenyls
("PCBs");
(b) "Environmental Laws" means all applicable Federal, state
and local laws, regulations or ordinances or amendments to such
regulations or ordinances relative to air quality, water quality, solid
waste management, hazardous or toxic substances or the protection of
health or the environment including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S.C.
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Section 9601, et seq.), the Hazardous Material Transportation Act (49
U.S.C. Section 1801, et seq.), the Federal Water Pollution Control Act
(33 U.S.C. Section 1251, et seq.), the Resource Conservation and
Recovery Act of 1976, as amended (42 U.S.C. Section 6901, et seq.)
("RCRA"), the Clean Air Act, as amended (42 U.S.C. Section 7401, et
seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section
2601, et seq.), the Federal Insecticide, Fungicide and Rodenticide Act,
as amended (7 U.S.C. Section 136, et seq.), the Clean Water Act of
1977, as amended (33 U.S.C. Section 1251, et seq.), and the National
Environmental Policy Act of 1969, as amended (42 U.S.C. Section 4321,
et seq.) and any analogous state or local statutes and the regulations
promulgated pursuant thereto;
(c) "Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the environment, including the movement of any
Contaminant or other substance through or in the air, soil, surface
water, groundwater or property or as defined in any Environmental Laws;
and
(d) "Remedial Action" means any action required under any
Environmental Laws to (i) clean up, remove, treat or in any other way
address any Contaminant or other substance in the environment, (ii)
prevent the Release or threat of Release or minimize the further
Release of any Contaminant or other substance so it does not migrate or
endanger or threaten to endanger public health or welfare or the
environment or (iii) perform preremedial studies and investigations and
post-remedial monitoring and care.
SECTION 4.18. EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.18(a) of the Disclosure Schedules contains a
true and complete list and copies of each contract, agreement, plan or
arrangement which is an "employee benefit plan," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), currently maintained by or on behalf of Seller covering the
employees of the Purchased Business or to which Seller is currently
obligated to contribute (collectively, the "Employee Benefit Plans").
Except as disclosed on Schedule 4.18(a), with respect to each Employee
Benefit Plan:
(i) as to each such Employee Benefit Plan which is a
"pension plan" (within the meaning of ERISA Section 3(2), but
not including a "multi-employer plan" within the meaning of
Section 3(37) of ERISA) (a "Pension Plan"), the Pension Plan
is qualified under Section 401(a) of the Internal Revenue Code
(the "Code"), to the extent it is intended to be so qualified
and complies in all respects with ERISA;
(ii) a determination letter has been received from
the Internal Revenue Service (or an application for such
determination letter is currently pending) with respect to the
tax qualified status of each Pension Plan and Seller has
satisfied all conditions to which each such determination
letter is subject;
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(iii) no Pension Plan has an "accumulated funding
deficiency," whether or not waived, as defined in Section
302(a)(2) of ERISA;
(iv) no "reportable event" within the meaning of
Section 4043(b) of ERISA has occurred with respect to any
Pension Plan;
(v) no notice of intent to terminate any Pension Plan
that is subject to Subtitle B of Title IV of ERISA has been
provided to participants or filed with the Pension Benefit
Guaranty Corporation ("PBGC") under Section 4041 of ERISA, nor
has the PBGC instituted any proceeding under Section 4042 of
ERISA to terminate any Pension Plan, nor has there been, since
January 1, 1976, any termination or partial termination of any
such Pension Plan within the meaning of Section 411(d)(3) of
the Code;
(vi) there has been no non-exempt "prohibited
transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA with respect to any such Employee Benefit
Plan; and
(vii) all disclosures and filings respecting each
such plan required under ERISA or the Code has been timely
provided and each Employee Benefit Plan has been administered
in all respects in accordance with its governing documents and
is in compliance with all applicable laws including,
specifically, the Retirement Equity Act of 1984 and the
Consolidated Omnibus Budget Reconciliation Act of 1985.
(b) Except as disclosed on Schedule 4.18(b), with respect to
each Employee Benefit Plan, there are no pending claims, investigations
or causes of action as to which Seller has received notice and, to the
best of Seller's knowledge, no claims are planned or threatened against
any Employee Benefit Plan or fiduciary of any Employee Benefit Plan by
any participant, beneficiary or governmental agency with respect to the
qualification or administration of any Employee Benefit Plan.
(c) Except as disclosed on Schedule 4.18(c), Seller has no
liability, jointly or otherwise, for (i) any pension plan for which
Seller or a member of the Seller's controlled group (within the meaning
of Section 4001(b) of ERISA (a "Controlled Group") is or was a
contributing sponsor that is subject to Subtitle B of Title IV of
ERISA, or (ii) any withdrawal liability demanded or yet to be demanded
under Title IV of ERISA by any multi-employer plan within the meaning
of Section 3(37) of ERISA (a "Multi-Employer Plan") for a complete or
partial withdrawal from such Multi-Employer Plan for any Controlled
Group of which Seller is or was a member.
(d) Except as disclosed on Schedule 4.18(d), Seller has made
no representation to or agreement with any of the employees of the
Purchased Business (whether written or oral) with respect to (i) the
provision of any employee benefits by Buyer or the Purchased
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Business beyond the Closing Date, or (ii) the continuation of any
benefits by Buyer or the Purchased Business beyond the Closing Date
under any of the Employee Benefit Plans.
SECTION 4.19. LITIGATION; PRODUCT LIABILITY; WORKERS' COMPENSATION.
(a) Except as disclosed on Schedule 4.19(a) of the Disclosure
Schedules, there is no litigation, suit, proceeding, action, claim or
investigation against Seller before any governmental authority and
there are no facts known to Seller that might reasonably be expected to
result in any such litigation, suit, proceeding, action, claim or
investigation. Seller is not subject to or in default with respect to
any presently existing order, writ, injunction, decree or written
notice received by Seller from any governmental authority.
(b) Except as disclosed on Schedule 4.19(b) of the Disclosure
Schedules, there have been no material warranty, charge back or product
liability claims made against Seller since March 25, 1996.
(c) Except as disclosed on Schedule 4.19(c) of the Disclosure
Schedules, there are no workers' compensation claims involving the
Purchased Business for which any current or former employee of Seller
is receiving ongoing medical or wage benefits.
SECTION 4.20. EMPLOYEES, CONSULTANTS AND INDEPENDENT CONTRACTORS.
(a) Set forth on Schedule 4.20(a) of the Disclosure Schedules
is a true and complete list of each person employed by Seller as of
October 31, 1997, which identifies each such person by name, social
security number, date of hire, current compensation, date of birth, sex
and status as an hourly or salaried employee. Schedule 4.20(a)
identifies persons who are not actively-at-work as of such date,
describes the date such inactive status commenced, the cause of such
inactive status at the date such inactive status commenced (e.g.
layoff, leave of absence or disability) and lists the employee
benefits, workers' compensation benefits and any other compensation or
benefits applicable to each such person as of the Closing Date. For
purposes of this Schedule 4.20(a), persons absent due to vacation shall
be considered to be actively-at-work.
(b) Schedule 4.18 and Schedule 4.20(b) of the Disclosure
Schedules set forth a true and complete list and copies of all
agreements with any of the current or former employees, consultants and
independent contractors of Seller to which the Seller is a party or by
which it is bound and, in any such case, pursuant to which the
Purchased Business has any continuing obligations.
(c) Schedule 4.20(c) of the Disclosure Schedules sets forth a
true and complete list of all consultants and independent contractors
of Seller who had, during the twelve (12) month period ended September
30, 1997, received remuneration from the Purchased Business in excess
of Twenty Thousand Dollars ($20,000) together with the current
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compensation for each such consultant and independent contractor, other
than legal and accounting.
SECTION 4.21. INSURANCE. Schedule 4.21 of the Disclosure Schedules sets
forth a true and complete list and copies of all policies of liability, theft,
fidelity, fire, product liability, workers' compensation and other forms of
insurance held by Seller, and specifies the insurer, amount of coverage, type of
insurance and policy numbers. Schedule 4.21 also sets forth any pending claims
under such policies. The policies listed in Schedule 4.21 are outstanding and in
full force and effect and all premiums due and payable with respect to such
policies have been paid in full.
ARTICLE V
WARRANTIES AND REPRESENTATIONS OF BUYER
As a material inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, Buyer represents and
warrants to Seller as follows:
SECTION 5.01. ORGANIZATION; POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
Buyer has all the requisite corporate power and authority to own, lease and
operate its business as it is now being conducted and to enter into this
Agreement.
SECTION 5.02. AUTHORITY, NO VIOLATION, ETC. The execution and delivery
of this Agreement by Buyer and the consummation of the transactions contemplated
by this Agreement have been duly and validly authorized by all necessary
corporate action on the part of Buyer. This Agreement and the other agreements
and documents to be executed and delivered by Buyer pursuant to the provisions
of this Agreement, constitute legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective provisions and
conditions, except as enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles of general application affecting the rights of creditors
and (ii) general principles of equity affecting the right to specific
enforceability of any of the remedies contained herein and therein. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated by this Agreement and compliance by Buyer with the provisions of
this Agreement will not:
(a) conflict with or result in a breach of any provision of
the organizational documents of Buyer or result in a default or give
rise to any right of termination, cancellation or acceleration under
any of the provisions of any note, lien, bond, mortgage, indenture,
license, lease, agreement or other instrument or obligation to which
Buyer is a party or by which Buyer, any of its assets or its business
may be bound, except for such conflict, breach or default as to which
valid waivers or consents have been obtained;
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<PAGE> 20
(b) violate any judgment, order, writ, injunction or decree of
any court, administrative agency or governmental body applicable to
Buyer, its assets or its business; or
(c) cause, or give any person grounds to cause (with or
without notice, the passage of time, or both), the maturity of any
liability or obligation of Buyer to be accelerated or increased.
All filings, consents and approvals of third parties and governmental
authorities required in connection with the execution and delivery by Buyer of
this Agreement and the consummation by Buyer of the transactions contemplated by
this Agreement have been obtained.
SECTION 5.03. NO LITIGATION. No action, suit or proceeding has been
instituted or, to the best knowledge of Buyer, is threatened to restrain or
prohibit or otherwise challenge the legality or validity of the transactions
contemplated by this Agreement.
ARTICLE VI
CERTAIN PRE-CLOSING COVENANTS OF SELLER
Seller covenants and agrees, between the date of this Agreement and the
Closing, except as otherwise consented to by Buyer:
SECTION 6.01. MAINTENANCE OF THE CORPORATE STATUS. Seller shall (i) be
maintained at all times as a corporation validly existing and in good standing
under the laws of Ohio, and duly authorized to do business in each and every
jurisdiction material to the operation of Seller and (ii) timely file all
required reports with every governmental or taxing authority applicable to
Seller.
SECTION 6.02. OPERATION OF THE PURCHASED BUSINESS. Seller shall operate
the Purchased Business in the ordinary course with prior historical practices,
and Seller shall use all commercially reasonable efforts to (i) preserve the
Purchased Business intact and conserve the goodwill related thereto, (ii) keep
available and maintain the services of all employees, agents and representatives
of Seller on the same or substantially the same terms and conditions, (iii)
continue and preserve good relationships with suppliers, customers and others
having business dealings or relationships with Seller, (iv) maintain in full
force and effect all material licenses and permits required for the operation of
the Purchased Business as presently conducted, (v) maintain, consistent with
past practices of Seller, all of Seller's buildings, offices, shops and other
structures, machinery, tools, equipment, fixtures and other properties, (vi) not
knowingly do any act or omit any act or permit any omission to act, reasonably
within its control, which will cause a breach or default under any of the
Material Contracts of Seller, and (vii) neither take any of the actions
described in Section 4.11, nor allow any of such actions to occur.
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<PAGE> 21
SECTION 6.03. ACCESS TO THE PURCHASED BUSINESS. Seller shall make
available to Buyer all information in its possession concerning the Purchased
Business that Buyer shall request. In addition, and without limiting the
generality of the foregoing, Seller shall make available its management team to
provide information to Buyer concerning the Significant Suppliers and
Significant Customers of Seller and shall permit Buyer and its accountants,
attorneys and other authorized representatives to enter upon the Seller's
offices and plant sites upon reasonable advance notice in order to inspect the
books and other records of Seller, to consult with and receive assistance from
employees of Seller, to examine Seller's assets, and to carry out any reasonable
tests and examinations of such assets deemed necessary by Buyer. Seller shall
contact all governmental and other authorities to permit the release of required
information to Buyer.
SECTION 6.04. OBTAINING CONSENTS; NOTICES. Seller shall use
commercially reasonable efforts to promptly obtain all consents and
authorizations of third parties and governmental authorities, to make all
filings, and to give all notices to third parties or governmental authorities
which may be necessary or required in order to effect, and in connection with,
the transactions contemplated by this Agreement.
SECTION 6.05. EXCLUSIVE RIGHT TO ACQUIRE. Seller grants to Buyer the
exclusive right to acquire the Purchased Assets until the Termination Date (as
defined in Section 11.04 of this Agreement), and Seller shall not engage in
discussions or negotiations with any other person or entity prior to the
expiration of the Termination Date relating to the sale, merger or other
disposition by Seller of the capital stock of Seller or the sale or other
disposition by Seller of any of its assets (other than the Inventory in the
ordinary course of the Purchased Business).
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligation of Buyer to consummate the transactions contemplated
pursuant to the provisions of this Agreement is subject to the satisfaction,
prior to or at the Closing, of each of the following conditions:
SECTION 7.01. REPRESENTATIONS AND WARRANTIES OF SELLER. Each of the
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as if made at and as of the Closing Date.
SECTION 7.02. COMPLIANCE. Seller shall have performed, complied with
and fulfilled all of the covenants, agreements, obligations and conditions
required by this Agreement to be performed, complied with or fulfilled by Seller
prior to or at the Closing.
SECTION 7.03. LITIGATION. No order, decree or ruling of any
governmental authority or court shall have been entered and no governmental
proceeding or other action, suit, claim or investigation
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<PAGE> 22
shall be pending or, to the best knowledge of Seller, threatened, pertaining to
the transactions contemplated by this Agreement.
SECTION 7.04. CONSENTS. Seller shall have obtained all consents and
authorizations of governmental authorities and other third parties required to
affect the transactions contemplated by this Agreement.
SECTION 7.05. APPROVAL OF THE BOARD OF DIRECTORS OF BUYER. Buyer shall
have received all corporate action necessary to authorize the (i) execution and
delivery of this Agreement and any other agreements or instruments contemplated
by this Agreement to which Buyer is a party and (ii) consummation of the
transactions contemplated and performance of its other obligations under this
Agreement.
SECTION 7.06. FINANCING ADEQUATE. Buyer shall have received a written
commitment for financing adequate to facilitate the acquisition of the Purchase
Business by Buyer on terms acceptable to Buyer, at Buyer's sole discretion.
SECTION 7.07. CLOSING DELIVERIES. Buyer shall have received from Seller
all of the instruments, documents and other items described in Section 9.02, and
the form and substance of all such deliveries shall be satisfactory in all
reasonable respects to Buyer.
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligation of Seller to consummate the transactions contemplated
pursuant to the provisions of this Agreement is subject to the satisfaction,
prior to or at the Closing, of each of the following conditions:
SECTION 8.01. REPRESENTATIONS AND WARRANTIES OF BUYER. Each of the
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as if made at and as of the Closing Date.
SECTION 8.02. COMPLIANCE. Buyer shall have performed, complied with and
fulfilled all of the covenants, agreements, obligations and conditions required
by this Agreement to be performed, complied with or fulfilled by Buyer prior to
or at the Closing.
SECTION 8.03. LITIGATION. No order, decree or ruling of any
governmental authority or court shall have been entered and no governmental
proceeding or other action, suit, claim or investigation shall be pending or, to
the best knowledge of Buyer, threatened, pertaining to the transactions
contemplated by this Agreement.
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<PAGE> 23
SECTION 8.04. CLOSING DELIVERIES. Seller shall have received from Buyer
all of the instruments, documents and other items described in Section 9.01 and
the form and substance of all such deliveries shall be satisfactory in all
reasonable respects to Seller.
ARTICLE IX
DELIVERIES
SECTION 9.01. DELIVERIES TO SELLER AT THE CLOSING. At the Closing, and
simultaneously with the deliveries to Buyer specified in Section 9.02 of this
Agreement, Buyer shall deliver or cause to be delivered to Seller the following:
(a) a payment equal to the Purchase Price in accordance with
the provisions set forth in Article II of this Agreement, allocated as
set forth on Schedule 2.01;
(b) a duly executed Assumption Agreement in the form of
Exhibit 9.01(b) attached;
(c) Secretary's Certificate certifying authorizing resolutions
for the transactions described in this Agreement and incumbency; and
(d) any other documents or instruments of conveyance and
transfer as Seller may reasonably request for the purpose of assigning,
transferring, granting, conveying and confirming the sale of the
Purchased Business and the Purchased Assets or any part thereof to
Buyer.
SECTION 9.02. DELIVERIES TO BUYER AT THE CLOSING. At the Closing, and
simultaneously with the deliveries to Seller specified in Section 9.01 of this
Agreement, Seller shall deliver or cause to be delivered to Buyer the following:
(a) a duly executed Bill of Sale in the form of Exhibit
9.02(a) attached;
(b) UCC financing statements or similar instruments or
documents duly executed by any lienholders releasing their security
interests, if any, in the Purchased Assets;
(c) a duly executed Transition Services Agreement in the form
of Exhibit 9.02(c) attached;
(d) duly executed Supply Agreement(s) in form and substance
satisfactory to Buyer and Seller;
(e) wire transfer instructions for payment of the Purchase
Price;
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(f) a duly executed Receipt;
(g) a Non-Competition Agreement executed by Seller and
Churchill Industries, Inc., the sole shareholder of Seller in the form
of Exhibit 9.02(g) attached;
(h) Consent to Assignment of Lease regarding the Leased Real
Property;
(i) Secretary's Certificate certifying authorizing resolutions
for the transactions described in this Agreement and incumbency;
(j) Guaranty of Hoffer's Inc. in the form of Exhibit 9.02(j)
attached; and
(k) any other documents or instruments of conveyance and
transfer as Buyer may reasonably request for the purpose of assigning,
transferring, granting, conveying and confirming the sale of the
Purchased Business and the Purchased Assets or any part thereof to
Buyer.
ARTICLE X
ADDITIONAL COVENANTS OF THE PARTIES
SECTION 10.01. FURTHER ASSURANCES. Seller, after the Closing, without
further consideration, shall execute, acknowledge and deliver any further
assignments, conveyances and other assurances, documents and instruments of
transfer, reasonably requested by Buyer, and shall take any other action
consistent with the terms of this Agreement that may reasonably be requested by
Buyer for the purpose of assigning, transferring, granting, conveying and
confirming the Purchased Business or the Purchased Assets or any part thereof to
Buyer.
SECTION 10.02. ACCESS TO RECORDS. For a period of five (5) years after
the Closing Date, Buyer shall retain or cause the Purchased Business to retain
and make the books and records of the Purchased Business available for
inspection by Seller or its duly authorized representatives and Seller and its
representatives shall have reasonable access to (including the right to make
copies), all of such books and records, to the extent that such access may
reasonably be required in connection with matters relating to or affected by the
operation of the Purchased Business or the Purchased Assets prior to the
Closing. Seller shall be solely responsible for any costs or expenses incurred
by it pursuant to this Section 10.02. After such five (5) year period, all such
records may be destroyed by Buyer or the Purchased Business, unless Seller
reasonably requests that such records be retained, at Seller's expense.
SECTION 10.03. PUBLIC STATEMENTS. Except for disclosures required by
applicable law, Buyer and Seller shall mutually agree upon the timing and
content of any and all announcements and public statements relating to the
signing of this Agreement and the transactions contemplated by this Agreement.
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<PAGE> 25
SECTION 10.04. CHECKS AND DRAFTS. Seller shall honor (whether presented
before, on or after the Closing) all checks and drafts drawn by it on or prior
to the Closing to pay trade payables and other liabilities of the Purchased
Business in conducting the Purchased Business in the ordinary course.
SECTION 10.05. EMPLOYEE BENEFIT PLANS.
(a) Effective the day following the Closing Date, those
employees of Seller whose employment with Buyer shall continue after
the Closing Date, which shall not include any employees on lay-off,
leave, disability (work-related or not), until such employees return to
work (the "Continued Employees"), shall cease to be covered under the
employee benefit plans of Seller and shall participate under the
employee benefit plans, programs and policies maintained by Buyer,
without any eligibility periods or conditions or pre-existing condition
limitations. Seller shall remain liable for all benefits accrued or
claims incurred on or prior to the Closing Date under all plans,
programs and policies maintained by Seller and Buyer shall be liable
for all benefits accrued and claims incurred after the Closing Date
under the plans, programs and policies maintained by Buyer.
(b) Seller shall be solely responsible for the provisions of
health care continuation coverage required under COBRA for those former
employees of the Purchased Business and other persons whose entitlement
to continuation coverage occurred on or before the Closing Date. Buyer
shall offer continuation coverage under its group health plans to all
eligible Continued Employees after the Closing Date.
(c) As soon as administratively feasible following the Closing
Date, Seller shall direct the trustee of Seller's 401(k) plan to
transfer to and Buyer shall direct the trustee of Buyer's 401(k) plan
to accept the vested portion of account balances of the Continuing
Employees in a manner that satisfies Section 414(1) and 411(d)(6) of
the Code. Buyer hereby represents and covenants that Buyer's 401(k)
plan has been determined qualified by the Internal Revenue Service, a
copy of the most recent determination letter for Buyer's 401(k) plan
has been provided to Seller and no event has occurred that would affect
the qualification of Buyer's 401(k) plan. Seller and Buyer consent and
agree to take such additional steps as are required bylaw or as may
otherwise be necessary and convenient in order to permit the transfer
of accounts contemplated by this Section 10.05(c).
ARTICLE XI
DEPOSIT; EXTENSION; TERMINATION
SECTION 11.01. DEPOSIT; EXTENSION; EARLY TERMINATION.
(a) Buyer, at its sole discretion, shall be entitled to extend
the Closing Date or terminate this Agreement prior to the Termination
Date, pursuant to the following:
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(i) Upon execution of this Agreement, Buyer shall
remit a Fifty Thousand Dollar ($50,000) deposit to Seller to
be applied to the Purchase Price.
(ii) If Closing does not occur prior to December 16,
1997, the deposit identified in Section 11.01(a)(i) shall be
forfeited to Seller and shall not be considered as a deposit
toward the Purchase Price or otherwise.
(iii) Buyer may extend the Closing Date to January
15, 1998 by remitting to Seller an additional Fifty Thousand
Dollar ($50,000) deposit on December 16, 1997. Such deposit
shall be considered a deposit to be applied to the Purchase
Price. If such payment is not made on December 16, 1997, this
Agreement shall terminate.
(iv) If by January 16, 1998 the Closing does not take
place, the deposit identified in Section 11.01(a)(iii) shall
be forfeited to Seller and this Agreement shall terminate.
(v) For the purposes of this Subsection 11.01(a)(v)
only, AAPC guarantees the deposit identified in Subsection
11.01(a)(iii) above from Buyer to Seller.
SECTION 11.02. TERMINATION BY MUTUAL AGREEMENT. This Agreement may be
terminated by the mutual agreement in writing of the parties at any time prior
to the Closing.
SECTION 11.03. TERMINATION BY BUYER. This Agreement and any obligations
of Buyer under this Agreement (other than its obligations under Sections 14.01
and 14.14) may be terminated by Buyer if, at the Closing, any of the conditions
set forth in Article VII shall not have been satisfied in all material respects
or waived in writing by Buyer.
SECTION 11.04. TERMINATION BY SELLER. This Agreement and any
obligations of Seller under this Agreement (other than its obligations under
Sections 14.01 and 14.14) may be terminated by Seller if, at the Closing, any of
the conditions set forth in Article VIII shall not have been satisfied in all
material respects or waived in writing by Seller.
SECTION 11.05. AUTOMATIC TERMINATION. This Agreement shall
automatically terminate at 11:59 p.m. on January 15, 1998 (the "Termination
Date"), unless the transactions contemplated by this Agreement are completed by
11:59 p.m. on January 15, 1998.
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ARTICLE XII
BULK SALES COMPLIANCE
SECTION 12.01. BULK SALES COMPLIANCE. Each of Buyer and the Purchased
Business waive compliance with the provisions of the applicable statutes
relating to bulk transfers or bulk sales. In accordance with the provisions of
Section 13.01 of this Agreement, Seller shall indemnify and hold Buyer harmless
from and against any and all losses, costs, damages, claims or expenses which
Buyer may sustain by reason of Seller's failure to comply with such bulk
transfer or bulk sales provisions, except with respect to the Assumed
Obligations.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. INDEMNIFICATION BY SELLER. Seller shall indemnify,
defend and hold each of Buyer and the Purchased Business and their respective
successors, permitted assigns, shareholders, directors, officers, employees and
other affiliates (collectively, "Buyer's Indemnified Persons") harmless from and
against any loss, damage, liability, claim, action, cause of action, regulatory,
legislative or judicial proceedings or investigations, assessments, levies,
fines, penalties, costs and expenses including, but not limited to, attorneys',
accountants', investigators' and experts' fees and expenses, each reasonably
sustained or incurred in connection with the defense or investigation of any
such claim (collectively "Damages"), arising out of or in any way relating to:
(a) the failure by Seller to perform any of its obligations
under this Agreement;
(b) the failure by Seller to discharge when due any Excluded
Liability;
(c) any misrepresentation in or breach of the representations
and warranties of Seller or the failure of Seller to perform any of its
covenants or obligations contained in this Agreement or in any
instrument or document furnished or to be furnished by Seller pursuant
to this Agreement or in connection with the transactions contemplated
by this Agreement;
(d) except for the Assumed Obligations reflected in the
October 31, 1997 balance sheet and those Assumed Obligations incurred
since October 31, 1997 in the ordinary and normal course of the
Purchased Business consistent with prior practice and disclosed to
Buyer, the operation of the Purchased Business on or prior to the
Closing Date, including all claims and proceedings the facts forming
the basis for which occurred on or prior to the Closing Date, whether
or not disclosed by Seller to Buyer;
(e) any actions, claims, suits or proceedings asserted by
third parties alleging personal injury or property damage due to,
arising out of, or by reason of the design,
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manufacture or use of any products of the Purchased Business on or
prior to the Closing Date;
(f) any workers' compensation claims of any employee or former
employee of the Purchased Business arising from events occurring on or
prior to the Closing Date;
(g) any Environmental Claim (as hereinafter defined) arising
under any of the Environmental Laws or any Remedial Action arising
pursuant to any of the Environmental Laws including, but not limited
to, investigation, remediation or removal of any Contaminant arising
out of or based upon the operation of the Purchased Business on or
prior to the Closing Date (Buyer and Seller agreeing that the
disclosures made pursuant to Schedule 4.17 or any attachment thereto in
no way limit the right of any of Buyer's Indemnified Persons to
indemnification under this Section 13.01);
(h) except for the Assumed Obligations, any and all claims for
compensation and other employee benefits (including, but not limited
to, severance pay, outplacement benefits, disability benefits, health,
retiree medical, workers' compensation, tuition assistance, death
benefits and pension and profit sharing plans and claims relating to
employment or termination of employment) accruing on or prior to the
Closing Date or on or after the Closing Date with respect to the
payment of severance benefits and other welfare benefit payments, if
any, with respect to (i) employees of the Purchased Business who have
ceased employment with the Purchased Business on or prior to the
Closing Date and (ii) employees of the Purchased Business who, on the
Closing Date, are on medical leave, maternity leave, temporary lay-off
or disability and related costs and liabilities, regardless of whether
such claims and related costs and liabilities are made or incurred
before, on or after the Closing Date; or
(i) except for the Assumed Obligations, all claims,
investigations, actions, suits, proceedings, demands, assessments,
judgments, costs and expenses, including reasonable attorneys' fees and
expenses (incurred thereon at trial and upon appeal), incident to the
foregoing.
Seller shall only be obligated to indemnify Buyer to the extent the above
amounts exceed the proceeds of insurance, if any, paid to Buyer covering the
claims or recoveries from third parties, and Buyer covenants and agrees to
pursue in good faith and with reasonable diligence any claims available under
applicable insurance policies.
"Environmental Claim" means any notice of any violation, claim, demand,
abatement or other order (conditional or otherwise) by any governmental
authority or any person (other than Buyer's Indemnified Persons) for personal
injury (including sickness, disease or death), tangible or intangible property
damage, damage to the environment, nuisance, pollution, contamination or other
adverse affects on the environment or for fines, penalties or restrictions,
resulting from or based upon (i) the existence or the continuation of the
existence of a Release (including, but not limited to,
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sudden or non-sudden, accidental or non-accidental Releases) of, or exposure to,
any substance, chemical, material, pollutant, Contaminant, odor or audible noise
or other release or emission in, into or onto the environment (including, but
not limited to, the air, ground, water or any surface) at, in, by, from or
related to the Purchased Business in amounts in excess of the applicable legal
standards, (ii) the environmental aspects of the transportation, storage,
treatment or disposal of Contaminants or other substances in connection with the
operation of the Purchased Business or (iii) the violation, or alleged
violation, of any presently enacted or pending statutes, ordinances, orders,
rules, regulations, Permits or licenses of or from any governmental authority,
agency or court relating to environmental matters connected with the operation
of the Purchased Business; provided, however, that any of Buyer's Indemnified
Persons shall have the right to pursue an Environmental Claim against Seller in
the event any of them suffer or incur any bona fide personal injury or property
damage.
SECTION 13.02. INDEMNIFICATION BY BUYER. Buyer shall indemnify, defend
and hold Seller and its respective successors, permitted assigns, shareholders,
directors, officers, employees and other affiliates (collectively, "Seller's
Indemnified Persons") harmless from and against any Damages arising out of or in
any way relating to:
(a) any misrepresentation in or breach of the representations
and warranties of Buyer or the failure of Buyer to perform any of its
covenants or obligations contained in this Agreement or in any
instrument or document furnished or to be furnished by Buyer pursuant
to this Agreement or in connection with the transactions contemplated
by this Agreement;
(b) any liabilities, obligations, claims, suits or proceedings
asserted by third parties due to, arising out of, or by reason of the
operation of the Purchased Business after the Closing Date;
(c) the failure to discharge when due the Assumed Obligations,
but not relative to or resulting from Seller's breach of the warranties
or representations regarding the Assumed Obligations;
(d) any actions, claims, suits or proceedings asserted by
third parties alleging personal injury or property damage due to,
arising out of, or by reason of the design, manufacture or use of any
products of the Purchased Business on or prior to the Closing Date;
(e) any workers' compensation claims of any employee or former
employee of the Purchased Business arising from events occurring after
the Closing Date;
(f) any Environmental Claim arising under any of the
Environmental Laws or any Remedial Action arising pursuant to any of
the Environmental Laws including, but not limited to, investigation,
remediation or removal of any Contaminant arising out of or based upon
the operation of the Purchased Business after the Closing Date;
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<PAGE> 30
(g) any and all claims for compensation and other employee
benefits (including, but not limited to, severance pay, outplacement
benefits, disability benefits, health, retiree medical, workers'
compensation, tuition assistance, death benefits and pension and profit
sharing plans and claims relating to employment or termination of
employment) accruing after the Closing Date (except for severance
benefits or welfare benefit payments, if any, with respect to (i)
employees of the Purchased Business who have ceased employment with the
Purchased Business on or prior to the Closing Date and (ii) employees
of the Purchased Business who, on the Closing Date, are on medical
leave, maternity leave, temporary lay-off or disability and related
costs and liabilities, regardless of whether such claims and related
costs and liabilities are made or incurred before, on or after the
Closing Date);
(h) any liability of Churchill Industries, Inc. as to that
certain Guaranty dated June 19, 1996 given for the benefit of J.M.J.
Partnership, an Ohio general partnership, pursuant to that certain
lease agreement more particularly described on Schedule 4.05 of the
Disclosure Schedules; or
(i) all claims, investigations, actions, suits, proceedings,
demands, assessments, judgments, costs and expenses, including
reasonable attorneys' fees and expenses (incurred thereon at trial and
upon appeal), incident to the foregoing.
SECTION 13.03. NOTICE. If any person believes that he, she or it has
suffered or incurred any Damages, that person shall so notify the indemnifying
party promptly in writing describing such loss or expense, the amount thereof,
if known, and the method of computation of such Damages, all with reasonable
particularity to permit the indemnifying party to assess the nature and cost of
the claim. If any action at law, suit in equity or administrative action is
instituted by or against a third party with respect to which any person intends
to claim any liability or expense as Damages under this Article IX, such person
shall promptly notify the indemnifying party of such action.
SECTION 13.04. DEFENSE OF CLAIMS. The indemnifying party shall have
thirty (30) calendar days after receipt of either notice referred to in Section
13.03 of this Agreement to notify the indemnified party that it elects to
conduct and control any legal or administrative action or suit with respect to
an indemnifiable claim. If the indemnifying party does not give such notice, the
indemnified person shall have the right to defend, contest, settle or compromise
such action or suit in the exercise of its exclusive discretion, and the
indemnifying party shall, upon request from the indemnified person, promptly pay
the indemnified person in accordance with the other provisions of this Article
XIII the amount of any Damages resulting from its liability to the third party
claimant. If the indemnifying party gives such notice, it shall have the right
to undertake, conduct and control, through counsel of its own choosing at its
sole expense, the conduct and settlement of such action or suit, and the
indemnified person shall cooperate with the indemnifying party in connection
therewith; provided, however, that (a) the indemnifying party shall not thereby
permit to exist any lien, encumbrance or other adverse charge securing the
claims indemnified hereunder upon any asset of the indemnified person, (b) the
indemnifying party shall not thereby consent to the imposition of any injunction
against the indemnified person without the written consent of the indemnified
person,
- 30 -
<PAGE> 31
(c) the indemnifying party shall permit the indemnified person to participate in
such conduct or settlement through counsel chosen by the indemnified person, but
the fees and expenses of such counsel shall be borne by the indemnified person
except as provided in clause (d) below, and (d) upon a final determination of
such action or suit, the indemnifying party shall agree promptly to reimburse to
the extent required under this Article XIII (subject to the provisions of
Section 13.07 of this Agreement) the indemnified person for the full amount of
any Damages resulting from such action or suit and all reasonable and related
expenses incurred by the indemnified person, except fees and expenses of counsel
for the indemnified person incurred after the assumption of the conduct and
control of such action or suit by the indemnifying party. So long as the
indemnifying party is contesting any such action in good faith, the indemnified
person shall not pay or settle any such action or suit. Notwithstanding the
foregoing, the indemnified person shall have the right to pay or settle any such
action or suit, provided that in such event the indemnified person shall waive
any right to indemnity therefor from the indemnifying party and no amount in
respect therefor shall be claimed as Damages under this Article XIII.
SECTION 13.05. ENVIRONMENTAL MATTERS. Seller shall, at its sole expense
and in the manner reasonably determined by Seller, conduct or direct any
environmental clean-up or Remedial Action after the date of Closing for which
Seller is responsible under this Agreement; provided, however, Seller will
provide Buyer with a complete copy of any governmental filing or submission at
the time it is made. Buyer agrees to cooperate with Seller in connection with
any such clean-up or Remedial Action including, without limitation, making
relevant personnel and records available to Seller at all reasonable times at a
reasonable charge to be agreed upon between Buyer and Seller.
SECTION 13.06. COOPERATION. If requested by the indemnifying party, the
indemnified person shall cooperate with the indemnifying party and its counsel
in contesting any claim which the indemnifying party elects to contest or, if
appropriate, in making any counterclaim against the person asserting the claim
or any cross-complaint against any person and further agrees to take such other
action as reasonably may be requested by an indemnifying party to reduce or
eliminate any loss or expense for which the indemnifying party would have
responsibility, but the indemnifying party will reimburse the indemnified person
for any expenses incurred by it in so cooperating or acting at the request of
the indemnifying party.
SECTION 13.07. LIMITATION. Notwithstanding anything to the contrary,
Seller shall have no liability to Buyer's Indemnified Persons for
indemnification under this Article XIII unless and until the aggregate amount of
Damages exceeds Twenty-Five Thousand Dollars ($25,000.00) and only to the extent
greater than Twenty-Five Thousand Dollars ($25,000.00). In the event that the
aggregate Damages exceed the $25,000 threshold, Seller shall have no liability
for indemnification under this Article XIII for any Damages which in the
aggregate exceed the Final Purchase Price with respect thereto.
SECTION 13.08. PAYMENT OF DAMAGES. The indemnifying party shall
promptly pay to the indemnified person in immediately available funds the amount
of any Damages to which the indemnified person is entitled by reason of the
provisions of this Agreement. The parties covenant
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<PAGE> 32
that any payment made pursuant to this Article XIII will be treated by the
parties on their respective tax returns as an adjustment to the Purchase Price.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.01. EXPENSES. Each of the parties shall pay all costs and
expenses incurred by it in negotiating and preparing this Agreement and in
closing and carrying out the transactions contemplated by this Agreement. In
addition, Seller shall pay all costs and expenses incurred by the Purchased
Business in connection with carrying out the transactions contemplated by this
Agreement.
SECTION 14.02. HEADINGS. The subject headings of the Articles and
Sections of this Agreement are included for purposes of convenience only and
shall not affect the construction or interpretation of any of its provisions.
SECTION 14.03. ENTIRE AGREEMENT. This Agreement, including the
Disclosure Schedules referred to in this Agreement which form a part of this
Agreement, and the instruments and documents to be delivered by the parties
pursuant to the provisions of this Agreement, contain the entire understanding
of the parties with respect to the transactions contemplated by this Agreement.
There are no representations, warranties, covenants or undertakings other than
those expressly set forth or provided for in this Agreement and such other
instruments and documents. This Agreement supersedes all agreements and
understandings between the parties with respect to the transactions contemplated
by this Agreement.
SECTION 14.04. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by all
the parties. The party for whose benefit a warranty, representation, covenant or
condition is intended may in writing waive any inaccuracies in the warranties
and representations contained in this Agreement or waive compliance with any of
the covenants or conditions contained in this Agreement and so waive performance
of any of the obligations of the other party to this Agreement and any defaults
under this Agreement; provided, however, that such waiver shall not affect or
impair the waiving party's rights with respect to any other warranty,
representation or covenant or any default under this Agreement, nor shall any
waiver constitute a continuing waiver.
SECTION 14.05. COUNTERPARTS. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
SECTION 14.06. DISCLOSURE SCHEDULES. All Disclosure Schedules attached
to this Agreement are incorporated in this Agreement and made a part of this
Agreement in the same manner as if such schedules were set forth at length in
the text of this Agreement. For purposes of determining
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<PAGE> 33
compliance by Seller with its obligations under this Agreement, an event, matter
or thing described in any one Disclosure Schedule shall satisfy any requirement
that such event, matter or thing is to be disclosed in any other Disclosure
Schedule.
SECTION 14.07. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties and their respective
successors and assigns; provided, however, (a) neither this Agreement nor any of
the obligations under this Agreement may be assigned by Seller without the prior
written consent of Buyer and (b) Buyer may assign its rights under this
Agreement to an affiliate of Buyer and to one or more lenders of Buyer or the
Purchased Business for collateral security purposes. No such assignment shall
relieve Buyer of any of its obligations under this Agreement.
SECTION 14.08. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties made by any party to this Agreement or
pursuant to this Agreement and the indemnification rights and obligations with
respect thereto set forth in Article XIII of this Agreement shall survive the
Closing Date for a period of one year, at which time such representations,
warranties and indemnification rights and obligations with respect thereto shall
expire; provided, however, notwithstanding the foregoing, (a) the rights and
obligations with respect to indemnification as provided in Article XIII shall
continue with respect to any matter for which indemnification had been properly
sought in writing prior to the expiration of such survival period, (b) all
representations and warranties as to the title of the Purchased Assets set forth
in Section 4.16 of this Agreement and the indemnification rights and obligations
with respect thereto shall survive without any expiration and (c) all
representations and warranties as to environmental matters set forth in Section
4.17 of this Agreement and the indemnification rights and obligations with
respect thereto set forth in Article XIII of this Agreement shall survive the
Closing Date for a period of two (2) years.
SECTION 14.09. NOTICES. All notices, requests, demands and other
communications to be given under this Agreement shall be in writing and shall be
deemed given (a) on the date of service if served personally on the party to
whom notice is to be given, (b) on the date of receipt if delivered by telecopy
or nationally recognized overnight courier or (c) on the third (3rd) business
day after deposit in the U.S. mail if mailed to the party to whom notice is to
be given by certified or registered mail, return receipt required, postage
prepaid and properly addressed as follows:
If to Buyer: American Glassmith Acquisition Corporation
_ American Architectural Products Corporation
South Bridge Executive Center
755 Boardman-Canfield Road, Building G - West
Boardman, Ohio 44512
Attn: Frank J. Amedia, Chief Executive Officer
Telecopy No.: (330) 965-9915
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<PAGE> 34
with a copy to: American Commercial Industries, Inc.
812 Huron Road, East, No. 880
Cleveland, Ohio 44115
Attn: James E. Phillips, Esq.
Telecopy No.: (216) 687-6740
if to Seller: American Glassmith, Inc.
_ Churchill Industries, Inc.
3100 Metropolitan Centre
333 South 7th Street
Minneapolis, Minnesota 55402
Attn: Otto W. Seidenberg
President and Chief Executive Officer
Telecopy No.: (612) 673-6703
with a copy to: The Churchill Companies
3100 Metropolitan Centre
333 South 7th Street
Minneapolis, Minnesota 55402
Attn: Kevin C. Dooley, Esq.
Telecopy No.: (612) 673-6615
SECTION 14.10. GENDER. Any reference to the masculine, feminine or
neuter gender shall be deemed to include each other gender unless the context
otherwise requires.
SECTION 14.11. KNOWLEDGE OF SELLER. As used in this Agreement, the
phrase "to the knowledge of Seller" or phrases of like import shall mean and be
construed as the knowledge of the employee of Seller identified on Schedule
14.11 of the Disclosure Schedules.
SECTION 14.12. GOVERNING LAW; CHOICE OF FORUM: SERVICE OF PROCESS; JURY
TRIAL WAIVER.
(a) The validity, interpretation and enforcement of this
Agreement, all Transactions contemplated by this Agreement and any
dispute arising out of the relationship between the parties hereto,
whether in contract, tort, equity or otherwise, shall be governed by
the internal laws of the State of Ohio (without giving effect to
principles of conflicts of law).
(b) Seller and Buyer irrevocably consent and submit to the
non-exclusive jurisdiction of the state courts located in Franklin
County, Ohio and the United States District Court for the Southern
District of Ohio and waive any objection based on venue or forum non
conveniens with respect to any action instituted therein arising under
this Agreement or in any way connected with or related or incidental to
the dealings of the parties hereto in
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<PAGE> 35
respect of this Agreement or the transactions related to this
Agreement, in each case whether now existing or hereafter arising, and
whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the
courts described above.
(c) Seller and Buyer hereby waive personal service of any and
all process upon them and consent that all such service of process may
be made by certified mail (return receipt requested) directed to their
respective addresses set forth in Section 14.09 of this Agreement and
service so made shall be deemed to be completed five (5) days after the
same shall have been so deposited in the U.S. mails, or, by service in
any other manner provided under the rules of any such courts. Within
thirty (30) days after such service, the party to whom such process is
brought shall appear in answer to such process, failing which such
party shall be deemed in default and judgment may be entered for the
amount of the claim and other relief requested.
(d) SELLER AND BUYER EACH HEREBY WAIVE ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER
THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS
AGREEMENT OR THE TRANSACTIONS RELATED HERETO WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT EQUITY OR OTHERWISE.
SELLER AND BUYER EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT SELLER AND BUYER MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
SECTION 14.13. SEVERABILITY. In the event that any of the provisions of
this Agreement are determined to be unenforceable by any court of competent
jurisdiction, the parties to this Agreement shall consider such provisions
amended and modified so as to eliminate such invalidity or unenforceability and
all other provisions shall remain in full force or effect as originally written.
SECTION 14.14. CONFIDENTIAL NATURE OF INFORMATION. Each party shall
treat in confidence all documents, materials, and other information which it has
and shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated by
this Agreement (whether obtained before or after the date of this Agreement) and
the preparation of this Agreement and other related documents. The obligation of
each party to treat such documents, materials and other information in
confidence shall not apply to any information which (a) such party can
demonstrate was already lawfully in its possession prior to the disclosure
thereof by the other party, (b) is known to the public and did not become so
known through any violation of a legal obligation, (c) became known to the
public through no fault of such party, (d) is later lawfully acquired by such
party from other sources, (e) is required to be disclosed under the
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<PAGE> 36
provisions of any Federal, state or local statute or regulation issued by a duly
authorized agency, board or commission thereof or (f) is required to be
disclosed by a rule or order of any court of competent jurisdiction. Each party
agrees, if it breaches any of the terms of this Section 14.14, it will consent
to the issuance of a temporary and/or permanent injunction by any court of
competent jurisdiction enjoining such party from continuing to breach the terms
of this Section 14.14.
IN WITNESS WHEREOF, each of the parties to the Agreement has executed
this Agreement this 10th day of December, 1997.
AMERICAN GLASSMITH, INC.
By: /s/ Otto W. Seidenberg
----------------------------------
Name: Otto W. Seidenberg
--------------------------------
Title: CEO
-------------------------------
AMERICAN GLASSMITH ACQUISITION CORPORATION
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia, President
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION*
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia, Chief Executive Officer
* Only a signatory so as to be bound by the
provisions of Section 11.01(a)(v) of this
Agreement.
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<PAGE> 37
LIST OF DISCLOSURE SCHEDULES
The following schedules to the Asset Purchase Agreement have been omitted
from this Exhibit 2.4. The Company agrees to furnish supplementally a copy of
any omitted schedule to the Securities and Exchange Commission upon request.
<TABLE>
<S> <C>
Exhibit 9.01(a) Form of Assumption Agreement
Exhibit 9.02(a) Form of Bill of Sale and Assignment of Interests
Exhibit 9.02(c) Form of Transition Services Agreement
Exhibit 9.02(g) Form of Non-Competition Agreement
Exhibit 9.02(j) Form of Guaranty
Schedule 2.01 Allocation of Purchase Price
Schedule 2.02(a) Seller's Good Faith Estimate of Net Book Value of Purchased Assets
Schedule 4.02(a) Conflicts; Defaults; Etc. of Seller
Schedule 4.02(b) Conflicts; Defaults; Etc. of the Purchased Business
Schedule 4.02(c) Required Consents
Schedule 4.03 Tax Matters
Schedule 4.05 Leased Real Property
Schedule 4.06 Leased Personal Property
Schedule 4.07 Financial Statements
Schedule 4.08 Inventories
Schedule 4.09(a) Material Contracts
Schedule 4.09(b) Prepayments; Defaults under Material Contracts
Schedule 4.09(c) Certain Agreements
Schedule 4.10 Accounts and Notes Receivable
Schedule 4.11 Certain Transactions; Adverse Change
Schedule 4.12 Customers and Suppliers
Schedule 4.13 Warranties
Schedule 4.14 Licenses and Permits
Schedule 4.15 Proprietary Information
Schedule 4.16 Title to the Assets of the Purchased Business
Schedule 4.17 Environmental Matters
Schedule 4.18(a) Employee Benefit Plans
Schedule 4.18(b) Claims re: Employee Benefit Plans
Schedule 4.18(c) Multi-Employer Plans
Schedule 4.18(d) Post-Closing Agreements re: Employee Benefit Plans
Schedule 4.19(a) Litigation
Schedule 4.19(b) Product Liability
Schedule 4.19(c) Workers' Compensation Claims
Schedule 4.20(a) List of Employees and Benefits
Schedule 4.20(b) Agreements with Employees; Independent Contractors
Schedule 4.20(c) Compensation
Schedule 4.21 Insurance
Schedule 14.11 Employee of Seller with Knowledge
</TABLE>
<PAGE> 1
Exhibit 2.5
AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into by and
between MODERN WINDOW CORPORATION, a Michigan corporation ("Seller"), DONALD B.
LIFTON, EDMUND H. DOYLE, AND SHELDON R. STONE, its Shareholders (hereinafter
collectively referred to as "Shareholders" or "Owners") and MODERN WINDOW
ACQUISITION CORP., a Delaware corporation, or its designee ("Buyer" or "MWAC").
RECITALS
A. Seller is engaged in the manufacture and sale of window
products at its facilities located in Oak Park, Michigan (the "Purchased
Business").
B. Buyer desires to purchase from Seller and its Owners, and
Seller and its Owners desire to sell to Buyer, substantially all of the assets
owned by Seller and used in the Purchased Business.
C. The parties hereto recognize that this Agreement and the
transactions contemplated herein are to be consummated at the time of the
payment of the Purchase Price detailed in Section 2.01 below. The parties hereto
also recognize that a portion of the Purchase Price described in Section 2.01(a)
provides Buyer with three alternative payment options. The parties hereto
recognize that Buyer, in its sole discretion, may exercise any of these three
payment options in Section 2.01(a), which payment options include:
(1) proceeding with the transactions contemplated by this
Agreement by paying the Cash Purchase Price detailed in
Section 2.01(a)(i), which Cash Purchase Price is to be paid
with funds to be received by Buyer from an offering of
securities of American Architectural Products Corporation, a
Delaware corporation ("AAPC") (hereinafter "Offering"); or
(2) proceeding with the transactions contemplated by this
Agreement by paying the Cash Purchase Price detailed in
Section 2.01(a)(ii) which Cash Purchase Price is to be paid
with funds received by Buyer, if at all, from financing
through Comerica Bank, in accordance with Buyer's current
commitment from Comerica Bank;
(3) or proceeding with the transactions contemplated by this
Agreement as an acquisition by the Buyer, in exchange for
shares of common stock of AAPC (hereinafter "Exchange of
Assets for Stock"), as described in Section 2.01(a)(iii) and
Section 2.02.
<PAGE> 2
The parties hereto recognize that whether the consideration for the transactions
contemplated by this Agreement includes payment of a Cash Purchase Price as
described in Section 2.01(a)(i) or (ii) or an Exchange of Assets for Stock, as
described in Section 2.01(a)(iii) and Section 2.02, that any financing required
to satisfy the Purchase Price described in Section 2.01 to be received from
Comerica Bank shall be in accordance with Buyer's current commitment with
Comerica Bank for any such financing.
PROVISIONS
NOW, THEREFORE, in consideration of the above Recitals and the
provisions contained in this Agreement, Seller, its Owners, and Buyer agree as
follows:
ARTICLE I
SALE OF ASSETS
SECTION 1.01. SALE OF ASSETS. Pursuant to the provisions set
forth in this Agreement, at the Closing (as defined in Section 3.01 of this
Agreement) Seller shall sell, convey, transfer, assign and deliver to Buyer, and
Buyer shall purchase and acquire from Seller, substantially all of the
properties of the Seller, all of the assets, properties and rights (other than
the Excluded Assets which are defined below in Section 1.02 of this Agreement)
owned by Seller and used or held for use solely in the operation of the
Purchased Business of every kind, character and description, whether tangible,
intangible, personal or mixed, and wheresoever located, whether carried on the
books of Seller or not carried on the books of Seller, due to expense, full
depreciation or otherwise (the "Purchased Assets") including, but not limited
to:
(a) all rights, title and interest in, to and under any
owned real property (the "Owned Real Property") listed in
Schedule 4.23 of the schedules attached to or accompanying this
Agreement and any supplement to this Agreement (the "Disclosure
Schedules");
(b) all machinery and equipment, supplies, spare parts,
tools, jigs, patterns, trade fixtures, dies, molds, vehicles
(whether titled or untitled), furniture, designs and drawings
(the "Equipment");
(c) all cash and cash equivalents, as well as accounts and
notes receivable;
(d) all inventory, raw materials, components,
work-in-process, finished goods, service parts and supplies,
packaging materials and other similar items (whether new or used)
(the "Inventory");
(e) all right, title and interest in, to and under all
leases of tools, furniture, machinery, supplies, vehicles,
equipment and other items of personal property listed in Schedule
4.06 of the Disclosure Schedules; provided, however, that to the
extent the assignment of any such lease or any claim or right or
any benefit arising under or resulting from such lease(s) shall
require the consent of
2
<PAGE> 3
another party, this Agreement shall not constitute an assignment
of such lease(s) if an attempted assignment would constitute a
breach of such lease(s) and, in lieu of such consent, Seller
shall cooperate with Buyer in any reasonable arrangement designed
to provide Buyer the benefits under, or any claim or right
arising under such lease(s) (the "Third Party Leases");
(f) all rights in, to and under all contracts, agreements,
purchase orders, customer orders and work orders listed in
Schedule 4.10 of the Disclosure Schedules; provided, however,
that to the extent the assignment of, or any claim or right or
any benefit arising under or resulting from, any such contract,
agreement, purchase order, customer order or work order shall
require the consent or approval of another party to such
contract, agreement, purchase order, customer order or work
order, this Agreement shall not constitute an assignment, if an
attempted assignment would constitute a breach of such contract,
agreement, purchase order, customer order or work order and, in
lieu of such consent, Seller shall cooperate with Buyer in any
reasonable arrangement designed to provide Buyer with the
benefits under such contract, agreement, purchase order, customer
order or work order, or any claim or right arising thereunder;
(g) all prepaid expenses, deposits and other similar items,
other than prepaid expenses, deposits and other similar items
relating to the Excluded Assets (as defined in Section 1.02 of
this Agreement);
(h) to the extent legally assignable, all franchises,
licenses, permits, certificates, approvals and other governmental
authorizations necessary to own or lease and operate the
Purchased Assets and to conduct the Purchased Business as it has
been conducted by Seller;
(i) all of Seller's right, title, goodwill, and interest in
the name "Modern Window Corporation," "Modern Window," or any
other trade names, trademarks, trademark applications, service
marks, service mark applications, copyrights, copyright
applications, patents, patent applications, inventions, trade
secrets, know-how, business plans and strategies, proprietary
processes and formulae, data bases, telephone numbers and all
other proprietary technical information, whether patentable or
unpatentable, related to the products, services or operations of
the Purchased Business as presently conducted;
(j) all books and records including, but not limited to,
property records, production records, engineering records,
environmental compliance records, purchase and sales records,
credit data, personnel and payroll records, accounting records,
customer lists, customer records and information, supplier lists,
parts lists, manuals, correspondence, files and any similar
items;
(k) all computer programs and a copy of the source code and
object code of all such programs, together with all additions,
modifications, updates and enhancements thereto; all design
specifications including, but not limited to, program
descriptions, system flow charts, file layouts, report layouts,
screen
3
<PAGE> 4
layouts and all other computer program documentation, all user's
manuals, training manuals, sales literature, and other system and
operations documentation relating to such computer programs;
(l) all rights, claims and choses in action against third
parties including, but not limited to, all rights against
suppliers under warranties covering any of the Inventory or
Equipment, as well as the benefit or proceeds of any of Seller's
insurance policies in regard to claims made or anticipated prior
to Closing;
(m) all stationery, forms, labels, shipping materials,
brochures, art work, photographs, advertising materials, and any
similar items;
(n) all other tangible and intangible assets of Seller
relating solely to the Purchased Business, whether or not carried
at value or listed on the books and records of Seller, and
whether or not in the possession of Seller or others;
(o) all of Seller's right, title, and interest in the stock
of a corporation known as Team Pros America Corporation, which
interest is specifically identified on Schedule 1.01(p) of the
Disclosure Schedules.
Notwithstanding the foregoing, the Purchased Assets shall
not include the Excluded Assets.
SECTION 1.02. EXCLUDED ASSETS. Seller shall not sell or deliver
to Buyer, and Buyer shall not purchase or acquire, the following assets owned by
Seller (the "Excluded Assets"):
(a) the issued and outstanding stock of Seller and the
minute books and stock records of Seller;
(b) Seller's insurance policies; and
(c) all claims and rights to deposits and prepaid expenses
relating to any of the other Excluded Assets.
SECTION 1.03. EXCLUDED AND ASSUMED OBLIGATIONS OR LIABILITIES.
Except for the Assumed Obligations as defined below, Buyer shall not assume and
shall not be responsible for any other obligation or liability of Seller or
shareholders, direct or indirect, known or unknown, choate or inchoate, absolute
or contingent, including specifically any responsibility for reporting of and/or
payment of Seller's and/or shareholders' obligations or liabilities to any
taxing authority (accordingly, after Closing, Seller shall continue to be
responsible for completion and filing of any tax return informational or
otherwise, in regard to Seller and/or its shareholders' obligations or
liabilities to any taxing authority); liabilities to Seller's principals, owners
or shareholders or entities in which such principals, owners, or shareholders
have an ownership or beneficial interest (excluding Doyco, Inc., and National
Human Resources Committee, Inc.) for any accrued consulting services and/or
notes or obligations payable;
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Seller's and shareholders' obligations pursuant to any Waiver and Consent
Agreement between Team Pros America Corporation and its stockholders except as
set forth below (the "Excluded Liabilities").
Buyer shall assume and agree to pay or perform only the
obligations and liabilities of Seller expressly set forth below (the "Assumed
Obligations").
The Assumed Obligations are:
(a) the Current Liabilities of Seller. For purposes of this
Agreement, the "Current Liabilities" shall mean the obligations
and liabilities of Seller for accrued expenses and accounts
payable of Seller related solely to the operation of the
purchased business (other than liabilities for income,
withholding, and franchise taxes), each as determined under GAAP
and which are identified on the October 31, 1997, balance sheet,
as well as those liabilities or obligations incurred since
October 31, 1997, in the ordinary and normal course of Seller's
business and as may be listed on Schedule 1.03(a) of the
Disclosure Schedules; and
(b) the obligations or liabilities of Seller in, to and
under the leases, contracts, agreements, purchase orders,
customer orders and work orders included in the Purchased Assets
pursuant to Section 1.01 of this Agreement; and
(c) the obligation or liability of Seller in, to, and under
a certain demand note for a FIFTY-SIX THOUSAND DOLLAR ($56,000)
loan by Doyco, Inc., Pension Plan (copies of the note are
attached to this Agreement as Schedule 1.03(c) of the Disclosure
Schedules); and
(d) the obligation or liability of Seller's existing three
(3) principals on approximately ONE HUNDRED THOUSAND DOLLAR
($100,000) working capital loan payable to American Commercial
Holdings, Inc., and a SIXTY-FIVE THOUSAND DOLLAR ($65,000)
working capital loan payable to American Architectural Products
Corporation (copies of the notes representing this working
capital loan shall be attached to this Agreement as Schedule
1.03(d) of the Disclosure Schedules); and
(e) the obligation or liability of Seller or shareholders
for all of Seller's real or personal property taxes payable to
the Oakland County, Michigan, Treasurer, which encumber the Owned
Real Property or any of the Purchased Assets.
(f) the debt obligation of Seller and shareholders of
approximately ONE MILLION THREE HUNDRED FIFTEEN THOUSAND SEVEN
HUNDRED NINETY-NINE DOLLARS SEVENTY-THREE CENTS ($1,315,799.73),
as of September 29, 1997, to the National Bank of Detroit, which
amount shall be paid to the lender at Closing by the Buyer.
(Copies of the payoff letter of National Bank of Detroit has been
attached to this Agreement as
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Schedule 1.03(f) of the Disclosure Schedules, which shall be
updated at Closing, subject to review and acceptance by Buyer.)
SECTION 1.04. TRANSFER OF TITLE TO THE PURCHASED ASSETS. The
sale, assignment, conveyance, transfer and delivery by Seller of the Purchased
Assets shall be made at the Closing by such deeds, bills of sale, assignments,
licenses, endorsements and other appropriate instruments of transfer as shall be
necessary to vest in Buyer, as of the Closing Date, good and marketable title to
the Purchased Assets, free and clear of any liens, charges and encumbrances,
except for the Assumed Obligations.
ARTICLE II
PURCHASE PRICE
SECTION 2.01. THE PURCHASE PRICE. Consideration (the "Purchase
Price") for the purchase of the Purchased Assets and the Purchased Business by
the Buyer, shall be:
(a) At the sole discretion and option of Buyer,
(i) Payment of Eight Hundred Thousand Dollars
($800,000) "Cash Purchase Price") to be paid with funds
received by Buyer from the Offering, provided, however, that
Two Hundred Thousand Dollars ($200,000) of the cash from the
payment to be made by Buyer shall be escrowed as provided in
Section 7.07 and Section 9.07, below. Payment of any Cash
Purchase Price pursuant to this paragraph shall be made not
later than five (5) business days after Buyer receives funds
from the Offering; or
(ii) Payment of the Cash Purchase Price with funds
received, if at all, from financing through Comerica Bank in
accordance with Buyer's current commitment with Comerica
Bank, provided, however, that Two Hundred Thousand Dollars
($200,000) of the cash from the payment to be made by Buyer
shall be escrowed as provided in Section 7.07 and Section
9.07, below. Payment of any Cash Purchase Price pursuant to
this paragraph shall be made not later than five (5)
business days after Buyer receives funding, if at all, from
Comerica Bank; or
(iii) transfer and delivery by Buyer of Ninety-Two
Thousand Three Hundred Eight (92,308) shares of common stock
of AAPC, subject to adjustment pursuant to Section 2.02, if
applicable; and
(1) the transfer and delivery by Buyer of Thirty
Thousand Seven Hundred Seventy (30,770) shares of common
stock of AAPC subject to a certain Put Option Agreement
(said shares shall not be subject to any adjustment pursuant
to Section 2.02);
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(b) Transfer and delivery by Buyer of a certain option
agreement to Seller permitting Seller or its shareholders to
purchase up to Forty Thousand (40,000) shares of common stock of
AAPC for a period of eighteen (18) months at an exercise price of
SIX DOLLARS FIFTY CENTS ($6.50) per share (the "Option
Agreement") subject to the terms of the Option Agreement; and
(c) An assumption by Buyer of the Assumed Obligations
described in Section 1.03 above.
SECTION 2.02. CONTINGENT ADJUSTMENT TO THE PURCHASE PRICE. If the
average closing price of common stock of AAPC (hereinafter "Share") as reported
at closing of trades made on the NASDAQ Bulletin Board (hereinafter "Average
Weighted Share Value") for the twenty (20) trading dates commencing with the
termination of the twelve (12)-month holding period after transfer and delivery
of the shares pursuant to Section 2.01(a)ii) (hereinafter the "Adjustment Review
Period") (which period shall end on __________), is less than $6.50, then the
provisions of this Section shall apply. If the Average Weighted Share Value of
shares during the Adjustment Review Period is equal to or greater than $6.50 per
share, there shall be no adjustment pursuant to this Section. If, however,
during the Adjustment Review Period the Average Weighted Share Value is less
than $6.50 per share, then Buyer shall deliver to Seller, at Buyer's option,
either
(a) additional Shares as soon as reasonably possible (but
not to exceed thirty (30) days) after the end of the Adjustment
Review Period, with a total share value equal to the sum of SIX
HUNDRED THOUSAND DOLLARS ($600,000) less the Average Weighted
Share Value at the end of the Adjustment Review Period multiplied
by 92,308. Any additional shares delivered pursuant to this
paragraph shall be registered Shares, subject to Buyer's
underwriters approval; or
(b) cash, as soon as reasonably possible (but not to exceed
thirty (30) days after the end of the Adjustment Review Period,
in an amount equal to the sum of SIX HUNDRED THOUSAND DOLLARS
($600,000) less the Average Weighted Share Value at the end of
the Adjustment Review Period multiplied by 92,308.
SECTION 2.03. TAXES. Seller shall pay all taxes, including income
and transfer taxes, if any, arising out of the sale of the Purchased Business to
Buyer, if any.
ARTICLE III
CLOSING
SECTION 3.01. THE CLOSING. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall occur at the offices of
American Architectural Products, Inc., 755 Boardman-Canfield Road, Southbridge
Executive Center, Building G-West, Boardman, OH 44512, upon the satisfaction of
all the contingencies contained in this Agreement, including specifically the
receipt by Buyer of funds from either the Offering or Comerica Bank in
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accordance with Buyer's current commitment, but in no event later than December
31, 1997, unless otherwise agreed to in writing by Buyer and Seller (the
"Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
As a material inducement to Buyer to enter into this Agreement,
and to consummate the transactions contemplated by this Agreement, Seller and
each of the Shareholders represents and warrants to Buyer as follows:
SECTION 4.01. ORGANIZATION; POWER. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of Michigan and
is qualified as a foreign corporation and in good standing in every other state
where the failure to so qualify would have a material adverse effect on the
financial condition, business, assets or results of operations of the Purchased
Business taken as a whole (a "Material Adverse Effect"). Seller has all of the
requisite corporate power and authority to own, lease and operate its assets and
to carry on its business as it is now being conducted. The persons executing
this Agreement as Shareholders constitute all of the persons who own,
beneficially or of record, any shares of capital stock of the Seller. Except as
set forth on Schedule 1.01, Seller does not (a) own, of record or beneficially,
any outstanding voting securities of or other equity security interests in any
corporation, partnership, association, joint venture or other entity or (b)
control (directly or indirectly and alone or in combination with others) any
corporation, partnership, association, joint venture, or other entity.
Seller has all of the requisite corporate power and authority to
own its right, title, and interest in a corporation named "Team Pros America
Corporation" as disclosed in Schedule 1.01(p) of the Disclosure Schedules.
Further, Seller has all of the requisite corporate power and authority to sell,
transfer, or otherwise dispose of its interest in Team Pros America Corporation,
and that Seller has received any and all necessary third-party consents or
approval and any such sale, transfer, exchange, or disposition is not subject to
any further restrictions, third-party consents, or approval whatsoever.
SECTION 4.02. AUTHORITY, NO VIOLATION, ETC.
(a) This Agreement and the other agreements and documents
to be executed and delivered by Seller or any Shareholder
pursuant to the provisions of this Agreement constitute legal,
valid and binding obligations of Seller and each Shareholder,
enforceable against Seller and/or such Shareholder in accordance
with their respective provisions, except as enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles of
general application affecting the rights of creditors and (ii)
general principles of equity affecting the right to specific
enforceability of any of the remedies contained herein and
therein. Except as set forth on Schedule 4.02(a) of the
Disclosure Schedules, the execution and delivery of this
Agreement, the consummation of the transactions
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contemplated by this Agreement, and compliance by Seller and the
Shareholders with the provisions of this Agreement will not:
(i) result in a default or give rise to any right of
termination, cancellation or acceleration under any of the
provisions of any note, lien, bond, mortgage, indenture,
license, lease, agreement or other instrument or obligation
to which Seller or any Shareholder is a party or by which
Seller or any Shareholder may be bound, except for such
breach or default as to which valid waivers or consents
have been obtained;
(ii) violate any judgment, order, writ, injunction or
decree of any court, administrative agency or governmental
body applicable to Seller; or
(iii) cause, or give any person grounds to cause (with
or without notice, the passage of time or both), the
maturity of any liability or obligation of Seller to be
accelerated or increased.
(b) Except as set forth on Schedule 4.02(b) of the
Disclosure Schedules, the execution and delivery of this
Agreement by Seller, the consummation by Seller of the
transactions contemplated by this Agreement and compliance by
Seller with the provisions of this Agreement will not:
(i) conflict with or result in a breach of any
provision of the organizational documents of Seller or
result in a default or give rise to any right of
termination, cancellation or acceleration under any of the
provisions of any note, lien, bond, mortgage, indenture,
license, lease, agreement or other instrument or obligation
to which the Seller is a party or by which the Purchased
Business, any of its assets or its business may be bound,
except for such conflict, breach or default as to which
valid waivers or consents have been obtained;
(ii) violate any judgment, order, writ, injunction or
decree of any court, administrative agency or governmental
body applicable to the Purchased Business, its assets or
its business; or
(iii) cause, or give any person grounds to cause (with
or without notice, the passage of time, or both), the
maturity of any liability or obligation of the Purchased
Business to be accelerated or increased.
(c) Except as set forth on Schedule 4.02(c), all filings,
consents and approvals of third parties and governmental
authorities required in connection with the execution and
delivery by Seller of this Agreement and the consummation by
Seller of the transactions contemplated by this Agreement
(including any consents required under any contracts, agreements,
permits, licenses, leases, notes or other instruments of the
Seller in connection with the
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change of ownership of the Purchased Business resulting from such
transactions) have been obtained.
SECTION 4.03. TAX MATTERS. Seller has accurately prepared in good
faith and has duly and timely filed with the appropriate Federal, state, local
or foreign governmental agencies ("Taxing Authorities") all tax returns or
reports required to be filed by Seller on behalf of the Purchased Business as
relate to the Purchased Business and the Purchased Assets. Except as set forth
on Schedule 4.03 of the Disclosure Schedules, all taxes due and payable by the
Seller with respect to the Purchased Business and the Purchased Assets to any
governmental authority for or with respect to the periods covered by such
returns and reports or with respect to any period (or portions thereof) ending
on or before the Closing Date and all interest, penalties, assessments and
deficiencies connected therewith, have been paid in full or the Seller has
adequately reserved for or made accruals with respect to all taxes due and
payable. All monies required to be withheld from employees of Seller for income
taxes, social security and other payroll taxes have been collected or withheld
and either paid to the respective governmental authorities, set aside in
accounts for such payments, or accrued, reserved against, and entered upon the
books of Seller. Except as set forth on Schedule 4.03, Seller has not executed
or filed with any taxing authority any agreement extending the period for
assessment or collection of any such taxes. Except as set forth on Schedule
4.03, Seller is not a party to any tax sharing agreement or to any pending
action or proceeding nor is any such action or proceeding threatened by any
governmental authority for the assessment or collection of taxes and no
deficiency notices or reports have been received by the Purchased Business with
respect to any of the tax returns of the Purchased Business. Except as set forth
on Schedule 4.03, within the past five (5) years, the Purchased Business has not
been subject to any Federal, state, local or foreign tax dispute or audit.
SECTION 4.04. COMPLIANCE WITH LAWS; NO DEFAULT OR LITIGATION.
(a) Other than Seller and shareholders' disclosed
default(s) on their obligations to the National Bank of Detroit,
Seller is not in default or violation under (i) any contract,
agreement, lease, consent, order or other commitment of the
Purchased Business or (ii) any law, rule, regulation, writ,
injunction, order or decree of any court or any foreign, Federal,
state, local or other governmental department, commission, board,
bureau, agency or instrumentality applicable to the Purchased
Business or the Purchased Assets;
(b) there are no actions, suits, claims, investigations or
legal, arbitration or administrative proceedings in progress,
pending or, to the best knowledge of Seller, threatened against
the Seller with respect to the consummation of the transactions
contemplated by this Agreement; and
(c) no action, suit, or proceeding has been instituted or,
to the best knowledge of Seller, is threatened to restrain or
prohibit or otherwise challenge the legality or validity of the
transactions contemplated by this Agreement.
SECTION 4.06. LEASED PERSONAL PROPERTY. Schedule 4.06 of the
Disclosure Schedules contains a true and complete list and copies of all leases
and other agreements under
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which the Seller is a lessee with respect to the Purchased Business or the
Purchased Assets (including, but not limited to, tools, furniture, machinery,
vehicles, equipment, or other personal property) owned by any other person (the
"Leased Personal Property"). Except as set forth on Schedule 4.06, each of the
leases listed in Schedule 4.06 are in full force and effect and there are no
defaults thereunder on the part of the Seller or the Purchased Business, any
other party thereto, nor has any event occurred which, with notice or lapse of
time or both, would constitute a default thereunder by the Seller.
SECTION 4.07. FINANCIAL STATEMENTS. Seller has furnished to Buyer
true and complete copies of the following financial statements of the Purchased
Business (collectively referred to as the "Financial Statements"), copies of
which are attached as Schedule 4.07 of the Disclosure Schedules:
(a) The unaudited balance sheets of the Purchased Business
as of [December 31, 1996] and the related unaudited statements of
shareholders' equity, operations and cash flows for each of the
years in the three-year period ending December 31, 1996
(collectively, the "Prior Year Financial Statements"). The Prior
Year Financial Statements have been prepared from the books and
records of the Purchased Business in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent
basis with prior periods, except as provided therein, and fairly
present the financial position of the Purchased Business as of
the dates thereof and the results of operations and cash flows of
the Purchased Business for the periods then ended.
(b) The unaudited balance sheet of the Purchased Business
as of October 31, 1997, and the related consolidated statements
of shareholders' equity, operations and cash flows for the eight
(8) month period ended October 31, 1997, (collectively, the
"Current Year Financial Statements"). Except as set forth on
Schedule 4.07, the Current Year Financial Statements have been
prepared from the books and records of the Purchased Business in
accordance with GAAP applied on a consistent basis with prior
periods (except for normal, recurring year-end adjustments),
fairly present the financial position of the Purchased Business
as of the date thereof, and fairly present the results of
operations and cash flows of the Purchased Business for the
periods then ended.
Except as set forth on Schedule 4.07, the Purchased Business has
no liabilities or obligations, fixed, contingent, accrued or otherwise which
should be but are not reflected in its October 31, 1997, balance sheet as
updated by Seller's September 1997 accounting entries in accordance with GAAP,
except for liabilities or obligations incurred since October 31, 1997, in the
ordinary and normal course of its business consistent with prior practice and
which will not have a Material Adverse Effect.
SECTION 4.08. INVENTORIES. Except as set forth on Schedule 4.08
of the Disclosure Schedules or as Seller may have reserved against in the
current financial statements of the Purchased Business, no material portion of
the inventories of the Purchased Business consist of items which are not
merchantable or which are not suitable and usable for the production or
completion of merchantable products for sale within one (1) year in the ordinary
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course of its business as determined in accordance with GAAP and no material
portion of such inventories consists of any items which are slow-moving,
obsolete or of below-standard quality. The quantities of all lines of
inventories are reasonable and appropriate in the present circumstances of the
Purchased Business.
SECTION 4.10. MATERIAL CONTRACTS.
(a) Schedule 4.10(a) of the Disclosure Schedules lists and
includes copies (except no copies of purchase orders in an amount
less than Twenty-Five Thousand Dollars ($25,000) shall be
included) of all contracts, leases (other than those described in
Schedule 4.05 or Schedule 4.06 of the Disclosure Schedules, which
are incorporated by reference into Schedule 4.10(a)), agreements,
commitments, purchase orders, work orders, customer orders, and
other arrangements, including all amendments thereto, to which
the Purchased Business is a party, except for those contracts,
leases, commitments, purchase orders, work orders and agreements
(i) which were entered into in the ordinary course of business
and (ii) under which the obligations of the Purchased Business
have been or shall be fully discharged within ninety (90) days
from the date such obligation was entered into and (iii) which
individually involve an obligation or liability on the part of
the Purchased Business in any amount less than Ten Thousand
Dollars ($10,000) (the "Material Contracts").
(b) All of the Material Contracts are valid and binding
obligations of the Seller and are in full force and effect and,
except as set forth on Schedule 4.02(c), do not require the
consent of any other party thereto to the sale of the Purchased
Business or the Purchased Assets to Buyer hereunder to continue
to be valid and binding, except as enforceability may be limited
by (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles of
general application affecting the rights of creditors and (ii)
general principles of equity affecting the right to specific
enforceability of any of the remedies contained therein. Except
as set forth in Schedule 4.10(b), (i) none of the payments
required to be made by Seller under any of the Material Contracts
has been prepaid more than thirty (30) days prior to the due date
of such payment thereunder and (ii) to the best knowledge of
Seller and the Purchased Business, there is not any existing
default, or event which, with notice or lapse of time, or both,
would constitute a default under any of the Material Contracts.
(c) Except as set forth on Schedule 4.10(c), Seller is not
a party to any of the following:
(i) any indenture, mortgage, note, guaranty, letter of
credit, installment obligation, agreement or other
instrument relating to the borrowing of money or the
guaranteeing of any obligation for the borrowing of money;
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(ii) any agreement, contract, or other commitment that
would limit the ability of the Purchased Business (or any
manager or officer thereof) to compete in any line of
business or with any person or in any geographic area, or
otherwise to conduct the Purchased Business as presently
conducted, or to use or disclose any information in the
possession of the Purchased Business;
(iii) any license agreement, including any agreement
with respect to any manufacturing rights granted to or by
the Purchased Business; or
(iv) any joint venture or similar agreement.
(d) All prior contracts, leases, agreements and instruments
of the Seller have been fully performed by the Purchased Business
and the Purchased Business has no ongoing or unfulfilled
obligations thereunder, except for a certain McKinley Contract,
attached and identified on Schedule 4.10(d) of the Disclosure
Schedules.
(e) None of the Material Contracts which requires the
production of products or the provision of services has or may
have associated with it a negative gross or net margin, as
determined in accordance with GAAP.
SECTION 4.11. ACCOUNTS AND NOTES RECEIVABLE. Schedule 4.11 of the
Disclosure Schedules contains a true and complete list of unpaid accounts and
notes receivable (third party and intercompany) of the Purchased Business from
any other person as of October 31, 1997. Except as otherwise set forth in
Schedule 4.11 or as Seller may have reserved against in the current financial
statements of the Purchased Business, all of the accounts and notes receivable
as of the date of this Agreement constitute valid claims which arose in the
ordinary course of the Purchased Business and, except as set forth on Schedule
4.11, there is:
(a) no account or note receivable debtor who has refused
or, to the best knowledge of Seller and the Purchased Business,
threatened to refuse to pay its obligations for any reason;
(b) no account or note receivable debtor who is, to the
best knowledge of Seller and the Purchased Business, insolvent,
unable to pay its debts as they become due, or in bankruptcy; and
(c) no account or note receivable pledged to any third
party.
SECTION 4.12. CERTAIN TRANSACTIONS; ADVERSE CHANGE. Except as set
forth on Schedule 4.12 of the Disclosure Schedules, since October 31, 1997, the
Purchased Business has been operated in the ordinary course and has not:
(a) sold or in any way transferred or otherwise disposed of
any of its assets or property, except for sales of inventory in
the ordinary course of its
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business or the disposition of other assets or property in the
ordinary course of business, consistent with past practice;
(b) incurred any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due,
except liabilities and obligations incurred in the ordinary
course of its business which will not have a Material Adverse
Effect;
(c) suffered any casualty, damage, destruction, loss or any
material interruption in use of any material assets or property
(whether or not covered by insurance) on account of fire, flood,
riot, strike or other hazard or Act of God;
(d) entered into any material agreement or made any
material commitment;
(e) received any notice of termination of any material
contract, lease or other agreement;
(f) made or suffered any material adverse change in its
financial condition, its assets or any aspect of the business;
(g) waived any right or canceled or compromised any debt or
claim, other than in the ordinary course of the business;
(h) made (or committed to make) capital expenditures in an
amount which exceeds One Hundred Thousand Dollars ($100,000) in
the aggregate;
(i) had any actual or overtly threatened employee strikes,
work stoppages, slow-downs, lock-outs or had any material change
in its relationship with any of its employees, salesmen,
distributors, sales representatives or independent contractors;
(j) made any change in the rate of compensation,
commission, benefits, bonus or other remuneration payable or paid
or agreed to pay any bonus, extra compensation, pension,
severance, vacation or other benefit to any shareholder,
director, officer, employee, salesman or distributor of the
Purchased Business, other than regularly scheduled increases,
bonuses or benefits about which Buyer has received prior written
notice;
(k) declared or paid any dividend or made any distribution
or other payment to any Seller; or
(l) without limitation by the enumeration of any of the
foregoing, except for the execution of this Agreement, entered
into any transaction other than in the ordinary course of its
business.
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SECTION 4.13. CUSTOMERS AND SUPPLIERS. Except as set forth on
Schedule 4.13 of the Disclosure Schedules, neither Seller nor the Purchased
Business has any knowledge of any intention of or indication by a "Significant
Customer" (as defined below) or a "Significant Supplier" (as defined below) to
terminate its business relationship with the Purchased Business or to limit or
alter its business relationship with the Purchased Business in any material
respect. As used in this Agreement, (a) "Significant Customer" means any of the
twenty (20) largest customers, by sales revenue, of the Purchased Business
during the twelve (12) month period ending [December 31, 1996,] and (b)
"Significant Supplier" means any of the fifteen (15) largest suppliers, by
dollar volume, of the Purchased Business during the twelve month period ending
[December 31, 1996.] Schedule 4.13 of the Disclosure Schedules contains a true
and correct list of all of the Significant Customers and Significant Suppliers
of the Purchased Business as of [December 31, 1996.]
SECTION 4.14. WARRANTIES. Except as set forth on Schedule 4.14 of
the Disclosure Schedules, Seller has not made any oral or written warranties
with respect to the quality or absence of defects of its products or services
which are currently in force. Except as set forth on Schedule 4.14, there are no
claims pending or, to the best of Seller's knowledge and the knowledge of the
Purchased Business, anticipated or threatened against the Purchased Business
with respect to the quality or absence of defects in such products or services.
Schedule 4.14 also sets forth the amount and nature of any warranty claims
experienced by Seller in each of the years ended December 31, 1994, 1995, and
1996, and the period January 1, 1997, to the present. Seller is not subject to
any liability for warranty claims which is not shown or which is in excess of
the amounts shown or reserved for in the 1994, 1995, and 1996 year-end financial
statements or, other than liability for warranty claims incurred in the ordinary
course of business after December 31, 1996, consistent with past experience. As
of October 31, 1997, Seller has adequately provided for known, unknown,
anticipated, or possible future warranty claims in a manner and amount
consistent with past experience.
SECTION 4.15. LICENSES AND PERMITS.
(a) Seller possesses all franchises, licenses, permits,
certificates, approvals and other authorizations necessary to own
or lease and operate its assets and to conduct the business
presently conducted by the Purchased Business (the "Permits").
Schedule 4.15 of the Disclosure Schedules contains a true and
complete list and copies of each of the Permits.
(b) Seller has fulfilled and performed its obligations
under each of the Permits in all material respects, and no event
has occurred which constitutes or, after notice or lapse of time
or both, would constitute a breach or default under any of the
Permits or would permit revocation or termination of any of the
Permits.
(c) Except as set forth on Schedule 4.02(c), no consent is
required from the issuer of any Permit for such Permit to
continue in full force and effect following the transfer of the
Purchased Business and the Purchased Assets to Buyer.
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SECTION 4.16. PROPRIETARY INFORMATION. Seller owns or possesses
the right to use the trade names, trademarks, trademark applications,
copyrights, copyright applications, patents, patent applications, inventions,
trade secrets, proprietary processes and formulae and all other proprietary
technical information, whether patentable or unpatentable, directly or
indirectly related to its products, services or operations or necessary to
conduct the Purchased Business as presently conducted (collectively, the
"Intellectual Property"). Schedule 4.16 of the Disclosure Schedules contains a
true and complete list and copies of each of the patents, copyrights,
trademarks, tradenames and service marks registrations and any and all pending
applications therefor, owned or licensed by the Seller (along with a designation
as to whether owned or licensed).
Neither Seller nor the Purchased Business has any knowledge of
any claim and neither has any reason to believe that any third party asserts
ownership rights in any of the Intellectual Property of the Seller. Neither
Seller nor the Purchased Business has any knowledge of any claim nor has any
reason to believe that use of any Intellectual Property by the Purchased
Business infringes upon any right of any third party. Neither Seller nor the
Purchased Business has any knowledge nor has any reason to believe that any
third party is infringing upon any of the rights of the Purchased Business in
any of the Intellectual Property.
SECTION 4.17. TITLE TO THE ASSETS OF THE PURCHASED BUSINESS;
COMPLETENESS AND CONDITION OF ASSETS. Except as disclosed on Schedule 4.17, the
assets owned or leased by the Seller in connection with the Purchased Business
and the Purchased Assets include all of the assets and properties which are
necessary to conduct the Purchased Business as presently conducted and to
perform all of the contracts, leases, agreements, commitments, purchase orders,
work orders, customer orders and other arrangements of the Purchased Business.
All of the tools, machinery and equipment of the Seller regularly used in the
Purchased Business are in good operating condition, ordinary wear and tear
excepted.
SECTION 4.18. ENVIRONMENTAL MATTERS. Schedule 4.18 of the
Disclosure Schedules contains (a) a description of (i) all licenses, permits,
and compliance schedules and, to the best of Seller's knowledge and the
knowledge of the Purchased Business, all regulatory plans which relate to the
Purchased Business, together with the durations and renewal dates thereof, and
(ii) all litigation, investigations, inquiries, and other proceedings, rulings,
orders or citations pending involving the Purchased Business of which Seller or
the Purchased Business has received notice or, to the best of Seller's knowledge
and the knowledge of the Purchased Business, threatened by government officials
with respect to the Purchased Business, as the result of any actual or alleged
failure of the Purchased Business to comply with any requirement of any
Environmental Laws (as hereinafter defined) and (b) a complete list of all solid
waste dumps and hazardous waste disposal, treatment and storage facilities which
are presently or, to the best of Seller's knowledge and the knowledge of the
Purchased Business, were used by the Purchased Business at any time during the
three (3) year period ending on the Closing Date for disposal of hazardous waste
as that term is defined in RCRA (as hereinafter defined).
Except as disclosed on Schedule 4.18:
(1) Seller has received all material permits and
approvals, kept all material records and made all material
filings required
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by applicable Federal, state or local laws with respect to
emissions into the environment (including solids, liquids,
and gases) and the proper disposal of such materials
(including solid waste materials);
(2) Seller is not the subject of any Federal,
state or local investigation evaluating whether any
Remedial Action (as hereinafter defined) is needed to
respond to a Release (as hereinafter defined) of any
Contaminant (as hereinafter defined) into the environment;
(3) during the three (3) year period ending on the
Closing Date, Seller has not filed, nor has Seller been
required to file, any notice under Federal, state or local
laws indicating past or present treatment, storage or
disposal of a hazardous waste as defined under 40 C.F.R.,
Parts 260-270, or any state equivalent or reporting a spill
or Release of a Contaminant at, on, under or about any
property leased or used by the Purchased Business;
(4) except for discharges in accordance with
applicable Environmental Laws, the Purchased Business has
not released any hazardous waste or substance onto the
ground or waters of any property now or previously owned,
leased or used by the Purchased Business;
(5) no underground storage tanks or surface
impoundments are located at, on or under any property now
or previously owned or leased by the Purchased Business;
and
(6) no lien in favor of any governmental authority
for (1) any liability under any Environmental Laws or (2)
to the best of Seller's knowledge and the knowledge of the
Purchased Business, damages arising from or costs incurred
by such governmental authority in response to a Release of
a Contaminant into the environment has been filed or
attached to the property leased by the Seller on behalf of
the Purchased Business.
For purposes of this Agreement:
(a) "Contaminant" means those substances which are
regulated by or form the basis of liability under any
Environmental Laws, including, but not limited to, asbestos and
polychlorinated biphenyls ("PCBs");
(b) "Environmental Laws" means all applicable Federal,
state and local laws, regulations or ordinances relative to air
quality, water quality, solid waste management, hazardous or
toxic substances or the protection of health or the environment
including, but not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601, et seq.), the Hazardous Material
Transportation Act (49 U.S.C. Section 1801, et seq.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251, et seq.),
the
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Resource Conservation and Recovery Act of 1976, as amended (42
U.S.C. Section 6901, et seq.) ("RCRA"), the Clean Air Act, as
amended (42 U.S.C. Section 7401, et seq.), the Toxic Substances
Control Act, as amended (15 U.S.C. Section 2601, et seq.), the
Federal Insecticide, Fungicide, and Rodenticide Act, as amended
(7 U.S.C. Section 136, et seq.), the Clean Water Act of 1977, as
amended (33 U.S.C. Section 1251, et seq.), and the National
Environmental Policy Act of 1969, as amended (42 U.S.C. Section
4321, et seq.), and any analogous state or local statutes and the
regulations promulgated pursuant thereto;
(c) "Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the environment, including the
movement of any Contaminant or other substance through or in the
air, soil, surface water, groundwater or property; and
(d) "Remedial Action" means any action required under any
Environmental Laws to (i) clean up, remove, treat or in any other
way address any Contaminant or other substance in the
environment, (ii) prevent the Release or threat of Release or
minimize the further Release of any Contaminant or other
substance so it does not migrate or endanger or threaten to
endanger public health or welfare or the environment or (iii)
perform preremedial studies and investigations and post-remedial
monitoring and care.
SECTION 4.19. EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.19(a) of the Disclosure Schedules contains a
true and complete list and copies of each contract, agreement,
plan or arrangement which is an "employee benefit plan," as
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), currently maintained
by or on behalf of the Purchased Business covering the employees
of the Purchased Business or to which the Purchased Business is
currently obligated to contribute (collectively, the "Employee
Benefit Plans"). Except as disclosed on Schedule 4.19(a), with
respect to each Employee Benefit Plan:
(i) as to each such Employee Benefit Plan which is a
"pension plan" (within the meaning of ERISA section 3(2),
but not including a "multi-employer plan" within the
meaning of Section 3(37) of ERISA) (a "Pension Plan"), the
Pension Plan is qualified under section 401(a) of the
Internal Revenue Code (the "Code"), to the extent it is
intended to be so qualified, and complies in all respects
with ERISA;
(ii) a determination letter has been received from the
Internal Revenue Service (or an application for such
determination letter is currently pending) with respect to
the tax qualified status of each Pension Plan and the
Purchased Business has satisfied all conditions to which
each such determination letter is subject;
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(iii) no Pension Plan has an "accumulated funding
deficiency," whether or not waived, as defined in section
302(a)(2) of ERISA;
(iv) no "reportable event" within the meaning of
section 4043(b) of ERISA has occurred with respect to any
Pension Plan;
(v) no notice of intent to terminate any Pension Plan
that is subject to Subtitle B of Title IV of ERISA has been
provided to participants or filed with the Pension Benefit
Guaranty Corporation ("PBGC") under section 4041 of ERISA,
nor has the PBGC instituted any proceeding under section
4042 of ERISA to terminate any Pension Plan, nor has there
been, since January 1, 1976, any termination or partial
termination of any such Pension Plan within the meaning of
Section 411(d)(3) of the Code;
(vi) there has been no non-exempt "prohibited
transaction" within the meaning of Section 4975 of the Code
or Section 406 of ERISA with respect to any such Employee
Benefit Plan; and
(vii) all disclosures and filings respecting each such
plan required under ERISA or the Code has been timely
provided and each Employee Benefit Plan has been
administered in all respects in accordance with its
governing documents and is in compliance with all
applicable laws including, specifically, the Retirement
Equity Act of 1984 and the Consolidated Omnibus Budget
Reconciliation Act of 1985.
(b) Except as disclosed on Schedule 4.19(b), with respect
to each Employee Benefit Plan, there are no pending claims,
investigations or causes of action as to which the Purchased
Business has received notice and, to the best of Seller's
knowledge and the knowledge of the Purchased Business, no claims
are planned or threatened against any Employee Benefit Plan or
fiduciary of any Employee Benefit Plan by any participant,
beneficiary or governmental agency with respect to the
qualification or administration of any Employee Benefit Plan.
(c) Except as disclosed on Schedule 4.19(c), the Purchased
Business has no liability, jointly or otherwise, for (i) any
pension plan for which the Purchased Business or a member of the
Seller's controlled group (within the meaning of Section 4001(b)
of ERISA (a "Controlled Group") is or was a contributing sponsor
that is subject to Subtitle B of Title IV of ERISA, or (ii) any
withdrawal liability demanded or yet to be demanded under Title
IV of ERISA by any multi-employer plan within the meaning of
Section 3(37) of ERISA (a "Multi-Employer Plan") for a complete
or partial withdrawal from such Multi-Employer Plan for any
Controlled Group of which the Purchased Business is or was a
member.
(d) Except as disclosed on Schedule 4.19(d), neither Seller
nor the Purchased Business has made any representation to or
agreement with any of the
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employees of the Purchased Business (whether written or oral)
with respect to (i) the provision of any employee benefits by
Buyer or the Purchased Business beyond the Closing Date, or (ii)
the continuation of any benefits by Buyer or the Purchased
Business beyond the Closing Date under any of the Employee
Benefit Plans.
SECTION 4.20. LITIGATION; PRODUCT LIABILITY; WORKERS'
COMPENSATION.
(a) Except as disclosed on Schedule 4.20(a) of the
Disclosure Schedules, there is no litigation, suit, proceeding,
action, claim or investigation against the Purchased Business
before any governmental authority and there are no facts known to
Seller or the Purchased Business that might reasonably be
expected to result in any such litigation, suit, proceeding,
action, claim or investigation. The Purchased Business is not
subject to or in default with respect to any presently existing
order, writ, injunction, decree or written notice received by the
Purchased Business of any governmental authority.
(b) Except as disclosed on Schedule 4.20(b) of the
Disclosure Schedules, there have been no material warranty,
charge back or product liability claims made against the
Purchased Business for the three (3) year period prior to the
date of this Agreement.
(c) Except as disclosed on Schedule 4.20(c) of the
Disclosure Schedules, there are no workers' compensation claims
involving the Purchased Business for which any current or former
employee of the Purchased Business is receiving ongoing medical
or wage benefits.
SECTION 4.21. EMPLOYEES, CONSULTANTS AND INDEPENDENT CONTRACTORS.
(a) Set forth on Schedule 4.21(a) of the Disclosure
Schedules is a true and complete list of each person employed by
the Purchased Business as of seven (7) days prior to the Closing
Date which identifies each such person by name, social security
number, date of hire, current compensation, date of birth, sex
and status as an hourly or salaried employee. Schedule 4.21(a)
identifies persons who are not actively-at-work as of such date,
describes the date such inactive status commenced, the cause of
such inactive status at the date such inactive status commenced
(e.g. layoff, leave of absence or disability) and lists the
employee benefits, workers' compensation benefits and any other
compensation or benefits applicable to each such person as of the
Closing Date. For purposes of this Schedule 4.21(a), persons
absent due to vacation shall be considered to be
actively-at-work.
(b) Schedule 4.19(a) and Schedule 4.21(b) of the Disclosure
Schedules set forth a true and complete list and copies of all
agreements with any of the current or former employees,
consultants and independent contractors of the Purchased Business
to which the Seller is a party or by which it is bound and, in
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any such case, pursuant to which the Purchased Business has any
continuing obligations.
(c) Schedule 4.21(c) of the Disclosure Schedules sets forth
a true and complete list of all consultants and independent
contractors of the Purchased Business who had, during the twelve
(12) month period ended [December 31, 1996,] received
remuneration from the Purchased Business in excess of Twenty
Thousand Dollars ($20,000) together with the current compensation
for each such consultant and independent contractor, other than
legal and accounting.
SECTION 4.22. INSURANCE. Schedule 4.22 of the Disclosure
Schedules sets forth a true and complete list and copies of all policies of
liability, theft, fidelity, fire, product liability, workers' compensation and
other forms of insurance held by the Purchased Business, and specifies the
insurer, amount of coverage, type of insurance and policy numbers. Schedule 4.22
also sets forth any pending claims under such policies. The policies listed in
Schedule 4.22 are outstanding and in full force and effect and all premiums due
and payable with respect to such policies have been paid in full.
ARTICLE V
WARRANTIES AND REPRESENTATIONS OF BUYER
As a material inducement to Seller to enter into this Agreement
and to consummate the transactions contemplated by this Agreement, Buyer
represents and warrants to Seller as follows:
SECTION 5.01. ORGANIZATION; POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
Buyer has all the requisite corporate power and authority to own, lease and
operate its business as it is now being conducted and to enter into this
Agreement.
SECTION 5.02. AUTHORITY, NO VIOLATION, ETC. The execution and
delivery of this Agreement by Buyer and the consummation of the transactions
contemplated by this Agreement have been duly and validly authorized by all
necessary corporate action on the part of Buyer. This Agreement, and the other
agreements and documents to be executed and delivered by Buyer pursuant to the
provisions of this Agreement, constitute legal, valid and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective provisions
and conditions, except as enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles of general application affecting the rights of creditors
and (ii) general principles of equity affecting the right to specific
enforceability of any of the remedies contained herein and therein. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated by this Agreement and compliance by Buyer with the provisions of
this Agreement will not:
(a) conflict with or result in a breach of any provision of
the organizational documents of Buyer or result in a default or
give rise to any right of termination, cancellation or
acceleration under any of the provisions of any
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note, lien, bond, mortgage, indenture, license, lease, agreement
or other instrument or obligation to which Buyer is a party or by
which Buyer, any of its assets or its business may be bound,
except for such conflict, breach or default as to which valid
waivers or consents have been obtained;
(b) violate any judgment, order, writ, injunction or decree
of any court, administrative agency or governmental body
applicable to Buyer, its assets or its business; or
(c) cause, or give any person grounds to cause (with or
without notice, the passage of time, or both), the maturity of
any liability or obligation of Buyer to be accelerated or
increased.
All filings, consents and approvals of third parties and
governmental authorities required in connection with the execution and delivery
by Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated by this Agreement have been or will be obtained.
SECTION 5.03. NO LITIGATION. No action, suit or proceeding has
been instituted or, to the best knowledge of Buyer, is threatened to restrain or
prohibit or otherwise challenge the legality or validity of the transactions
contemplated by this Agreement.
ARTICLE VI
DELIVERIES AND CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
SECTION 6.01. DELIVERIES TO SELLER AT THE CLOSING. At the
Closing, and simultaneously with the deliveries to Buyer specified in Section
6.02 of this Agreement or as otherwise agreed, Buyer shall deliver or cause to
be delivered to Seller, or Seller's principals, the following:
(a) Payment of the Purchase Price at Buyer's sole option
and discretion as provided in any of Section 2.01(a)(i) or
Section 2.01(a)(ii) or Section 2.01(a)(iii);
(b) an Option to Seller permitting Seller or its
shareholders to purchase up to Forty Thousand (40,000) additional
shares of common stock of AAPC for a period of eighteen (18)
months at an exercise price of SIX DOLLARS FIFTY CENTS ($6.50)
per share in accordance with a certain Option Agreement; and
(c) payment by cash or certified check in the amount of
FIFTY-SIX THOUSAND DOLLARS ($56,000) to Doyco, Inc., Pension
Plan, which represents full payment on a note from Doyco, Inc.,
Pension Plan to the Seller; and
(d) payment by cash or certified check jointly to Seller
and the Oakland County Treasurer in such an amount which
represents full payment of
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Seller's obligation or liability for certain real estate or
personal property taxes payable to the Oakland County, Michigan,
Treasurer, which amounts shall be conveyed by Seller to the
Oakland County, Michigan, Treasurer, and all encumbrances on the
Owned Real Property or any of the Purchased Assets released at
that time.
(e) any other documents or instruments of conveyance and
transfer as Seller may reasonably request for the purpose of
assigning, transferring, granting, conveying and confirming the
sale of the Purchased Business and the Purchased Assets or any
part thereof to Buyer.
SECTION 6.02. DELIVERIES TO BUYER AT THE CLOSING. At the Closing,
and simultaneously with the deliveries to Seller specified in Section 6.01 of
this Agreement, Seller shall deliver or cause to be delivered to Buyer the
following:
(a) a duly executed Bill of Sale;
(b) UCC financing statements or similar instruments or
documents duly executed by any lienholders releasing their
security interests, if any, in the Purchased Assets;
(c) a duly executed Receipt;
(d) Non-Competition Agreements in form and substance
satisfactory to Buyer executed by Seller and each of the
principals of Seller and each shareholder of Seller. Said
Non-Competition Agreements shall provide that Seller and each
shareholder of Seller shall refrain from competing in any manner
with the business being acquired by Buyer;
(e) written documentation of the release of all liens
against the real property of Seller, including, but not limited
to written documentation of the release of all liens against the
real property of the Buyer, including documents indicating that
such releases have been recorded in the Oakland County Recorder's
Office;
(f) written documentation regarding the payment and
satisfaction of any and all tax liability to the City of Detroit
with regard to any issue, including specifically a certain
withholding tax dispute which has been disclosed to Buyer in
Schedule 4.03. To the extent Seller and/or its shareholders fail
to pay and satisfy any and all tax liability to the City of
Detroit at or prior to Closing, written documentation of said
payment and satisfaction of any and all tax liabilities to the
City of Detroit will be provided no later than December 31, 1997;
(g) a Waiver and Consent Agreement duly executed by each
stockholder of Team Pros America Corporation granting Seller all
the requisite
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corporate power and authority to sell, transfer, or otherwise
dispose of its interest in Team Pros America Corporation to
Buyer;
(h) all right, title and interest of Seller in the stock of
a certain corporation named Team Pros America Corporation,
including the stock certificates, together with fully executed
stock powers; and
(i) any other documents or instruments of conveyance and
transfer as Buyer may reasonably request for the purpose of
assigning, transferring, granting, conveying and confirming the
sale of the Purchased Business and the Purchased Assets or any
part thereof to Buyer.
SECTION 6.03. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The
obligations of Buyer under this Agreement shall, at the option of Buyer, be
subject to the satisfaction, on or prior to the Closing of the following
conditions:
(a) Buyer, in the exercise of its sole discretion, shall
have opted to exercise any of the three (3) payment options in
Section 2.01(a). The parties hereto recognize that whether the
consideration for the transactions contemplated by this Agreement
include payment of a Cash Purchase Price as defined in Section
2.01(a)(i) or (ii) or an Exchange of Assets for Stock, as
described in Section 2.01(a)(iii) and Section 2.02, that any
financing required to satisfy the Purchase Price described in
Section 2.01 to be received from Comerica Bank shall be in
accordance with Buyer's current commitment with Comerica Bank for
any such financing.
(b) There shall have been no material breach by Seller or
any shareholder in the performance of any of its covenants,
representations, warranties, and agreements herein; each of the
representations and warranties of Seller and shareholders
contained or referred to herein shall be true and correct in all
material respects on the Closing Date as though made on the
Closing Date, except for changes specifically permitted by this
Agreement or resulting from any transaction expressly consented
to in writing by the Buyer. There shall have been delivered to
the Buyer a certificate to such effect, dated the Closing date,
signed by each of the shareholders and by and on behalf of the
Seller.
(c) Between the date hereof and the Closing, there shall
have been
(i) no material adverse change in the Purchased
Business, Purchased Assets or the Seller's business or the
financial condition, property, prospects, operations,
liabilities, profits, or condition (financial or otherwise)
of Seller; and
(ii) Seller shall have made no capital expenditure in
excess of One Hundred Thousand Dollars ($100,000) in the
aggregate without prior written consent of Buyer; and
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(iii) Seller shall have made no increase in wages,
salaries or benefits to any principal, shareholder agent
and/or employee of Seller except for regularly scheduled
increases about which the Buyer has received prior notice;
and
(iv) there shall have been no material adverse federal
or state legislative or regulatory change effecting the
Purchased Business, the Purchased Assets or Seller's
operations, products or services; and
(v) there shall have been no material damage to the
Purchased Business or the Purchased Assets by fire, flood,
casualty, act of God, or the public enemy or other cause,
regardless of insurance coverage for such damage; and there
shall have been delivered to the Buyer a certificate to
such effect dated as of the Closing signed by each of the
shareholders and by and on behalf of Seller.
(d) There shall have been no action, suit, investigation or
proceeding instituted or threatened by any governmental or
regulatory agency to restrain, prohibit or otherwise challenge
the legality or validity of the transactions contemplated by this
Agreement.
(e) Parties shall have received all governmental and
regulatory approvals and actions necessary to consummate the
transactions contemplated by this Agreement.
(f) Seller shall have received consents, in form and
substance reasonably satisfactory to the Buyer, to the
transactions contemplated by this Agreement from all appropriate
governmental authorities and from the other parties to all
contracts, leases, agreements, and permits to which Seller or any
shareholder is a party or by which Seller, any shareholder or any
of the Purchased Assets are affected and which otherwise require
such consent prior to the Closing or, in the good faith judgment
of the Buyer, are necessary to prevent an adverse change in the
Purchased Business or Purchased Assets or in the operations,
liabilities, profits, prospects or condition (financial or
otherwise), of Seller.
(g) Seller and Seller's shareholders shall have executed a
Non-Competition Agreement in form and substance acceptable to
Buyer which provides that Seller and Seller's shareholders shall
refrain from competing in any manner with the Purchased Business
that Buyer is acquiring as part of this Agreement.
(h) Seller and Shareholders shall have received any and all
necessary waivers and consents from Team Pros America
Corporation, a Delaware corporation, and its stockholders to
permit Seller to transfer all of its right, title, and interest
in the stock of Team Pros America Corporation. Further, Seller
and shareholders shall comply with any and all other requirements
from Team Pros
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America Corporation as part of any Waiver and Consent Agreement.
Seller and shareholders also agree that their obligations under
the Waiver and Consent Agreement with Team Pros America
Corporation and its stockholders will survive the Closing of this
transaction.
(i) Seller and Shareholders shall have resolved any and all
tax disputes or audits with any federal, state, local or foreign
government agency and Seller and Shareholders shall have secured
and recorded any necessary releases to insure that none of the
purchased assets are encumbered as a result of any tax dispute or
liability of Seller or any of Shareholders.
(j) Seller shall have forgiven any and all debt from its
Shareholders at Closing, and Seller shall produce written
documentation regarding the forgiveness of the debt of the Seller
held by each Shareholder of Seller.
(k) All matters, proceedings, instruments, and documents
required to carry out this Agreement or incidental thereto and
all other relevant legal matters shall be reasonably satisfactory
to counsel for the Buyer.
ARTICLE VII
ADDITIONAL COVENANTS OF THE PARTIES
SECTION 7.01. FURTHER ASSURANCES. Seller, after the Closing,
without further consideration, shall execute, acknowledge and deliver any
further assignments, conveyances and other assurances, documents and instruments
of transfer, reasonably requested by Buyer, and shall take any other action
consistent with the terms of this Agreement that may reasonably be requested by
Buyer for the purpose of assigning, transferring, granting, conveying and
confirming the Purchased Business or the Purchased Assets or any part thereof to
Buyer.
SECTION 7.02. ACCESS TO RECORDS. For a period of five (5) years
after the Closing Date, Buyer shall retain or cause the Purchased Business to
retain and make the books and records of the Purchased Business available for
inspection by Seller or its duly authorized representatives and Seller and its
representatives shall have reasonable access to (including the right to make
copies), all of such books and records, to the extent that such access may
reasonably be required in connection with matters relating to or affected by the
operation of the Purchased Business or the Purchased Assets prior to the
Closing. Seller shall be solely responsible for any costs or expenses incurred
by it pursuant to this Section 7.02. After such five (5) year period, all such
records may be destroyed by Buyer or the Purchased Business, unless Seller
reasonably requests that such records be retained, at Seller's expense.
SECTION 7.03. PUBLIC STATEMENTS. Except for disclosures required
by applicable law and subject to the provisions of Section 10.14, Buyer and
Seller shall mutually agree upon the timing and content of any and all
announcements and public statements relating to the signing of this Agreement
and the transactions contemplated by this Agreement.
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SECTION 7.04. CHECKS AND DRAFTS. Seller shall honor (whether
presented before, on or after the Closing) all checks and drafts drawn by it on
or prior to the Closing to pay trade payables and accrued expenses of the
Purchased Business in conducting the Purchased Business in the ordinary course.
SECTION 7.05. EXERCISE OF PURCHASE PRICE OPTIONS. The parties
hereto recognize that a portion of the Purchase Price described in Section
2.01(a) provides Buyer with three (3) alternative payment options. The parties
hereto recognize that Buyer, in its sole discretion, may exercise any of these
three (3) payment options in Section 2.01(a). The parties also recognize that
whether the consideration for the transactions contemplated by this Agreement
include any financing required from Comerica Bank, said financing shall be in
accordance with Buyer's current commitment with Comerica Bank for any such
financing.
SECTION 7.06. ESCROW AGREEMENT. Seller agrees to the placement of
TWO HUNDRED THOUSAND DOLLARS ($200,000) of any Cash Purchase Price referenced in
Section 2.01(a)(i) or (ii) above, into an interest-bearing escrow account
pursuant to a certain Escrow Agreement, which shall be on terms and conditions
acceptable to Buyer, at its sole discretion (the "Escrow Agreement"). The Escrow
Agreement shall provide for the escrow of TWO HUNDRED THOUSAND DOLLARS
($200,000) to indemnify Buyer for damages pursuant to Article IX of this
Agreement. The Escrow Agreement shall provide for Buyer's Accountant to serve as
Escrow Agent. But for unforeseen circumstances in regard to such audit, the
Escrow Agreement shall terminate upon the earlier of thirty (30) days after the
completion of Seller's 1997 year-end financial audit or April 1, 1998.
ARTICLE VIII
BULK SALES COMPLIANCE
SECTION 8.01. BULK SALES COMPLIANCE. Each of Buyer, Seller, and
the Purchased Business have issued a notice in compliance with the provisions of
the applicable statutes relating to bulk transfers or bulk sales. In accordance
with the provisions of Section 9.01 of this Agreement, Seller and its
shareholders shall indemnify and hold Buyer harmless from and against any and
all losses, costs, damages, claims or expenses which Buyer may sustain by reason
of Seller's failure to provide accurate information in regard to compliance with
such bulk transfer or bulk sales provisions.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. INDEMNIFICATION BY SELLER AND SHAREHOLDERS. Subject
to the limitation contained in Section 9.07, below, Seller and its Shareholders
shall indemnify, defend and hold each of Buyer and the Purchased Business and
their respective successors, permitted assigns, shareholders, directors,
officers, employees and other affiliates (collectively, "Buyer's Indemnified
Persons") harmless from and against any loss, damage, liability, claim, action,
cause of action, regulatory, legislative or judicial proceedings or
investigations, assessments, levies, fines, penalties, costs and expenses
including, but not limited to, reasonable attorneys',
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<PAGE> 28
accountants', investigators' and experts' fees and expenses, reasonably
sustained or incurred in connection with the defense or investigation of any
such claim (collectively "Damages"), arising out of or in any way relating to:
(a) the failure by Seller or Shareholders to substantially
perform any of its material obligations under this Agreement;
(b) the failure by Seller or Shareholders to discharge when
due any Excluded Liability;
(c) any misrepresentation in or breach of the
representations and warranties of Seller or Shareholders or the
failure of Seller or its Shareholders to perform any of its
covenants or obligations contained in this Agreement or in any
instrument or document furnished or to be furnished by Seller
pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement;
(d) except for liabilities and obligations reflected in the
October 31, 1997, balance sheet and those liabilities and
obligations incurred since October 31, 1997, in the ordinary and
normal course of the Purchased Business consistent with prior
practice and disclosed to Buyer (the "Assumed Obligations"), the
operation of the Purchased Business on or prior to the Closing
Date, including all claims and proceedings the facts forming the
basis for which occurred on or prior to the Closing Date, whether
or not disclosed by Seller to Buyer;
(e) any actions, claims, suits or proceedings asserted by
third parties alleging personal injury or property damage due to,
arising out of, or by reason of the design, manufacture or use of
any products of the Purchased Business on or prior to the Closing
Date;
(f) any action, claim, suit, proceeding, or obligation of
Seller and/or shareholders with regard to any and all tax
filings, disputes, or audits with any federal, state, local, or
foreign government agency, regardless of whether Seller and
shareholders shall have disclosed issues with regard to any such
tax filings, disputes, or audits to Buyer;
(g) any workers' compensation claims of any employee or
former employee of the Purchased Business relating to events
occurring on or prior to the Closing Date;
(h) any Environmental Claim (as hereinafter defined)
arising under any of the Environmental Laws or any Remedial
Action arising pursuant to any of the Environmental Laws
including, but not limited to, investigation, remediation or
removal of any Contaminant arising out of or based upon the
operation of the Purchased Business on or prior to the Closing
Date (Buyer and Seller agreeing that the disclosures made
pursuant to Schedule 4.18 or any attachment thereto in
28
<PAGE> 29
no way limit the right of any of Buyer's Indemnified Persons to
indemnification under this Section 9.01);
(i) except for the Assumed Obligations, any and all claims
for compensation and other employee benefits (including, but not
limited to, severance pay, outplacement benefits, disability
benefits, health, retiree medical, workers' compensation, tuition
assistance, death benefits and pension and profit sharing plans
and claims relating to employment or termination of employment)
accruing on or prior to the Closing Date or on or after the
Closing Date with respect to the payment of severance benefits
and other welfare benefit payments, if any, with respect to (i)
employees of the Purchased Business who have ceased employment
with the Purchased Business on or prior to the Closing Date and
(ii) employees of the Purchased Business who, on the Closing
Date, are on medical leave, maternity leave, temporary lay-off or
disability and related costs and liabilities, regardless of
whether such claims and related costs and liabilities are made or
incurred before, on or after the Closing Date;
(j) except for the Assumed Obligations, all claims,
investigations by third parties other than Buyer, actions, suits,
proceedings, assessments, judgments, costs and expenses,
including reasonable attorneys' fees and expenses (incurred
thereon at trial and upon appeal), incident to the foregoing; or
(k) any misrepresentation in or failure to provide accurate
information or representations with regard to the due diligence
requests which preceded this Agreement or in any instrument or
document furnished or to be furnished by Seller pursuant to this
Agreement.
(l) any liability of the Seller and the Shareholders with
regard to the treatment of the transaction contemplated by this
Agreement as being a C reorganization within the meaning of
Section 368(a)(1)(C) of the Code.
Seller shall only be obligated to indemnify Buyer to the extent the above
amounts exceed the proceeds of Seller's insurance, if any, paid to Buyer
covering the claims or recoveries from third parties. Buyer and Seller mutually
agree to waive any right of subrogation against the other which might be
asserted by either party's insurer(s).
"Environmental Claim" means any notice of any violation, claim,
demand, abatement or other order (conditional or otherwise) by any governmental
authority or any person (other than Buyer's Indemnified Persons) for personal
injury (including sickness, disease or death), tangible or intangible property
damage, damage to the environment, nuisance, pollution, contamination or other
adverse affects on the environment or for fines, penalties or restrictions,
resulting from or based upon (i) the existence or the continuation of the
existence of a Release (including, but not limited to, sudden or non-sudden,
accidental or non-accidental Releases) of, or exposure to, any substance,
chemical, material, pollutant, Contaminant, odor or audible noise or other
release or emission in, into or onto the environment (including, but not limited
to, the air, ground, water or any surface) at, in, by, from or related to the
Purchased Business in amounts in excess of the applicable legal standards, (ii)
the environmental aspects of the
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<PAGE> 30
transportation, storage, treatment or disposal of Contaminants or other
substances in connection with the operation of the Purchased Business or (iii)
the violation, or alleged violation, of any presently enacted or pending
statutes, ordinances, orders, rules, regulations, Permits or licenses of or from
any governmental authority, agency or court relating to environmental matters
connected with the operation of the Purchased Business; provided, however, that
any of Buyer's Indemnified Persons shall have the right to pursue an
Environmental Claim against Seller in the event any of them suffer or incur any
bona fide personal injury or property damage.
SECTION 9.02. INDEMNIFICATION BY BUYER. Buyer shall indemnify,
defend and hold Seller and its successors or assigns (collectively, "Seller's
Indemnified Persons") harmless from and against any loss, damage, liability,
claim, action, cause of action, regulatory, legislative or judicial proceedings
or investigations, assessments, levies, fines, penalties, costs and expenses
including, but not limited to, reasonable attorneys', accountants',
investigators' and experts' fees and expenses, reasonably sustained or incurred
in connection with the defense or investigation of any such claim (collectively
"Damages"), arising out of or in any way relating to:
(a) any misrepresentation in or breach of the
representations and warranties of Buyer or the failure of Buyer
to perform any of its covenants or obligations contained in this
Agreement or in any instrument or document furnished or to be
furnished by Buyer pursuant to this Agreement or in connection
with the transactions contemplated by this Agreement;
(b) Any liabilities, obligations, claims, suits or
proceedings asserted by third parties due to, arising out of, or
by reason of the operation of the Purchased Business after the
Closing Date except for those items referred to in Section 9.01
of this Agreement;
(c) the Assumed Obligations; or
(d) all claims, investigations, actions, suits,
proceedings, demands, assessments, judgments, costs and expenses,
including reasonable attorneys' fees and expenses (incurred
thereon at trial and upon appeal), incident to the foregoing.
SECTION 9.03. NOTICE. If any person believes that he, she or it
has suffered or incurred any Damages, that person shall so notify the
indemnifying party promptly in writing describing such loss or expense, the
amount thereof, if known, and the method of computation of such Damages, all
with reasonable particularity to permit the indemnifying party to assess the
nature and cost of the claim. If any action at law, suit in equity or
administrative action is instituted by or against a third party with respect to
which any person intends to claim any liability or expense as Damages under this
Article IX, such person shall promptly notify the indemnifying party of such
action.
SECTION 9.04. DEFENSE OF CLAIMS. The indemnifying party shall
have thirty (30) calendar days after receipt of either notice referred to in
Section 9.03 of this Agreement to notify the indemnified party that it elects to
conduct and control any legal or administrative action or
30
<PAGE> 31
suit with respect to an indemnifiable claim. If the indemnifying party does not
give such notice, the indemnified person shall have the right to defend,
contest, settle or compromise such action or suit in the exercise of its
exclusive discretion, and the indemnifying party shall, upon request from the
indemnified person, promptly pay the indemnified person in accordance with the
other provisions of this Article IX the amount of any Damages resulting from its
liability to the third party claimant. If the indemnifying party gives such
notice, it shall have the right to undertake, conduct and control, through
counsel of its own choosing at its sole expense, the conduct and settlement of
such action or suit, and the indemnified person shall cooperate with the
indemnifying party in connection therewith; provided, however, that (a) the
indemnifying party shall not thereby permit to exist any lien, encumbrance or
other adverse charge securing the claims indemnified hereunder upon any asset of
the indemnified person, (b) the indemnifying party shall not thereby consent to
the imposition of any injunction against the indemnified person without the
written consent of the indemnified person, (c) the indemnifying party shall
permit the indemnified person to participate in such conduct or settlement
through counsel chosen by the indemnified person, but the fees and expenses of
such counsel shall be borne by the indemnified person except as provided in
clause (d) below, and (d) upon a final determination of such action or suit, the
indemnifying party shall agree promptly to reimburse to the extent required
under this Article IX (subject to the provisions of Section 9.07 of this
Agreement) the indemnified person for the full amount of any Damages resulting
from such action or suit and all reasonable and related expenses incurred by the
indemnified person, except fees and expenses of counsel for the indemnified
person incurred after the assumption of the conduct and control of such action
or suit by the indemnifying party. So long as the indemnifying party is
contesting any such action in good faith, the indemnified person shall not pay
or settle any such action or suit. Notwithstanding the foregoing, the
indemnified person shall have the right to pay or settle any such action or
suit, provided that in such event the indemnified person shall waive any right
to indemnity therefor from the indemnifying party and no amount in respect
therefor shall be claimed as Damages under this Article IX.
SECTION 9.05. ENVIRONMENTAL MATTERS. Seller shall, at its sole
expense and in the manner reasonably determined by Seller, conduct or direct any
environmental clean-up or remediation which is required by law after the date of
Closing for which Seller is responsible under this Agreement; provided, however,
Seller will provide Buyer with a complete copy of any governmental filing or
submission at the time it is made. Buyer agrees to cooperate with Seller in
connection with any such clean-up or remediation including, without limitation,
making relevant personnel and records available to Seller at all reasonable
times at a reasonable charge to be agreed upon between Buyer and Seller.
SECTION 9.06. COOPERATION. If requested by the indemnifying
party, the indemnified person shall cooperate with the indemnifying party and
its counsel in contesting any claim which the indemnifying party elects to
contest or, if appropriate, in making any counterclaim against the person
asserting the claim or any cross-complaint against any person and further agrees
to take such other action as reasonably may be requested by an indemnifying
party to reduce or eliminate any loss or expense for which the indemnifying
party would have responsibility, but the indemnifying party will reimburse the
indemnified person for any expenses incurred by it in so cooperating or acting
at the request of the indemnifying party.
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<PAGE> 32
SECTION 9.07. LIMITATION. Notwithstanding anything to the
contrary, Seller or its Shareholders shall have no liability to Buyer's
Indemnified Persons for indemnification under this Article IX unless and until
the aggregate amount of Damages exceeds ONE HUNDRED THOUSAND DOLLARS ($100,000).
In the event that the aggregate Damages exceed the ONE HUNDRED THOUSAND DOLLAR
($100,000) threshold, Seller shall have liability for indemnification under this
Article IX for Damages. A certain warranty issue was disclosed to Buyer prior to
Closing, and Seller has given a credit to a customer for THIRTY-FIVE THOUSAND
DOLLARS ($35,000). Said THIRTY-FIVE THOUSAND DOLLAR ($35,000) credit shall be
deducted from the ONE HUNDRED THOUSAND DOLLAR ($100,000) threshold. Accordingly,
as of the signing of this Agreement, THIRTY-FIVE THOUSAND DOLLARS ($35,000) in
damages have already been aggregated towards the ONE HUNDRED THOUSAND DOLLAR
($100,000) threshold. However, Seller's liability for indemnification under
Article IX for Damages shall not exceed EIGHT HUNDRED THOUSAND DOLLARS NO CENTS
($800,000). No claim or cause of action or asserted liability for
indemnification under this Article IX shall be valid if made after two (2)
years. Failure to institute a claim or cause of action within such period will
constitute an absolute bar to the institution of any proceedings or actions
based upon, and will constitute a waiver of, all the claims and/or causes of
action not so asserted.
Further, Seller has agreed, pursuant to the Escrow Agreement and Section 7.07 of
this Agreement, to escrow TWO HUNDRED THOUSAND DOLLARS ($200,000) of any Cash
Purchase Price referenced in Section 2.01(a)(i) or (ii) into an interest-bearing
escrow account for possible indemnification pursuant to Article IX of this
Agreement.
SECTION 9.08. PAYMENT OF DAMAGES. The indemnifying party shall
promptly pay to the indemnified person in immediately available funds the amount
of any Damages to which the indemnified person is entitled by reason of the
provisions of this Agreement. The parties covenant that any payment made
pursuant to this Article IX will be treated by the parties on their respective
tax returns as an adjustment to the Purchase Price.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. EXPENSES. Each of the parties shall pay all costs
and expenses incurred by it in negotiating and preparing this Agreement and in
Closing and carrying out the transactions contemplated by this Agreement. In
addition, Seller shall pay all costs and expenses incurred by the Purchased
Business in connection with carrying out the transactions contemplated by this
Agreement.
SECTION 10.02. HEADINGS. The subject headings of the Articles and
Sections of this Agreement are included for purposes of convenience only and
shall not affect the construction or interpretation of any of its provisions.
SECTION 10.03. ENTIRE AGREEMENT. This Agreement, including
preamble, recitals, and articles, as well as the Disclosure Schedules referred
to in this Agreement which form a part of this Agreement, and the instruments
and documents to be delivered by the parties
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<PAGE> 33
pursuant to the provisions of this Agreement, contain the entire understanding
of the parties with respect to the transactions contemplated by this Agreement.
There are no representations, warranties, covenants or undertakings other than
those expressly set forth or provided for in this Agreement and such other
instruments and documents. This Agreement supersedes all agreements and
understandings between the parties with respect to the transactions contemplated
by this Agreement.
SECTION 10.04. MODIFICATION AND WAIVER. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all the parties. The party for whose benefit a warranty,
representation, covenant or condition is intended may in writing waive any
inaccuracies in the warranties and representations contained in this Agreement
or waive compliance with any of the covenants or conditions contained in this
Agreement and so waive performance of any of the obligations of the other party
to this Agreement and any defaults under this Agreement; provided, however, that
such waiver shall not affect or impair the waiving party's rights with respect
to any other warranty, representation or covenant or any default under this
Agreement, nor shall any waiver constitute a continuing waiver.
SECTION 10.05. COUNTERPARTS. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. This Agreement may also be executed by facsimile signatures, each of
which shall be deemed an original.
SECTION 10.06. DISCLOSURE SCHEDULES. All Disclosure Schedules
attached to this Agreement are incorporated in this Agreement and made a part of
this Agreement in the same manner as if such schedules were set forth at length
in the text of this Agreement.
SECTION 10.07. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties and their
respective successors and assigns; provided, however, (a) neither this Agreement
nor any of the obligations under this Agreement may be assigned by Seller
without the prior written consent of Buyer and (b) Buyer may assign its rights
under this Agreement to lenders of the Buyer or the Purchased Business for
collateral security purposes. No such assignment shall relieve Buyer of any of
its obligations under this Agreement.
SECTION 10.08. NATURE AND SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. All representations and warranties made by any party to this
Agreement or pursuant to this Agreement and the indemnification rights and
obligations with respect thereto set forth in Article IX of this Agreement shall
survive the Closing Date for a period of four (4) years, at which time such
representations, warranties and indemnification rights and obligations with
respect thereto shall expire; provided, however, notwithstanding the foregoing,
(a) the rights and obligations with respect to indemnification as provided in
Article IX shall continue with respect to any matter for which indemnification
had been properly sought in writing prior to the expiration of such survival
period, (b) all representations and warranties as to the title of the Purchased
Business and the Purchased Assets set forth in Section 4.17 of this Agreement
and the indemnification rights and obligations with respect thereto shall
survive without any expiration and (c) all representations and warranties as to
environmental matters set forth in Section 4.18 of this Agreement and the
indemnification rights and obligations with respect
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thereto set forth in Article IX of this Agreement shall survive the Closing Date
for a period of seven (7) years.
SECTION 10.09. NOTICES. All notices, requests, demands and other
communications to be given under this Agreement shall be in writing and shall be
deemed given (a) on the date of service if served personally on the party to
whom notice is to be given, (b) on the date of receipt if delivered by telecopy
or nationally recognized overnight courier or (c) on the third (3rd) business
day after deposit in the U.S. mail if mailed to the party to whom notice is to
be given by certified or registered mail, return receipt required, postage
prepaid and properly addressed as follows:
If to Buyer: Modern Window Acquisition Corporation
755 Boardman-Canfield Road
Southbridge Executive Center
Building "G" West
Boardman, Ohio 44512
Attn: Frank J. Amedia, President
Telecopy No.: (330) 965-9915
with a copy to: Modern Window Acquisition Corporation
812 Huron Road, East, No. 880
Cleveland, Ohio 44115
Attn: James E. Phillips, Esq., Counsel
Telecopy No.: (216) 687-6740
if to Seller: Modern Window Corporation
Edmund H. Doyle
4463 Barchester Drive
Bloomfield Hills, MI 48302
Modern Window Corporation
Donald Lifton
1198 Charrington Drive
Bloomfield Hills, MI 48301
SECTION 10.10. GENDER. Any reference to the masculine, feminine
or neuter gender shall be deemed to include each other gender unless the context
otherwise requires.
SECTION 10.11. KNOWLEDGE OF SELLER AND THE PURCHASED BUSINESS. As
used in this Agreement, the phrase "to the knowledge of Seller and the Purchased
Business" or phrases of like import shall mean and be construed as the
collective knowledge of Seller and the officers of the Purchased Business
identified on Schedule 10.11 of the Disclosure Schedules.
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SECTION 10.12. GOVERNING LAW; DISPUTE RESOLUTION.
(a) This Agreement and all transactions contemplated by
this Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Ohio without giving
effect to the principles of conflicts of laws thereof.
(b) Any controversy, dispute or claim arising out of or
relating to this Agreement, including Article IX and questions
concerning the scope and applicability of this Section 10.12,
shall be settled by arbitration in Cuyahoga County, Ohio, in
accordance with the rules of commercial arbitration then followed
by the American Arbitration Association or any successor to the
functions thereof, except as set forth in Section 10.12(c). This
agreement to arbitrate shall be specifically enforceable against
each of the parties.
(c) When a matter has been submitted for arbitration,
within thirty (30) days of such submission, Buyer will choose an
arbitrator and Seller will choose an arbitrator, and an
additional arbitrator independent of the parties will be selected
unanimously by the two arbitrators chosen by the parties. The
dispute shall then be resolved by majority vote of the three
arbitrators. If the arbitrator chosen by Buyer and the arbitrator
chosen by Seller cannot agree upon a third independent arbitrator
within thirty (30) days of their appointment, the independent
third arbitrator will be selected according to the procedures of
the American Arbitration Association or any successor to the
function thereof.
(d) The parties hereto agree that an action to compel
arbitration pursuant to this Agreement may be brought in any
court of competent jurisdiction. Application may also be made to
any such court for confirmation of any decision or award of the
arbitrators, for an order of enforcement and for other remedies
which may be necessary to effectuate such decision or award. The
parties hereto hereby consent to the jurisdiction of the
arbitrators and of such court and waive any objection to the
jurisdiction of such arbitrator and court.
(e) One or more of the parties to any arbitration
proceeding commenced hereunder shall be entitled as a part of the
arbitration award to the costs and expenses (including reasonable
attorneys' fees and interest on any award) of investigating,
preparing and pursuing an arbitration claim as such costs and
expenses are awarded by the arbitration panel.
SECTION 10.13. SEVERABILITY. In the event that any of the
provisions of this Agreement are determined to be unenforceable by any court of
competent jurisdiction, the parties to this Agreement shall consider such
provisions amended and modified so as to eliminate such invalidity or
unenforceability and all other provisions shall remain in full force or effect
as originally written.
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SECTION 10.14. CONFIDENTIAL NATURE OF INFORMATION. Each party
shall treat in confidence all documents, materials, and other information which
it shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated by
this Agreement (whether obtained before or after the date of this Agreement) and
the preparation of this Agreement and other related documents. The obligation of
each party to treat such documents, materials and other information in
confidence shall not apply to any information which (a) such party can
demonstrate was already lawfully in its possession prior to the disclosure
thereof by the other party, (b) is known to the public and did not become so
known through any violation of a legal obligation, (c) became known to the
public through no fault of such party, (d) is later lawfully acquired by such
party from other sources, (e) is required to be disclosed under the provisions
of any Federal, state or local statute or regulation issued by a duly authorized
agency, board or commission thereof or (f) is required to be disclosed by a rule
or order of any court of competent jurisdiction. Each party agrees, if it
breaches any of the terms of this Section 10.14, it will consent to the issuance
of a temporary and/or permanent injunction by any court of competent
jurisdiction enjoining such party from continuing to breach the terms of this
Section 10.14. Notwithstanding the provisions of this Section, Buyer shall have
the right to disclose any information as it deems necessary in conjunction with
obtaining financing for the transactions contemplated in this Agreement or an
offer of securities of AAPC, including, without limitation, a description of the
Seller's business and products, an inclusion of financial statements, and other
financial information regarding the Seller, or the Purchased Business.
36
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Signature Page to Agreement
IN WITNESS WHEREOF, each of the parties to the Agreement has
executed this Agreement this 10th day of December 1997.
MODERN WINDOW CORPORATION
By: /s/ Edmund H. Doyle
------------------------------
Edmund H. Doyle
Its: Chairman
Seller
SHAREHOLDERS
By: /s/ Donald B. Lifton
------------------------------
Donald B. Lifton
By: /s/ Edmund H. Doyle
------------------------------
Edmund H. Doyle
By: /s/ Sheldon R. Stone
------------------------------
Sheldon R. Stone
MODERN WINDOW ACQUISITION
CORPORATION
By: /s/ Frank J. Amedia
------------------------------
Frank J. Amedia, President
Buyer
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The following schedules to the Agreement have been omitted from this
Exhibit 2.5. The Company agrees to furnish supplementally a copy of any omitted
schedule to the Securities ad Exchange Commission upon request.
Schedule 1.01 Voting securities or equity interests in other
entities
Schedule 1.01(o) Interest in Team Pros America Corporation stock
Schedule 1.03(a) Current Liabilities
Schedule 1.03(c) Doyco, Inc. Pension Plan demand note
Schedule 1.03(d) American Architectural Products Corporation working
capital loan
Schedule 1.03(f) Loan payoff letter
Schedule 4.02(a) Authority of Seller
Schedule 4.02(b) No Violations
Schedule 4.02(c) Third-Party Consents
Schedule 4.03 Tax Matters
Schedule 4.06 Leased Personal Property
Schedule 4.07 Financial Statements
Schedule 4.08 Inventories
Schedule 4.10(a) Material Contracts
Schedule 4.10(b) Prepayments or Defaults
Schedule 4.10(c) Indentures, Mortgages, et al.
Schedule 4.10(d) Full Performance of Prior Contracts
Schedule 4.11 Accounts and Notes Receivable
Schedule 4.12 Certain Transactions; Adverse Change
Schedule 4.13 Significant Customers and Significant Suppliers
Schedule 4.14 Warranties
Schedule 4.15 Licenses and Permits
Schedule 4.16 Intellectual Property
Schedule 4.17 Title to and Condition of Assets
Schedule 4.18 Environmental Matters
Schedule 4.19(a) Employee Benefit Plans
Schedule 4.19(b) Claims under Employee Benefit Plans
Schedule 4.19(c) Pension Plan or Withdrawal Liability
Schedule 4.19(d) Representatives with respect to Employee Benefit
Plans
Schedule 4.20(a) Litigation
Schedule 4.20(b) Warranty and Product Liability Claims
Schedule 4.20(c) Worker's Compensation Claims
Schedule 4.21(a) Employees
Schedule 4.21(b) Employment and Consulting Agreements
Schedule 4.21(c) Consultants and Independent Contractors
Schedule 4.22 Insurance Policies
<PAGE> 1
EXHIBIT 99.1
================================================================================
---------------------------------
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
as Issuer,
EAGLE & TAYLOR COMPANY,
FORTE, INC.,
WESTERN INSULATED GLASS, CO.,
THERMETIC GLASS, INC.,
BBPI ACQUISITION CORPORATION,
DCI/DCW ACQUISITION CORPORATION,
AMERICAN GLASSMITH ACQUISITION CORPORATION,
MODERN WINDOW ACQUISITION CORPORATION,
as Subsidiary Guarantors
and
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
$125,000,000
11 3/4% SENIOR NOTES DUE 2007, SERIES A
11 3/4% SENIOR NOTES DUE 2007, SERIES B
---------------------------------
--------------------
INDENTURE
Dated as of December 10, 1997
--------------------
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1)........................................... 7.10
(a)(2).......................................... 7.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A.
(a)(5).......................................... 7.10
(b)............................................. 7.10
(c)............................................. N.A.
311(a).............................................. 7.11
(b)............................................. 7.11
(c)............................................. N.A.
312(a).............................................. 2.05
(b)............................................. 11.03
(c)............................................. 11.03
313(a).............................................. 7.06
(a)(4).......................................... 4.04; 11.05
(b)(2).......................................... 7.06
(c)............................................. 7.06
(d)............................................. 7.06
314(a).............................................. 4.03
(b)............................................. N.A.
(c)(3).......................................... N.A.
(d)............................................. N.A.
(e)............................................. 11.05
(f)............................................. N.A.
- -----------------------
*This Cross-Reference Table is not part of the Indenture.
N.A. means not applicable.
(i)
<PAGE> 3
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY
REFERENCE.................................................... 1
SECTION 1.01. DEFINITIONS.................................................. 1
SECTION 1.02. OTHER DEFINITIONS............................................ 21
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE
ACT.......................................................... 22
SECTION 1.04. RULES OF CONSTRUCTION........................................ 22
ARTICLE 2 THE NOTES.................................................... 23
SECTION 2.01. FORM AND DATING.............................................. 23
SECTION 2.02. EXECUTION AND AUTHENTICATION................................. 24
SECTION 2.03. REGISTRAR AND PAYING AGENT................................... 24
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.......................... 25
SECTION 2.05. NOTEHOLDER LISTS............................................. 25
SECTION 2.06. TRANSFER AND EXCHANGE........................................ 26
SECTION 2.07. REPLACEMENT NOTES............................................ 26
SECTION 2.08. OUTSTANDING NOTES............................................ 27
SECTION 2.09. TREASURY NOTES............................................... 27
SECTION 2.10. TEMPORARY NOTES.............................................. 27
SECTION 2.11. CANCELLATION................................................. 28
SECTION 2.12. DEFAULTED INTEREST........................................... 28
SECTION 2.13. CUSIP NUMBER................................................. 28
SECTION 2.14. DEPOSIT OF MONEYS............................................ 29
SECTION 2.15. RESTRICTIVE LEGENDS.......................................... 29
SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTE........................ 31
SECTION 2.17. SPECIAL TRANSFER PROVISIONS.................................. 32
SECTION 2.18. PERSONS DEEMED OWNERS........................................ 34
SECTION 2.19. RECORD DATE.................................................. 35
ARTICLE 3 REDEMPTION................................................... 35
SECTION 3.01. NOTICES TO TRUSTEE........................................... 35
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED............................ 35
SECTION 3.03. NOTICE OF REDEMPTION......................................... 36
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION............................... 37
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.................................. 37
SECTION 3.06. NOTES REDEEMED IN PART....................................... 38
SECTION 3.07. OPTIONAL REDEMPTION.......................................... 38
(ii)
<PAGE> 4
SECTION 3.08. MANDATORY REDEMPTION......................................... 39
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS
PROCEEDS..................................................... 39
ARTICLE 4 COVENANTS.................................................... 41
SECTION 4.01. PAYMENT OF NOTES............................................. 41
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.............................. 41
SECTION 4.03. SEC REPORTS.................................................. 42
SECTION 4.04. COMPLIANCE CERTIFICATES...................................... 43
SECTION 4.05. TAXES........................................................ 44
SECTION 4.06. STAY, EXTENSION AND USURY LAWS............................... 44
SECTION 4.07. LIMITATION ON RESTRICTED PAYMENTS............................ 45
SECTION 4.08. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
RESTRICTED SUBSIDIARIES.................................... 47
SECTION 4.09. LIMITATION ON INDEBTEDNESS................................... 49
SECTION 4.10. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK........... 52
SECTION 4.11. LIMITATION ON AFFILIATE TRANSACTIONS......................... 54
SECTION 4.12. LIMITATION ON LIENS.......................................... 55
SECTION 4.13. CORPORATE EXISTENCE.......................................... 55
SECTION 4.14. CHANGE OF CONTROL............................................ 55
SECTION 4.15. LIMITATION ON ISSUANCES OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES.................................... 57
SECTION 4.16. LIMITATION ON REPAYMENT UPON A CHANGE OF
CONTROL.................................................... 57
SECTION 4.17. LIMITATION ON SALE/LEASEBACK
TRANSACTIONS............................................... 57
SECTION 4.18. LIMITATION ON DESIGNATIONS OF UNRESTRICTED
SUBSIDIARIES............................................... 58
SECTION 4.19. FURTHER INSTRUMENTS AND ACTS................................. 59
ARTICLE 5 SUCCESSORS................................................... 59
SECTION 5.01. LIMITATIONS ON MERGER, CONSOLIDATION OR SALE OF
ASSETS....................................................... 59
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED............................ 60
ARTICLE 6 DEFAULTS AND REMEDIES........................................ 61
SECTION 6.01. EVENTS OF DEFAULT............................................ 61
SECTION 6.02. ACCELERATION................................................. 63
SECTION 6.03. OTHER REMEDIES............................................... 63
SECTION 6.04. WAIVER OF PAST DEFAULTS...................................... 64
SECTION 6.05. CONTROL BY MAJORITY.......................................... 64
SECTION 6.06. LIMITATION ON SUITS.......................................... 64
SECTION 6.07. RIGHTS OF NOTEHOLDERS TO RECEIVE PAYMENT..................... 65
SECTION 6.08. COLLECTION SUIT BY TRUSTEE................................... 65
(iii)
<PAGE> 5
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM............................. 65
SECTION 6.10. PRIORITIES................................................... 66
SECTION 6.11. UNDERTAKING FOR COSTS........................................ 67
ARTICLE 7 TRUSTEE...................................................... 67
SECTION 7.01. DUTIES OF TRUSTEE............................................ 67
SECTION 7.02. RIGHTS OF TRUSTEE............................................ 69
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE................................. 70
SECTION 7.04. TRUSTEE'S DISCLAIMER......................................... 70
SECTION 7.05. NOTICE OF DEFAULTS........................................... 70
SECTION 7.06. REPORTS BY TRUSTEE TO NOTEHOLDERS............................ 70
SECTION 7.07. COMPENSATION AND INDEMNITY................................... 71
SECTION 7.08. REPLACEMENT OF TRUSTEE....................................... 72
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC............................. 73
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION................................ 73
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE
COMPANY.................................................... 74
ARTICLE 8 DISCHARGE OF INDENTURE....................................... 74
SECTION 8.01. DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE.................. 74
SECTION 8.02. CONDITIONS TO DEFEASANCE..................................... 75
SECTION 8.03. APPLICATION OF TRUST MONEY................................... 77
SECTION 8.04. REPAYMENT TO THE COMPANY..................................... 77
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS......................... 77
SECTION 8.06. REINSTATEMENT................................................ 77
ARTICLE 9 AMENDMENTS................................................... 78
SECTION 9.01. WITHOUT CONSENT OF NOTEHOLDERS............................... 78
SECTION 9.02. WITH CONSENT OF NOTEHOLDERS.................................. 79
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.......................... 81
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS............................ 81
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES............................. 82
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.............................. 82
ARTICLE 10 SUBSIDIARY GUARANTEE OF NOTES................................ 82
SECTION 10.01. SUBSIDIARY GUARANTEE......................................... 82
SECTION 10.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE............... 84
SECTION 10.03. SUBSIDIARY GUARANTEE UNCONDITIONAL, ETC...................... 84
SECTION 10.04. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY............... 85
SECTION 10.05. CONTRIBUTION................................................. 86
SECTION 10.06. RELEASE...................................................... 86
SECTION 10.07. ADDITIONAL SUBSIDIARY GUARANTORS............................. 87
SECTION 10.08. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON
CERTAIN TERMS.............................................. 87
(iv)
<PAGE> 6
SECTION 10.09. SUCCESSORS AND ASSIGNS...................................... 88
SECTION 10.10. WAIVER OF STAY, EXTENSION OR USURY LAWS..................... 88
ARTICLE 11 MISCELLANEOUS............................................... 88
SECTION 11.01. TRUST INDENTURE ACT CONTROLS................................ 88
SECTION 11.02. NOTICES..................................................... 89
SECTION 11.03. COMMUNICATION BY NOTEHOLDERS WITH OTHER
NOTEHOLDERS............................................... 90
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT................................................. 90
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION............... 90
SECTION 11.06. RULES BY TRUSTEE AND AGENTS................................. 91
SECTION 11.07. LEGAL HOLIDAYS.............................................. 91
SECTION 11.08. NO RECOURSE AGAINST OTHERS.................................. 91
SECTION 11.09. DUPLICATE ORIGINALS......................................... 92
SECTION 11.10. GOVERNING LAW............................................... 92
SECTION 11.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS............... 92
SECTION 11.12. SUCCESSORS.................................................. 92
SECTION 11.13. SEVERABILITY................................................ 92
SECTION 11.14. COUNTERPART ORIGINALS....................................... 92
SECTION 11.15. TABLE OF CONTENTS, HEADINGS, ETC............................ 93
EXHIBIT A - FORM OF INITIAL NOTE
EXHIBIT B - FORM OF EXCHANGE NOTE
EXHIBIT C - FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS TO NON-QIB
ACCREDITED INVESTORS
EXHIBIT D - FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS PURSUANT TO
REGULATION S
(v)
<PAGE> 7
INDENTURE, dated as of December 10, 1997, among American
Architectural Products Corporation, a Delaware corporation (the "Company"), each
of Eagle & Taylor Company, Forte, Inc., Western Insulated Glass, Co., Thermetic
Glass, Inc., BBPI Acquisition Corporation, DCI/DCW Acquisition Corporation,
American Glassmith Acquisition Corporation and Modern Window Acquisition
Corporation, as Subsidiary Guarantors (as defined) of the Company's obligations
hereunder, and United States Trust Company of New York, a banking corporation
organized and existing under the laws of the State of New York, in its capacity
as trustee (the "Trustee").
The Company has duly authorized the creation of an issue of
11 3/4% Senior Notes due 2007, Series A (the "Initial Notes") and 11 3/4% Senior
Notes due 2007, Series B (the "Exchange Notes") and, to provide therefor, the
Company and the Subsidiary Guarantors have duly authorized the execution and
delivery of this Indenture. All things necessary to make the Notes (as defined),
when duly issued and executed by the Company, and authenticated and delivered
hereunder, the valid obligations of the Company and the Subsidiary Guarantors
have, and to make this Indenture a valid and binding agreement of the Company
and the Subsidiary Guarantors, have been done.
The Company, the Subsidiary Guarantors and the Trustee agree
as follows for the benefit of each other and for the equal and ratable benefit
of the Holders of the Notes:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in a Permitted Business; (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or a Restricted Subsidiary of
the Company; (iii) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary of the Company; or (iv) Permitted
Investments of the type and in the amounts described in clause (viii) of the
definition thereof; provided, however, that, in the case of clauses (ii) and
(iii), such Restricted Subsidiary is primarily engaged in a Permitted Business.
<PAGE> 8
"Adjusted Net Assets" of a Subsidiary Guarantor at any date
shall mean the lesser of the amount by which (x) the fair value of the property
of such Subsidiary Guarantor exceeds the total amount of liabilities, including,
without limitation, the probable liability of such Subsidiary Guarantor with
respect to its contingent liabilities (after giving effect to all other fixed
and contingent liabilities incurred or assumed on such date), but excluding
liabilities under the Subsidiary Guarantee, of such Subsidiary Guarantor at such
date and (y) the present fair salable value of the assets of such Subsidiary
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Subsidiary Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities Incurred or assumed on such
date and after giving effect to any collection from any Subsidiary by such
Subsidiary Guarantor in respect of the obligations of such Subsidiary under the
Subsidiary Guarantee), excluding debt in respect of the Subsidiary Guarantee, as
they become absolute and matured.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Disposition" means any sale, lease, transfer, issuance
or other disposition (or series of related sales, leases, transfers, issuances
or dispositions that are part of a common plan) of shares of Capital Stock of
(or any other equity interests in) a Restricted Subsidiary (other than
directors' qualifying shares) or of any other property or other assets (each
referred to for the purposes of this definition as a "disposition") by the
Company or any of its Restricted Subsidiaries (including any disposition by
means of a merger, consolidation or similar transaction) other than (i) a
disposition by a Restricted Subsidiary to the Company or by the Company or a
Restricted Subsidiary to a Wholly-Owned Subsidiary, (ii) a disposition of
inventory in the ordinary course of business, (iii) a disposition of obsolete or
worn out equipment or equipment that is no longer useful in the conduct of the
business of the Company and its Restricted Subsidiaries and that is disposed of
in each case in the ordinary course of business, (iv) dispositions of property
for net proceeds which, when taken collectively with the net proceeds of any
other such dispositions under this clause (iv) that were consummated since the
beginning of the calendar year in which such disposition is consummated, do not
exceed $1 million, and (v) transactions permitted under Section 5.01.
Notwithstanding anything to the contrary contained above, a Restricted Payment
made in compliance with Section 4.07 shall not constitute an Asset Disposition
except for purposes of determinations of the Consolidated Coverage Ratio.
-2-
<PAGE> 9
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Notes, compounded annually) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the product of the numbers of years (rounded upwards to
the nearest month) from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness or redemption or
similar payment with respect to Preferred Stock multiplied by the amount of such
payment by (ii) the sum of all such payments.
"Bankruptcy Code" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person duly authorized, with respect to any particular matter, to exercise
the power of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and to
be in full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP, and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date such lease may be terminated without penalty.
-3-
<PAGE> 10
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully Guaranteed or insured by the United
States government or any agency or instrumentality thereof, (iii) certificates
of deposit, time deposits and eurodollar time deposits with maturities of one
year or less from the date of acquisition, bankers' acceptances with maturities
not exceeding one year and overnight bank deposits, in each case with any
commercial bank having capital and surplus in excess of $500 million, (iv)
repurchase obligations for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated A-1
or the equivalent thereof by Moody's or S&P and in each case maturing within one
year after the date of acquisition, (vi) investment funds investing 95% of their
assets in securities of the types described in clauses (i)-(v) above, (vii)
readily marketable direct obligations issued by any state of the United States
of America or any political subdivision thereof having one of the two highest
rating categories obtainable from either Moody's or S&P and (viii) Indebtedness
or Preferred Stock issued by Persons with a rating of "A" or higher from S&P or
"A2" or higher from Moody's.
"Change of Control" means (i) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all of the assets of the Company and its Subsidiaries; or (ii)
a majority of the Board of Directors of the Company or of any direct or indirect
holding company thereof shall consist of Persons who are not Continuing
Directors of the Company; or (iii) the acquisition by any Person or Group (other
than the Management Group) of the power, directly or indirectly, to vote or
direct the voting of securities having more than 35% of the ordinary voting
power for the election of directors of the Company or of any direct or indirect
holding company thereof; provided that no Change of Control shall be deemed to
occur pursuant to this clause (iii) so long as the Management Group owns an
amount of securities representing the power, directly or indirectly, to vote or
direct the voting of securities having more than 50.0% of the ordinary voting
power for the election of directors of the Company or of any direct or indirect
holding company thereof.
"Commission" means the U.S. Securities and Exchange Commission
or its successor.
"Common Stock" means the common stock of the Company, par
value $.001 per share.
"Company" means American Architectural Products Corporation, a
Delaware corporation, until a successor replaces it in accordance with Article 5
hereof and thereafter means the successor.
-4-
<PAGE> 11
"Consolidated Cash Flow" for any period means the Consolidated
Net Income for such period, plus the following to the extent deducted in
calculating such Consolidated Net Income: (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization
expense, and (v) all other non-cash items reducing Consolidated Net Income
(excluding any non-cash item to the extent it represents an accrual of or
reserve for cash disbursements for any subsequent period prior to the stated
maturity of the Notes) and less, (x) the aggregate amount of contingent and
"earnout" payments in respect of any Permitted Business acquired by the Company
or any Restricted Subsidiary that are paid in cash during such period and (y) to
the extent added in calculating Consolidated Net Income, non-cash items
(excluding such non-cash items to the extent they represent an accrual for cash
receipts reasonably expected to be received prior to the Stated Maturity of the
Notes), in each case for such period. Notwithstanding the foregoing, the income
tax expense, depreciation expense and amortization expense of a Subsidiary of
the Company shall be included in Consolidated Cash Flow only to the extent (and
in the same proportion) that the net income of such Subsidiary was included in
calculating Consolidated Net Income.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination and as to which financial statements are available to
(ii) Consolidated Interest Expense for such four fiscal quarters; provided,
however, that (A) if the Company or any of its Restricted Subsidiaries has
Incurred any Indebtedness since the beginning of such period and through the
date of determination of the Consolidated Coverage Ratio that remains
outstanding or if the transaction giving rise to the need to calculate
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to (1) such Indebtedness
as if such Indebtedness had been Incurred on the first day of such period
(provided that if such Indebtedness is Incurred under a revolving credit
facility (or similar arrangement or under any predecessor revolving credit or
similar arrangement) only that portion of such Indebtedness that constitutes the
one year projected average balance of such Indebtedness (as determined in good
faith by the Board of Directors of the Company) shall be deemed outstanding for
purposes of this calculation), and (2) the discharge of any other Indebtedness
repaid, repurchased, defeased or otherwise discharged with the proceeds of such
new Indebtedness as if such discharge had occurred on the first day of such
period, (B) if since the beginning of such period any Indebtedness of the
Company or any of its Restricted Subsidiaries has been repaid, repurchased,
defeased or otherwise discharged (other than Indebtedness under a revolving
credit or similar arrangement unless such revolving credit Indebtedness has been
permanently repaid and the underlying commitment terminated and has not been
replaced), Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such Indebtedness had been repaid,
repurchased, defeased or otherwise discharged on the first day of such period,
(C) if since
-5-
<PAGE> 12
the beginning of such period the Company or any of its Restricted Subsidiaries
shall have made any Asset Disposition or if the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio is an Asset Disposition,
Consolidated Cash Flow for such period shall be reduced by an amount equal to
the Consolidated Cash Flow (if positive) attributable to the assets which are
the subject of such Asset Disposition for such period or increased by an amount
equal to the Consolidated Cash Flow (if negative) attributable thereto for such
period, and Consolidated Interest Expense for such period shall be (i) reduced
by an amount equal to the Consolidated Interest Expense attributable to any
Indebtedness of the Company or any of its Restricted Subsidiaries repaid,
repurchased, defeased or otherwise discharged with respect to the Company and
its continuing Restricted Subsidiaries in connection with such Asset Disposition
for such period (or, if the Capital Stock of any Restricted Subsidiary of the
Company is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale) and (ii) increased by interest income attributable
to the assets which are the subject of such Asset Disposition for such period,
(D) if since the beginning of such period the Company or any of its Restricted
Subsidiaries (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary of the Company (or any Person which becomes a Restricted
Subsidiary of the Company as a result thereof) or an acquisition of assets
occurring in connection with a transaction causing a calculation to be made
hereunder which constitutes all or substantially all of an operating unit of a
business, Consolidated Cash Flow and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including the
incurrence of any Indebtedness) as if such Investment or acquisition occurred on
the first day of such period and (E) if since the beginning of such period any
Person that subsequently became a Restricted Subsidiary of the Company or was
merged with or into the Company or any Restricted Subsidiary of the Company
since the beginning of such period shall have made any Asset Disposition,
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (C) or (D) above if made by the Company or a Restricted
Subsidiary of the Company during such period, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or acquisition
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition of assets, the amount
of income or earnings relating thereto and the amount of Consolidated Interest
Expense associated with any Indebtedness Incurred in connection therewith, the
pro forma calculations shall be determined in good faith by a responsible
financial or accounting officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period (taking
into account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months).
-6-
<PAGE> 13
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its Restricted Subsidiaries determined
in accordance with GAAP, plus, to the extent not included in such interest
expense (i) interest expense attributable to Capitalized Lease Obligations, (ii)
amortization of debt discount, (iii) capitalized interest, (iv) non-cash
interest expense, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi)
interest actually paid by the Company or any such Restricted Subsidiary under
any Guarantee of Indebtedness or other obligation of any other Person, (vii) net
payments (whether positive or negative) pursuant to Interest Rate Agreements,
(viii) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Indebtedness Incurred by such plan or trust and (ix) cash and Disqualified Stock
dividends in respect of all Preferred Stock of Subsidiaries and Disqualified
Stock of the Company held by Persons other than the Company or a Wholly-Owned
Subsidiary and less (a) to the extent included in such interest expense, the
amortization of capitalized debt issuance costs and (b) interest income.
Notwithstanding the foregoing, the Consolidated Interest Expense with respect to
any Restricted Subsidiary of the Company that was not a Wholly-Owned Subsidiary
shall be included only to the extent (and in the same proportion) that the net
income of such Restricted Subsidiary was included in calculating Consolidated
Net Income.
"Consolidated Net Income" means, for any period, the
consolidated net income (loss) of the Company and its consolidated Subsidiaries
determined in accordance with GAAP; provided, however, that there shall not be
included in such Consolidated Net Income: (i) any net income (loss) of any
Person acquired by the Company or any of its Restricted Subsidiaries in a
pooling of interests transaction for any period prior to the date of such
acquisition, (ii) any net income of any Restricted Subsidiary of the Company if
such Restricted Subsidiary is subject to restrictions, directly or indirectly,
on the payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company (other than restrictions in
effect on the Issue Date with respect to a Restricted Subsidiary of the Company
and other than restrictions that are created or exist in compliance with Section
4.08), (iii) any gain or loss realized upon the sale or other disposition of any
assets of the Company or its consolidated Restricted Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) which are not sold or otherwise
disposed of in the ordinary course of business and any gain or loss realized
upon the sale or other disposition of any Capital Stock of any Person, (iv) any
extraordinary gain or loss, (v) the cumulative effect of a change in accounting
principles, (vi) the net income of any Person, other than a Restricted
Subsidiary, except to the extent of the lesser of (A) cash dividends or
distributions actually paid to the Company or any of its Restricted Subsidiaries
by such Person and (B) the net income of such Person (but in no event less than
zero), and the net loss of such Person (other than an Unrestricted Subsidiary)
shall be included only to the extent of the aggregate Investment of the Company
or any of its Restricted
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<PAGE> 14
Subsidiaries in such Person and (vii) any non-cash expenses attributable to
grants or exercises of employee stock options. Notwithstanding the foregoing,
for the purpose of Section 4.07 only, there shall be excluded from Consolidated
Net Income any dividends, repayments of loans or advances or other transfers of
assets from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary
to the extent such dividends, repayments or transfers increase the amount of
Restricted Payments permitted under such covenant pursuant to clause (a) (3) (D)
thereof.
"Consolidated Net Worth" means, the total of the amounts shown
on the balance sheet of the Company and its consolidated Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
the end of the most recent fiscal quarter of the Company ending prior to the
taking of any action for the purpose of which the determination is being made
and for which financial statements are available (but in no event ending more
than 135 days prior to the taking of such action), as (i) the par or stated
value of all outstanding Capital Stock of the Company plus (ii) paid in capital
or capital surplus relating to such Capital Stock plus (iii) any retained
earnings or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Continuing Director" of any Person means, as of the date of
determination, any Person who (i) was a member of the Board of Directors of such
Person on the date of this Indenture or (ii) was nominated for election or
elected to the Board of Directors of such Person with the affirmative vote of a
majority of the Continuing Directors of such Person who were members of such
Board of Directors at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 11.02 or such other address as to
which the Trustee may give notice to the Company.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Disqualified Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event (other than an event
which would constitute a Change of Control), (i) matures (excluding any maturity
as the result of an optional redemption by the
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<PAGE> 15
issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the Stated Maturity of the Notes, or (ii) is
convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (a) debt securities or (b) any Capital Stock referred to in (i)
above, in each case at any time prior to the Stated Maturity of the Notes.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means an offering for cash by the Company of
Common Stock, or options, warrants or rights with respect to Common Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto, and the rules and
regulations of the Commission promulgated thereunder.
"Exchange Notes" has the meaning set forth in the preamble to
this Indenture.
"Exchange Offer" means the registration by the Company under
the Securities Act pursuant to a registration statement of the offer by the
Company to each Noteholder of the Initial Notes to exchange all the Initial
Notes held by such Noteholder for the Exchange Notes in an aggregate principal
amount equal to the aggregate principal amount of the Initial Notes held by such
Noteholder, all in accordance with the terms and conditions of the Notes
Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company or
its Restricted Subsidiaries in existence on the Issue Date, plus interest
accrued thereon, after application of the net proceeds of the sale of the Notes
as described in the Offering Memorandum.
"fair market value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length, free market
transaction, for cash, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors of
the Company acting reasonably and in good faith and shall be evidenced by a
Board Resolution of the Board of Directors of the Company delivered to the
Trustee.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the date of this Indenture,
including those set forth in the
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<PAGE> 16
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession.
All ratios and computations based on GAAP contained in the Indenture shall be
computed in conformity with GAAP.
"Group" shall mean any "group" for purposes of Section 13(d)
of the Exchange Act.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter incurred) which is expressly
subordinate or junior in right of payment to the obligations of such Subsidiary
Guarantor under the Subsidiary Guarantee pursuant to a written agreement.
"Incur" means issue, assume, guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication), (i) the principal of and premium (if
any) in respect of indebtedness of such Person for borrowed money, (ii) the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto) (other
than obligations with respect to letters of credit securing obligations (other
than obligations described in clauses (i), (ii) and (v)) entered into in the
ordinary course of business of such Person to the extent that such letters of
credit are not drawn upon or, if and to the extent
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<PAGE> 17
drawn upon, such drawing is reimbursed no later than the third business day
following receipt by such Person of a demand for reimbursement following payment
on the letter of credit), (iv) all obligations of such Person to pay the
deferred and unpaid purchase price of property or services (except (x) trade
payables and accrued expenses Incurred in the ordinary course of business and
(y) contingent or "earnout" payment obligations in respect of any Permitted
Business acquired by the Company or any Restricted Subsidiary), which purchase
price is due more than six months after the date of placing such property in
service or taking delivery and title thereto or the completion of such services,
(v) all Capitalized Lease Obligations and all Attributable Indebtedness of such
Person, (vi) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person, (vii)
all Indebtedness of other Persons to the extent Guaranteed by such Person,
(viii) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or, with
respect to any Restricted Subsidiary of the Company, any Preferred Stock of such
Restricted Subsidiary to the extent such obligation arises on or before the
Stated Maturity of the Notes (but excluding, in each case, accrued dividends)
with the amount of Indebtedness represented by such Disqualified Stock or
Preferred Stock, as the case may be, being equal to the greater of its voluntary
or involuntary liquidation preference and its maximum fixed repurchase price;
provided that, for purposes hereof the "maximum fixed repurchase price" of any
Disqualified Stock or Preferred Stock, as the case may be, which does not have a
fixed repurchase price shall be calculated in accordance with the terms of such
Disqualified Stock or Preferred Stock, as the case may be, as if such
Disqualified Stock or Preferred Stock, as the case may be, were purchased on any
date on which Indebtedness shall be required to be determined pursuant to the
Indenture, and if such price is based on the fair market value of such
Disqualified Stock or Preferred Stock, as the case may be, such fair market
value shall be determined in good faith by the Board of Directors of the Company
and (ix) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements. Unless specifically set
forth above, the amount of Indebtedness of any Person at any date shall be the
outstanding principal amount of all unconditional obligations as described
above, as such amount would be reflected on a balance sheet prepared in
accordance with GAAP, and the maximum liability of such Person, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations described above at such date.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Initial Notes" has the meaning set forth in the preamble to
this Indenture.
"Initial Purchasers" means NatWest Capital Markets Limited and
McDonald & Company Securities, Inc.
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<PAGE> 18
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Notes, which shall be June 1 and December 1 of
each year, commencing June 1, 1998.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts payable on the balance sheet of such
Person) or other extension of credit (including by way of Guarantee or similar
arrangement, but excluding any debt or extension of credit represented by a bank
deposit other than a time deposit) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such Person.
For purposes of Section 4.07, (i) "Investment" shall include the portion
(proportionate to the Company's equity interest in a Restricted Subsidiary to be
designated as an Unrestricted Subsidiary) of the fair market value of the net
assets of such Restricted Subsidiary of the Company at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time that such Subsidiary is so redesignated a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors and
evidenced by a resolution of such Board of Directors certified in an Officers'
Certificate to the Trustee.
"Issue Date" means the date on which the Notes and the
Subordinated PIK Debentures are originally issued.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
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<PAGE> 19
"Management Group" means George S. Hofmeister, Frank J. Amedia
and AAP Holdings, Inc. and each member of the immediate family of any of the
foregoing natural persons and any trust or similar device created for the
benefit of any one or more of the foregoing and each Person which acquires a
direct or indirect beneficial ownership interest in shares of Capital Stock of
the Company as an executor or administrator for or by way of inheritance or
bequest from one or more of the foregoing natural persons following the death of
such Person.
"Maturity Date" means December 1, 2007.
"Moody's" means Moody's Investors Service, Inc., or its
successor.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to the properties or assets subject to such Asset
Disposition) therefrom in each case net of (i) all legal, title and recording
tax expenses, commissions and other fees and expenses incurred, and all Federal,
state, foreign and local taxes required to be paid or accrued as a liability
under GAAP, as a consequence of such Asset Disposition, (ii) all distributions
and other payments required to be made to any Person owning a beneficial
interest in assets subject to sale or minority interest holders in Subsidiaries
or joint ventures as a result of such Asset Disposition, (iii) the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the assets disposed of in
such Asset Disposition, provided, however, that upon any reduction in such
reserves (other than to the extent resulting from payments of the respective
reserved liabilities), Net Available Cash shall be increased by the amount of
such reduction to reserves, and retained by the Company or any Restricted
Subsidiary of the Company after such Asset Disposition and (iv) any portion of
the purchase price from an Asset Disposition placed in escrow (whether as a
reserve for adjustment of the purchase price, for satisfaction of indemnities in
respect of such Asset Disposition or otherwise in connection with such Asset
Disposition), provided, however, that upon the termination of such escrow, Net
Available Cash shall be increased by any portion of funds therein released to
the Company or any Restricted Subsidiary.
"Net Cash Proceeds," with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
Incurred in connection with such issuance or sale and net of taxes paid or
payable as a result of such issuance or sale.
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<PAGE> 20
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any Restricted Subsidiary (a) provides any Guarantee or credit
support of any kind (including any undertaking, guarantee, indemnity, agreement
or instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as a guarantor, general partner or otherwise) and (ii) no
default with respect to which (including any rights that the holders thereof may
have to take enforcement action against an Unrestricted Subsidiary) would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S of the Securities Act.
"Noteholder" or "Holder" means a registered holder of one or
more Notes.
"Note Register" means the register of names and addresses of
the Holders of the Notes maintained by the Registrar.
"Notes" means the Initial Notes and the Exchange Notes treated
as a single class of securities, as amended or supplemented from time to time in
accordance with the terms hereof, that are issued pursuant to this Indenture.
"Notes Registration Rights Agreement" means the Notes
Registration Rights Agreement dated as of December 10, 1997 among the Company
and the Initial Purchasers for the benefit of themselves and the Noteholders, as
the same may be amended or modified from time to time in accordance with the
terms thereof.
"Obligations" means any principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated
December 5, 1997, pursuant to which the Initial Notes were offered, and any
supplements thereto.
"Officer" means the Chairman of the Board, the Vice-Chairman
of the Board, the Chief Executive Officer, the Chief Financial Officer, the
President, any Vice-President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by two
Officers of the Company, at least one of whom shall be the principal executive,
financial or accounting officer of the Company.
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<PAGE> 21
"Offshore Physical Notes" has the meaning provided in Section
2.01.
"Opinion of Counsel" means a written opinion, in form and
substance acceptable to the Trustee, from legal counsel who is acceptable to the
Trustee. Such legal counsel may be an employee of or counsel to the Company or
the Trustee.
"Permitted Business" means any business which is the same as
or related, ancillary or complementary to any of the businesses of the Company
and its Restricted Subsidiaries on the date hereof, as reasonably determined by
the Company's Board of Directors.
"Permitted Investment" means an Investment by the Company or
any of its Restricted Subsidiaries in (i) a Wholly-Owned Subsidiary of the
Company; provided, however, that the primary business of such Wholly-Owned
Subsidiary is a Permitted Business; (ii) another Person if as a result of such
Investment such other Person becomes a Wholly-Owned Subsidiary of the Company or
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Wholly-Owned Subsidiary of the
Company; provided, however, that in each case such Person's primary business is
a Permitted Business; (iii) Temporary Cash Investments; (iv) receivables owing
to the Company or any of its Restricted Subsidiaries, created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; (v) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of
business; (vi) loans and advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary in an aggregate amount outstanding at any one time not to exceed
$250,000 to any one employee or $1.0 million in the aggregate; (vii) stock,
obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any of its Restricted
Subsidiaries or in satisfaction of judgments or claims; (viii) a Person engaged
in a Permitted Business or a loan or advance by the Company the proceeds of
which are used solely to make an investment in a Person engaged in a Permitted
Business or a Guarantee by the Company of Indebtedness of any Person in which
such Investment has been made; provided, however, that no Permitted Investments
may be made pursuant to this clause (viii) to the extent the amount thereof
would, when taken together with all other Permitted Investments made pursuant to
this clause (viii), exceed $5.0 million in the aggregate (plus, to the extent
not previously reinvested, any return of capital realized on Permitted
Investments made pursuant to this clause (viii), or any release or other
cancellation of any Guarantee constituting such Permitted Investment); (ix)
Persons to the extent such Investment is received by the Company or any
Restricted Subsidiary as consideration for asset dispositions effected in
compliance with the covenant described under Section 4.10; (x) prepayments and
other credits to suppliers made in the ordinary course of business consistent
with the past practices of the Company and its
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<PAGE> 22
Restricted Subsidiaries; and (xi) Investments in connection with pledges,
deposits, payments or performance bonds made or given in the ordinary course of
business in connection with or to secure statutory, regulatory or similar
obligations, including obligations under health, safety or environmental
obligations.
"Permitted Liens" means: (i) Liens granted by the Company and
the Subsidiary Guarantors which secure Indebtedness to the extent the
Indebtedness is incurred pursuant to clause (i) of paragraph (b) under Section
4.09; (ii) Liens in favor of the Company; (iii) Liens on property of a Person
existing at the time such Person is acquired by or merged into or consolidated
with the Company or any Restricted Subsidiary thereof; provided that such Liens
were in existence prior to the contemplation of such acquisition and do not
extend to any assets of the Company or its Restricted Subsidiaries other than
those acquired in connection with such merger or consolidation; (iv) Liens to
secure the performance of obligations, surety or appeal bonds, performance bonds
or other obligations of a like nature incurred in the ordinary course of
business; (v) Liens existing on the Issue Date; (vi) Liens in respect of
extensions, renewals, refundings or refinancings of any Indebtedness secured by
the Liens referred to in clauses (i), (ii), (iii) and (v) above and (viii)
below; provided that the Liens in connection with such renewal, extensions,
renewals, refundings or refinancing shall be limited to all or part of the
specific property which was subject to the original Lien; (vii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided that any reserve or other
appropriate provisions as shall be required in conformity with GAAP shall have
been made therefor; (viii) any Lien securing purchase money obligations incurred
in compliance with paragraph (b)(ii) of Section 4.09, provided that such Liens
do not extend to any property (other than the property so purchased) owned by
the Company or its Restricted Subsidiaries and is not incurred more than 30 days
after the incurrence of such Indebtedness secured by such Lien; (ix) Liens to
secure Capitalized Lease Obligations (except in respect of Sale/Leaseback
Transactions) on real or personal property of the Company to the extent
consummated in compliance with paragraph (b)(ii) of Section 4.09, provided that
such Liens do not extend to or cover any property of the Company of any of its
Subsidiaries other than the property subject to such Capitalized Lease
Obligation; and (x) Liens incurred in the ordinary course of business of the
Company or any Restricted Subsidiary thereof with respect to obligations that do
not exceed $1 million at any one time outstanding and that (A) are not incurred
in connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (B) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of the business by the Company or such
Restricted Subsidiary.
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<PAGE> 23
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision hereof or any other entity.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Private Placement Legend" has the meaning provided in Section
2.15.
"Public Market" exists at any time with respect to the Common
Stock if (a) the Common Stock is then registered with the Commission pursuant to
Section 12(b) or 12(g) of the Exchange Act and traded either on a national
securities exchange or in the National Association of Securities Dealers
Automated Quotation System and (b) at least 15% of the total issued and
outstanding Common Stock has been distributed prior to such time by means of an
effective registration statement under the Securities Act.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
"Record Date" means the record dates specified in the Notes,
whether or not a Legal Holiday.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, replaces, renews, repays or extends (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and "refinanced"
shall have a correlative meaning) any Indebtedness existing on the date hereof
or Incurred in compliance with this Indenture (including Indebtedness of the
Company that refinances Indebtedness of any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary that refinances Indebtedness of
another Restricted Subsidiary) including Indebtedness that refinances
Refinancing Indebtedness; provided, however, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the earlier of (A) the first
anniversary of the Stated Maturity of the Notes and (B) the Stated Maturity of
the Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an
Average Life at the time such Refinancing Indebtedness is Incurred that is equal
to or greater than the lesser of (A) the Average Life of the Notes and (B) the
Average Life of the Indebtedness being refinanced and, (iii) the Refinancing
Indebtedness is in an aggregate principal amount (or if issued with original
issue discount, an aggregate issue price) that is equal to (or 101% of, in the
case of a refinancing of the Notes in
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<PAGE> 24
connection with a Change of Control) or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced (plus the
amount of any premium required to be paid in connection therewith and reasonable
fees and expenses therewith) provided, further, that Refinancing Indebtedness
shall not include Indebtedness of a Subsidiary which refinances Indebtedness of
the Company.
"Registrar" means the Trustee, or any successor thereto
appointed as registrar pursuant to the Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement dated December 10, 1997 between the Company, the Subsidiary Guarantors
and the Initial Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer," when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) with direct responsibility for the
administration of this Indenture and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Investment" means any Investment other than a
Permitted Investment.
"Restricted Payment" has the meaning provided in Section
4.07(a).
"Restricted Security" has the meaning assigned to such term in
Rule 144(a)(3) under the Securities Act.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"S&P" and "Standard and Poor's" means Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies Inc., or any successor
organization thereto.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Subsidiary
leases it from such Person.
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<PAGE> 25
"Secured Indebtedness" means any Indebtedness of a Subsidiary
Guarantor secured by a Lien.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor statute or statutes thereto, and the rules and regulations of
the Commission promulgated thereunder.
"Senior Indebtedness" in the case of the Notes means
Indebtedness that is not by its terms expressly subordinate or junior in right
of payment to any other Indebtedness of the Company or the Subsidiary Guarantee
of a Restricted Subsidiary.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the Commission.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision.
"Subordinated Obligations" means Indebtedness that is
expressly subordinate or junior in right of payment to any other Indebtedness of
the Company or the Subsidiary Guarantee of a Restricted Subsidiary.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Company.
"Subsidiary Guarantee" means each of the guarantees of the
respective Subsidiary Guarantors pursuant to Article 10 hereof, and shall
include each guarantee substantially in the form contained in Exhibits A and B
hereto, as such guarantee may be amended, modified or supplemented from time to
time.
"Subsidiary Guarantor" means each Subsidiary of the Company in
existence on the Issue Date and each Subsidiary (other than Unrestricted
Subsidiaries) created or acquired by the Company after the Issue Date that
executes a Subsidiary Guarantee.
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"Temporary Cash Investments" means any of the following: (i)
any Investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof, (ii) Investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital surplus and
undivided profits aggregating in excess of $250 million (or the foreign currency
equivalent thereof) and whose long-term debt, or whose parent holding company's
long-term debt, is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act), (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in clause
(i) above entered into with a bank meeting the qualifications described in
clause (ii) above, (iv) Investments in commercial paper, maturing not more than
180 days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P,
(v) Investments in securities with maturities of six months or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's and
(vi) Investments in mutual funds whose investment guidelines restrict such
funds' investments to those satisfying the provisions of clauses (i) through (v)
above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) and the rules and regulations thereunder as in effect on
the date on which this Indenture is qualified under the TIA, except as provided
in Section 9.03 hereof; provided, however, that, in the event the Trust
Indenture Act of 1939 is amended after such date, "TIA" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means United States Trust Company of New York, a
banking corporation organized and existing under the laws of the State of New
York, until a successor replaces it in accordance with Article 7 and thereafter
means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company
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(including any newly acquired or newly formed Subsidiary of the Company) to be
an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries
owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any
property of, the Company or any Restricted Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; provided, however, that each
Subsidiary to be so designated and each of its Subsidiaries has not at the time
of such designation, and does not thereafter create, Incur, issue, assume,
Guarantee or otherwise becomes liable with respect to any Indebtedness other
than Non-Recourse Indebtedness and either (A) the Subsidiary to be so designated
has total consolidated assets of $10,000 or less or (B) if such Subsidiary has
consolidated assets greater than $10,000, then such designation would be
permitted under Section 4.07. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary subject to the limitations
contained in Section 4.18.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"U.S. Physical Notes" has the meaning provided in Section
2.01.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the
Company, at least 99% of the Capital Stock of which (other than directors'
qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"actual knowledge".................................................7.02
"Affiliate Transaction"............................................4.11
"Agent Members"....................................................2.16
"Asset Disposition Offer"..........................................3.09
"Bankruptcy Law"...................................................6.01
"Change of Control Payment"........................................4.14
"Change of Control Payment Date"...................................4.14
"covenant defeasance option".......................................8.01
"Custodian"........................................................6.01
"Declaration"......................................................6.02
"Default Amount"...................................................6.02
"Designation"......................................................4.18
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"Designation Amount"...............................................4.18
"Event of Default".................................................6.01
"Funding Subsidiary Guarantor"....................................10.05
"Global Note"......................................................2.01
"Guaranteed Obligations"..........................................10.01
"judgment default provision".......................................6.01
"legal defeasance option"..........................................8.01
"Legal Holiday"...................................................10.07
"Net Available Cash"...............................................4.10
"Notice of Default"................................................6.01
"Offer Amount".....................................................3.09
"Offer Period".....................................................3.09
"Paying Agent".....................................................2.03
"Purchase Date"....................................................3.09
"Registrar"........................................................2.03
"Revocation".......................................................4.18
"Successor Company"................................................5.01
"Taxes"............................................................4.05
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"obligor" on the Notes means the Company, the Subsidiary
Guarantors and any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
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(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular; and
(v) provisions apply to successive events and transactions.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Initial Notes, the notation thereon relating to the
Subsidiary Guarantees and the Trustee's certificate of authentication thereon
shall be substantially in the form of Exhibit A hereto. The Exchange Notes, the
notation thereon relating to the Subsidiary Guarantees and the Trustee's
certificate of authentication thereon shall be substantially in the form of
Exhibit B hereto. The Notes may have notations, legends or endorsements required
by law, stock exchange rule or Depository rule or usage. The Company, the
Subsidiary Guarantors and the Trustee shall approve the form of the Notes and
any notation, legend or endorsement on them. Each Note shall be dated the date
of its authentication.
The terms and provisions contained in the forms of the Notes
and the Subsidiary Guarantees, annexed hereto as Exhibits A and B, shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company, the Subsidiary Guarantors and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent global notes in registered
form, in substantially the form set forth in Exhibit A (the "Global Note"),
deposited with the Trustee, as custodian for the Depository, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Global Note may from time to time be increased
or decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A (the "Offshore
Physical Notes"). Notes offered and sold in reliance on any other exemption from
registration under the Securities Act other
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than as described in the preceding paragraph shall be issued, and Notes offered
and sold in reliance on Rule 144A may be issued, in the form of permanent
certificated Notes in registered form, in substantially the form set forth in
Exhibit A (the "U.S. Physical Notes"). The Offshore Physical Notes and the U.S.
Physical Notes are sometimes collectively herein referred to as the "Physical
Notes".
SECTION 2.02. EXECUTION AND AUTHENTICATION.
(a) Two Officers of the Company (each of whom shall, in each
case, have been duly authorized by all requisite corporate actions) shall sign
the Notes for the Company by manual or facsimile signature. If an Officer whose
signature is on a Note no longer holds that office at the time the Note is
authenticated, the Note shall nevertheless be valid. Each Subsidiary Guarantor
shall execute a Subsidiary Guarantee in the manner set forth in Section 10.02.
(b) A Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Note has been authenticated under this Indenture.
(c) The Trustee shall authenticate (i) Initial Notes for
original issue in the aggregate principal amount not to exceed $125,000,000, and
(ii) Exchange Notes from time to time for issue only in exchange for a like
principal amount of Initial Notes, in each case upon receipt of a written order
of the Company signed by two Officers.
(d) The Trustee may appoint an authenticating agent acceptable
to the Company to authenticate Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent has the same
rights as an Agent to deal with the Company or an Affiliate.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
(a) The Company shall maintain an office or agency (which
shall be located in the Borough of Manhattan in the City of New York, State of
New York) where (i) Notes may be presented for registration of transfer or for
exchange ("Registrar"), (ii) Notes may be presented for payment ("Paying Agent")
and (iii) notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Noteholder. The
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Company shall notify the Trustee and the Trustee shall notify the Noteholders of
the name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any Subsidiary Guarantor may act as
Paying Agent, Registrar or co-registrar. The Company shall enter into an
appropriate agency agreement with any Agent not a party to this Indenture, which
shall incorporate the provisions of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the
Trustee shall act as such, and shall be entitled to appropriate compensation in
accordance with Section 7.07 hereof.
(b) The Company initially appoints the Trustee as Registrar,
Paying Agent and agent for service of notices and demands in connection with the
Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company, the Subsidiary Guarantors or any other obligor on
the Notes shall require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent shall hold in trust for the benefit of the
Noteholders and the Trustee all money held by the Paying Agent for the payment
of principal of, premium, if any, and interest on the Notes, and shall notify
the Trustee of any Default by the Company, any of the Subsidiary Guarantors or
any other obligor on the Notes in making any such payment. While any such
Default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company, the Subsidiary Guarantors or any other
obligor on the Notes at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Company or a Subsidiary Guarantor) shall have no further
liability for the money delivered to the Trustee. If the Company, the Subsidiary
Guarantors or any other obligor on the Notes acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Noteholders
all money held by it as Paying Agent.
SECTION 2.05. NOTEHOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Noteholders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company, the Subsidiary Guarantors or any
other obligor on the Notes shall furnish to the Trustee at least seven Business
Days before each Interest Payment Date and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Noteholders, including the
aggregate
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principal amount of the Notes held by each thereof, and the Company, the
Subsidiary Guarantors or any other obligor on the Notes shall otherwise comply
with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Where Notes are presented to the Registrar or a
co-registrar with a request to register the transfer thereof or exchange them
for an equal principal amount of Notes of other denominations, the Registrar
shall register the transfer or make the exchange if its requirements for such
transactions are met; provided, that any Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the Registrar and the
Trustee duly executed by the Noteholder thereof or his attorney duly authorized
in writing. To permit registrations of transfer and exchanges, the Company shall
issue and the Trustee shall authenticate Notes at the Registrar's request.
(b) Neither the Registrar nor the Company shall be required
(i) to issue, to register the transfer of or to exchange Notes during a period
beginning at the opening of business on a Business Day 15 days before the day of
any selection of Notes for redemption under Section 3.02 hereof and ending at
the close of business on the day of selection, (ii) to register the transfer of
or exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (iii) to register the
transfer or exchange of a Note between the Record Date and the next succeeding
Interest Payment Date.
(c) No service charge by the Company shall be made for any
registration of a transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment by the Noteholder of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith (other than such transfer tax or similar governmental
charge payable upon exchanges pursuant to Section 2.10, 3.06 or 9.05 hereof).
(d) Each Holder of the Global Note shall, by acceptance of
such Global Note, agree that transfers of beneficial interests in such Global
Note may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Global Note shall be required to be reflected in a book entry.
SECTION 2.07. REPLACEMENT NOTES.
(a) If any mutilated Note is surrendered to the Trustee, or
the Company and the Trustee receive evidence to the satisfaction of each thereof
of the destruction, loss or theft of any Note, the Company shall issue and the
Trustee, upon receipt by it of the
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written order of the Company signed by two Officers of the Company, shall
authenticate a replacement Note if the Trustee's requirements for replacements
of Notes are met. If required by the Trustee or the Company, an indemnity bond
must be supplied by the Holder that is sufficient in the judgment of the Trustee
and the Company to protect the Company, the Subsidiary Guarantors, the Trustee,
any Agent or any authenticating agent from any loss which any of them may suffer
if a Note is replaced. The Company and the Trustee may charge a Noteholder for
reasonable out-of-pocket expenses in replacing a Note.
(b) Every replacement Note is an obligation of the Company and
each of the Subsidiary Guarantors.
SECTION 2.08. OUTSTANDING NOTES.
(a) The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by the Company or by the
Trustee, those delivered to the Trustee for cancellation and those described in
this Section as not outstanding.
(b) If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
(c) If the principal amount of any Note is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue.
(d) Subject to Section 2.09 hereof, a Note does not cease to
be outstanding because the Company or an Affiliate of the Company or a
Subsidiary Guarantor holds the Note.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, the Subsidiary Guarantors, or any of their respective Affiliates
shall be considered as though not outstanding, except that for purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which a Responsible Officer of the
Trustee has actual knowledge are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon written order of
the Company signed
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by two Officers of the Company. Temporary Notes shall be substantially in the
form of definitive Notes but may have variations that the Company, the
Subsidiary Guarantors and the Trustee consider appropriate for temporary Notes.
Without unreasonable delay, the Company shall prepare and the Trustee, upon
receipt of the written order of the Company signed by two Officers of the
Company, shall authenticate definitive Notes in exchange for temporary Notes.
Until such exchange, temporary Notes shall be entitled to the same rights,
benefits and privileges under this Indenture as definitive Notes.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee (or its Agent) shall cancel all Notes, if not already cancelled,
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall destroy cancelled Notes (subject to the record retention
requirement of the Exchange Act), and deliver certification of their destruction
to the Company, unless by a written order, signed by two Officers of the
Company, the Company shall direct that cancelled Notes be returned to it. The
Company may not issue new Notes to replace Notes that it has redeemed or paid or
that have been delivered to the Trustee for cancellation. If the Company
acquires any of the Notes, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless or until the
same are surrendered to the Trustee (or its Agent) for cancellation pursuant to
this Section.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Noteholders on a subsequent special record date, which date shall be at the
earliest practicable date but in all events at least five Business Days prior to
the payment date, in each case at the rate provided in the Notes and in Section
4.01 hereof. The Company shall, with the consent of the Trustee, fix or cause to
be fixed each such special record date and payment date. At least 15 days before
the special record date, the Company (or, upon the written request of the
Company, the Trustee, in the name of and at the expense of the Company) shall
mail to Noteholders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
SECTION 2.13. CUSIP NUMBER.
The Company in issuing the Notes may use a "CUSIP" number, and
if so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a
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convenience to Noteholders; provided that no representation shall be deemed to
be made by the Trustee as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
SECTION 2.14. DEPOSIT OF MONEYS.
Prior to 10:00 a.m. New York City time on each Interest
Payment Date and Maturity Date, the Company shall deposit with the Paying Agent
in immediately available funds money sufficient to make cash payments, if any,
due on such Interest Payment Date or Maturity Date, as the case may be.
SECTION 2.15. RESTRICTIVE LEGENDS.
Each Global Note and Physical Note that constitutes a
Restricted Security shall bear the following legend (the "Private Placement
Legend") unless otherwise agreed by the Company and the Noteholder thereof:
THIS NOTE OR ITS PREDECESSORS HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, UNITED STATES PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT
IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR
BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE
144(k) UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH
TRANSFER, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO AMERICAN
ARCHITECTURAL PRODUCTS CORPORATION OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A
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QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), AND IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES AT THE
TIME OF TRANSFER OF LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO AMERICAN ARCHITECTURAL PRODUCTS CORPORATION THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR (G) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO AMERICAN ARCHITECTURAL PRODUCTS CORPORATION)
AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION
S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
Each Global Note shall also bear the following legend on the
face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY OR A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH
NOMINEE TO A SUCCESSOR
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DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. TRANSFERS OF THIS
GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED
TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTE.
(a) The Global Note initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Section 2.15.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Note, and the Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of the
Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers
in whole, but not in part, to the Depository, its successors or their respective
nominees. Interest of
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beneficial owners in the Global Note may be transferred or exchanged for
Physical Notes in accordance with the rules and procedures of the Depository and
the provisions of Section 2.17. In addition, Physical Notes shall be transferred
to all beneficial owners in exchange for their beneficial interests in the
Global Note if (i) the Depository notifies the Company that it is unwilling or
unable to continue as Depository for the Global Note and a successor depository
is not appointed by the Company within 90 days of such notice or (ii) an Event
of Default has occurred and is continuing and the Registrar has received a
written request from the Depository or the Trustee to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion
of the beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b) above, the Registrar shall (if one or more Physical Notes are to
be issued) reflect on its books and records the date and a decrease in the
principal amount of the beneficial interest in the Global Note to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note
to beneficial owners pursuant to paragraph (b), the Global Note shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the Global Note, an equal aggregate principal amount of Physical Notes of
authorized denominations.
(e) Any Physical Note constituting a Restricted Security
delivered in exchange for an interest in the Global Note pursuant to paragraph
(b) or (c) above shall, except as otherwise provided by paragraphs (a)(i)(x) and
(c) of Section 2.17, bear the legend regarding transfer restrictions applicable
to the Physical Notes set forth in Section 2.15.
(f) The Holder of the Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Noteholder is
entitled to take under this Indenture or the Notes.
SECTION 2.17. SPECIAL TRANSFER PROVISIONS.
(a) Transfers to Non-QIB Institutional Accredited Investors
and Non- U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
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(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after
December 10, 1999 or (y) (1) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB (excluding
Non-U.S.Persons), the proposed transferee has delivered to the
Registrar a certificate substantially in the form of Exhibit C hereto
or (2) in the case of a transfer to a Non-U.S. Person, the proposed
transferor has delivered to the Registrar a certificate substantially
in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar
of (x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the
Registrar's procedures, whereupon (a) the Registrar shall reflect on
its books and records the date and a decrease in the principal amount
of the Global Note in an amount equal to the principal amount of the
beneficial interest in the Global Note to be transferred, and (b) the
Company shall execute and the Trustee shall authenticate and deliver
one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of a Note constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided
for on the form of Note stating, or has otherwise advised the Company
and the Registrar in writing, that the sale has been effected in
compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Note stating, or
has otherwise advised the Company and the Registrar in writing, that it
is purchasing the Note for its own account or an account with respect
to which it exercises sole investment discretion and that any such
account is a QIB within the meaning of Rule 144A, and it is aware that
the sale to it is being made in reliance on Rule 144A and acknowledges
that it has received such information regarding the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A; and
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(ii) if the proposed transferee is an Agent Member and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in the Global Note, upon receipt by
the Registrar of instructions given in accordance with the Depository's
and the Registrar's procedures, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of
the Global Note in an amount equal to the principal amount of the
Physical Notes to be transferred, and the Trustee shall cancel the
Physical Notes so transferred.
(c) Private Placement Legend. Upon the registration of the
transfer, exchange or replacement of Notes not bearing the Private Placement
Legend, the Registrar shall deliver Notes that do not bear the Private Placement
Legend. Upon the registration of the transfer, exchange or replacement of Notes
bearing the Private Placement Legend, the Registrar shall deliver only Notes
that bear the Private Placement Legend unless (i) the circumstance contemplated
by paragraph (a)(i)(x) of this Section 2.17 exists or (ii) there is delivered to
the Registrar an Opinion of Counsel reasonably satisfactory to the Company and
the Trustee to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain for at least two years copies of
all letters, notices and other written communications received pursuant to
Section 2.16 or this Section 2.17. The Company shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable written notice to the
Registrar.
SECTION 2.18. PERSONS DEEMED OWNERS.
Prior to due presentment of a Note for registration of
transfer and subject to Section 2.12, the Company, the Trustee, any Paying
Agent, any Registrar and any co-registrar and any Agent of any of the foregoing
may deem and treat the Person in whose name any Note shall be registered upon
the register of Notes kept by the Registrar as the absolute owner of such Note
(whether or not such Note shall be overdue and notwithstanding any notation of
the ownership or other writing thereon made by anyone other than the Company,
any Registrar or any co-registrar) for the purpose of receiving payments of
principal of or interest on such Note and for all other purposes; and none of
the Company, the Trustee, any Paying Agent, any Registrar or any co-registrar or
any Agent of the foregoing shall be affected by any notice to the contrary.
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SECTION 2.19. RECORD DATE.
The record date for purposes of determining the identity of
Noteholders entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be the later of (i) 30 days
prior to the first solicitation of such consent or (ii) the date of the most
recent list of Holders furnished to the Trustee, if applicable, pursuant to
Section 2.05 hereto.
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
(a) If the Company elects to redeem Notes pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 60 days (unless a shorter period is acceptable to the Trustee)
a redemption date, an Officers' Certificate setting forth (i) the Section of
this Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Notes to be redeemed, (iv) the redemption
price and accrued and unpaid interest and (v) whether it requests the Trustee to
give notice of such redemption.
(b) If the Company is required to make an offer to purchase
Notes pursuant to the provisions of Sections 4.10 or 4.14 hereof, it shall
furnish to the Trustee at least 30 days (or such lesser period as the Trustee
may agree) but not more than 60 days before mailing any offer to purchase
pursuant to such Sections, an Officers' Certificate setting forth (i) the
Section of this Indenture pursuant to which the offer to purchase shall occur,
(ii) the proposed purchase date, (iii) the maximum principal amount of Notes to
be purchased, (iv) the purchase price and accrued and unpaid interest, (v)
whether it requests the Trustee to mail any offer to purchase and (vi) further
setting forth a statement to the effect that (a) the Company or one of its
Subsidiaries has effected an Asset Disposition and the conditions set forth in
Section 4.10 have been satisfied or (b) a Change of Control has occurred and the
conditions set forth in Section 4.14 have been satisfied, as applicable.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
(a) If less than all of the Notes are to be redeemed, the
Trustee shall select the Notes to be redeemed among the Noteholders on a pro
rata basis, by lot or in accordance with any other method the Trustee considers
fair and appropriate (and in such manner as complies with applicable legal and
stock exchange requirements, if any); provided, however, that if a partial
redemption is made with the proceeds of an Equity
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Offering, selection of the Notes or portion thereof for redemption shall be made
by the Trustee only on a pro rata basis to the extent practicable, unless such
method is otherwise prohibited. In the event of partial redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 45 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
(b) The Trustee shall promptly notify the Company in writing
of the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes may be
redeemed in part in multiples of $1,000 principal amount only. Except as
provided in the preceding sentence, provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for
redemption.
(c) Notice of redemption will be sent, by first class mail,
postage prepaid, at least 30 days prior to the date fixed for redemption to each
Holder whose Notes are to be redeemed at the last address for such Holder then
shown on the registry books.
SECTION 3.03. NOTICE OF REDEMPTION.
(a) Subject to the provisions of Section 3.09 hereof, at least
30 days but not more than 60 days before a redemption date, the Company shall
mail or cause to be mailed a notice of redemption by first class mail, postage
prepaid to each Holder whose Notes are to be redeemed at the last address for
such Holder then shown on the registry books.
The notice shall identify the Notes to be redeemed and shall
state:
(i) the redemption date;
(ii) the redemption price;
(iii) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued;
(iv) the name and address of the Paying Agent;
(v) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
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(vi) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date;
(vii) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(viii) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
(b) At the Company's request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense;
provided, however, that the Company shall have delivered to the Trustee at least
45 days (unless a shorter period is acceptable to the Trustee) prior to the
proposed redemption date an Officers' Certificate requesting that the Trustee
give such notice and setting forth the information to be stated in such notice
as provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become due and payable on the
redemption date at the redemption price plus accrued and unpaid interest, if
any.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
(a) Prior to 10:00 a.m., New York City time, on the redemption
date, the Company shall deposit with the Paying Agent (other than the Company or
any of its Subsidiaries) money sufficient to pay the redemption price of and
accrued interest on all Notes to be redeemed on that date. The Paying Agent
shall promptly return to the Company any money deposited with the Paying Agent
by the Company in excess of the amounts necessary to pay the redemption price
of, and accrued interest on, all Notes to be redeemed.
(b) If the Company complies with the provisions of the
preceding paragraph, on and after the redemption date, interest ceases to accrue
on the Notes or the portions of Notes called for redemption whether or not such
Notes are presented for payment, and the only remaining right of the Holders of
such Notes shall be to receive payment of the redemption price upon surrender to
Paying Agent if the Notes are redeemed. If a Note is redeemed on or after a
Record Date but on or prior to the related Interest Payment Date, then any
accrued and unpaid interest shall be paid to the Person in
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whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after any redemption date, interest
will cease to accrue on the Notes or part thereof called for redemption as long
as the Company has deposited with the Paying Agent funds in satisfaction of the
redemption price pursuant to this Indenture.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as provided in Section 3.07(b), the Company may
redeem all or any portion of the Notes at any time on or after December 1, 2002,
at a redemption price equal to a percentage of the principal amount thereof, as
set forth in the immediately succeeding sentence, plus accrued and unpaid
interest to the redemption date. The redemption price as a percentage of the
principal amount shall be as follows, if the Notes are redeemed during the 12
month period commencing on December 1 of the years set forth below, plus in each
case, accrued and unpaid interest to the date of redemption (subject to the
right of holders of record on the relevant record date to receive interest on
the relevant Interest Payment Date):
<TABLE>
<CAPTION>
Period Redemption Price
------ ----------------
<S> <C>
2002 105.000%
2003 103.333%
2004 101.667%
2005 and thereafter 100.000%
</TABLE>
(b) At any time, or from time to time, prior to December 1,
2000, the Company may, at its option, redeem up to 35% of the aggregate
principal amount of the Notes with the net cash proceeds of one or more Equity
Offerings by the Company so long as there is a Public Market at the time of such
redemption (which fact shall be certified to the Trustee in an Officer's
Certificate delivered to the Trustee pursuant to Section 3.01(a)) at a
redemption price equal to 110% of the principal amount thereof, plus accrued and
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unpaid interest thereon, if any, to the date of redemption; provided, however,
that after any such redemption the aggregate principal amount of the Notes
outstanding must equal at least $82 million. In order to effect the foregoing
redemption with the proceeds of any Equity Offering, the Company shall make such
redemption not more than 90 days after the consummation of any such Equity
Offering.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth in Sections 4.10 and 4.14, the Company is
not required to make mandatory redemption or sinking fund payments with respect
to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
(a) In the event that, pursuant to Section 4.10 hereof, the
Company shall commence an offer to all Noteholders to purchase Notes (an "Asset
Disposition Offer"), it shall follow the procedures specified below:
(i) The Asset Disposition Offer shall remain open for a
period of 30 Business Days following its commencement and no longer,
except to the extent that a longer period is required by applicable law
(the "Offer Period"). No later than five Business Days after the
termination of the Offer Period (the "Purchase Date"), the Company
shall purchase the principal amount of Notes required to be purchased
pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to
the Asset Disposition Offer.
(ii) If the Purchase Date is on or after a Record Date and on
or before the related Interest Payment Date, any accrued interest shall
be paid to the Person in whose name a Note is registered at the close
of business on such Record Date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Disposition
Offer.
(iii) Upon the commencement of any Asset Disposition Offer,
the Company shall send or cause to be sent in accordance with Section
3.03, a notice to each Noteholder. The notice shall contain all
instructions and materials necessary to enable such Holders to tender
Notes pursuant to the Asset Disposition Offer. The notice, which shall
govern the terms of the Asset Disposition Offer, shall state:
(1) that the Asset Disposition Offer is being made
pursuant to this Section 3.09 and Section 4.10 hereof and the
length of time the Asset Disposition Offer shall remain open;
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(2) the Offer Amount, the purchase price and the
Purchase Date;
(3) that any Note not tendered or accepted for
payment shall continue to accrue interest;
(4) that any Note accepted for payment pursuant to
the Asset Disposition Offer shall cease to accrue interest
after the Purchase Date;
(5) that Holders electing to have a Note purchased
pursuant to any Asset Disposition Offer shall be required to
surrender the Note, with the form entitled "Option of
Noteholder to Elect Purchase" on the reverse of the Note
completed, to the Company, a depositary, if appointed by the
Company, or a Paying Agent at the address specified in the
notice at least three days before the Purchase Date;
(6) that Holders shall be entitled to withdraw their
election if the Company, depositary or Paying Agent, as the
case may be, receives, not later than the expiration of the
Offer Period, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to
have the Note purchased;
(7) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company
shall select the Notes to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the
Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(8) that Holders whose Notes were purchased only in
part shall be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered.
(iv) On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Asset Disposition Offer or, if less than the Offer
Amount has been tendered, all Notes or portions thereof tendered, and
deliver to the Trustee an Officers' Certificate stating that such Notes
or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Paying Agent shall
promptly (but in any case not later than five Business Days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal
to the purchase price of the Note tendered by such Holder and accepted
by the Company for purchase, and the Company shall
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promptly issue a new Note, and at the written request of the Company
the Trustee shall authenticate and mail or deliver such new Note, to
such Holder equal in principal amount to any unpurchased portion of the
Note surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall
publicly announce the results of the Asset Disposition Offer on the
Purchase Date.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
(a) The Company shall pay the principal of, premium, if any,
and interest on the Notes on the dates and in the manner provided in the Notes
and in this Indenture. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary Guarantor, holds as of 10:00 a.m. New York City time on the due
date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due. Such Paying Agent shall return to the Company, no later than
five Business Days following the date of payment, any money (including accrued
interest paid by the Company) that exceeds such amount of principal, premium, if
any, and interest paid on the Notes.
(b) The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 2% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful, and it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace period) at the same rate to the
extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
(a) The Company shall maintain in the Borough of Manhattan, in
the City of New York, an office or agency (which may be an office of the Trustee
or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required
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office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
(b) The Company may also from time to time designate one or
more other offices or agencies where the Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the Borough of Manhattan, in the City of New York for such purposes. The
Company shall give prior written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
(c) The Company hereby designates the Corporate Trust Office
of the Trustee as one such office or agency of the Company in accordance with
Section 2.03.
SECTION 4.03. SEC REPORTS.
(a) Upon consummation of the Exchange Offer and the issuance
of the Exchange Notes, the Company and each Subsidiary Guarantor (at its own
expense) shall file with the Commission and shall furnish to the Trustee and
each Noteholder within 15 days after it files them with the Commission copies of
the quarterly and annual reports and of the information, documents, and other
reports (or copies of such portions of any of the foregoing as the Commission
may by rules and regulations prescribe) to be filed pursuant to Section 13 or
15(d) of the Exchange Act (without regard to whether the Company is subject to
the requirements of such Section 13 or 15(d) of the Exchange Act); provided,
that prior to the consummation of the Exchange Offer and the issuance of the
Exchange Notes, the Company (at its own expense), will mail to the Trustee and
the Noteholders in accordance with paragraph (b) of this Section 4.03
substantially the same information that would have been required by the
foregoing documents within 15 days of when any such document would otherwise
have been required to be filed with the Commission. Upon qualification of this
Indenture under the TIA, the Company and each Subsidiary Guarantor shall also
comply with the provisions of TIA Section 314(a).
(b) At the Company's expense, the Company and each Subsidiary
Guarantor, as applicable, shall cause an annual report if furnished by it to
stockholders generally and each quarterly or other financial report if furnished
by it to stockholders generally to be filed with the Trustee and mailed to the
Noteholders at their addresses appearing in the register of Notes maintained by
the Registrar at the time of such mailing or furnishing to stockholders.
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(c) The Company and each Subsidiary Guarantor shall provide to
any Holders of Initial Notes any information reasonably requested by such
Noteholder concerning the Company and each Subsidiary Guarantor (including
financial statements) necessary in order to permit such Noteholder to sell or
transfer Notes in compliance with Rule 144A under the Securities Act.
(d) If the Company instructs the Trustee to distribute any of
the documents described in Section 4.03(a) to the Noteholders, the Company shall
provide the Trustee with a sufficient number of copies of all such documents.
SECTION 4.04. COMPLIANCE CERTIFICATES.
(a) The Company and each Subsidiary Guarantor shall deliver to
the Trustee, within 90 days after the end of each fiscal year, an Officers'
Certificate signed by its principal executive officer, principal financial
officer or principal accounting officer stating that a review of the activities
of the Company and its Subsidiaries or such Subsidiary Guarantor, as the case
may be, during the preceding fiscal year has been made under the supervision of
the signing Officers with a view to determining whether each has kept, observed,
performed and fulfilled its Obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge each has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred during such
period, describing all such Defaults or Events of Default of which he or she may
have knowledge and what action each is taking or proposes to take with respect
thereto).
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03 above shall be
accompanied by a written statement of (x) the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of Article 4, 5 or 6 of this Indenture
insofar as they relate to accounting matters or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation and (y) if
any Restricted Subsidiary's or Subsidiary Guarantor's financial statements are
not prepared on a consolidated basis with the Company's, such Restricted
Subsidiary's or Guarantor's independent public accountants (who shall be a firm
of established national reputation) that in making the examination necessary for
certification of such financial statements nothing has come to their attention
which would lead them to
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believe that any of the Restricted Subsidiaries or Subsidiary Guarantors is in
Default under this Indenture or, if any such Default has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company and each of the Subsidiary Guarantors shall,
so long as any of the Notes are outstanding, deliver to the Trustee, forthwith
upon any Officer becoming aware of (i) any Default or Event of Default or (ii)
any event of default under any other mortgage, indenture or instrument to which
the Company is a party, an Officers' Certificate specifying such Default, Event
of Default or event of default and what action the Company or such Subsidiary
Guarantor, as the case may be, is taking or proposes to take with respect
thereto.
(d) The Company and each of the Subsidiary Guarantors shall
also comply with TIA Section 314(a)(4).
SECTION 4.05. TAXES.
The Company and each of the Subsidiary Guarantors will, and
will cause its Restricted Subsidiaries to, pay and discharge when due all taxes,
levies, imposts, duties or other governmental charges ("Taxes") imposed on its
income or profits or on any of its properties, except such Taxes which are being
contested in good faith in appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
Each of the Company and the Subsidiary Guarantors covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture (including, but not limited to, the payment of the principal of or
interest on the Notes); and the Company and each Subsidiary Guarantor (to the
extent that they may lawfully do so) hereby expressly waive all benefit or
advantage of any such law, and covenant that they shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.07. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries, directly or indirectly, to (i) declare or pay any
dividend or make any
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distribution on or in respect of its Capital Stock (including any payment in
connection with any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) except (A) dividends or distributions payable in its
Capital Stock (other than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock and (B) dividends or distributions payable
to the Company or a Restricted Subsidiary of the Company which holds any equity
interest in the paying Restricted Subsidiary (and if the Restricted Subsidiary
paying the dividend or making the distribution is not a Wholly-Owned Subsidiary,
to its other holders of Capital Stock on a pro rata basis), (ii) purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company
held by Persons other than a Wholly-Owned Subsidiary of the Company or any
Capital Stock of a Restricted Subsidiary of the Company held by any Affiliate of
the Company, other than a Wholly-Owned Subsidiary (in either case, other than in
exchange for its Capital Stock (other than Disqualified Stock)), (iii) purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations or (iv) make any Investment (other than a Permitted
Investment) in any Person (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or Investment
as described in preceding clauses (i) through (iv) being referred to as a
"Restricted Payment"), if at the time the Company or such Restricted Subsidiary
makes such Restricted Payment:
(1) a Default or Event of Default shall have occurred and be
continuing (or would result therefrom); or
(2) the Company is not able to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) under Section 4.09; or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments declared or made subsequent to the Issue Date
would exceed the sum of (A) 50% of the Consolidated Net Income accrued
during the period (treated as one accounting period) from the first day
of the fiscal quarter beginning on or after the Issue Date to the end
of the most recent fiscal quarter ending prior to the date of such
Restricted Payment as to which financial results are available (but in
no event ending more than 135 days prior to the date of such Restricted
Payment) (or, in case such Consolidated Net Income shall be a deficit,
minus 100% of such deficit); (B) the aggregate net proceeds received by
the Company from the issue or sale of its Capital Stock (other than
Disqualified Stock) or other capital contributions subsequent to the
Issue Date (other than net proceeds received from an issuance or sale
of such Capital Stock to (x) a Subsidiary of the Company, (y) an
employee stock ownership plan or similar trust of (z) management
employees of the Company or any Subsidiary of the Company (other than
sales of Capital Stock (other than Disqualified Stock) to management
employees of the Company pursuant to bona fide employee stock option
plans of the Company); provided, however, that
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the value of any non-cash net proceeds shall be as determined by the
Board of Directors in good faith, except that in the event the value of
any non-cash, net proceeds shall be $2.0 million or more, the value
shall be as determined in writing by an independent investment banking
firm of nationally recognized standing; (C) the amount by which
Indebtedness of the Company is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a Restricted Subsidiary
of the Company) subsequent to the Issue Date of any Indebtedness of the
Company convertible or exchangeable for Capital Stock of the Company
(less the amount of any cash, or other property, distributed by the
Company upon such conversion or exchange); and (D) the amount equal to
the net reduction in Investments (other than Permitted Investments)
made after the Issue Date by the Company or any of its Restricted
Subsidiaries in any Person resulting from (i) repurchases or
redemptions of such Investments by such Person, proceeds realized upon
the sale of such Investment to an unaffiliated purchaser, repayments of
loans or advances or other transfers of assets by such Person to the
Company or any Restricted Subsidiary of the Company or (ii) the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investment") not
to exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments previously included in the calculation of the amount of
Restricted Payments; provided, however, that no amount shall be
included under this clause (D) to the extent it is already included in
Consolidated Net Income.
(b) The provisions of paragraph (a) shall not prohibit: (i)
any purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary, an employee stock
ownership plan or similar trust or management employees of the Company or any
Subsidiary of the Company); provided, however, that (A) such purchase or
redemption shall be excluded in the calculation of the amount of Restricted
Payments and (B) the Net Cash Proceeds from such sale shall be excluded from
clause (3) (B) of paragraph (a); (ii) any purchase or redemption of Subordinated
Obligations of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Subordinated Obligations of the Company in
compliance with Section 4.09; provided, further, that such purchase or
redemption shall be excluded in the calculation of the amount of Restricted
Payments; (iii) any purchase or redemption of Subordinated Obligations as a
result of a Change of Control (provided that Section 4.14 is complied with) and
(iv) any purchase or redemption of Subordinated Obligations from Net Available
Cash to the extent permitted under Section 4.10; provided, further, that such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments; and (v) dividends paid within 60 days after the date of
declaration if at such date of declaration such dividend would have complied
with this provision; provided, however,
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that such dividend shall be included in the calculation of the amount of
Restricted Payments; provided, however, that in the case of clauses (i), (ii),
(iii) and (iv) no Default or Event of Default shall have occurred or be
continuing at the time of such payment or as a result thereof.
(c) For purposes of determining compliance with the covenant
set forth in this Section 4.07, Restricted Payments may be made with cash or
non-cash assets, provided that any Restricted Payment made other than in cash
shall be valued at the fair market value (determined, subject to the additional
requirements of the immediately succeeding proviso, in good faith by the Board
of Directors) of the assets so utilized in making such Restricted Payment,
provided, further, that (i) in the case of any Restricted Payment made with
Capital Stock or Indebtedness, such Restricted Payment shall be deemed to be
made in an amount equal to the greater of the fair market value thereof and the
liquidation preference (if any) or principal amount of the Capital Stock or
Indebtedness, as the case may be, so utilized, and (ii) in the case of any
Restricted Payment in an aggregate amount in excess of $2.0 million, a written
opinion as to the fairness of the valuation thereof (as determined by the
Company) for purposes of determining compliance with Section 4.07 shall be
issued by an independent investment banking firm of national standing.
(d) Not later than the date of making any Restricted Payment,
the Company shall deliver to the Trustee an Officer's Certificate stating that
such Restricted Payment complies with this Indenture and setting forth in
reasonable detail the basis upon which the required calculations were computed,
which calculations may be based upon the Company's latest available quarterly
financial statements, and a copy of any required investment banker's opinion.
SECTION 4.08. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any such Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligation owed to the Company, (ii) make
any loans or advances to the Company or (iii) transfer any of its property or
assets to the Company, except: (a) any encumbrance or restriction pursuant to an
agreement in effect at or entered into on the Issue Date; (b) any encumbrance or
restriction with respect to such a Restricted Subsidiary pursuant to an
agreement relating to any Indebtedness issued by such Restricted Subsidiary on
or prior to the date on which such Restricted Subsidiary was acquired by the
Company and outstanding on such date (other than Indebtedness Incurred in
anticipation of, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Restricted
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Subsidiary of the Company or was acquired by the Company); (c) any encumbrance
or restriction with respect to such a Restricted Subsidiary pursuant to an
agreement evidencing Indebtedness Incurred without violation of this Indenture
or effecting a refinancing of Indebtedness issued pursuant to an agreement
referred to in clauses (a) or (b) or this clause (c) or contained in any
amendment to an agreement referred to in clauses (a) or (b) or this clause (c);
provided, however, that the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in any of such agreement, refinancing agreement
or amendment, taken as a whole, are no less favorable to the Holders of the
Notes in any material respect, as determined in good faith by the Board of
Directors of the Company, than encumbrances and restrictions with respect to
such Restricted Subsidiary contained in agreements in effect at, or entered into
on, the Issue Date; (d) in the case of clause (iii) of this Section 4.08, any
encumbrance or restriction (A) that restricts in a customary manner the
subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B) by virtue of
any transfer of, agreement to transfer, option, or right with respect to, or
Lien on, any property or assets of the Company or any Restricted Subsidiary not
otherwise prohibited by this Indenture, (C) that is included in a licensing
agreement to the extent such restrictions limit the transfer of the property
subject to such licensing agreement or (D) arising or agreed to in the ordinary
course of business and that does not, individually or in the aggregate, detract
from the value of property or assets of the Company or any of its Subsidiaries
in any manner material to the Company or any such Restricted Subsidiary; (e) in
the case of clause (iii) of this Section 4.08, restrictions contained in
security agreements, mortgages or similar documents securing Indebtedness of a
Restricted Subsidiary to the extent such restrictions restrict the transfer of
the property subject to such security agreements; (f) in the case of clause
(iii) of this Section 4.08, any instrument governing or evidencing Indebtedness
of a Person acquired by the Company or any Restricted Subsidiary of the Company
at the time of such acquisition, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person so acquired; provided, however, that such Indebtedness is not
Incurred in connection with or in contemplation of such acquisition; (g) any
restriction with respect to such a Restricted Subsidiary imposed pursuant to an
agreement entered into for the sale or disposition of all or substantially all
of the Capital Stock or assets of such Restricted Subsidiary pending the closing
of such sale or disposition; and (h) encumbrances or restrictions arising or
existing by reason of applicable law.
SECTION 4.09. LIMITATION ON INDEBTEDNESS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness; provided, however, that: (i)
the Company and its Restricted Subsidiaries may Incur Indebtedness which is
expressly subordinate and junior in right of payment to the Notes, if no Default
or Event of Default shall have occurred and be continuing at the time of such
Incurrence or would occur as a consequence of such
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Incurrence and the Consolidated Coverage Ratio would be equal to at least 2.00
to 1.00; and (ii) the Company and its Restricted Subsidiaries may Incur Senior
Indebtedness if no Default or Event of Default shall have occurred and be
continuing at the time of such Incurrence or would occur as a consequence of
such Incurrence and the Consolidated Coverage Ratio would be at least equal to
(x) 2.25 to 1.00 if such Indebtedness is Incurred prior to December 1, 1999, and
(y) 2.00 to 1.00 if such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company
and its Restricted Subsidiaries may Incur the following Indebtedness:
(i) Secured Indebtedness (including, without limitation, any
renewal, extension, refunding, restructuring, replacement or
refinancing thereof referred to in the definition thereof); provided,
however, that the aggregate principal amount of all Secured
Indebtedness Incurred pursuant to this clause (i) does not exceed $25.0
million at any time outstanding, less the aggregate principal amount
thereof repaid with the net proceeds of Asset Dispositions;
(ii) Indebtedness represented by Capitalized Lease
Obligations, mortgage financings or purchase money obligations, in each
case Incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property or
equipment used in a Permitted Business or Incurred to refinance any
such purchase price or cost of construction or improvement, in each
case Incurred no later than 365 days after the date of such acquisition
or the date of completion of such construction or improvement;
provided, however, that the principal amount of any Indebtedness
Incurred pursuant to this clause (ii), shall not exceed $5 million at
any time outstanding;
(iii) Indebtedness of the Company owing to and held by any
Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary
owing to and held by the Company or any Wholly-Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such Wholly-Owned
Subsidiary ceasing to be a Wholly-Owned Subsidiary or any subsequent
transfer of any such Indebtedness (except to the Company or any
Wholly-Owned Subsidiary) shall be deemed, in each case, to constitute
the Incurrence of such Indebtedness by the issuer thereof;
(iv) Indebtedness represented by (a) the Notes, (b) the
Subsidiary Guarantees, (c) Existing Indebtedness and (d) any
Refinancing Indebtedness Incurred in respect of any Indebtedness
described in this clause (iv) or Incurred pursuant to paragraph (a)
above;
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(v) (A) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on the date on which such Restricted Subsidiary was
acquired by the Company (other than Indebtedness Incurred in
anticipation of, or to provide all or any portion of the funds or
credit support utilized to consummate the transaction or series of
related transactions pursuant to which such Restricted Subsidiary
became a Subsidiary or was otherwise acquired by the Company);
provided, however, that at the time such Restricted Subsidiary is
acquired by the Company, the Company would have been able to Incur $
1.00 of additional Indebtedness pursuant to paragraph (a) above after
giving effect to the Incurrence of such Indebtedness pursuant to this
clause (v) and (B) Refinancing Indebtedness Incurred by a Restricted
Subsidiary in respect of Indebtedness Incurred by such Restricted
Subsidiary pursuant to this clause (v);
(vi) Indebtedness (A) in respect of performance bonds,
bankers' acceptances and surety or appeal bonds provided by the Company
or any of its Restricted Subsidiaries to their customers in the
ordinary course of their business, (B) in respect of performance bonds
or similar obligations of the Company or any of its Restricted
Subsidiaries for or in connection with pledges, deposits or payments
made or given in the ordinary course of business in connection with or
to secure statutory, regulatory or similar obligations, including
obligations under health, safety or environmental obligations and (C)
arising from Guarantees to suppliers, lessors, licensees, contractors,
franchises or customers of obligations (other than Indebtedness)
Incurred in the ordinary course of business;
(vii) Indebtedness under Currency Agreements and Interest Rate
Agreements; provided, however, that in the case of Currency Agreements
and Interest Rate Agreements, such Currency Agreements and Interest
Rate Agreements are entered into for bona fide hedging purposes of the
Company or its Restricted Subsidiaries (as determined in good faith by
the Board of Directors of the Company) and correspond in terms of
notional amount, duration, currencies and interest rates, as
applicable, to Indebtedness of the Company or its Restricted
Subsidiaries Incurred without violation of the Indenture or to business
transactions of the Company or its Restricted Subsidiaries on customary
terms entered into in the ordinary course of business;
(viii) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations,
or from Guarantees or letters of credit, surety bonds or performance
bonds securing any obligations of the Company or any of its Restricted
Subsidiaries pursuant to such agreements, in each case Incurred in
connection with the disposition of any business assets or Restricted
Subsidiary of the Company (other than Guarantees of Indebtedness or
other obligations Incurred by any Person acquiring all or any portion
of such business
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assets or Restricted Subsidiary of the Company for the purpose of
financing such acquisition) in a principal amount not to exceed the
gross proceeds actually received by the Company or any of its
Restricted Subsidiaries in connection with such disposition; provided,
however, that the principal amount of any Indebtedness Incurred
pursuant to this clause (viii), when taken together with all
Indebtedness Incurred pursuant to this clause (viii) and then
outstanding, shall not exceed $2 million;
(ix) Indebtedness consisting of (A) Guarantees by the Company
(so long as the Company could have Incurred such Indebtedness directly
without violation of this Indenture) and (B) Guarantees by a Restricted
Subsidiary of Senior Indebtedness Incurred by the Company without
violation of this Indenture (so long as such Restricted Subsidiary
could have Incurred such Indebtedness directly without violation of
this Indenture);
(x) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument issued by
the Company or its Restricted Subsidiaries drawn against insufficient
funds in the ordinary course of business in an amount not to exceed
$250,000 at any time; provided that such Indebtedness is extinguished
within two Business Days of its incurrence; and
(xi) Indebtedness (other than Indebtedness described in
clauses (i) -(x)) in a principal amount which, when taken together with
the principal amount of all other Indebtedness Incurred pursuant to
this clause (xi) and then outstanding, will not exceed $10.0 million
(it being understood that any Indebtedness Incurred under this clause
(xi) shall cease to be deemed Incurred or outstanding for purposes of
this clause (xi) (but shall be deemed to be Incurred for purposes of
paragraph (a)) from and after the first date on which the Company or
its Restricted Subsidiaries could have Incurred such Indebtedness under
the foregoing paragraph (a) without reliance upon this clause (xi)).
(c) Neither the Company nor any Restricted Subsidiary shall
Incur any Indebtedness under paragraph (b) above if the proceeds thereof are
used, directly or indirectly, to refinance any Subordinated Obligations of the
Company unless such Indebtedness shall be subordinated to the Notes to at least
the same extent as such Subordinated Obligations. No Restricted Subsidiary shall
Incur any Indebtedness under paragraph (b) above if the proceeds thereof are
used, directly or indirectly, to refinance any Guarantor Subordinated Obligation
of such Subsidiary Guarantor unless such Indebtedness shall be subordinated to
the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee to
at least the same extent as such Guarantor Subordinated Obligation.
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(d) The Company will not permit any Unrestricted Subsidiary to
Incur any Indebtedness other than Non-Recourse Debt.
SECTION 4.10. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any Asset Disposition unless (i) the Company or
such Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value, as determined in good faith
by the Company's Board of Directors (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset Disposition, (ii)
at least 80% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or Cash Equivalents and (iii) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be) (A)
first, to the extent the Company or any Restricted Subsidiary elects (or is
required by the terms of any Secured indebtedness), (x) to prepay, repay or
purchase Secured Indebtedness or (y) to the investment in or acquisition of
Additional Assets within 270 days from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; (B) second, within 270
days from the receipt of such Net Available Cash, to the extent of the balance
of such Net Available Cash after application in accordance with clause (A), to
make an offer to purchase Notes at 101% of their principal amount plus accrued
and unpaid interest, if any, thereon; (C) third, within 90 days after the later
of the application of Net Available Cash in accordance with clauses (A) and (B)
and the date that is one year from the receipt of such Net Available Cash, to
the extent of the balance of such Net Available Cash after application in
accordance with clauses (A) and (B), to prepay, repay or repurchase Indebtedness
(other than Preferred Stock) of the Company or of a Wholly-Owned Subsidiary (in
each case other than Indebtedness owed to the Company); and (D) fourth, to the
extent of the balance of such Net Available Cash after application in accordance
with clauses (A), (B) and (C), to (w) the investment in or acquisition of
Additional Assets, (x) the making of Temporary Cash Investments, (y) the
prepayment, repayment or purchase of Indebtedness of the Company (other than
Indebtedness owing to any Subsidiary of the Company) or Indebtedness of any
Subsidiary (other than Indebtedness owed to the Company or any of its
Subsidiaries) or (z) any other purpose otherwise permitted under the Indenture,
in each case within the later of 45 days after the application of Net Available
Cash in accordance with clauses (A), (B) and (C) or the date that is one year
from the receipt of such Net Available Cash; provided, however, that, in
connection with any prepayment, repayment or purchase of Indebtedness pursuant
to clause (A), (B), (C) or (D) above, the Company or such Restricted Subsidiary
shall retire such Indebtedness and shall cause the related loan commitment (if
any) to be permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased. Notwithstanding the foregoing provisions, the
Company and its Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance herewith except to the extent that the aggregate
Net
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Available Cash from all Asset Dispositions which are not applied in accordance
with this covenant at any time exceed $5 million. The Company shall not be
required to make an offer for Notes pursuant to this covenant if the Net
Available Cash available therefor (after application of the proceeds as provided
in clause (A)) is less than $5 million for any particular Asset Disposition
(which lesser amounts shall be carried forward for purposes of determining
whether an offer is required with respect to the Net Available Cash from any
subsequent Asset Disposition).
For the purposes of this covenant, the following will be
deemed to be cash: (x) the assumption by the transferee of Senior Indebtedness
of the Company or Senior Indebtedness of any Restricted Subsidiary and the
release of the Company or such Restricted Subsidiary from all liability on such
Senior Indebtedness in connection with such Asset Disposition (in which case the
Company shall, without further action, be deemed to have applied such assumed
Indebtedness in accordance with clause (A) of the preceding paragraph) and (y)
securities received by the Company or any Restricted Subsidiary of the Company
from the transferee that are promptly (and in any event within 60 days)
converted by the Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
purchase of Notes pursuant to clause (a)(iii)(B), the Company will be required
to purchase Notes tendered pursuant to an offer by the Company for the Notes at
a purchase price of 101% of their principal amount plus accrued and unpaid
interest, if any, to the purchase date in accordance with the procedures
(including prorating in the event of oversubscription) set forth in this
Indenture. If the aggregate purchase price of the Notes tendered pursuant to the
offer is less than the Net Available Cash allotted to the purchase of the Notes,
the Company will apply the remaining Net Available Cash in accordance with
clauses (a) (iii) (C) or (D) above.
(c) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Notes pursuant to this
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this Indenture by virtue thereof.
SECTION 4.11. LIMITATION ON AFFILIATE TRANSACTIONS.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or conduct any
transaction or series of related transactions (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with or for
the benefit of any Affiliate of the Company, other than
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a Wholly-Owned Subsidiary (an "Affiliate Transaction"), unless: (i) the terms of
such Affiliate Transaction are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arm's length dealings with a Person who is not
such an Affiliate; (ii) in the event such Affiliate Transaction involves an
aggregate amount in excess of $1 million, the terms of such transaction have
been approved by a majority of the members of the Board of Directors of the
Company and by a majority of the disinterested members of such Board, if any
(and such majority or majorities, as the case may be, determines that such
Affiliate Transaction satisfies the criteria in (i) above); and (iii) in the
event such Affiliate Transaction involves an aggregate amount in excess of $2
million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Affiliate
Transaction is fair to the Company or such Restricted Subsidiary, as the case
may be, from a financial point of view.
(b) The foregoing paragraph (a) shall not apply to (i) any
Restricted Payment permitted to be made pursuant to Section 4.07, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, or any
stock options and stock ownership plans for the benefit of employees, officers
and directors, consultants and advisors approved by the Board of Directors of
the Company, (iii) loans or advances to employees in the ordinary course of
business of the Company or any of its Restricted Subsidiaries in aggregate
amount outstanding not to exceed $250,000 to any employee or $500,000 in the
aggregate at any time, (iv) any transaction between Wholly-Owned Subsidiaries,
(v) indemnification agreements with, and the payment of fees and indemnities to,
directors, officers and employees of the Company and its Restricted
Subsidiaries, in each case in the ordinary course of business, (vi) transactions
pursuant to agreements in existence on the Issue Date which are (x) described in
the Offering Memorandum or (y) otherwise, in the aggregate, immaterial to the
Company and its Restricted Subsidiaries taken as a whole, (vii) any employment,
non-competition or confidentiality agreements entered into by the Company or any
of its Restricted Subsidiaries with its employees in the ordinary course of
business, or (viii) the issuance of Capital Stock of the Company (other than
Disqualified Stock).
SECTION 4.12. LIMITATION ON LIENS.
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Liens, except for Permitted Liens.
SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence, and
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the corporate, partnership or other existence of each Subsidiary, in accordance
with the respective organizational documents (as the same may be amended from
time to time) of each Subsidiary and the rights (charter and statutory),
licenses and franchises of the Company and its Subsidiaries; provided, however,
that the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any Subsidiary,
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Noteholders.
SECTION 4.14. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control each Noteholder
will have the right to require the Company to repurchase all or any part of such
Noteholder's Notes at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of purchase
(the "Change of Control Payment") (subject to the right of Noteholders of record
on a relevant Record Date to receive interest due on the relevant Interest
Payment Date).
(b) Within 20 days following any Change of Control, unless the
Company has mailed a redemption notice with respect to all the outstanding Notes
in connection with such Change of Control, the Company shall mail a notice to
each Noteholder with a copy to the Trustee or, at the Company's option, by the
Trustee (at the Company's expense) stating:
(i) that a Change of Control has occurred and that such
Noteholder has the right to require the Company to purchase such
Noteholder's Notes at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to
the date of purchase (subject to the right of Noteholders of record on
a Record Date to receive interest on the relevant Interest Payment
Date);
(ii) the repurchase date (which shall be no earlier than 50
days nor later than 60 days from the date such notice is mailed) (the
"Change of Control Payment Date"); and
(iii) the procedures determined by the Company, consistent
with this Indenture, that a Noteholder must follow in order to have its
Notes purchased.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.14. To the extent that the provisions of any securities laws or
regulations conflict with provisions of the Indenture,
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the Company will comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described in this Indenture
by virtue thereof.
(c) Noteholders electing to have a Note repurchased will be
required to surrender the Note, with the form entitled "Option of Noteholder to
Elect Purchase" on the reverse of the Note completed, to the Company at the
address specified in the notice at least 10 Business Days prior to the
repurchase date. Noteholders will be entitled to withdraw their election if the
Trustee or the Company receives, not later than three Business Days prior to the
repurchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Noteholder, the principal amount of the Note which was
delivered for repurchase by the Noteholder and a statement that such Noteholder
is withdrawing his election to have such Note purchased.
(d) On the Change of Control Payment Date, the Company will,
to the extent lawful, (i) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with the
Trustee an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Trustee will promptly mail to each Noteholder so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each
Noteholder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. Unless the Company
defaults in the payment for any Notes properly tendered pursuant to the Change
of Control Offer, any Notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date.
SECTION 4.15. LIMITATION ON ISSUANCES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES.
The Company will not permit any of its Restricted Subsidiaries
to issue any Capital Stock to any Person (other than to the Company or a
Wholly-Owned Subsidiary of the Company) or permit any Person (other than the
Company or a Wholly-Owned Subsidiary of the Company) to own any Capital Stock of
a Restricted Subsidiary of the Company, if in either case as a result thereof
such Restricted Subsidiary would no longer be a Restricted Subsidiary of the
Company; provided, however, that this provision shall not prohibit (x) the
Company or any of its Restricted Subsidiaries from selling, leasing or otherwise
disposing of all of the Capital Stock of any Restricted Subsidiary or (y) the
designation of a Restricted Subsidiary as an Unrestricted Subsidiary in
compliance with this Indenture.
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SECTION 4.16. LIMITATION ON REPAYMENT UPON A CHANGE OF CONTROL.
The Company will not make an offer to repurchase any
Subordinated Obligations if it is required to do so pursuant to a Change of
Control until at least 60 days after the occurrence of such Change of Control
and shall not purchase any Subordinated Obligations for 30 days following the
time the Company is required to make purchases of the Notes under this Indenture
following such Change of Control.
SECTION 4.17. LIMITATION ON SALE/LEASEBACK TRANSACTIONS.
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into, Guarantee or otherwise become
liable with respect to any Sale/Leaseback Transaction with respect to any
property or assets unless (i) the Company or such Restricted Subsidiary, as the
case may be, would be entitled pursuant to this Indenture to Incur Indebtedness
secured by a Permitted Lien on such property or assets in an amount equal to the
Attributable Indebtedness with respect to such Sale/Leaseback Transaction, (ii)
the Net Cash Proceeds from such Sale/Leaseback Transaction are at least equal to
the fair market value of the property or assets subject to such Sale/Leaseback
Transaction (such fair market value determined, in the event such property or
assets have a fair market value in excess of $1.0 million, no more than 30 days
prior to the effective date of such Sale/ Leaseback Transaction, by the Board of
Directors of the Company as evidenced by a resolution of such Board of
Directors) and (iii) the net cash proceeds of such Sale/Leaseback Transaction
are applied in accordance with the provisions described under Section 4.10.
SECTION 4.18. LIMITATION ON DESIGNATIONS OF UNRESTRICTED SUBSIDIARIES.
(a) The Company may designate any Subsidiary of the Company
(other than a Subsidiary of the Company which owns Capital Stock of a Restricted
Subsidiary) as an "Unrestricted Subsidiary" under this Indenture (a
"Designation") only if:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or, after giving effect to such Designation;
and
(ii) the Company would be permitted under this Indenture to
make an Investment at the time of Designation (assuming the
effectiveness of such Designation) in an amount (the "Designation
Amount") equal to the sum of (i) the fair market value of the Capital
Stock of such Subsidiary owned by the Company and the Restricted
Subsidiaries on such date and (ii) the aggregate amount of other
Investments of the Company and the Restricted Subsidiaries in such
Subsidiary on such date; and
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(iii) the Company would be permitted to Incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.09 at the time of Designation (assuming the effectiveness of
such Designation).
(b) In the event of any such Designation, the Company shall be
deemed to have made an Investment constituting a Restricted Payment pursuant to
the covenant described under Section 4.07 for all purposes of this Indenture in
the Designation Amount. The Company shall not, and shall not permit any
Restricted Subsidiary to, at any time (x) provide direct or indirect credit
support for or a Guarantee of any Indebtedness of any Unrestricted Subsidiary
(including of any undertaking, agreement or instrument evidencing such
Indebtedness), (y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary or (z) be directly or indirectly liable for any
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity upon the occurrence
of a default with respect to any Indebtedness of any Unrestricted Subsidiary
(including any right to take enforcement action against such Unrestricted
Subsidiary), except, in the case of clause (x) or (y), to the extent permitted
under Section 4.07.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation"), whereupon such Subsidiary shall then
constitute a Restricted Subsidiary, if:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Revocation;
and
(ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such Revocation would, if
incurred at such time, have been permitted to be incurred for all
purposes of this Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions of the Company delivered to the Trustee certifying compliance with
the foregoing provisions.
SECTION 4.19. FURTHER INSTRUMENTS AND ACTS.
The Trustee shall not be bound to ascertain or inquire as to
the performance or observance of any covenants, conditions or agreements on the
part of the Company, except as otherwise set forth herein, but the Trustee may
require of the Company full information and advice as to the performance of the
covenants, conditions and agreements contained herein, and upon request of the
Trustee, the Company will execute and deliver
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such further instruments and do such further acts as may be reasonably necessary
or proper to carry out more effectively the purposes of this Indenture.
SECTION 4.20. COMPANY TO CAUSE CERTAIN SUBSIDIARIES TO BECOME GUARANTORS.
The Company shall not (i) permit any of its Restricted
Subsidiaries to incur, guarantee or secure through the granting of Liens any
Indebtedness or (ii) pledge any intercompany notes representing obligations of
any of its Restricted Subsidiaries to secure the payment of any Indebtedness, in
either case unless such Restricted Subsidiary is a Wholly Owned Subsidiary which
is a Subsidiary Guarantor or at such time becomes a Subsidiary Guarantor by
executing a supplemental indenture in which such Restricted Subsidiary agrees to
be bound by the terms of this Indenture as a Subsidiary Guarantor and executes a
Subsidiary Guarantee.
ARTICLE 5
SUCCESSORS
SECTION 5.01. LIMITATIONS ON MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not consolidate with or merge with or into,
or convey, transfer or lease all or substantially all of its assets to, any
Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation, partnership, trust or
limited liability company organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia
and the Successor Company (if not the Company) shall expressly assume,
by supplemental indenture, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company
under the Notes and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor
Company or any Subsidiary of the Successor Company as a result of such
transaction as having been incurred by the Successor Company or such
Restricted Subsidiary at the time of such transaction), no Default or
Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company (A) would have a Consolidated Net Worth equal to or
greater than the
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Consolidated Net Worth of the Company immediately prior to such
transaction and (B) would be able to Incur at least an additional $1.00
of Indebtedness pursuant to paragraph (a) of Section 4.09;
(iv) there has been delivered to the Trustee an Opinion of
Counsel to the effect that Holders of the Notes will not recognize
income, gain or loss for U.S. Federal income tax purposes as a result
of such consolidation, merger, conveyance, transfer or lease and will
be subject to U.S. Federal income tax on the same amount and in the
same manner and at the same times as would have been the case if such
consolidation, merger, conveyance, transfer or lease had not occurred;
and
(v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
The Successor Company will succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture,
but, in the case of a lease of all or substantially all its assets, the Company
will not be released from the obligation to pay the principal of and interest on
the Notes.
Notwithstanding clauses (ii) and (iii) of Section 5.01, any
Restricted Subsidiary of the Company may consolidate with, merge into or
transfer all or part of its properties and assets to the Company.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
(a) An "Event of Default" occurs if:
(i) there is a default in any payment of interest on any Note
when due, continued for 30 days;
(ii) there is a default in the payment of principal of any
Note when due at its Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration or otherwise;
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(iii) there is a failure by the Company to comply with its
obligations under Section 5.01 hereof;
(iv) there is failure by the Company to comply for 30 days
after notice with any of its obligations under Sections 4.01, 4.03,
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.14, 4.15, 4.16, 4.17 or 4.18
hereof (in each case, other than a failure to purchase Notes which
shall constitute an Event of Default under clause (ii) above);
(v) there is a failure by the Company or any Subsidiary
Guarantor to comply for 60 days after notice with its other agreements
contained in this Indenture;
(vi) Indebtedness of the Company or any Restricted
Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default
and the total amount of such Indebtedness unpaid or accelerated exceeds
$2.0 million and such default shall not have been cured or such
acceleration rescinded after a 10-day period;
(vii) any judgment or decree for the payment of money in
excess of $2.0 million (to the extent not covered by insurance) is
rendered against the Company or a Significant Subsidiary and such
judgment or decree shall remain undischarged or unstayed for a period
of 60 days after such judgment becomes final and non-appealable;
(viii) any Subsidiary Guarantee by a Significant Subsidiary
ceases to be in full force and effect (except as contemplated by the
terms of this Indenture) or any Subsidiary Guarantor that is a
Significant Subsidiary denies or disaffirms its obligations under this
Indenture or its Subsidiary Guarantee and such Default continues for 10
days;
(ix) the Company or any of its Significant Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors,
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(E) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, or
(F) takes any corporate action to authorize or effect
any of the foregoing; or
(x) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary case,
(B) appoints a Custodian of the Company or any of its
Significant Subsidiaries or for all or substantially all of
the property of the Company or any of its Significant
Subsidiaries, or
(C) orders the liquidation of the Company or any of its
Significant Subsidiaries,
and the order or decree remains unstayed and in effect for 60
consecutive days.
(b) The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
(c) A Default under clause (iv) or (v) of Section 6.01(a)
hereof is not an Event of Default until the Trustee notifies the Company or such
Subsidiary Guarantor, as the case may be, or the Holders of 25% in principal
amount of the outstanding Notes notifies the Company or such Subsidiary
Guarantor, as the case may be, and the Trustee of the Default and the Company or
such Subsidiary Guarantor, as the case may be, does not cure such Default within
the time specified in such clause (iv) or (v) after receipt of the notice. The
written notice must specify the Default, demand that it be remedied and state
that the notice is a "Notice of Default."
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default
specified in clause (ix) or (x) of Section 6.01(a) with respect to the Company
or any Subsidiary Guarantor) occurs and is continuing, the Trustee by notice to
the Company, or the Holders of not less than 25% in aggregate principal amount
of the then outstanding Notes by notice to the Company and the Trustee, may
declare (a "Declaration") the unpaid principal of, and any accrued and unpaid
interest on, all the Notes to be due and payable (the "Default Amount"). Upon
any
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such Declaration the Default Amount shall be due and payable immediately. If an
Event of Default specified in clause (ix) or (x) of Section 6.01(a) occurs with
respect to the Company or any of the Subsidiary Guarantors, the Default Amount
shall ipso facto become and be immediately due and payable without any
Declaration or other act on the part of the Trustee or any Noteholder. The
Holders of a majority in aggregate principal amount of the then outstanding
Notes by written notice to the Trustee and to the Company may rescind any
Declaration if the rescission would not conflict with any judgment or decree and
if all Events of Default then continuing (other than any Events of Default with
respect to the nonpayment of principal of or interest on any Note which has
become due solely as a result of such Declaration) have been cured and the
Trustee has been paid all amounts due to it under Section 7.07, and may waive
any Default other than a Default with respect to a covenant or provision that
cannot be modified or amended without the consent of each Noteholder pursuant to
Section 9.02 hereof.
SECTION 6.03. OTHER REMEDIES.
(a) If an Event of Default occurs and is continuing, the
Trustee and the Noteholders may pursue any available remedy to collect the
payment of principal, premium, if any, or interest on the Notes or to enforce
the performance of any provision of the Notes or this Indenture.
(b) The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Noteholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Noteholders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may, on behalf of
all the Noteholders, waive an existing Default or Event of Default and its
consequences, except a continuing Default or Event of Default in the payment of
the principal, premium, if any, or interest on any Note (other than principal,
premium (if any) or interest which has become due solely as a result of a
Declaration) or a Default or Event of Default that cannot be modified or amended
without the consent of the Holder of each outstanding Note affected. Upon any
such waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
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SECTION 6.05. CONTROL BY MAJORITY.
Noteholders of a majority in principal amount of the Notes
then outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of other Noteholders or that may involve the
Trustee in personal liability. The Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action under this Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
SECTION 6.06. LIMITATION ON SUITS.
(a) Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, a Noteholder may pursue a
remedy with respect to this Indenture or the Notes only if:
(i) the Noteholder has previously given to the Trustee written
notice of a continuing Event of Default;
(ii) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue
the remedy;
(iii) such Noteholder or Noteholders offer, and, if requested,
provide, to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(v) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee,
in the reasonable opinion of such Trustee, a direction inconsistent
with the request.
(b) A Noteholder may not use this Indenture to prejudice the
rights of another Noteholder or to obtain a preference or priority over another
Noteholder.
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SECTION 6.07. RIGHTS OF NOTEHOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Noteholder to receive payment of principal, premium, if any,
interest on the Note, on or after the respective due dates expressed in the
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of the
Noteholder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a)(i) or (ii)
or an acceleration pursuant to Section 6.02 occurs and is continuing, the
Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Company or any Subsidiary Guarantor or any other
obligor on the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid on the Notes and interest on overdue
principal, premium, if any, and, to the extent lawful, interest on overdue
installments of interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including any advances made by the Trustee
and the reasonable compensation, expenses and disbursements of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07) and the Noteholders
allowed in any judicial proceedings relative to the Company or any Subsidiary
Guarantor (or any other obligor on the Notes), its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Noteholder to make
such payments to the Trustee, and in the event that the Trustee shall consent to
the making of such payments directly to the Noteholders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof. To the extent that the payment of any
such compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.07
hereof out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, dividends, money, securities and other properties which
the Noteholders may be entitled to receive in such proceeding whether in
liquidation or under
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any plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Noteholder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Noteholder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Noteholder in any such proceeding.
SECTION 6.10. PRIORITIES.
(a) If the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following order:
(i) First: to the Trustee, its agents and attorneys for
amounts due under Section 7.07, including payment of all compensation,
expenses and liabilities incurred, and all advances made, by the
Trustee and the costs and expenses of collection;
(ii) Second: if the Noteholders are forced to proceed against
the Company directly without the Trustee, to the Noteholders for their
collection costs;
(iii) Third: to the Noteholders for amounts due and unpaid on
the Notes for principal, premium, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium, if any, and
interest, respectively; and
(iv) Fourth: to the Company or, to the extent the Trustee
collects any amount pursuant to Article 10 hereof from any Subsidiary
Guarantor, to such Subsidiary Guarantor, or to such party as a court of
competent jurisdiction shall direct.
(b) The Trustee may fix a record date and payment date for any
payment to Noteholders. At least 15 calendar days before such record date, the
Company shall mail to each Holder and the Trustee a notice that states the
record date, the payment date and the amount to be paid.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This
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Section does not apply to a suit by the Trustee, a suit by a Noteholder pursuant
to Section 6.07 hereof, or a suit by Holders of more than 10% in principal
amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances and in the conduct
of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform only those duties as are
specifically set forth in this Indenture and the duties of the Trustee
shall be determined solely by the express provisions of this Indenture,
the Trustee need perform only those duties that are specifically set
forth in this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture, but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall examine the same to determine whether
or not they conform to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained,
the Trustee may not be relieved from liabilities for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
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(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of Section 7.01 and to the provisions of the TIA.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document unless the Trustee has reason to believe such fact or matter is not
true.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
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(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The permissive rights of the Trustee to do certain things
enumerated in this Indenture shall not be construed as a duty and the Trustee
shall not be answerable for other than its negligence or wilful default with
respect to such permissive rights.
(g) Except for (i) an Event of Default under 6.01(a)(i)
(except with respect to Additional Interest) or (ii) hereof, or (ii) any other
event of which the Trustee has "actual knowledge," which event, with the giving
of notice or the passage of time or both, would constitute an Event of Default,
the Trustee shall not be deemed to have notice of any Default or Event of
Default unless specifically notified in writing of such event by the Company or
the Noteholders of not less than 25% in aggregate principal amount of Notes
outstanding; as used herein, the term "actual knowledge" means the actual fact
or statement of knowing, without any duty to make any investigation with regard
thereto.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary Guarantor or any Affiliate of the Company or any Subsidiary Guarantor
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights. However, the Trustee is subject to Sections 7.10 and 7.11
hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Notes or
the Subsidiary Guarantees, it shall not be accountable for the Company's use of
the proceeds from the Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Notes or the Subsidiary Guarantees or any
other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
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SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if a Responsible Offerer of the Trustee has knowledge thereof, the Trustee shall
mail to each Noteholder in the manner and to the extent provided in TIA 313(a) a
notice of the Default or Event of Default within 60 days after it occurs. Except
in the case of a Default or Event of Default in any payment of principal,
premium (if any) or interest on any Note, the Trustee may withhold the notice if
and so long as its Board of Directors, a committee of its Board of Directors or
a committee of its officers in good faith determines that withholding the notice
is in the interest of the Noteholders.
SECTION 7.06. REPORTS BY TRUSTEE TO NOTEHOLDERS.
(a) Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as the Notes remain
outstanding, the Trustee shall mail to the Noteholders a brief report dated as
of such reporting date that complies with TIA Section 313(a) (but if no event
described in TIA Section 313(a) has occurred within the twelve months preceding
the reporting date, no report need be transmitted). The Trustee also shall
comply with TIA Section 313(b)(2) and (c).
(b) A copy of each report at the time of its mailing to the
Noteholders shall be filed with the Commission and each stock exchange, if any,
on which the Notes are listed, in accordance with and to the extent required by
TIA Section 313(d). The Company shall promptly notify the Trustee if and when
the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
(a) The Company and the each of the Subsidiary Guarantors,
jointly and severally, shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder,
including extraordinary services such as default administration. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company and each of the Subsidiary Guarantors, jointly and
severally, shall reimburse the Trustee upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
(b) The Company and each of the Subsidiary Guarantors, jointly
and severally, shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim
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(whether asserted by the Company, any Holder or any other Person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except as set forth below in subparagraph (d). The Trustee shall
notify the Company and each of the Subsidiary Guarantors promptly of any claim
for which it may seek indemnity. Failure by the Trustee to so notify the Company
or any Subsidiary Guarantor shall not relieve the Company or any of the
Subsidiary Guarantors of their Obligations hereunder. The Trustee may have
separate counsel and the Company and each of the Subsidiary Guarantors, jointly
and severally, shall pay the reasonable fees and expenses of such counsel.
Neither the Company nor any Subsidiary Guarantor need pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
(c) The obligations of the Company and each of the Subsidiary
Guarantors under this Section 7.07 shall survive the resignation or removal of
the Trustee and the satisfaction and discharge or termination of this Indenture.
(d) Notwithstanding subparagraphs (a) or (b) above, neither
the Company nor any Subsidiary Guarantor need reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through its own
negligence, bad faith or willful misconduct.
(e) To secure the Company's and each of the Subsidiary
Guarantor's payment obligations in this Section, the Trustee shall have a Lien
prior to the Notes on all money or property held or collected by the Trustee,
except that held in trust to pay principal, premium, if any, and interest on
particular Notes. Such Lien shall survive the resignation or removal of the
Trustee and the satisfaction and discharge or termination of this Indenture.
(f) When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.01(ix) or (x) hereof occurs, the
expenses and the compensation for such services (including the reasonable fees
and expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
(a) A resignation or removal of the Trustee and appointment of
a successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
(b) The Trustee may resign at any time and be discharged from
the trust hereby created by so notifying the Company. The Noteholders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee if:
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(i) the Trustee fails to comply with Section 7.10 hereof;
(ii) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(iii) a Custodian, receiver or other public officer takes
charge of the Trustee or its property; or
(iv) the Trustee becomes incapable of acting.
(c) If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall notify each
Noteholder of such event and promptly appoint a successor Trustee. Within one
year after the successor Trustee takes office, the Holders of a majority in
principal amount of the then outstanding Notes may appoint a successor Trustee
to replace the successor Trustee appointed by the Company.
(d) A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to each Noteholder. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the Lien provided for in
Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's and each of the Subsidiary Guarantor's obligations
under Section 7.07 hereof shall continue for the benefit of the retiring
Trustee.
(e) If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, any of the Subsidiary Guarantors or the Noteholders of at least 10% in
principal amount of the then outstanding Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) If the Trustee after written request by any Noteholder who
has been a Noteholder for at least six months fails to comply with Section 7.10,
such Noteholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to another
corporation, the resulting,
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surviving or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise eligible hereunder,
be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
(a) There shall at all times be a Trustee hereunder which
shall be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or the District of Columbia
authorized under such laws to exercise corporate trustee power, shall be subject
to supervision or examination by Federal, State, Territorial, or District of
Columbia authority and shall have (or be a part of a holding company with) a
combined capital and surplus of at least $100 million as set forth in its most
recent published annual report of condition.
(b) This Indenture shall always have a Trustee who satisfies
the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee shall comply
with TIA Section 310(b). The provisions of TIA Section 310 shall also apply to
the Company and each of the Subsidiary Guarantors, as obligor of the Notes.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Company and each
of the Subsidiary Guarantors as obligor on the Notes.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01. DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE.
(a) When (i) the Company delivers to the Trustee all
outstanding Notes (other than Notes replaced pursuant to Section 2.07 hereof)
canceled or for cancellation or (ii) all outstanding Notes have become due and
payable and the Company irrevocably deposits with the Trustee funds sufficient
to pay at maturity all outstanding Notes, including interest thereon (other than
Notes replaced pursuant to Section 2.07 hereof), and if in either case the
Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Sections 8.01(e) and 8.06 hereof, cease to be of
further effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel reasonably acceptable to the Trustee and at the cost and
expense of the Company.
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(b) Subject to Sections 8.01(e), 8.02 and 8.06 hereof, the
Company at any time may terminate (i) all its obligations under the Notes and
this Indenture ("legal defeasance option") or (ii) all obligations under
Sections 3.09, 4.04(a), (b) and (c), 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12,
4.15, 4.16, 4.17, 4.18 and 5.01(iii) and (v) ("covenant defeasance option"). The
Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
(c) If the Company exercises its legal defeasance option,
payment of the Notes may not be accelerated because of an Event of Default. If
the Company exercises its covenant defeasance option, payment of the Notes may
not be accelerated because of an Event of Default specified in Section
6.01(a)(iv), 6.01(a)(vi), 6.01(a)(vii), 6.01(a)(viii) or 6.01(a)(ix) (but only
with respect to Significant Subsidiaries) or 6.01(a)(x) hereof (but only with
respect to Significant Subsidiaries), or because of the failure of the Company
or the Subsidiary Guarantors to comply with Sections 5.01(iii) or 5.01(v).
(d) Upon satisfaction of the conditions set forth herein and
Section 8.02 and upon request of the Company, the Trustee shall acknowledge in
writing the discharge of those obligations that the Company terminates.
(e) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.01(d), 8.04,
8.05 and 8.06 hereof and the obligations of each Subsidiary Guarantor under
Article 10 in respect thereof shall survive until the Notes have been paid in
full. Thereafter, the Company's obligations in Sections 7.07, 8.04, 8.05 and
8.08 hereof and the obligations of each Subsidiary Guarantor under Article 10 in
respect thereof shall survive.
SECTION 8.02. CONDITIONS TO DEFEASANCE.
(a) The Company may exercise its legal defeasance option or
its covenant defeasance option only if:
(i) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations in amounts (including
interest, but without consideration of any reinvestment of such
interest) and maturities sufficient, but in the case of the legal
defeasance option only, not more than such amounts (as certified by a
nationally recognized firm of independent public accountants), to pay
and discharge at their Stated Maturity (or such earlier redemption date
as the Company shall have specified to the Trustee) the principal of,
premium, if any, interest on all outstanding Notes to maturity or
redemption, as the case may be, and to pay all of the sums payable by
it hereunder; provided, that the Trustee shall have been irrevocably
instructed to apply such money or the proceeds of such U.S.
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Government Obligations to the payment of said principal, premium, if
any, and interest with respect to the Notes;
(ii) in the case of the legal defeasance option only, 123 days
pass after the deposit is made and during the 123 day period no Default
or Event of Default specified in Section 6.01(ix) or (x) hereof with
respect to the Company or any Subsidiary Guarantor occurs which is
continuing at the end of the period;
(iii) no Default or Event of Default has occurred and is
continuing on the date of such deposit and after giving effect thereto;
(iv) the deposit does not constitute a default under any other
agreement binding on the Company;
(v) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940, as amended;
(vi) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Noteholders will not recognize
income, gain or loss for U.S. Federal income tax purposes as a result
of such defeasance and will be subject to U.S. Federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such defeasance had not occurred;
(vii) in the case of the covenant defeasance option, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Noteholders will not recognize income, gain or loss
for Federal income tax purposes as a result of such covenant defeasance
and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(viii) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Notes as contemplated
by this Article 8 have been complied with.
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(b) In order to have money available on a payment date to pay
principal, premium, if any, or interest on the Notes, the U.S. Government
Obligations deposited pursuant to preceding clause (a) shall be payable as to
principal or interest at least one Business Day before such payment date in such
amounts as shall provide the necessary money. U.S. Government Obligations shall
not be callable at the issuer's option.
(c) Before or after a deposit, the Company may make
arrangements satisfactory to the Trustee for the redemption of Notes at a future
date in accordance with Article 3 hereof.
SECTION 8.03. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to this Article 8. It shall apply the
deposited money and the money from U.S. Government Obligations through the
Paying Agent and in accordance with this Indenture to the payment of principal,
premium, if any, and interest on the Notes.
SECTION 8.04. REPAYMENT TO THE COMPANY.
(a) The Trustee and the Paying Agent shall promptly pay to the
Company upon written request any excess money or securities held by them at any
time; provided, however, that the Trustee shall not pay any such excess to the
Company unless the amount remaining on deposit with the Trustee, after giving
effect to such transfer are sufficient to pay principal, premium, if any, and
interest on the outstanding Notes, which amount shall be certified to the
Trustee by independent public accountants.
(b) The Trustee and the Paying Agent shall pay to the Company
upon written request any money held by them for the payment of principal,
premium, if any, or interest that remains unclaimed for two years after the date
upon which such payment shall have become due; provided, however, that the
Company shall have either caused notice of such payment to be mailed to each
Noteholder entitled thereto no less than 30 days prior to such repayment or
within such period shall have published such notice in a financial newspaper of
widespread circulation published in the City of New York. After payment to the
Company, Noteholders entitled to the money must look to the Company and the
Subsidiary Guarantors for payment as general creditors unless an applicable
abandoned property law designates another Person, and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS.
The Company and the Subsidiary Guarantors, jointly and
severally, shall pay and shall indemnify the Trustee against any tax, fee or
other charge imposed on or assessed
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against deposited U.S. Government Obligations or the principal and interest
received on such U.S. Government Obligations.
SECTION 8.06. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with this Article 8 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's and each of the Subsidiary Guarantor's Obligations
under this Indenture and the Notes and the Subsidiary Guarantees shall be
revived and reinstated as though no deposit had occurred pursuant to this
Article 8 until such time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations in accordance with this Article 8;
provided, however, that if the Company or any Subsidiary Guarantor has made any
payment of principal of, premium, if any, or interest on any Notes because of
the reinstatement of its Obligations, the Company or any of the Subsidiary
Guarantors, as the case may be, shall be subrogated to the rights of the
Noteholders to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF NOTEHOLDERS.
(a) Notwithstanding Section 9.02 of this Indenture, the
Company, the Subsidiary Guarantors and the Trustee may amend or supplement this
Indenture or the Notes without the consent of any Noteholder:
(i) to cure any ambiguity, omission, defect or
inconsistency; provided, that such amendment or supplement does not, as
evidenced by an Opinion of Counsel delivered to the Trustee, adversely
affect the rights of any Noteholder in any respect;
(ii) to comply with Article 5 hereof;
(iii) to provide for uncertificated Notes in addition to or in
place of certificated Notes (provided, that the uncertificated Notes
are issued in registered form for purposes of Section 163(f) of the
Internal Revenue Code, or in a manner such that the uncertificated
Notes are described in Section 163(f)(2)(B) of the Internal Revenue
Code);
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(iv) to add further Guarantees with respect to the Notes or to
secure the Notes with additional collateral;
(v) to add to the covenants of the Company for the benefit of
the Noteholders or to surrender any right or power conferred upon the
Company or the Guarantors;
(vi) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA;
(vii) to make any change that would provide additional rights
or benefits to the Holders of the Notes or that does not, as evidenced
by an Opinion of Counsel delivered to the Trustee, adversely affect the
rights of any Noteholder in any respect; or
(viii) to evidence or provide for a replacement Trustee under
Section 7.08 hereof;
provided, that the Company has delivered to the Trustee an Opinion of Counsel
stating that any such amendment or supplement complies with the provisions of
this Section 9.01.
(b) Upon the request of the Company and the Subsidiary
Guarantors accompanied by Board Resolutions of their respective Boards of
Directors authorizing the execution of any such supplemental indenture, and upon
receipt by the Trustee of the documents described in Section 7.02, Section 9.06
and Section 11.04 hereof, the Trustee shall join with the Company and the
Subsidiary Guarantors in the execution of any supplemental indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into such supplemental indenture which affects
its own rights, duties or immunities under this Indenture or otherwise.
(c) After an amendment or supplement under this Section 9.01
becomes effective, the Company shall mail to all Noteholders a notice briefly
describing such amendment or supplement. The failure to give such notice to all
Noteholders, or any defect therein, shall not impair or affect the validity of
an amendment or supplement under this Section.
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SECTION 9.02. WITH CONSENT OF NOTEHOLDERS.
(a) Except as provided below in this Section 9.02, the Company
and the Trustee may amend or supplement this Indenture or the Notes with the
written consent of the Noteholders of not less than a majority in aggregate
principal amount of the Notes then outstanding (including consents obtained in
connection with a purchase of, or tender offer or exchange offer for the Notes)
and subject to Section 6.04 and 6.07 any existing Default or Event of Default
and its consequences (other than a Default or Event of Default in the payment of
principal premium, if any, or interest, if any, on the Notes except a payment
default resulting from an acceleration of the Notes that has been rescinded) or
compliance with any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a purchase of,
or tender offer or exchange offer for the Notes). However, without the consent
of each Noteholder affected, an amendment, supplement or waiver under this
Section 9.02 may not (with respect to any Notes held by a non-consenting
Holder):
(i) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(ii) reduce the stated rate of or extend the stated time for
payment of any interest on any Note;
(iii) reduce the principal of or extend the Stated Maturity of
any Note or alter the redemption provisions (including without
limitation Sections 3.07, 3.09, 4.11 and 4.14 hereof) with respect
thereto;
(iv) reduce the premium payable upon the redemption or
repurchase of any Note or change the time at which any Note may be
redeemed in accordance with Section 3.07;
(v) make any Note payable in money other than that stated in
the Note;
(vi) make any change in Section 6.04 or 6.07 hereof or in this
Section 9.02(a);
(vii) waive a Default or Event of Default in the payment of
principal of premium, if any, or interest, if any, on, or redemption
payment with respect to, any or Note (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration);
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(viii) impair the right of any Holder to receive payment of
principal of and interest on such Holder's Notes on or after the due
dates therefor or to institute suit for the enforcement of any payment
on or with respect to such Holder's Notes;
(ix) make any change in the amendment provisions which require
each Holder's consent or in the waiver provisions; or
(x) release any Subsidiary Guarantor from its Subsidiary
Guaranty, except as provided herein.
(b) Upon the request of the Company and the Subsidiary
Guarantors accompanied by Board Resolutions of their respective Boards of
Directors authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Noteholders as aforesaid, and upon receipt by the Trustee of the
documents described in Section 7.02, Section 9.06 and Section 11.04 hereof, the
Trustee shall join with the Company and the Subsidiary Guarantors in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
(c) It shall not be necessary for the consent of the
Noteholders under this Section 9.02 to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
(d) After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to all Noteholders a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall comply with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
(a) Until an amendment, supplement or waiver becomes
effective, a consent to it by a Noteholder is a continuing consent by the
Noteholder and every subsequent Noteholder or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any
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such Noteholder or subsequent Noteholder may revoke the consent as to its Note
if the Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. An amendment, supplement or waiver
becomes effective when approved by the requisite Holders and executed by the
Trustee (or, if otherwise provided in such waiver, amendment or supplement, in
accordance with its terms) and thereafter binds every Noteholder, unless it
makes a change described in any of clauses (i) through (x) of Section 9.02, in
which case, the amendment, supplement or waiver shall bind only each Holder of a
Note who has consented to it and every subsequent Holder of a Note or portion of
a Note that evidences the same indebtedness as the consenting Holder's Note.
(b) The Company may fix a record date for determining which
Noteholders must consent to such amendment, supplement or waiver. If the Company
fixes a record date, the record date shall be fixed at (i) the later of 30 days
prior to the first solicitation of such consent or the date of the most recent
list of Noteholders furnished to the Trustee prior to such solicitation pursuant
to Section 2.05 hereof, or (ii) such other date as the Company shall designate.
If a record date is fixed, then notwithstanding the last sentence of the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment or waiver or revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No consent shall be valid or effective for more than 90 days after such
record date except to the extent that the requisite number of consents to the
amendment, supplement or waiver have been obtained within such 90-day period or
as set forth in the preceding paragraph of this Section 9.04.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
(a) Notes authenticated and delivered after the execution of
any supplemental indenture may bear a notation in form approved by the Trustee
as to any matter provided for in such amendment, supplement or waiver on any
Note thereafter authenticated. The Company in exchange for all Notes may issue
and the Trustee shall authenticate new Notes that reflect the amendment,
supplement or waiver.
(b) Failure to make the appropriate notation or issue a new
Note shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment, waiver or supplemental
indenture authorized pursuant to this Article 9 if the amendment, waiver or
supplemental indenture does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. If it does, the Trustee may, but need not, sign
it. In signing or refusing to sign such amendment, waiver or supplemental
indenture, the Trustee shall be entitled to receive and,
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subject to Section 7.01, shall be fully protected in relying upon, in addition
to the documents required by Section 7.02 and Section 11.04, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that such
amendment, waiver or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms.
ARTICLE 10
SUBSIDIARY GUARANTEE OF NOTES
SECTION 10.01. SUBSIDIARY GUARANTEE
(a) Each Subsidiary Guarantor hereby jointly and severally
irrevocably and unconditionally guarantees, as a primary obligor and not a
surety, to each Noteholder of a Note now or hereafter authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the Obligations of the Company hereunder or thereunder, (i) the due and punctual
payment of the principal, premium, if any, interest (including post-petition
interest in any proceeding under any Bankruptcy Law whether or not an allowed
claim in such proceeding) on overdue principal, premium, if any, and interest,
if lawful on such Note, and (ii) all other monetary Obligations payable by the
Company under this Indenture (including under Section 7.07 hereof) and the Notes
(all of the foregoing being hereinafter collectively called the "Guaranteed
Obligations"), when and as the same shall become due and payable, whether by
acceleration thereof, call for redemption or otherwise (including amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code), in accordance with the terms of any such Note
and of this Indenture, subject, however, in the case of (i) and (ii) above, to
the limitations set forth in Section 10.04 hereof. Each Subsidiary Guarantor
hereby agrees that its Obligations hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any failure to
enforce the provisions of any such Note or this Indenture, any waiver,
modification or indulgence granted to the Company with respect thereto, the
recovery of any judgment against the Company, any action to enforce the same, by
the Noteholders or the Trustee, the recovery of any judgment against the
Company, any action to enforce the same, or any other circumstances which may
otherwise constitute a legal or equitable discharge of a surety or guarantor.
Each Subsidiary Guarantor hereby waives diligence, presentment, filing of claims
with a court in the event of a merger or bankruptcy of the Company, any right to
require a proceeding first against the Company, the benefit of discussion,
protest or notice with respect to any such Note or the Indebtedness evidenced
thereby and all demands whatsoever, and covenants that this Subsidiary Guarantee
shall not be discharged as to any such Note except by payment in full of the
principal thereof, premium, if any, and all accrued interest thereon.
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(b) Each Subsidiary Guarantor further agrees that this
Subsidiary Guarantee herein constitutes a guarantee of payment, performance and
compliance when due (and not a guarantee of collection) and waives any right to
require that any resort be had by any Noteholder or the Trustee to any Note held
for payment of the Guaranteed Obligations.
(c) Each Subsidiary Guarantor agrees that it shall not be
entitled to, and hereby irrevocably waives, any right of subrogation in relation
to the Noteholders or the Trustee in respect of any Guaranteed Obligations. Each
Subsidiary Guarantor further agrees that, as between such Subsidiary Guarantor,
on the one hand, and the Noteholders and the Trustee, on the other hand, (x) the
maturity of the Guaranteed Obligations may be accelerated as provided in Article
6 for the purposes of such Subsidiary Guarantor's Subsidiary Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Guaranteed Obligations, and (y) in the event of
any Declaration of acceleration of such Guaranteed Obligations as provided in
Article 6 hereof, such Guaranteed Obligations (whether or not due and payable)
shall forthwith become due and payable by such Subsidiary Guarantor for the
purpose of this Article 10.
(d) Each Subsidiary Guarantor also agrees to pay any and all
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Noteholder in enforcing any rights under this Article 10.
(e) The Subsidiary Guarantee set forth in this Article 10
shall not be valid or become obligatory for any purpose with respect to a Note
until the certificate of authentication on such Note shall have been signed by
or on behalf of the Trustee.
SECTION 10.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
(a) To evidence each Subsidiary Guarantor's Subsidiary
Guarantee set forth in this Article 10, each Subsidiary Guarantor hereby agrees
that a notation of such Subsidiary Guarantee shall be placed on each Note
authenticated and delivered by the Trustee.
(b) This Indenture shall be executed on behalf of each
Subsidiary Guarantor, and an Officer of each Subsidiary Guarantor shall sign the
notation of the Subsidiary Guarantee on the Notes by manual or facsimile
signature. If an Officer whose signature is on this Indenture or the notation of
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which the Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless. Each Subsidiary Guarantor
hereby agrees that the Subsidiary Guarantee set forth in Section 10.01 hereof
shall remain in full force and effect notwithstanding any failure to endorse on
each Note a notation of the Subsidiary Guarantee.
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(c) The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of each Subsidiary
Guarantor.
SECTION 10.03. SUBSIDIARY GUARANTEE UNCONDITIONAL, ETC.
Upon failure of payment when due of any Guaranteed Obligation
for whatever reason, each Subsidiary Guarantor will be obligated to pay the same
immediately. Each Subsidiary Guarantor hereby agrees that its obligations
hereunder shall be continuing, absolute and unconditional, irrespective of: the
recovery of any judgment against the Company or any Subsidiary Guarantor; any
extension, renewal, settlement, compromise, waiver or release in respect of any
obligation of the Company under this Indenture or any Note, by operation of law
or otherwise; any modification or amendment of or supplement to this Indenture
or any Note; any change in the corporate existence, structure or ownership of
the Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Company or its assets or any resulting release or
discharge of any obligation of the Company contained in this Indenture or any
Note; the existence of any claim, set-off or other rights which any Subsidiary
Guarantor may have at any time against the Company, the Trustee, any Noteholder
or any other Person, whether in connection herewith or any unrelated
transactions; provided, that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim; any invalidity or
unenforceability relating to or against the Company for any reason of this
Indenture or any Note, or any provision of applicable law or regulation
purporting to prohibit the payment by the Company of the principal, premium, if
any, or interest on any Note or any other Guaranteed Obligation; or any other
act or omission to act or delay of any kind by the Company, the Trustee, any
Noteholder or any other Person or any other circumstance whatsoever which might,
but for the provisions of this paragraph, constitute a legal or equitable
discharge of the Subsidiary Guarantors' obligations hereunder. Each Subsidiary
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest, notice and all
demand whatsoever and covenants that this Subsidiary Guarantee will not be
discharged except by the complete performance of the obligations contained in
the Notes, this Indenture and in this Article 10. Each Subsidiary Guarantor's
obligations hereunder shall remain in full force and effect until the Indenture
shall have terminated and the principal of and interest on the Notes and all
other Guaranteed Obligations shall have been paid in full. If at any time any
payment of the principal of or interest on any Note or any other payment in
respect of any Guaranteed Obligation is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of the Company or
otherwise, each Subsidiary Guarantor's obligations hereunder with respect to
such payment shall be reinstated as though such payment had been due but not
made at such time, and this Article 10, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Subsidiary
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Guarantor irrevocably waives any and all rights to which it may be entitled, by
operation of law or otherwise, upon making any payment hereunder to be
subrogated to the rights of the payee against the Company with respect to such
payment or otherwise to be reimbursed, indemnified or exonerated by the Company
in respect thereof.
SECTION 10.04. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY.
Each Subsidiary Guarantor and by its acceptance hereof each
Noteholder hereby confirms that it is the intention of all such parties that the
guarantee by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
Law, Federal and state fraudulent conveyance laws or other legal principles. To
effectuate the foregoing intention, the Noteholders and each Subsidiary
Guarantor hereby irrevocably agree that the obligations of such Subsidiary
Guarantor under the Subsidiary Guarantee shall be limited to the maximum amount
as will, after giving effect to all other contingent and fixed liabilities of
such Subsidiary Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Subsidiary
Guarantee or pursuant to Section 10.05 hereof, result in the obligations of such
Subsidiary Guarantor under the Subsidiary Guarantee not constituting such
fraudulent transfer or conveyance under federal or state law.
SECTION 10.05. CONTRIBUTION.
In order to provide for just and equitable contribution among
the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in
the event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Subsidiary Guarantor") under the Subsidiary Guarantee, such Funding
Subsidiary Guarantor shall be entitled to a contribution from all other
Subsidiary Guarantors in a pro rata amount based on the Adjusted Net Assets of
each Subsidiary Guarantor (including the Funding Subsidiary Guarantor) for all
payments, damages and expenses incurred by that Funding Subsidiary Guarantor in
discharging the Company's obligations with respect to the Notes or any other
Subsidiary Guarantor's obligations with respect to the Subsidiary Guarantee.
SECTION 10.06. RELEASE.
Upon the sale or disposition of all of the Equity Interests of
a Subsidiary Guarantor to a Person which is not the Company or a Subsidiary of
the Company, which is otherwise in compliance with this Indenture, such
Subsidiary Guarantor shall be deemed released from all its obligations under the
Indenture without any further action required on the part of the Trustee or any
Noteholder; provided, however, that any such termination shall occur if and only
to the extent that all Obligations of each Subsidiary Guarantor under
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all of its guarantees of, and under all of its pledges of assets or other
security interests which secure, Indebtedness of the Company and the other
Subsidiary Guarantors shall also terminate upon such release, sale or transfer;
provided further, that without limiting the foregoing, any proceeds received by
the Company or any Subsidiary of the Company from such transaction shall be
applied as provided in Section 4.10 and Section 3.09. The Trustee shall execute
an appropriate instrument prepared by the Company evidencing such release upon
receipt of a request by the Company accompanied by an Officers' Certificate
certifying as to the compliance with this Section 10.06. Any Subsidiary
Guarantor not so released remains liable for the full amount of principal,
premium, if any, and interest on the Notes as provided in this Article 10.
SECTION 10.07. ADDITIONAL SUBSIDIARY GUARANTORS.
Any Person that was not a Subsidiary Guarantor on the date of
this Indenture may become a Subsidiary Guarantor by executing and delivering to
the Trustee (a) a supplemental indenture in form and substance satisfactory to
the Trustee, which subjects such Person to the provisions (including, without
limitation, the representations and warranties in this Article 10 and Article
11) of this Indenture as a Subsidiary Guarantor and (b) an Opinion of Counsel to
the effect that such supplemental indenture has been duly authorized and
executed by such Person and constitutes the legal, valid, binding and
enforceable obligation of such Person (subject to such customary exceptions
concerning creditors' rights and equitable principles as may be acceptable to
the Trustee in its discretion). The Subsidiary Guarantee of each Person
described in this Section 10.07 shall apply to all Notes theretofore executed
and delivered, notwithstanding any failure of such Notes to contain a notation
of such Subsidiary Guarantee thereon.
SECTION 10.08. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN
TERMS.
(a) Nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of a Subsidiary Guarantor with or into
the Company or another Subsidiary Guarantor that is a Wholly-Owned Subsidiary of
the Company or shall prevent any sale or conveyance of the property of a
Subsidiary Guarantor as an entirety or substantially as an entirety to the
Company or another Subsidiary Guarantor that is a Wholly-Owned Subsidiary of the
Company. Upon any such consolidation, merger, sale or conveyance, the Subsidiary
Guarantee given by such Subsidiary Guarantor shall no longer have any force or
effect.
(b) Nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of a Subsidiary Guarantor with or into
a Person or Persons other than the Company or another Subsidiary Guarantor
(whether or not affiliated with the Subsidiary Guarantor), or successive
consolidations or mergers in which a
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Subsidiary Guarantor or its successor or successors shall be a party or parties,
or shall prevent any sale or conveyance of the property of a Subsidiary
Guarantor as an entirety or substantially as an entirety, to a Person other than
the Company or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor); provided, however, that, subject to Sections 10.06 and
10.08(a), (x) (i) immediately after such transaction, and giving effect thereto,
no Default or Event of Default shall have occurred as a result of such
transaction and be continuing, or (ii) such transaction does not violate any
covenants set forth in this Indenture, and (y) (i) the respective transaction is
treated as an Asset Disposition for purposes of Section 4.10 and Section 3.09
hereof or (ii) if the surviving Person is not the Subsidiary Guarantor, each
Subsidiary Guarantor hereby covenants and agrees that, upon any such
consolidation, merger, sale or conveyance, the Subsidiary Guarantee set forth in
this Article 10, and the due and punctual performance and observance of all of
the covenants and conditions of this Indenture to be performed by such
Subsidiary Guarantor, shall be expressly assumed (in the event that the
Subsidiary Guarantor is not the surviving Person in the merger), by supplemental
indenture satisfactory in form to the Trustee of the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Subsidiary Guarantor, and such successor Person shall succeed
to, and be substituted for, the Subsidiary Guarantor with the same effect as if
it had been named herein as a Subsidiary Guarantor.
SECTION 10.09. SUCCESSORS AND ASSIGNS.
This Article 10 shall be binding upon each Subsidiary
Guarantor and its successors and assigns and shall inure to the benefit of the
successors and assigns of the Trustee and the Noteholders and, in the event of
any transfer or assignment of rights by any Noteholder or the Trustee, the
rights and privileges conferred upon that party in this Indenture and in the
Notes shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 10.10. WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each Subsidiary Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive each
such Subsidiary Guarantor from performing its Subsidiary Guarantee as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) each such Subsidiary Guarantor hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
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ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control. Until such time as
this Indenture becomes qualified under the TIA, the Company, the Subsidiary
Guarantors and the Trustee shall be deemed subject to and governed by the TIA as
if the Indenture were so qualified on the date hereof.
SECTION 11.02. NOTICES.
(a) Any notice or communication by the Company, any Subsidiary
Guarantor or the Trustee to the other is duly given if in writing and delivered
in person or mailed by first class mail (registered or certified, return receipt
requested), confirmed facsimile transmission or overnight air courier
guaranteeing next day delivery, to the other's address:
If to the Company or any of the Subsidiary Guarantors:
American Architectural Products Corporation
755 Boardman - Canfield Road
South Bridge Executive Center
Building G West
Boardman, Ohio 44512
Attention: Chief Financial Officer
Facsimile No.: (330) 965-9915
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: Corporate Trust Administration
Facsimile No.: (212) 852-1625
(b) The Company or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications.
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(c) All notices and communications (other than those sent to
Noteholders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if by facsimile
transmission; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
(d) Any notice or communication to a Noteholder shall be
mailed by first class mail, postage prepaid, to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Noteholders.
(e) If a notice or communication is mailed to any Person in
the manner provided above within the time prescribed, it is duly given, whether
or not the addressee receives it.
(f) If the Company mails a notice or communication to
Noteholders, it shall mail a copy to the Trustee and each Agent at the same
time.
SECTION 11.03. COMMUNICATION BY NOTEHOLDERS WITH OTHER NOTEHOLDERS.
Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or the
Notes. The Company, the Subsidiary Guarantors, the Trustee, the Registrar and
anyone else shall have the protection of TIA Section 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company and/or any of
the Subsidiary Guarantors to the Trustee to take any action under this
Indenture, the Company and/or any of the Subsidiary Guarantors, as the case may
be, shall furnish to the Trustee:
(i) an Officer's Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have been satisfied
(except with regard to an authentication order pursuant to Section
2.02(c) hereof, which shall require a certificate of two Officers); and
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(ii) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e), shall comply with the definition of the term "Officers'
Certificate" and shall include:
(i) a statement that the person making such certificate or
opinion has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(iv) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been satisfied.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Noteholders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 11.07. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in New York City, or at a place of payment are authorized
or obligated by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
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SECTION 11.08. NO RECOURSE AGAINST OTHERS.
No past, present or future director, officer, employee, agent,
manager, stockholder or partner of the Company or its predecessors shall have
any liability for any Obligations of the Company under the Notes or this
Indenture or for any claim based on, in respect of, or by reason of such
Obligations or their creation. Each Noteholder by accepting a Note waives and
releases all such liability. This waiver and release are part of the
consideration for issuance of the Notes.
SECTION 11.09. DUPLICATE ORIGINALS.
The parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture.
SECTION 11.10. GOVERNING LAW.
This Indenture and the Notes shall be governed by, and
construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the laws of another jurisdiction would be required thereby.
SECTION 11.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of any of the Subsidiary Guarantors, the Company or their
respective Subsidiaries. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture.
SECTION 11.12. SUCCESSORS.
All agreements of the Company and the Subsidiary Guarantors in
this Indenture and the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 11.13. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
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SECTION 11.14. COUNTERPART ORIGINALS.
This Indenture may be executed in any number of counterparts,
each of which so executed shall be an original, but all of them together
represent the same agreement.
SECTION 11.15. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
SIGNATURES
AMERICAN ARCHITECTURAL
PRODUCTS CORPORATION
By /s/ Frank J. Amedia
-------------------------------
Name: Frank J. Amedia
Title: President
EAGLE & TAYLOR COMPANY
By /s/ Joseph Dominijanni
-------------------------------
Name: Joseph Dominijanni
Title: Vice President - Finance
FORTE, INC.
By /s/ Frank J. Amedia
-------------------------------
Name: Frank J. Amedia
Title: President
WESTERN INSULATED GLASS, CO.
By /s/ Frank J. Amedia
-------------------------------
Name: Frank J. Amedia
Title: Chief Executive Officer
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THERMETIC GLASS, INC.
By /s/ Frank J. Amedia
-------------------------------
Name: Frank J. Amedia
Title: Chief Executive Officer
BBPI ACQUISITION CORPORATION
By /s/ Frank J. Amedia
-------------------------------
Name: Frank J. Amedia
Title: President
DCI/DCW ACQUISITION
CORPORATION
By /s/ Frank J. Amedia
-------------------------------
Name: Frank J. Amedia
Title: President
AMERICAN GLASSMITH
ACQUISITION CORPORATION
By /s/ Frank J. Amedia
-------------------------------
Name: Frank J. Amedia
Title: President
MODERN WINDOW ACQUISITION
CORPORATION
By /s/ Frank J. Amedia
-------------------------------
Name: Frank J. Amedia
Title: President
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UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee
By /s/ Patricia Stermer
--------------------------------
Name: Patricia Stermer
Title: Assistant Vice President
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EXHIBIT A
FORM OF INITIAL NOTE
THIS NOTE OR ITS PREDECESSORS HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, UNITED STATES PERSONS OR A BENEFICIAL INTEREST HEREIN
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE SECURITIES ACT)
(AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S.
PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT
IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) UNDER
THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH TRANSFER, RESELL
OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO AMERICAN ARCHITECTURAL
PRODUCTS CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES AT THE TIME OF TRANSFER OF LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO AMERICAN ARCHITECTURAL PRODUCTS
CORPORATION THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM
<PAGE> 103
EXHIBIT A
Page 2
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR (G) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO AMERICAN ARCHITECTURAL PRODUCTS CORPORATION)
AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATES NOTES LAWS AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING
THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS;
[Include the following legends only on Global Notes]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE
OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE &
CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS
OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
<PAGE> 104
EXHIBIT A
Page 3
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE> 105
EXHIBIT A
Page 4
CUSIP No: A23855AA7
(Front of Note)
No. 1 $___________
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
11.75% Senior Notes due 2007, Series A
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION, a Delaware corporation promises to
pay to ____________________, or its registered assigns, the principal sum of
$__________________ on December 1, 2007.
Interest Payment Dates: June 1 and December 1, commencing June 1, 1998.
Record Dates: May 15 and November 15 (whether or not a Business Day).
Additional provisions of this Note are set forth on the other side of this Note.
Dated:
AMERICAN ARCHITECTURAL
PRODUCTS CORPORATION
By: _______________________
By: _______________________
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned Indenture
UNITED STATES TRUST COMPANY OF NEW YORK
By:_________________________________
Authorized Signatory
<PAGE> 106
EXHIBIT A
Page 5
(Reverse of Note)
11.75% SENIOR NOTE DUE 2007, Series A
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined below) unless otherwise indicated.
1. Interest. American Architectural Products Corporation, a
Delaware corporation (the "Company"), promises to pay interest on the principal
amount of this Note at the rate and in the manner specified below. The Company
shall pay, in cash, interest on the principal amount of this Note at the rate
per annum of 11.75%. The Company will pay interest semiannually in arrears on
June 1 and December 1 of each year (each an "Interest Payment Date"), commencing
June 1, 1998, or if any such day is not a Business Day on the next succeeding
Business Day. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest shall accrue from the most recent
Interest Payment Date to which interest has been paid or, if no interest has
been paid, from the date of the original issuance of the Notes. To the extent
lawful, the Company shall pay interest on overdue principal at the rate of 2%
per annum in excess of the then applicable interest rate on the Notes; it shall
pay interest on overdue installments of interest (without regard to any
applicable grace periods) at the same rate to the extent lawful. The rate of
interest payable on this Note shall be subject to the assessment of additional
interest (the "Additional Interest") as follows:
(i) if the Exchange Offer Registration Statement (as defined
below) or Shelf Registration Statement (as defined below) is not filed within 60
days following the Issue Date or, in the case of the Shelf Registration
Statement, 60 days following a Shelf Request, (as defined in the Registration
Rights Agreement) Additional Interest shall accrue on the Notes over and above
the stated interest at a rate of 0.50% per annum for the first 30 days
commencing on the 61st day after the Issue Date or the Shelf Request,
respectively, such Additional Interest rate increasing by an additional 0.50%
per annum at the beginning of each subsequent 30-day period;
(ii) if the Exchange Offer Registration Statement or Shelf
Registration Statement is not declared effective within, in the case of the
Exchange Offer Registration Statement, 150 days following the Issue Date or, in
the case of the Shelf Registration Statement, 150 days following a Shelf
Request, Additional Interest shall accrue on the Notes over and above the stated
interest at a rate of 0.50% per annum for the first 30 days commencing on the
151st day after the Issue Date or the Shelf Request, respectively, such
Additional Interest rate increasing by an additional 0.50% per annum at the
beginning of each subsequent 30-day period; or
<PAGE> 107
EXHIBIT A
Page 6
(iii) if (A) the Company and the Subsidiary Guarantors have
not exchanged all Notes validly tendered in accordance with the terms of the
Exchange Offer on or prior to 180 days after the Issue Date or (B) the Exchange
Offer Registration Statement ceases to be effective at any time prior to the
time that the Exchange Offer is consummated or (C) if applicable, the Shelf
Registration Statement has been declared effective and such Shelf Registration
Statement ceases to be effective at any time prior to the second anniversary of
the Issue Date (unless all the Notes have been sold thereunder), then Additional
Interest shall accrue on the Notes over and above the stated interest at a rate
of 0.50% per annum for the first 30 days commencing on (x) the 181st day after
the Issue Date with respect to the Notes validly tendered and not exchanged by
the Company, in the case of (A) above, or (y) the day the Exchange Offer
Registration Statement ceases to be effective or usable for its intended purpose
in the case of (B) above, or (z) the day such Shelf Registration Statement
ceases to be effective in the case of (C) above, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each subsequent
30-day period; provided, however, that the Additional Interest rate on the Notes
under clauses (i), (ii) and (iii) above may not exceed in the aggregate 2.0% per
annum; and provided further, that (1) upon the filing of the Exchange Offer
Registration Statement or Notes Shelf Registration Statement (in the case of
clause (i) above), (2) upon the effectiveness of the Exchange Offer Registration
Statement or Shelf Registration Statement (in the case of (ii) above), or (3)
upon the exchange of Exchange Notes for all Notes tendered (in the case of
clause (iii)(A) above), or upon the effectiveness of the Exchange Offer
Registration Statement which had ceased to remain effective (in the case of
clause (iii)(B) above), or upon the effectiveness of the Shelf Registration
Statement which had ceased to remain effective (in the case of clause (iii)(C)
above), Additional Interest on the Notes as a result of such clause (or the
relevant subclause thereof), as the case may be, shall cease to accrue.
"Exchange Offer" shall mean the exchange offer by the Company
of Initial Notes for Exchange Notes pursuant to Section 2(a) of the Registration
Rights Agreement.
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such registration
statement, in each case including the Offering Memorandum or prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Record Date" shall have the meaning provided on the front of
this Note.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company and the Subsidiary Guarantors pursuant to
the provisions of the Registration Rights Agreement which covers all of the
Initial Notes on an appropriate form under Rule 415 under the Securities Act, or
any similar rule that may be adopted by the Commission, and all amendments and
supplements to such registration statement, including post-effective
<PAGE> 108
EXHIBIT A
Page 7
amendments, in each case including the Offering Memorandum contained therein,
all exhibits thereto and all material incorporated by reference therein.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are registered Holders of
Notes at the close of business on the Record Date immediately preceding the
Interest Payment Date, even if such Notes are cancelled after such Record Date
and on or before such Interest Payment Date. Noteholders must surrender Notes to
a Paying Agent to collect principal payments. The Company shall pay principal,
premium, if any, and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal, premium, if any, and interest
by its check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Noteholder at the Noteholder's
registered address.
3. Paying Agent and Registrar. Initially, the Trustee will act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Noteholder. The Company or
any Guarantor of the Company may act in any such capacity, except that none of
the Company, its Subsidiaries or their Affiliates shall act (i) as Paying Agent
in connection with any redemption, offer to purchase, discharge or defeasance,
as otherwise specified in the Indenture, and (ii) as Paying Agent or Registrar
if a Default or Event of Default has occurred and is continuing.
4. Indenture. The Company issued the Notes under an Indenture,
dated as of December 10, 1997 (the "Indenture"), between the Company and United
States Trust Company of New York, as Trustee (the "Trustee"). The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the TIA as in effect on the date the Indenture is qualified,
except as otherwise provided in the Indenture. The Notes are subject to all such
terms, and Noteholders are referred to the Indenture and the TIA for a statement
of such terms. The terms of the Indenture shall govern any inconsistencies
between the Indenture and the Notes. The Notes are senior Obligations of the
Company limited to $125,000,000 in aggregate principal amount.
5.(a) Optional Redemption. Except as indicated in the next
succeeding paragraph, the Notes are not redeemable at the Company's option prior
to December 1, 2002. Thereafter, the Notes will be redeemable, at the option of
the Company, in whole or in part, at the redemption prices (expressed as
percentages of the principal amount of the Notes) set forth below, plus accrued
interest to the redemption date:
PERIOD REDEMPTION PRICE
2002..........................................................105.000%
<PAGE> 109
EXHIBIT A
Page 8
2003......................................................... 103.333%
2004......................................................... 101.667%
2005 and thereafter......................................... 100.000%
(b) Optional Redemption Upon Equity Offerings. At any time, or
from time to time, on or prior to December 1, 2000, the Company may, at its
option, use the Net Cash Proceeds of one or more Equity Offerings by the Company
so long as there is a Public Market at the time of such redemption (which fact
shall be certified to the Trustee in an Officer's Certificate delivered to the
Trustee pursuant to Section 3.01(a)), at a redemption price equal to 110% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the date of redemption; provided, however, that after any such redemption, the
aggregate principal amount of the Notes outstanding must equal at least $82
million. In order to effect the foregoing redemption with the proceeds of any
Equity Offering, the Company shall make such redemption not more than 90 days
after the consummation of any such Equity Offering.
6. Mandatory Redemption. The Notes are not subject to
mandatory redemption or sinking fund payments.
7. Repurchase at Option of Noteholder. (a) If there is a
Change of Control, each Holder of Notes will have the right to require the
Company to repurchase all or any part of such Holder's Notes at a repurchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date). Within 20 days following any Change of Control, the
Company will mail a notice to each Noteholder stating (i) that a Change of
Control has occurred and that such Noteholder has the right to require the
Company to repurchase all or any part of such Noteholder's Notes at a repurchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase (subject to the right of
Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date); (ii) the circumstances and relevant facts
regarding such Change of Control (including information with respect to pro
forma historical income, cash flow and capitalization after giving effect to
such Change of Control); (iii) the repurchase date (which will be no earlier
then 50 days nor later than 60 days from the date such notice is mailed); and
(iv) the procedures, determined by the Company consistent with the Indenture,
that a Noteholder must follow in order to have its Notes repurchased.
Noteholders that are subject to an offer to repurchase may elect to have such
Notes repurchased by completing the form entitled "Option of Noteholder to Elect
Purchase" appearing below.
(b) If the Company or a Subsidiary consummates any Asset
Disposition, and when the aggregate amount of Net Available Cash from such an
Asset Disposition exceeds
<PAGE> 110
EXHIBIT A
Page 9
$5 million, the Company shall be required to offer to purchase the maximum
principal amount of Notes, that is in an integral multiple of $1,000, that may
be purchased out of the Net Available Cash at 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date fixed for the
closing of such offer in accordance with the procedures set forth in the
Indenture. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Net Available Cash, the Notes to be redeemed shall
be selected on a pro rata basis. Noteholders that are the subject of an offer to
purchase will receive an Asset Disposition Offer from the Company prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Noteholder to Elect Purchase" appearing below.
8. Notice of Redemption. Notice of redemption shall be mailed
at least 30 (unless a shorter period is acceptable to the Trustee) but not more
than 60 days before the redemption date to each Holder whose Notes are to be
redeemed at its registered address. Notes may be redeemed in part but only in
whole multiples of $1,000, unless all of the Notes held by a Noteholder are to
be redeemed. On and after the redemption date, interest ceases to accrue on
Notes or portions of them called for redemption.
9. Registration Rights. Pursuant to the Registration Rights
Agreement, and subject to certain terms and conditions stated therein, the
Company will be obligated to consummate an Exchange Offer pursuant to which the
Holders of the Initial Notes shall have the right to exchange this Note for
Exchange Notes, which have been registered under the Securities Act, in like
principal amount and having terms identical in all material respect to the
Initial Note.
10. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Noteholder among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Note or portion of a Note selected for redemption. Also, it need not exchange or
register the transfer of any Notes during a period beginning at the opening of
business on a Business Day 15 days before the day of any selection of Notes to
be redeemed and ending at the close of business on the day of selection or
during the period between a Record Date and the corresponding Interest Payment
Date.
11. Persons Deemed Owners. Prior to due presentment to the
Trustee for registration of the transfer of this Note, the Trustee, any Agent
and the Company may deem and treat the Person in whose name this Note is
registered as its absolute owner for the purpose of receiving payment of
principal of, premium, if any, and interest on this Note and for all other
purposes whatsoever, whether or not this Note is overdue, and neither the
<PAGE> 111
EXHIBIT A
Page 10
Trustee, any Agent nor the Company shall be affected by notice to the contrary.
The registered Noteholder shall be treated as its owner for all purposes.
12. Amendments and Waivers. Subject to certain exceptions
provided in the Indenture, the Indenture or the Notes may be amended with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes, and any existing Default or Event of Default (except a payment default)
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes. Without the consent of any Noteholder the
Indenture or the Notes may be amended to, among other things, cure any
ambiguity, defect or inconsistency, to comply with the requirements of the
Commission in order to effect or maintain qualification of the Indenture under
the TIA or to make any change that does not adversely affect the rights of any
Noteholder.
13. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare the unpaid principal of, and any accrued
and unpaid interest on, all the Notes to be due and payable immediately;
provided, that in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company or any Subsidiary
Guarantor, all outstanding Notes shall become due and payable immediately
without further action or notice. Noteholders may not enforce the Indenture or
the Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Noteholders notice of any continuing default
(except a default in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.
14. Trustee Dealings with the Company. The Trustee under the
Indenture, in its individual or any other capacity may make loans to, accept
deposits from, and perform services for the Company, the Subsidiary Guarantors
or any Affiliate of the Company or the Subsidiary Guarantors, and may otherwise
deal with the Company, the Subsidiary Guarantors and their respective Affiliates
as if it were not Trustee.
15. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
its Capital Stock or certain Indebtedness, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications
<PAGE> 112
EXHIBIT A
Page 11
and exceptions provided for in the Indenture. The Company must annually report
to the Trustee on compliance with such limitations.
16. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. Subsidiary Guarantee. Each Subsidiary Guarantor has
jointly and severally irrevocably and unconditionally guaranteed the payment of
principal, premium, if any, and interest (including interest on overdue
principal and overdue interest, if lawful) on the Notes; provided, however, each
Subsidiary Guarantor that makes a payment or distribution under a Subsidiary
Guarantee shall be entitled to a contribution from each other Guarantor in a pro
rata amount based on the Adjusted Net Assets of each Subsidiary Guarantor.
18. Defeasance. Subject to certain conditions provided for in
the Indenture, the Company at any time may terminate some or all of its
obligations under the Notes and the Indenture if the Company deposits with the
Trustee money or U.S. Government Obligations for the payment of principal,
premium (if any) and interest on the Notes to redemption or maturity, as the
case may be.
19. Governing Law. The Laws of the State of New York shall
govern this Note and the Indenture, without regard to principles of conflict of
laws.
20. Abbreviations. Customary abbreviations may be used in the
name of a Noteholder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
21. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Note Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Noteholders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
The Company will furnish to any Noteholder upon written
request and without charge a copy of the Indenture. Request may be made to:
American Architectural Products Corporation
755 Boardman - Canfield Road
<PAGE> 113
EXHIBIT A
Page 12
South Bridge Executive Center
Building G West
Boardman, Ohio 44512
Attn: Chief Financial Officer
<PAGE> 114
EXHIBIT A
Page 13
FORM OF NOTATION ON SECURITY
RELATING TO SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE
The Subsidiary Guarantors (as defined in the Indenture (the
"Indenture") referred to in the Note upon which this notation is endorsed and
each hereinafter referred to as a "Subsidiary Guarantor," which term includes
any successor person under the Indenture) (i) have jointly and severally
irrevocably and unconditionally guaranteed as a primary obligor and not a
surety, (such guarantee by each Subsidiary Guarantor being referred to herein as
the "Subsidiary Guarantee") (a) the due and punctual payment of the principal,
premium, if any, and interest on the Notes, whether at Stated Maturity or
interest payment date, by acceleration, call for redemption or otherwise, (b)
the due and punctual payment of interest on the overdue principal of and
interest, if any, on the Notes, to the extent lawful, (c) the due and punctual
performance of all other monetary Obligations of the Company under the Indenture
and the Notes to the Noteholders or the Trustee, all in accordance with the
terms set forth in Article 10 of the Indenture and (d) in case of any extension
of time of payment or renewal of any Notes or any such Obligations, the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at Stated Maturity by acceleration or
otherwise and (ii) have agreed to pay any and all costs and expenses (including
reasonable attorneys' fees) incurred by the Trustee or any Noteholders in
enforcing any rights under this Subsidiary Guarantee.
The Obligations of each Subsidiary Guarantor to the Holders of
Notes and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture
are expressly set forth in Article 10 of the Indenture and reference is hereby
made to such Indenture for the precise terms of this Subsidiary Guarantee.
No stockholder, officer, director or incorporator, as such,
past, present or future of any Subsidiary Guarantor shall have any liability
under this Subsidiary Guarantee by reason of his or its status as such
stockholder, officer, director or incorporator.
This is a continuing Subsidiary Guarantee and, except as
otherwise expressly provided for in Section 10.06 of the Indenture, shall remain
in full force and effect and shall be binding upon the Subsidiary Guarantor and
its successors and assigns until full and final payment of all of the Company's
Obligations under the Notes and the Indenture and shall inure to the benefit of
the successors and assigns of the Trustee and the Noteholders and, in the event
of any transfer or assignment of rights by any Noteholder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions hereof. This is a Subsidiary Guarantee of payment and not of
collectability.
<PAGE> 115
EXHIBIT A
Page 14
This Subsidiary Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
THE TERMS OF ARTICLE 10 OF THE INDENTURE ARE
INCORPORATED HEREIN BY REFERENCE.
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
Guarantors:
EAGLE & TAYLOR COMPANY
By_________________________________
Name:
Title:
FORTE, INC.
By_________________________________
Name:
Title:
WESTERN INSULATED GLASS, CO.
By_________________________________
Name:
Title:
<PAGE> 116
EXHIBIT A
Page 15
THERMETIC GLASS, INC.
By_________________________________
Name:
Title:
BBPI ACQUISITION CORPORATION
By_________________________________
Name:
Title:
DCI/DCW ACQUISITION
CORPORATION
By_________________________________
Name:
Title:
AMERICAN GLASSMITH ACQUISITION
CORPORATION
By_________________________________
Name:
Title:
MODERN WINDOW ACQUISITION
CORPORATION
By_________________________________
Name:
Title:
<PAGE> 117
EXHIBIT A
Page 16
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
<PAGE> 118
EXHIBIT A
Page 17
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date:______________
Your Signature:_________________________
(Sign exactly as your name appears on
the face of this Note)
<PAGE> 119
EXHIBIT A
Page 18
In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act") covering resales of this Note
(which effectiveness shall not have been suspended or terminated at the date of
the transfer) and (ii) December 10, 1999, the undersigned confirms that it has
not utilized any general solicitation or general advertising in connection with
the transfer and that this Note is being transferred:
Check One
<TABLE>
<S> <C>
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) ___ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) ___ outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act; or
(5) ___ pursuant to the exemption from registration provided by Rule 144
under the Securities Act; or
(6) ___ pursuant to an effective registration statement under the Securities
Act; or
(7) ___ pursuant to another available exemption from the registration
requirements of the Securities Act.
</TABLE>
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any Person other than the
registered Noteholder thereof; provided that if box (3), (4), (5) or (7) is
checked, the Company or the Trustee may require, prior to registering any such
transfer of the Notes, in its sole discretion, such legal opinions,
certifications (including an investment letter in the case of box (3) or (4))
and other information as the Trustee or the Company has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
If
<PAGE> 120
EXHIBIT A
Page 19
none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the
Noteholder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated:__________________________ Signed:_________________________________
(Sign exactly as name appears on
the other side of this Note)
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:_______________________ _____________________________________
NOTICE: To be executed by an
executive officer
<PAGE> 121
EXHIBIT A
Page 20
OPTION OF NOTEHOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Company pursuant to Section 4.10 or Section 4.14 of the
Indenture check the appropriate box:
[ ] Section 4.10 [ ] Section 4.14
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:
$______________________
Date:__________________
Your Signature:_________________________
(Sign exactly as your name appears
on the face of this Note)
<PAGE> 122
EXHIBIT B
FORM OF EXCHANGE NOTE
[Include the following legend only on Global Notes]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE
OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE.
<PAGE> 123
EXHIBIT B
Page 2
CUSIP No: A23855AA7
(Front of Note)
No. 1 $___________
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
11.75% Senior Note dues 2007, Series B
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION, a Delaware
corporation, promises to pay to ____________________________, or its registered
assigns, the principal sum of $_______________ on December 1, 2007.
Interest Payment Dates: June 1 and December 1, commencing June 1, 1998.
Record Dates: May 15 and November 15 (whether or not a Business Day).
Additional provisions of this Note are set forth on the other side of this Note.
Dated:
AMERICAN ARCHITECTURAL PRODUCTS
CORPORATION
By: ________________________
Name:
Title:
By: ________________________
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned Indenture
United States Trust Company of New York,
as Trustee
By:_____________________________
Authorized Signatory
Date:___________________________
<PAGE> 124
EXHIBIT B
Page 3
(Reverse of Note)
11.75% SENIOR NOTES DUE 2007, SERIES B
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined below) unless otherwise indicated.
1. Interest. American Architectural Products Corporation, a
Delaware corporation (the "Company"), promises to pay interest on the principal
amount of this Note at the rate and in the manner specified below. The Company
shall pay, in cash, interest on the principal amount of this Note at the rate
per annum of 11.75%. The Company will pay interest semiannually in arrears on
June 1 and December 1 of each year (each an "Interest Payment Date"), commencing
June 1, 1998, or if any such day is not a Business Day on the next succeeding
Business Day. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest shall accrue from the most recent
Interest Payment Date to which interest has been paid or, if no interest has
been paid, from the date of the original issuance of the Notes. To the extent
lawful, the Company shall pay interest on overdue principal at the rate of 2%
per annum in excess of the then applicable interest rate on the Notes; it shall
pay interest on overdue installments of interest (without regard to any
applicable grace periods) at the same rate to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are registered Noteholders
at the close of business on the Record Date immediately preceding the Interest
Payment Date, even if such Notes are cancelled after such Record Date and on or
before such Interest Payment Date. Noteholders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal premium, if
any, and interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by its check payable in such
U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Noteholder at the Noteholder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee will act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Noteholder. The Company,
or any Subsidiary Guarantor of the Company may act in any such capacity, except
that none of the Company, its Subsidiaries or their Affiliates shall act (i) as
Paying Agent in connection with any redemption, offer to purchase, discharge or
defeasance, as otherwise specified
<PAGE> 125
EXHIBIT B
Page 4
in the Indenture, and (ii) as Paying Agent or Registrar if a Default or Event of
Default has occurred and is continuing.
4. Indenture. The Company issued the Notes under an Indenture,
dated as of December 10, 1997 (the "Indenture"), between the Company and United
States Trust Company of New York, as trustee (the "Trustee"). The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the TIA as in effect on the date the Indenture is qualified,
except as otherwise provided in the Indenture. The Notes are subject to all such
terms, and Noteholders are referred to the Indenture and the TIA for a statement
of such terms. The terms of the Indenture shall govern any inconsistencies
between the Indenture and the Notes. The Notes are senior Obligations of the
Company limited to $125,000,000 in aggregate principal amount.
5. (a) Optional Redemption. Except as indicated in the next
succeeding paragraph, the Notes are not redeemable at the Company's option prior
to December 1, 2002. Thereafter, the Notes will be redeemable, at the option of
the Company, in whole or in part, at the redemption prices (expressed as
percentages of the principal amount of the Notes) set forth below, plus accrued
interest to the redemption date:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
<S> <C>
2002......................................................... 105.000%
2003......................................................... 103.333%
2004......................................................... 101.667%
2005 and thereafter......................................... 100.000%
</TABLE>
(b) Optional Redemption Upon Equity Offerings. At any time, or
from time to time, on or prior to December 1, 2000, the Company may, at its
option, use the Net Cash Proceeds of one or more Equity Offerings by the Company
so long as there is a Public Market at the time of such redemption, at a
redemption price equal to 110% of the principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the date of redemption; provided, however,
that after any such redemption, the aggregate principal amount of the Notes
outstanding must equal at least $82 million. In order to effect the foregoing
redemption with the proceeds of any Equity Offering, the Company shall make such
redemption not more than 90 days after the consummation of any such Equity
Offering.
6. Mandatory Redemption. The Notes are not subject to
mandatory redemption or sinking fund payments.
<PAGE> 126
EXHIBIT B
Page 5
7. Repurchase at Option of Noteholder. (a) If there is a
Change of Control, each Holder of Notes will have the right to require the
Company to repurchase all or any part of such Holder's Notes at a repurchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of Holders of
record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date). Within 30 days following any Change of Control, the
Company will mail a notice to each Noteholder stating (i) that a Change of
Control has occurred and that such Noteholder has the right to require the
Company to repurchase all or any part of such Noteholder's Notes at a repurchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase (subject to the right of
Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date); (ii) the circumstances and relevant facts
regarding such Change of Control (including information with respect to pro
forma historical income, cash flow and capitalization after giving effect to
such Change of Control; (iii) the repurchase date (which will be no earlier than
50 days nor later than 60 days from the date such notice is mailed); and (iv)
the procedures, determined by the Company consistent with the Indenture, that a
Noteholder must follow in order to have its Notes repurchased. Noteholders that
are subject to an offer to repurchase may elect to have such Notes repurchased
by completing the form entitled "Option of Noteholder to Elect Purchase"
appearing below.
(b) If the Company or a Subsidiary consummates any Asset
Disposition, and when the aggregate amount of Net Available Cash from such an
Asset Disposition exceeds $5 million, the Company shall be required to offer to
purchase the maximum principal amount of Notes, that is in an integral multiple
of $1,000, that may be purchased out of the Net Available Cash, at an offer
price in cash in an amount equal to 101% of the outstanding principal amount
thereof, plus accrued and unpaid interest, if any, to the date fixed for the
closing of such offer in accordance with the procedures set forth in the
Indenture. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Net Available Cash, the Notes to be redeemed shall
be selected on a pro rata basis. Noteholders that are the subject of an offer to
purchase will receive an Asset Disposition Offer from the Company prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Noteholder to Elect Purchase" appearing below.
8. Notice of Redemption. Notice of redemption shall be mailed
at least 30 days (unless a shorter period is acceptable to the Trustee) but not
more than 60 days before the redemption date to each Holder whose Notes are to
be redeemed at its registered address. Notes may be redeemed in part but only in
whole multiples of $1,000, unless all of the Notes held by a Noteholder are to
be redeemed. On and after
<PAGE> 127
EXHIBIT B
Page 6
the redemption date, interest ceases to accrue on Notes or portions of them
called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Noteholder among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Note or portion of a Note selected for redemption. Also, it need not exchange or
register the transfer of any Notes during a period beginning on the opening of
business on a Business Day 15 days before the day of any selection of Notes to
be redeemed and ending on the close of business on the day of selection or
during the period between a Record Date and the corresponding Interest Payment
Date.
10. Persons Deemed Owners. Prior to due presentment to the
Trustee for registration of the transfer of this Note, the Trustee, any Agent
and the Company may deem and treat the Person in whose name this Note is
registered as its absolute owner for the purpose of receiving payment of
principal of, premium, if any, and interest on this Note and for all other
purposes whatsoever, whether or not this Note is overdue, and neither the
Trustee, any Agent nor the Company shall be affected by notice to the contrary.
The registered Noteholder shall be treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions
provided in the Indenture, the Indenture or the Notes may be amended with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes, and any existing default or Event of Default (except a payment default)
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes. Without the consent of any Noteholder the
Indenture or the Notes may be amended to, among other things, cure any
ambiguity, defect or inconsistency, to comply with the requirements of the
Commission in order to effect or maintain qualification of the Indenture under
the TIA Noteholders or to make any change that does not adversely affect the
rights of any Noteholder.
12. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare the unpaid principal of, and any accrued
and unpaid interest on, all the Notes to be due and payable immediately;
provided, that in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company or any Subsidiary
Guarantor, all outstanding Notes shall become
<PAGE> 128
EXHIBIT B
Page 7
due and payable immediately without further action or notice. Noteholders may
not enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Noteholders notice
of any continuing default (except a default in payment of principal or interest)
if it determines that withholding notice is in their interests. The Company must
furnish an annual compliance certificate to the Trustee.
13. Trustee Dealings with the Company. The Trustee under the
Indenture, in its individual or any other capacity may make loans to, accept
deposits from, and perform services for the Company, the Subsidiary Guarantor or
any Affiliate of the Company or the Subsidiary Guarantor, and may otherwise deal
with the Company, the Subsidiary Guarantor and their respective Affiliates as if
it were not Trustee.
14. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
its Capital Stock or certain Indebtedness, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions provided for in the Indenture. The
Company must annually report to the Trustee on compliance with such limitations.
15. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
16. Subsidiary Guarantee. Each Subsidiary Guarantor has
jointly and severally irrevocably and unconditionally guaranteed the payment of
principal, premium, if any, and interest (including interest on overdue
principal and overdue interest, if lawful) on the Notes; provided, however, each
Subsidiary Guarantor that makes a payment or distribution under a Subsidiary
Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Subsidiary Guarantor.
17. Defeasance. Subject to certain conditions provided for in
the Indenture, the Company at any time may terminate some or all of its
obligations under the Notes and the Indenture if the Company deposits with the
Trustee money or U.S.
<PAGE> 129
EXHIBIT B
Page 8
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to redemption or maturity, as the case may be.
18. Governing Law. The Laws of the State of New York shall
govern this Note and the Indenture, without regard to principles of conflict of
laws.
19. Abbreviations. Customary abbreviations may be used in the
name of a Noteholder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
20. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Note Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Noteholders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
The Company will furnish to any Noteholder upon written
request and without charge a copy of the Indenture. Request may be made to:
American Architectural Products Corporation
755 Boardman - Canfield Road
South Bridge Executive Center
Building G West
Boardman, Ohio 44512
Attn: Chief Financial Officer
<PAGE> 130
EXHIBIT B
Page 9
FORM OF NOTATION ON SECURITY
RELATING TO SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE
The Subsidiary Guarantors (as defined in the Indenture (the
"Indenture") referred to in the Note upon which this notation is endorsed and
each hereinafter referred to as a "Subsidiary Guarantor," which term includes
any successor person under the Indenture) (i) have jointly and severally
irrevocably and unconditionally guaranteed as a primary obligor and not a
surety, (such guarantee by each Subsidiary Guarantor being referred to herein as
the "Subsidiary Guarantee") (a) the due and punctual payment of the principal,
premium, if any, and interest on the Notes, whether at Stated Maturity or
interest payment date, by acceleration, call for redemption or otherwise, (b)
the due and punctual payment of interest on the overdue principal of and
interest, if any, on the Notes, to the extent lawful, (c) the due and punctual
performance of all other monetary Obligations of the Company under the Indenture
and the Notes to the Noteholders or the Trustee, all in accordance with the
terms set forth in Article 10 of the Indenture and (d) in case of any extension
of time of payment or renewal of any Notes or any such Obligations, the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at Stated Maturity by acceleration or
otherwise and (ii) have agreed to pay any and all costs and expenses (including
reasonable attorneys' fees) incurred by the Trustee or any Noteholders in
enforcing any rights under this Subsidiary Guarantee.
The Obligations of each Subsidiary Guarantor to the Holders of
Notes and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture
are expressly set forth in Article 10 of the Indenture and reference is hereby
made to such Indenture for the precise terms of this Subsidiary Guarantee.
No stockholder, officer, director or incorporator, as such,
past, present or future of any Subsidiary Guarantor shall have any liability
under this Subsidiary Guarantee by reason of his or its status as such
stockholder, officer, director or incorporator.
This is a continuing Subsidiary Guarantee and, except as
otherwise expressly provided for in Section 10.06 of the Indenture, shall remain
in full force and effect and shall be binding upon the Subsidiary Guarantor and
its successors and assigns until full and final payment of all of the Company's
Obligations under the Notes and the Indenture and shall inure to the benefit of
the successors and assigns of the Trustee and the Noteholders and, in the event
of any transfer or assignment of rights by any
<PAGE> 131
EXHIBIT B
Page 10
Noteholder or the Trustee, the rights and privileges herein conferred upon that
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. This is a Subsidiary
Guarantee of payment and not of collectability.
This Subsidiary Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
THE TERMS OF ARTICLE 10 OF THE INDENTURE ARE
INCORPORATED HEREIN BY REFERENCE.
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
Guarantors:
EAGLE & TAYLOR COMPANY
By_________________________________
Name:
Title:
FORTE, INC.
By_________________________________
Name:
Title:
WESTERN INSULATED GLASS, CO.
By_________________________________
Name:
Title:
<PAGE> 132
EXHIBIT B
Page 11
THERMETIC GLASS, INC.
By_________________________________
Name:
Title:
BBPI ACQUISITION CORPORATION
By_________________________________
Name:
Title:
DCI/DCW ACQUISITION
CORPORATION
By_________________________________
Name:
Title:
AMERICAN GLASSMITH ACQUISITION
CORPORATION
By_________________________________
Name:
Title:
MODERN WINDOW ACQUISITION
CORPORATION
By_________________________________
Name:
Title:
<PAGE> 133
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
<PAGE> 134
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date:______________
Your Signature:_________________________
(Sign exactly as your name appears
on the face of this Note)
-13-
<PAGE> 135
OPTION OF NOTEHOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Company pursuant to Section 4.10 or Section 4.14 of the
Indenture check the appropriate box:
[ ] Section 4.10 [ ] Section 4.14
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:
$______________________
Date:__________________
Your Signature: ________________________
(Sign exactly as your name appears on
the face of this Note)
-14-
<PAGE> 136
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Administration
Re: American Architectural Products Corporation
11 3/4% Senior Notes due 2007
Ladies and Gentlemen:
In connection with our proposed purchase of 11 3/4% Senior
Notes due 2007 (the "Notes") of American Architectural Products Corporation (the
"Company"), we confirm that:
1. We have received a copy of the Offering Memorandum (the
"Offering Memorandum"), dated December 5, 1997 relating to the Notes and such
other information as we deem necessary in order to make our investment decision.
We acknowledge that we have read and agreed to the matters stated on pages (ii)
and (iii) of the Offering Memorandum and in the section entitled "Transfer
Restrictions" of the Offering Memorandum including the restrictions on
duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Notes (as described in the Offering Memorandum) and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any
<PAGE> 137
EXHIBIT C
Page 2
accounts for which we are acting as hereinafter stated, that if we should sell
or otherwise transfer any Notes prior to the date which is two years after the
original issuance of the Notes, we will do so only (i) to the Company or any of
its subsidiaries, (ii) inside the United States in accordance with Rule 144A
under the Securities Act to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act), (iii) inside the United States to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
the Trustee (as defined in the Indenture relating to the Notes), a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the Notes, (iv) outside the United States in accordance with Rule
904 of Regulation S under the Securities Act, (v) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(vi) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing any of the Notes from
us a notice advising such purchaser that resales of the Notes are restricted as
stated herein.
4. We are not acquiring the Notes for or on behalf of, and
will not transfer the Notes to, any pension or welfare plan (as defined in
Section 3 of the Employee Retirement Income Security Act of 1974), except as
permitted in the section entitled "Transfer Restrictions" of the Offering
Memorandum.
5. We understand that, on any proposed resale of any Notes, we
will be required to furnish to the Trustee and the Company such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or their investment, as the case may be.
7. We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
<PAGE> 138
EXHIBIT C
Page 3
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
By:________________________________
Name:
<PAGE> 139
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
_______________, ____
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Administration
Re: American Architectural Products Corporation
(the "Company") 11 3/4% Senior
Notes due 2007 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $_____________
aggregate principal amount of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Notes was not made to a Person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
<PAGE> 140
EXHIBIT D
Page 2
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:________________________
Authorized Signature
<PAGE> 1
EXHIBIT 99.2
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
Dated as of December 10, 1997
by and among
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
and
THE SUBSIDIARY GUARANTORS,
named herein
and
NATWEST CAPITAL MARKETS LIMITED
and
MCDONALD & COMPANY SECURITIES, INC.
as the Initial Purchasers
$125,000,000
11 3/4% SENIOR NOTES DUE 2007
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Definitions................................................................................. 1
2. Exchange Offer.............................................................................. 5
3. Notes Shelf Registration.................................................................... 9
4. Additional Interest......................................................................... 10
5. Registration Procedures..................................................................... 12
6. Registration Expenses....................................................................... 21
7. Indemnification............................................................................. 22
8. Rules 144 and 144A.......................................................................... 26
9. Underwritten Registrations.................................................................. 26
10. Miscellaneous. ............................................................................. 26
(a) No Inconsistent Agreements......................................................... 26
(b) Adjustments Affecting Registrable Notes............................................ 27
(c) Amendments and Waivers............................................................. 27
(d) Notices............................................................................ 27
(e) Successors and Assigns............................................................. 29
(f) Counterparts....................................................................... 29
(g) Headings........................................................................... 29
(h) Governing Law...................................................................... 29
(i) Severability....................................................................... 29
(j) Notes Held by the Issuers or their
Affiliates......................................................................... 29
(k) Third Party Beneficiaries.......................................................... 30
</TABLE>
-i-
<PAGE> 3
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
This Notes Exchange and Registration Rights Agreement (the
"Agreement") is dated as of December 10, 1997, by and among American
Architectural Products Corporation, a Delaware corporation (the "Company"), the
subsidiary guarantors listed in the signature pages hereto (collectively, the
"Subsidiary Guarantors"), and NatWest Capital Markets Limited and McDonald &
Company Securities, Inc. (each an "Initial Purchaser" and, collectively the
"Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated December 4, 1997, among the Company, the Subsidiary Guarantors
and the Initial Purchasers (the "Purchase Agreement"), which provides for the
sale by the Company to the Initial Purchasers of $125,000,000 aggregate
principal amount of the Company's 11 3/4% Notes due 2007 (the "Notes"), which
Notes will be guaranteed by the Subsidiary Guarantors. The Company and the
Subsidiary Guarantors are collectively referred to herein as the "Issuers." In
order to induce the Initial Purchasers to enter into the Purchase Agreement, the
Issuers have agreed to provide the registration rights set forth in this
Agreement for the benefit of the Initial Purchasers and their direct and
indirect transferees. The execution and delivery of this Agreement is a
condition to the obligation of the Initial Purchasers to purchase the Notes
under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: Has the meaning provided in Section 4(a)
hereof.
Advice: Has the meaning provided in the last paragraph of
Section 5 hereof.
Agreement: Has the meaning provided in the first introductory
paragraph hereto.
<PAGE> 4
Applicable Period: Has the meaning provided in Section 2(b)
hereof.
Closing Date: Has the meaning provided in the Purchase
Agreement.
Company: Has the meaning provided in the first introductory
paragraph hereto.
Effectiveness Date: The 150th day after the Issue Date.
Effectiveness Period: Has the meaning provided in Section 3(a)
hereof.
Event Date: Has the meaning provided in Section 4(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: Has the meaning provided in Section 2(a)
hereof.
Exchange Offer: Has the meaning provided in Section 2(a)
hereof.
Exchange Registration Statement: Has the meaning provided in
Section 2(a) hereof.
Filing Date: The 60th day after the Issue Date.
Holder: Any holder of a Note or Registrable Notes.
Indemnified Person: Has the meaning provided in Section 7(c)
hereof.
Indemnifying Person: Has the meaning provided in Section 7(c)
hereof.
Indenture: Means the Indenture dated as of December 10, 1997
among the Company, the Subsidiary Guarantors and United States Trust Company of
New York, as Trustee, pursuant to which the Notes are being issued, as amended
or supplemented from time to time in accordance with the terms thereof.
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<PAGE> 5
Initial Purchasers: Has the meaning provided in the first
introductory paragraph hereto.
Inspectors: Has the meaning provided in Section 5(n) hereof.
Issue Date: The date on which the original Notes were sold to
the Initial Purchasers pursuant to the Purchase Agreement.
Issuers: Has the meaning provided in the second introductory
paragraph hereto.
NASD: Has the meaning provided in Section 5(r) hereof.
Notes: Has the meaning provided in the second introductory
paragraph hereto.
Participant: Has the meaning provided in Section 7(a) hereof.
Participating Broker-Dealer: Has the meaning provided in
Section 2(b) hereof.
Persons: An individual, trustee, corporation, partnership,
limited liability company, joint stock company, trust, unincorporated
association, union, business association, firm or other legal entity.
Private Exchange: Has the meaning provided in Section 2(b)
hereof.
Private Exchange Notes: Has the meaning provided in Section
2(b) hereof.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, and all other amendments and supplements to the
Prospectus, with respect to the terms of the offering of any portion of the
Registrable Notes covered by such Registration Statement including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
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<PAGE> 6
Purchase Agreement: Has the meaning provided in the second
introductory paragraph hereto.
Records: Has the meaning provided in Section 5(n) hereof.
Registrable Notes: Each Note upon original issuance of the
Notes and at all times subsequent thereto, each Exchange Note as to which
Section 2(c)(iv) hereof is applicable upon original issuance and at all times
subsequent thereto and each Private Exchange Note upon original issuance thereof
and at all times subsequent thereto, until in the case of any such Note,
Exchange Note or Private Exchange Note, as the case may be, the earliest to
occur of (i) a Registration Statement (other than, with respect to any Exchange
Note as to which Section 2(c)(iv) hereof is applicable, the Exchange
Registration Statement) covering such Note, Exchange Note or Private Exchange
Note, as the case may be, has been declared effective by the SEC and such Note
(unless such Note was not tendered for exchange by the Holder thereof), Exchange
Note or Private Exchange Note, as the case may be, has been disposed of in
accordance with such effective Registration Statement, (ii) such Note, Exchange
Note or Private Exchange Note, as the case may be, is, or may be, sold in
compliance with Rule 144, or (iii) such Note, Exchange Note or Private Exchange
Note, as the case may be, ceases to be outstanding for purposes of the
Indenture.
Registration Statement: Any registration statement of the
Company, including, but not limited to, the Exchange Registration Statement,
that covers any of the Registrable Notes pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
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<PAGE> 7
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission or any successor
thereto.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: Has the meaning provided in Section 2(c) hereof.
Shelf Registration: Has the meaning provided in Section 3(a)
hereof.
Shelf Registration Statement: shall mean a "shelf"
registration statement of the Company and the Subsidiary Guarantors which covers
all of the Registrable Notes on an appropriate form under Rule 415 under the
1933 Act, or any similar rule that may be adopted by the SEC, and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
Subsidiary Guarantors: Has the meaning provided in the first
introductory paragraph hereto.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee(s): The trustee under the Indenture and, if existent,
the trustee under any indenture governing the Exchange Notes and Private
Exchange Notes (if any).
Underwritten registration or underwritten offering: A
registration in which securities of one or more of the Issuers are sold to an
underwriter for reoffering to the public.
2. Exchange Offer
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<PAGE> 8
(a) Each of the Issuers agrees to file with the SEC no later
than the Filing Date an offer to exchange (the "Exchange Offer") any and all of
the Registrable Notes (other than the Private Exchange Notes, if any) for a like
aggregate principal amount of debt securities of the Company, guaranteed by the
Subsidiary Guarantors, which are identical in all material respects to the Notes
(the "Exchange Notes") (and which are entitled to the benefits of the Indenture
or a trust indenture which is identical in all material respects to the
Indenture (other than such changes to the Indenture or any such identical trust
indenture as are necessary to comply with any requirements of the SEC to effect
or maintain the qualification thereof under the TIA) and which, in either case,
has been qualified under the TIA), except that the Exchange Notes (other than
Private Exchange Notes, if any) shall have been registered pursuant to an
effective Registration Statement under the Securities Act and shall contain no
restrictive legend thereon. The Exchange Offer shall be registered under the
Securities Act on the appropriate form (the "Exchange Registration Statement")
and shall comply with all applicable tender offer rules and regulations under
the Exchange Act. The Issuers agree to use their best efforts to (x) cause the
Exchange Registration Statement to be declared effective under the Securities
Act no later than the Effectiveness Date; (y) keep the Exchange Offer open for
at least 30 business days (or longer if required by applicable law) after the
date that notice of the Exchange Offer is mailed to the Holders; and (z)
consummate the Exchange Offer on or prior to the 180th day following the Issue
Date. If after such Exchange Registration Statement is declared effective by the
SEC, the Exchange Offer or the issuance of the Exchange Notes thereunder is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Exchange Registration
Statement shall be deemed not to have become effective for purposes of this
Agreement until such stop order, injunction or other order or requirement is no
longer in effect. Each Holder who participates in the Exchange Offer will be
required to represent that any Exchange Notes received by it will be acquired in
the ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Notes in violation of
the provisions of the Securities Act, and that such Holder in not an "affiliate"
of any of the Issuers within the meaning of the Securities Act. Upon
consummation of the Exchange Offer in accordance with this Section 2, the
Issuers shall have no further obligation to register Registrable Notes (other
than
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<PAGE> 9
Private Exchange Notes and other than in respect of any Exchange Notes as to
which clause 2(c)(v) hereof applies) pursuant to Section 3 hereof. No securities
other than the Exchange Notes shall be included in the Exchange Registration
Statement.
(b) The Issuers shall include within the Prospectus contained
in the Exchange Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchasers, which shall
contain a summary statement of the positions taken or policies made by the Staff
of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange
Offer (a "Participating Broker-Dealer"), whether such positions or policies have
been publicly disseminated by the Staff of the SEC or such positions or
policies, in the judgment of the Initial Purchasers, represent the prevailing
views of the Staff of the SEC. Such "Plan of Distribution" section shall also
expressly permit the use of the Prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means by
which Participating Broker-Dealers may resell the Exchange Notes.
Each of the Issuers shall use its best efforts to keep the
Exchange Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be lawfully
delivered by any Participating Broker-Dealer subject to the prospectus delivery
requirements of the Securities Act for such period of time as is necessary to
comply with applicable law in connection with any resale of the Exchange Notes;
provided, however, that such period shall not exceed 180 days after the
consummation of the Exchange Offer (or such longer period if extended pursuant
to the last paragraph of Section 5 hereof) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, either of the
Initial Purchasers holds any Notes acquired by it and having the status of an
unsold allotment in the initial distribution, the Issuers shall, upon the
request of either of the Initial Purchasers, simultaneously with the delivery of
the Exchange Notes in the Exchange Offer issue and deliver to the Initial
Purchasers in exchange (the "Private Exchange") for such Notes held by the
Initial Purchasers a like principal amount of debt securities of the
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<PAGE> 10
Company, guaranteed by the Subsidiary Guarantors, that are identical in all
material respects to the Exchange Notes (the "Private Exchange Notes") (and
which are issued pursuant to the same Indenture as the Exchange Notes) except
for the placement of a restrictive legend on such Private Exchange Notes. The
Private Exchange Notes shall if permissible bear the same CUSIP number as the
Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes
will accrue from the last interest payment date on which interest was paid on
the Notes surrendered in exchange therefor or, if no interest has been paid on
the Notes, from the Issue Date.
In connection with the Exchange Offer, the Issuers shall:
(1) mail to each Holder a copy of the Prospectus forming part
of the Exchange Registration Statement, together with an appropriate
letter of transmittal and related documents;
(2) utilize the services of a depositary for
the Exchange Offer with an address in the Borough
of Manhattan, The City of New York;
(3) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business day
on which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with
all applicable laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Issuers shall:
(1) accept for exchange all Notes tendered and not
validly withdrawn pursuant to the Exchange Offer or the
Private Exchange;
(2) deliver to the Trustee for cancellation all
Notes so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver
promptly to each Holder of Notes, Exchange Notes or
Private Exchange Notes, as the case may be, equal in
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<PAGE> 11
principal amount to the Notes of such Holder so accepted
for exchange.
The Exchange Notes and the Private Exchange Notes are to be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture, which in either event shall provide that (1) the
Exchange Notes shall not be subject to the transfer restrictions set forth in
the Indenture and (2) the Private Exchange Notes shall be subject to the
transfer restrictions set forth in the Indenture. The Indenture or such
indenture shall provide that the Exchange Notes, the Private Exchange Notes and
the Notes shall vote and consent together on all matters as to which they have
the right to vote or consent as one class and that none of the Exchange Notes,
the Private Exchange Notes or the Notes will have the right to vote or consent
as a separate class on any matter.
(c) If, (i) because of any change in law or in currently
prevailing interpretations of the Staff of the SEC, the Issuers are not
permitted to effect an Exchange Offer, (ii) the Exchange Offer is not
consummated within 180 days after the Issue Date, (iii) any holder of Private
Exchange Notes so requests at any time after the consummation of the Private
Exchange, or (iv) any Holder (other than the Initial Purchasers) is not eligible
to participate in the Exchange Offer, then the Issuers shall promptly deliver to
the Holders and the Trustee written notice thereof (the "Shelf Notice") and, in
the case of clauses (i) and (ii) above, all Holders, in the case of clause (iii)
above, the Holders of the Private Exchange Notes and, in the case of clause (iv)
above, the affected Holder, and shall file a Notes Shelf Registration pursuant
to Section 3 hereof; provided, however, that in the case of clause (iii) above
such Holders shall pay all reasonable registration expenses of the Company as
described in Section 6 hereof in connection with such Notes Shelf Registration.
3. Notes Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:
(a) Notes Shelf Registration. The Issuers shall as promptly as
reasonably practicable file with the SEC a Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415 covering all of
the Registrable Notes (the "Notes Shelf Registration"); provided, however, that
no holder of Notes or Exchange Notes shall be
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<PAGE> 12
entitled to have Notes or Exchange Notes held by it covered by such Shelf
Registration Statement unless such holder expressly agrees to be bound by the
provisions of this Agreement applicable to such holder. If the Issuers shall not
have yet filed a Notes Exchange Registration Statement, each of the Issuers
shall use its best efforts to file with the SEC the Notes Shelf Registration on
or prior to the Filing Date. The Notes Shelf Registration shall be on Form S-3
or another appropriate form permitting registration of such Registrable Notes
for resale by Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Issuers shall not
permit any securities other than the Registrable Notes to be included in the
Notes Shelf Registration.
Each of the Issuers shall use its best efforts to cause the
Notes Shelf Registration to be declared effective under the Securities Act by
the 150th day after the Notes Shelf Request and to keep the Notes Shelf
Registration continuously effective under the Securities Act until the date
which is two years from the Issue Date, subject to extension pursuant to the
last paragraph of Section 5 hereof, or such shorter period ending when all
Registrable Notes covered by the Notes Shelf Registration have been sold in the
manner set forth and as contemplated in the Notes Shelf Registration or when the
Notes become eligible for registration without volume restrictions, pursuant to
Rule 144 under the Securities Act (the "Effectiveness Period").
(b) Withdrawal of Stop Orders. If the Notes Shelf Registration
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities registered
thereunder), each of the Issuers shall use its best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof.
Issuers shall be deemed not to have used their reasonable best
efforts to keep the Shelf Registration Statement effective during the requisite
period if any of them voluntarily takes any action that would result in Holders
of Notes or Exchange Notes covered thereby not being able to offer and sell such
Notes or Exchange Notes during that period, unless such action is required by
applicable law; provided, however, that the foregoing shall not apply to actions
taken by the issuers in good faith and for valid business reasons including,
without limitation, the acquisition or divestiture of assets, so long as the
issuers
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<PAGE> 13
within 90 days thereafter comply with the requirements of Section 5 hereof.
(c) Supplements and Amendments. The Issuers shall promptly
supplement and amend the Notes Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Notes Shelf Registration, if required by the Securities Act, or if reasonably
requested for such purpose by the Holders of a majority in aggregate principal
amount of the Registrable Notes covered by such Registration Statement or by any
underwriter of such Registrable Notes.
4. Additional Interest
(a) The Issuers and the Initial Purchasers agree that the
Holders of Registrable Notes will suffer damages if the Issuers fail to fulfill
their obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers agree to pay, as liquidated damages and as the sole and exclusive
remedy therefor, additional interest on the Notes ("Notes Additional Interest")
under the circumstances and to the extent set forth below:
(i) if the Notes Exchange Offer Registration Statement or
Notes Shelf Registration Statement is not filed within, in the case the
Notes Exchange Offer Registration Statement, 60 days following the
Issue Date or, in the case of the Notes Shelf Registration Statement,
60 days following a Notes Shelf Request, Notes Additional Interest
shall accrue on the Notes over and above the stated interest at a rate
of 0.50% per annum for the first 30 days commencing on the 61st day
after the Issue Date or the Shelf Request, respectively, such Notes
Additional Interest rate increasing by an additional 0.50% per annum at
the beginning of each subsequent 30-day period;
(ii) if the Notes Exchange Offer Registration Statement or
Notes Shelf Registration Statement is not declared effective within, in
the case of the Notes Exchange Offer Registration Statement, 150 days
following the Issue Date or, in the case of the Notes Shelf
Registration Statement, 150 days following a Notes Shelf Request, Notes
Additional Interest shall accrue on the Notes over and above the stated
interest at a rate of 0.50% per annum for the first 30 days commencing
on the 151st day after the Issue Date or the Notes Shelf
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<PAGE> 14
Request, respectively, such Notes Additional Interest rate increasing
by an additional 0.50% per annum at the beginning of each subsequent
30-day period; or
(iii) if (A) the Company has not exchanged all Notes validly
tendered in accordance with the terms of the Exchange Offer on or prior
to 180 days after the Issue Date or (B) the Exchange Offer Registration
Statement ceases to be effective at any time prior to the time that the
Exchange Offer is consummated or (C) if applicable, the Notes Shelf
Registration Statement has been declared effective and such Notes Shelf
Registration Statement ceases to be effective at any time prior to the
second anniversary of the Issue Date (unless all the Notes have been
sold thereunder), then Notes Additional Interest shall accrue on the
Notes over and above the stated interest at a rate of 0.50% per annum
for the first 30 days commencing on (x) the 181st day after the Issue
Date with respect to the Notes validly tendered and not exchanged by
the Company, in the case of (A) above, or (y) the day the Notes
Exchange Offer Registration Statement ceases to be effective or usable
for its intended purpose in the case of (B) above, or (z) the day such
Notes Shelf Registration Statement ceases to be effective in the case
of (C) above, such Notes Additional Interest rate increasing by an
additional 0.50% per annum at the beginning of each subsequent 30-day
period;
provided, however, that the Notes Additional Interest rate on the Notes
under clauses (i), (ii) or (iii) above, may not exceed in the aggregate
2.0% per annum; and provided further, that (1) upon the filing of the
Notes Exchange Offer Registration Statement or Notes Shelf Registration
Statement (in the case of clause (i) above), (2) upon the effectiveness
of the Notes Exchange Offer Registration Statement or Notes Shelf
Registration Statement (in the case of (ii) above), or (3) upon the
exchange of Exchange Notes for all Notes tendered (in the case of
clause (iii)(A) above), or upon the effectiveness of the Notes Exchange
Offer Registration Statement which had ceased to remain effective (in
the case of clause (iii)(B) above), or upon the effectiveness of the
Notes Shelf Registration Statement which had ceased to remain effective
(in the case of clause (iii)(C) above), Notes Additional Interest on
the Notes as a result of such clause (or the relevant subclause
thereof), as the case may be, shall cease to accrue.
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<PAGE> 15
"Transfer Restricted Notes" means each Note until (i) the date on which
such Note has been exchanged for a freely transferable Exchange Note in the
Exchange Offer, (ii) the date on which such Note or Exchange Note has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iii) the date on which such Note or
Exchange Note is distributed to the public pursuant to Rule 144 under the
Securities Act or is salable pursuant to Rule 144(k) under the Securities Act.
Notwithstanding anything to the contrary in this Section 4(a), the Company shall
not be required to pay any Additional Interest to the holder of the Transfer
Restricted Notes if such holder; (a) failed to comply with its obligations to
make the representations in the first paragraph of Section 2; or (b) failed to
provide the information required to be provided by it, if any, pursuant to the
penultimate paragraph of Section 5.
(b) The Issuers shall notify the Trustee within one business
day after each and every date on which an event occurs in respect of which Notes
Additional Interest is required to be paid (an "Event Date"). The Company shall
pay the Notes Additional Interest due on the transfer restricted Notes by
depositing with the paying agent (which shall not be the Company for these
purposes) for the transfer restricted Notes, in trust, for the benefit of the
holders thereof, prior to 11:00 A.M. on the next interest payment date specified
by the Indenture (or such other indenture), sums sufficient to pay the Notes
Additional Interest then due. Any amounts of Notes Additional Interest due
pursuant to clauses (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be
payable to the Holders of affected Notes in cash semi-annually on each interest
payment date specified by the Indenture (or such other indenture) to the record
holders entitled to receive the interest payment to be made on such date,
commencing with the first such date occurring after any such Notes Additional
Interest commences to accrue. The amount of Notes Additional Interest will be
determined by multiplying the applicable Notes Additional Interest rate by the
principal amount of the affected Registrable Notes of such Holders, multiplied
by a fraction, the numerator of which is the number of days such Notes
Additional Interest rate was applicable during such period (determined on the
basis of a 360-day year comprised of twelve 30-day months and, in the case of a
partial month, the actual number of days elapsed), and the denominator of which
is 360.
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<PAGE> 16
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Sections 2 or 3 hereof, the Issuers shall effect such
registration(s) to permit the sale of the securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Issuers hereunder, the Issuers shall:
(a) Prepare and file with the SEC prior to the Filing Date a
Registration Statement or Registration Statements as prescribed by
Sections 2 or 3 hereof, and use their best efforts to cause each such
Registration Statement to become effective and remain effective as
provided herein; provided, however, that, if (1) such filing is
pursuant to Section 3 hereof, or (2) a Prospectus contained in an
Exchange Registration Statement filed pursuant to Section 2 hereof is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Issuers shall, if requested in
writing, furnish to and afford the Holders of the Registrable Notes
covered by such Registration Statement or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in
each case at least three business days prior to such filing). The
Issuers shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders must
be afforded an opportunity to review prior to the filing of such
document under the immediately preceding sentence, if the Holders of a
majority in aggregate principal amount of the Registrable Notes covered
by such Registration Statement, or any such Participating
Broker-Dealer, as the case may be, their counsel, or the managing
underwriters, if any, shall object thereto in writing, which writing
shall set forth a reasonable basis for such objection.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Notes Shelf Registration or Exchange
Registration Statement, as the
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<PAGE> 17
case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable
Period or until consummation of the Exchange Offer, as the case may be;
cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions of
the Securities Act and the Exchange Act applicable to it with respect
to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and
with respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus; the Company
shall be deemed not to have used its best efforts to keep a
Registration Statement effective during the Applicable Period if it
voluntarily takes any action that would result in selling Holders of
the Registrable Notes covered thereby or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable
Notes or such Exchange Notes during that period unless such action is
required by applicable law or unless such action is taken in good faith
and for valid business reasons so long as the Company complies with
this Agreement, including without limitation, the provisions of
paragraph 5(k) hereof and the last paragraph of this Section 5.
(c) If (1) a Notes Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, notify the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, promptly (but in any event within two
business days), and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, at the sole expense of the Issuers,
one conformed copy of such Registration Statement or post-effective
amendment including financial statements and
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<PAGE> 18
schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the SEC of any stop
order suspending the effectiveness of a Registration Statement or of
any order preventing or suspending the use of any preliminary
prospectus or the initiation of any proceedings for that purpose, (iii)
if at any time when a Prospectus is required by the Securities Act to
be delivered in connection with sales of the Registrable Notes or
resales of Exchange Notes by Participating Broker-Dealers the
representations and warranties of the Issuers contained in any
agreement (including any underwriting agreement), contemplated by
Section 5(n) hereof cease to be true and correct, (iv) of the receipt
by the Issuers of any notification with respect to the suspension of
the qualification or exemption from qualification of a Registration
Statement or any of the Registrable Notes or the Exchange Notes to be
sold by any Participating Broker-Dealer for offer or sale in any
jurisdiction, or the initiation or threatening of any proceeding for
such purpose, (v) of the happening of any event, the existence of any
condition or any information becoming known that makes any statement
made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any
changes in or amendments or supplements to such Registration Statement,
Prospectus or documents so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi)
of the determination by the Issuers that a post-effective amendment to
a Registration Statement would be appropriate.
(d) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending
the qualification (or exemption from qualification) of any of the
Registrable Notes or the Exchange Notes for sale in any jurisdiction,
and, if any such order is issued,
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<PAGE> 19
to use its best efforts to obtain the withdrawal of any such order at
the earliest possible moment.
(e) If a Notes Shelf Registration is filed pursuant to Section
3 hereof and if requested by the managing underwriter or underwriters
(if any), or the Holders of a majority in aggregate principal amount of
the Registrable Notes being sold in connection with an underwritten
offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter
or underwriters (if any), such Holders, or counsel for any of them
reasonably request to be included therein, (ii) make all required
filings of such prospectus supplement or such post-effective amendment
as soon as practicable after the Issuers have received notification of
the matters to be incorporated in such prospectus supplement or
post-effective amendment, and (iii) supplement or make amendments to
such Registration Statement.
(f) If (1) a Notes Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, furnish to each selling Holder of Registrable Notes and to each
such Participating Broker-Dealer who so requests and to counsel and
each managing underwriter, if any, at the sole expense of the Issuers,
one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including
financial statements and schedules, and, if requested, all documents
incorporated or deemed to be incorporated therein by reference and all
exhibits.
(g) If (1) a Notes Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, deliver to each selling Holder of Registrable Notes, or each
such Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, at the sole expense of the
Issuers, as many copies of the Prospectus or Prospectuses (including
each form of preliminary pros-
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<PAGE> 20
pectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, each
Issuer hereby consents to the use of such Prospectus and each amendment
or supplement thereto by each of the selling Holders of Registrable
Notes or each such Participating Broker-Dealer, as the case-may be, and
the underwriters or agents, if any, and dealers (if any), in connection
with the offering and sale of the Registrable Notes covered by, or the
sale by Participating Broker-Dealers of the Exchange Notes pursuant to,
such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, to use its best efforts to register
or qualify such Registrable Notes (and to cooperate with selling
Holders of Registrable Notes or each such Participating Broker-Dealer,
as the case may be, the managing underwriter or underwriters, if any,
and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Notes) for offer and sale under the securities or Blue
Sky laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request in writing; provided, however, that
where Exchange Notes held by Participating Broker-Dealers or
Registrable Notes are offered other than through an underwritten
offering, the Issuers agree to cause their counsel to perform Blue Sky
investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective, and do any and
all other acts or things reasonably necessary or advisable to enable
the disposition in such jurisdictions of the Exchange Notes held by
Participating Broker-Dealers or the Registrable Notes covered by the
applicable Registration Statement; provided, however, that none of the
Issuers shall be required to (A) qualify generally to do business in
any jurisdiction where it is not then so qualified, (B) take any action
that would subject it to general service of process in any such
jurisdiction
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<PAGE> 21
where it is not then so subject or (C) subject itself to taxation in
excess of a nominal dollar amount in any such jurisdiction where it is
not then so subject.
(i) If a Notes Shelf Registration is filed pursuant to Section
3 hereof, cooperate with the selling Holders of Registrable Notes and
the managing underwriter or underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Notes to be sold, which certificates shall not bear any
restrictive legends and shall be in a form eligible for deposit with
The Depository Trust Company; and enable such Registrable Notes to be
in such denominations and registered in such names as the managing
underwriter or underwriters, if any, or Holders may reasonably request.
(j) Use its best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary
to enable the Holders thereof or the underwriter or underwriters, if
any, to dispose of such Registrable Notes, except as may be required
solely as a consequence of the nature of a selling Holder's business,
in which case each of the Issuers will cooperate in all reasonable
respects with the filing of such Registration Statement and the
granting of such approvals.
(k) If (1) a Notes Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, upon the occurrence of any event contemplated by paragraph
5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and
(subject to Section 5(a) hereof) file with the SEC, at the sole expense
of the Issuers, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Notes being sold
thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact
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<PAGE> 22
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(l) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with certificates for the Registrable Notes or Exchange Notes, as the
case may be, in a form eligible for deposit with The Depositary Trust
Company and (ii) provide a CUSIP number for the Registrable Notes or
Exchange Notes, as the case may be.
(m) In connection with any underwritten offering initiated by
the Company of Registrable Notes pursuant to a Notes Shelf
Registration, enter into an underwriting agreement as is customary in
underwritten offerings of debt securities similar to the Notes and take
all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to facilitate the registration or
the disposition of such Registrable Notes and, in such connection, (i)
make such representations and warranties to, and covenants with, the
underwriters with respect to the business of the Issuers and their
respective subsidiaries and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by Issuers to
underwriters in underwritten offerings of debt securities similar to
the Notes, and confirm the same in writing if and when requested; (ii)
obtain the written opinion of counsel to the Issuers and written
updates thereof in form, scope and substance reasonably satisfactory to
the managing underwriter or underwriters, addressed to the underwriters
covering the matters customarily covered in opinions requested in
underwritten offerings of debt similar to the Notes and such other
matters as may be reasonably requested by the managing underwriter or
underwriters; (iii) obtain "cold comfort" letters and updates thereof
in form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters from the independent certified public
accountants of the Issuers (and, if necessary, any other independent
certified public accountants of any subsidiary of any of the Issuers or
of any business acquired by any of the Issuers for which financial
statements and financial data are, or are required to be, included or
incorporated by reference in the Registration Statement), addressed to
each of the
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<PAGE> 23
underwriters, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings of debt similar to the Notes and such other
matters as reasonably requested by the managing underwriter or
underwriters; and (iv) if an underwriting agreement is entered into,
the same shall contain indemnification provisions and procedures no
less favorable than those set forth in Section 7 hereof (or such other
provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of Registrable Notes covered by such
Registration Statement and the managing underwriter or underwriters or
agents) with respect to all parties to be indemnified pursuant to said
Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(n) If (1) a Notes Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, make available for inspection by any selling Holder of such
Registrable Notes being sold, or each such Participating Broker-Dealer,
as the case may be, any underwriter participating in any such
disposition of Registrable Notes, if any, and any attorney, accountant
or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept,
during reasonable business hours, all financial and other records,
pertinent corporate documents and instruments of the Issuers and their
respective subsidiaries (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and
employees of the Issuers and their respective subsidiaries to make
available for inspection all information reasonably requested by any
such Inspector in connection with such Registration Statement. Records
which any of the Issuers determine, in good faith, to be confidential
and any Records which it notifies the Inspectors are confidential shall
not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in
such Registration Statement,
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<PAGE> 24
(ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, (iii) disclosure of
such information is, in the opinion of counsel (a copy of which shall
be delivered to the Issuers) for any Inspector, necessary or advisable
in connection with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving such Inspector and
arising out of, based upon, relating to, or involving this Agreement,
or any transactions contemplated hereby or arising hereunder, or (iv)
the information in such Records has been made generally available to
the public. Each selling Holder of such Registrable Securities and each
such Participating Broker-Dealer will be required to agree that
information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Issuers unless and until
such information is generally available to the public. Each selling
Holder of such Registrable Notes and each such Participating
Broker-Dealer will be required to further agree that it will, upon
learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Issuers and allow the
Issuers to undertake appropriate action to prevent disclosure of the
Records deemed confidential at the Issuers' sole expense.
(o) Provide an indenture trustee for the Registrable Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a) hereof, as the case may
be, to be qualified under the TIA not later than the effective date of
the Exchange Offer or the first Registration Statement relating to the
Registrable Notes; and in connection therewith, cooperate with the
trustee under any such indenture and the Holders of the Registrable
Notes, to effect such changes to such indenture as may be required for
such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely manner.
(p) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earnings
statements satisfying the
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<PAGE> 25
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable
Notes are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of
the Company after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(q) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Issuers (or to such other Person as directed by the Issuers) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Issuers shall mark, or cause to be marked, on such
Registrable Notes that such Registrable Notes are being cancelled in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be; in no event shall such Registrable Notes be marked as paid
or otherwise satisfied.
(r) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and each underwriter, if any, participating
in the disposition of such Registrable Notes and their respective
counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD").
(s) Use its best efforts to take all other steps
necessary or advisable to effect the registration of the
Registrable Notes covered by a Registration Statement
contemplated hereby.
The Issuers may require each seller of Registrable Notes as to
which any Registration Statement is being effected to furnish to the Issuers
such information regarding such seller and the distribution of such Registrable
Notes as the Issuers may, from time to time, reasonably request. The Issuers may
exclude from such Registration Statement the Registrable Notes of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request. Each seller as to which any Notes Shelf Registration is
being effected agrees to furnish
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<PAGE> 26
promptly to the Issuers all information required to be disclosed in order to
make the information previously furnished to the Issuers by such seller not
materially misleading.
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
actual receipt of any notice from the Issuers of the happening of any event of
the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof,
such Holder will forthwith discontinue disposition of such Registrable Notes or
Exchange Notes, as the case may be, covered by such Registration Statement or
Prospectus to be sold by such Holder or Participating Broker-Dealer, as the case
may be, until such Holder's or Participating Broker-Dealer's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 5(k)
hereof, or until it is advised in writing (the "Advice") by the Issuers that the
use of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto. In the event the Issuers shall give any such
notice, each of the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and including the date
of the giving of such notice to and including the date when each seller of
Registrable Notes covered by such Registration Statement or Exchange Notes to be
sold by such Participating Broker-Dealer, as the case may be, shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 5(k) hereof or (y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuers shall be borne by the Issuers
whether or not the Exchange Offer or a Notes Shelf Registration is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of the
Issuer's counsel in connection with Blue Sky qualifications of the Registrable
Notes or Exchange Notes and determination of the eligibility of the Registrable
Notes or Exchange Notes for investment under the laws of such
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<PAGE> 27
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the
case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for deposit with The Depository Trust Company
and of printing Prospectuses if the printing of Prospectuses is requested by the
managing underwriter or underwriters, if any, by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any Registration
Statement or sold by any Participating Broker-Dealer, as the case may be, (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Issuers, (v) fees and disbursements of all independent certified
public accountants referred to in Section 5(n)(iii) hereof (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance by or incident to such performance),
(vi) rating agency fees, if any, and any fees associated with making the
Registrable Notes or Exchange Notes eligible for trading through The Depository
Trust Company, (vii) Securities Act liability insurance, if the Issuers desire
such insurance, (viii) fees and expenses of all other Persons retained by the
Issuers, (ix) internal expenses of the Issuers (including, without limitation,
all salaries and expenses of officers and employees of the Issuers performing
legal or accounting duties), (x) the expense of any annual audit, (ix) the fees
and expenses incurred in connection with the listing of the securities to be
registered on any securities exchange or any inter-dealer quotation system, if
applicable, and (xii) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement.
(b) The Issuers, jointly and severally, shall reimburse the
Holders of the Registrable Notes being registered in a Notes Shelf Registration
for the reasonable fees and disbursements of not more than one counsel chosen in
writing by the Holders of a majority in aggregate principal amount of the
Registrable Notes to be included in such Registration Statement. In addition,
the Issuers, jointly and severally, shall reimburse the Initial Purchasers for
the reasonable fees and expenses of one counsel in connection with the Exchange
Offer which shall be White & Case, and
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<PAGE> 28
shall not be required to pay any other legal expenses of the Initial Purchasers
in connection therewith.
7. Indemnification. (a) Each of the Issuers, jointly and
severally, agrees to indemnify and hold harmless each Holder of Registrable
Notes offered pursuant to a Notes Shelf Registration Statement and each
Participating Broker-Dealer selling Exchange Notes during the Applicable Period,
the affiliates, directors, officers, agents, representatives and employees of
each such Person or its affiliates, and each other Person, if any, who controls
any such Person or its affiliates within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant") from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement pursuant to which the offering of such Registrable Notes or Exchange
Notes, as the case may be, is registered (or any amendment thereto) or related
Prospectus (or any amendments or supplements thereto) or any related preliminary
prospectus, or caused by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Issuers will
not be required to indemnify a Participant if (i) such losses, claims, damages
or liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
furnished to the Issuers in writing by or on behalf of such Participant
expressly for use therein or (ii) if such Participant sold to the person
asserting the claim the Registrable Notes or Exchange Notes which are the
subject of such claim and such untrue statement or omission or alleged untrue
statement or omission was contained or made in any preliminary prospectus and
corrected in the Prospectus or any amendment or supplement thereto and the
Prospectus does not contain any other untrue statement or omission or alleged
untrue statement or omission of a material fact that was the subject matter of
the related proceeding and such Participant failed to deliver or provide a copy
of the Prospectus (as amended or supplemented) to such Person with or prior to
the confirmation of the sale of such Registrable Notes or Exchange Notes sold to
such Person if required by applicable laws, unless such failure to deliver or
provide a copy of the Prospectus (as amended or supple-
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<PAGE> 29
mented) was a result of noncompliance by the Issuers with Section 5 of this
Agreement.
(b) Each Participant agrees, severally and not jointly, to
indemnify and hold harmless the Issuers, their respective directors and officers
and each Person who controls the Issuers within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers to each Participant, but only (i) with
reference to information furnished to the Issuers in writing by or on behalf of
such Participant expressly for use in any Registration Statement or Prospectus,
any amendment or supplement thereto, or any preliminary prospectus or (ii) with
respect to any untrue statement or representation made by such Participant in
writing to the Issuers.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any Person in respect of which indemnity may be sought pursuant
to either of the two preceding paragraphs, such Person (the "Indemnified
Person") shall promptly notify the Person against whom such indemnity may be
sought (the "Indemnifying Person") in writing, and the Indemnifying Person,
shall have the right to retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise (unless and only to the extent that such failure
results in the loss or compromise of any material rights or defenses by the
Indemnifying Person). In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually agreed in writing to the
contrary, (ii) the Indemnifying Person shall have failed within a reasonable
period of time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that, unless there exists a
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<PAGE> 30
conflict among Indemnified Persons, the Indemnifying Person shall not, in
connection with any one such proceeding or separate but substantially similar
related proceeding in the same jurisdiction arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such reasonable fees and expenses shall be reimbursed promptly as they are
incurred. Any such separate firm for the Participants and such control Persons
of Participants shall be designated in writing by Participants who sold a
majority in interest of Registrable Notes and Exchange Notes sold by all such
Participants and any such separate firm for the Issuers, their directors, their
officers and such control Persons of the Issuers shall be designated in writing
by the Issuers. The Indemnifying Person shall not be liable for any settlement
of any proceeding effected without its prior written consent, but if settled
with such consent or if there be a final non-appealable judgment for the
plaintiff for which the Indemnified Person is entitled to indemnification
pursuant to this Agreement, the Indemnifying Person agrees to indemnify and hold
harmless each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement or
compromise of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party, and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (A) includes
an unconditional written release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in Sections 7(a) and
7(b) hereof is for any reason unavailable to, or insufficient to hold harmless,
an Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the offering
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<PAGE> 31
of the Notes or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuers on the one hand or such Participant or such other
Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances.
(e) The parties agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purposes) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in
this Section 7 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
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<PAGE> 32
8. Rules 144 and 144A. The Company covenants that it will file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder in a timely
manner in accordance with the requirements of the Securities Act and the
Exchange Act and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder of Registrable Notes, make
publicly available annual reports and such information, documents and other
reports of the type specified in Sections 13 and 15(d) of the Exchange Act. The
Company further covenants for so long as any Registrable Notes remain
outstanding, to make available to any Holder or beneficial owner of Registrable
Notes in connection with any sale thereof and any prospective purchaser of such
Registrable Notes from such Holder or beneficial owner the information required
by Rule 144(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations. If any of the Registrable Notes
covered by any Notes Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will manage the offering will be selected by the Holders of a majority in
aggregate principal amount of such Registrable Notes included in such offering
and reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous. (a) No Inconsistent Agreements. None of the
Issuers have entered, as of the date hereof, and none of the Issuers shall,
after the date of this Agreement, enter into any agreement with respect to any
of its securities that is inconsistent with the rights granted to the Holders of
Registrable Notes in this Agreement or otherwise conflicts with the provisions
hereof. Other than as provided in Schedule A attached hereto none of the Issuers
have entered and none of the Issuers will enter into any agreement with respect
to any of its securities which will
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<PAGE> 33
grant to any Person piggy-back registration rights with respect to a
Registration Statement.
(b) Adjustments Affecting Registrable Notes. Other than as
provided in Schedule B attached hereto none of the Issuers shall, directly or
indirectly, take any action with respect to the Registrable Notes as a class
that would adversely affect the ability of the Holders of Registrable Notes to
include such Registrable Notes in a registration undertaken pursuant to this
Agreement.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, otherwise than with the
prior written consent of the Holders of not less than a majority in aggregate
principal amount of the then outstanding Registrable Notes. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Notes may be given by Holders of at least
a majority in aggregate principal amount of the Registrable Notes being sold by
such Holders pursuant to such Registration Statement; provided, however, that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
1. if to a Holder of the Registrable Notes or any
Participating Broker-Dealer, at the most current address of
such Holder or Participating Broker-Dealer, as the case may
be, set forth on the records of the registrar under the
Indenture, with a copy in like manner to the Initial
Purchasers as follows:
NatWest Capital Markets Limited
135 Bishopsgate
London, EC2M 3XT
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<PAGE> 34
United Kingdom
with copies to:
Gleacher NatWest, Inc.
660 Madison Avenue
New York, NY 10021
Attention: Roger Hoit
Facsimile No: (212) 752-3201
and
White & Case
1155 Avenue of the Americas
New York, NY 10036
Attention: Timothy B. Goodell
Facsimile No: (212) 354-8113
2. if to an Issuer, as follows:
American Architectural Products Corporation
755 Boardman-Canfield Road
Boardman, Ohio 44512
Attention: Frank J. Amedia
Facsimile No: (330) 985-9915
with a copy to:
Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue
Phoenix, Arizona 85004
Attention: Christopher D. Johnson
Facsimile No: (602) 253-8129
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address and in the manner specified in such Indenture.
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<PAGE> 35
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto; provided, however, that this Agreement shall not inure to the benefit of
or be binding upon a successor or assign of a Holder unless and to the extent
such successor or assign holds Registerable Notes.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning thereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT
TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Notes Held by the Issuers or their Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registerable
Notes is required hereunder, Registerable Notes held by the Issuers or their
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent
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<PAGE> 36
or approval was given by the Holders of such required percentage.
(k) Third Party Beneficiaries. Holders of Registerable Notes
and Participating Broker-Dealers are intended third party beneficiaries of this
Agreement, and this Agreement may be enforced by such Persons.
IN WITNESS WHEREOF, the parties have executed the Agreement as
of the date first written above.
Issuer:
AMERICAN ARCHITECTURAL PRODUCTS
CORPORATION
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
Subsidiary Guarantors:
DCI/DWC ACQUISITION CORPORATION
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
BBPI ACQUISITION CORPORATION
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
AMERICAN GLASSMITH ACQUISITION
CORPORATION
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
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<PAGE> 37
MODERN WINDOWS ACQUISITION
CORPORATION
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
EAGLE & TAYLOR COMPANY
By: /s/ Joseph Dominijanni
-----------------------------------
Name: Joseph Dominijanni
Title: Vice President -- Finance
FORTE, INC.
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
THERMETIC GLASS, CO.
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: Chief Executive Officer
WESTERN INSULATED GLASS, INC.
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: Chief Executive Officer
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<PAGE> 38
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written:
NATWEST CAPITAL MARKETS LIMITED
By: /s/ N. S. Coulbeck
-----------------------------------
Name: N. S. Coulbeck
Title: Director
MCDONALD & COMPANY SECURITIES, INCORPORATED
By: /s/ Edward S. Pentecost
-----------------------------------
Name: Edward S. Pentecost
Title: Senior Vice President
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<PAGE> 39
SCHEDULE A
Piggy-Back Registration Rights
Registration Rights Agreement dated as of December 18, 1996 between
American Architectural Products Corporation and AAP Holdings, Inc.
Registration Rights Agreement dated as of July 18, 1997 among American
Architectural Products Corporation, Richard L. Owens, Richard L. Owens, Jr.,
Dennis M. Owens, Raymond E. Kelly and Brian DeSollar.
Letter of Agreement dated as of August 16, 1996 between American
Architectural Products Corporation and The Miller Group (as amended).
<PAGE> 40
SCHEDULE B
Adjustments Reflecting Registrable Notes
<PAGE> 1
EXHIBIT 99.3
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
$125,000,000
11.75% Senior Notes due 2007
PURCHASE AGREEMENT
December 4, 1997
NatWest Capital Markets Limited
McDonald & Company Securities, Incorporated
c/o NatWest Capital Markets Limited
135 Bishopsgate
London, EC2M 3XT
United Kingdom
Ladies and Gentlemen:
Each of the undersigned hereby confirms its agreement with you
(the "Initial Purchasers"), as set forth below.
1. The Notes. Subject to the terms and conditions herein
contained, American Architectural Products Corporation, a Delaware corporation
(the "Company") proposes to issue and sell to the Initial Purchasers
$125,000,000 aggregate principal amount of its 11.75% Senior Notes due 2007 (the
"Notes"). The Notes are to be issued under an indenture (the "Indenture") to be
dated as of December 10, 1997 between the Company and United States Trust
Company of New York, as trustee (the "Trustee").
The Notes will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom. The notes will be guaranteed (the
"Notes Guarantee") by each of the Subsidiaries (as defined below) on a senior
basis.
In connection with the sale of the Notes, the Company has
prepared a preliminary offering memorandum dated November 11, 1997 as
supplemented by the
<PAGE> 2
Supplement to Preliminary Offering Memorandum dated December 4, 1997 (the
"Preliminary Memorandum") and will prepare a final offering memorandum dated
December 4, 1997 (the "Final Memorandum"; the Preliminary Memorandum and the
Final Memorandum each herein being referred to as a "Memorandum") setting forth
or including a description of the terms of the Notes, the terms of the offering
of the Notes, a description of the Company and the Subsidiaries and any material
developments relating to the Company and the Subsidiaries occurring after the
date of the most recent historical financial statements included therein.
The Company and the Initial Purchasers will enter into a
Registration Rights Agreement (the "Registration Rights Agreement") prior to or
concurrently with the issuance of the Notes. Pursuant to the Registration Rights
Agreement, under the circumstances and the terms set forth therein, the Company
will agree to file with the Securities and Exchange Commission (the
"Commission"): (i) a registration statement on Form S-4 (the "Exchange Offer
Registration Statement") relating to a registered Exchange Offer (as defined in
the Registration Rights Agreement) for the Notes under the Act to offer to the
holders of the Notes the opportunity to exchange their Notes for an issue of
notes substantially identical to the Notes that would be registered under the
Act (the "Exchange Notes") (except that (a) interest thereon will accrue from
the last date on which interest was paid on the Notes, or if no such interest
has been paid, from the date of original issuance of the Notes, (b) such
Exchange Notes will not contain restrictions on transfer, and (c) such Exchange
Notes will not contain provisions relating to an increase in their interest rate
under certain circumstances); or (ii) alternatively, in the event that
applicable interpretations of the Commission do not permit the Company to effect
the Exchange Offer or do not permit any holder of the Notes to participate in
the Exchange Offer, a shelf registration statement (the "Shelf Registration
Statement") to cover resales of Notes by such holders who satisfy certain
conditions, including providing certain information in connection with the Shelf
Registration Statement.
2. Representations and Warranties. Each of the Company and the
Subsidiaries, represents and warrants to, and agrees with the Initial Purchasers
that:
(a) Neither the Preliminary Memorandum as of the date thereof
nor the Final Memorandum nor any amendment or supplement thereto as of
the date thereof and, in the case of the Final Memorandum and any
amendment or supplement thereto, at all times subsequent thereto up to
the Closing Date (as defined in Section 3 below) contained or shall
contain any untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth
-2-
<PAGE> 3
in this Section 2(a) do not apply to statements or omissions made in
reliance upon and in conformity with information furnished to the
Company in writing by the Initial Purchasers expressly for use in the
Preliminary Memorandum, the Final Memorandum or any amendment or
supplement thereto. The Final Memorandum conforms in all material
respects to the requirements of the Act and the rules and regulations
promulgated thereunder as if it were a prospectus filed as part of a
registration statement on Form S-1 relating to the Notes.
(b) As of the Closing Date, the Company will have the
authorized and issued capital stock set forth in the Final Memorandum;
the Subsidiaries constitute all of the subsidiaries of the Company; the
Company will own the percentage of the issued and outstanding stock (or
other equity securities) of each of the Subsidiaries as listed on
Schedule 2 hereto; all of the outstanding shares of capital stock of
the Company and the Subsidiaries as of the Closing Date will be duly
authorized and validly issued, will be fully paid and nonassessable
(except with respect to the Company's stock to the extent of loans
outstanding to executive officers as described in the Memorandum) and
will not have been issued in violation of any preemptive or similar
rights; except as set forth in the Final Memorandum, there are no (i)
options, warrants or other rights to purchase from the Company and the
Subsidiaries, (ii) agreements or other obligations of the Company or
any of the Subsidiaries to issue or (iii) other rights to convert any
obligation into, or exchange any securities for, shares of capital
stock of, or other equity securities in, the Company or any of the
Subsidiaries outstanding. The entities listed on Schedule 2 hereto
(collectively, the "Subsidiaries") are the only subsidiaries, direct or
indirect, of the Company. Except as disclosed on Schedule 2, the
Company does not own, directly or indirectly, any capital stock or any
other equity or long-term debt securities or have any equity interests
in any firm, partnership, joint venture, limited liability company or
other entity.
(c) The Company and each of the Subsidiaries has been duly
incorporated, is validly existing and is in good standing as a
corporation under the laws of its jurisdiction of incorporation, with
all requisite corporate power and authority to own its properties and
conduct its business as now conducted, and as described in the Final
Memorandum; each of the Company and the Subsidiaries is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not, individually or in the aggregate,
have a material adverse effect on the general affairs, management,
business, condition (financial or otherwise), prospects or results of
operations of the
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<PAGE> 4
Company and the Subsidiaries, taken as a whole (any such event, a
"Material Adverse Effect").
(d) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Notes. The Notes, when issued, will be in the form contemplated by the
Indenture. The Notes have been duly and validly authorized, executed
and delivered by the Company and, when authenticated by the Notes
Trustee in accordance with the provisions of the Indenture and when
delivered to and paid for by the Initial Purchasers in accordance with
the terms of this Agreement, will have been duly executed, issued and
delivered and will constitute valid and legally binding obligations of
the Company, will entitle the Initial Purchasers to the benefits of the
Indenture and will be enforceable against the Company in accordance
with their terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, fraudulent transfer or
conveyance or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
(regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law).
(e) The Company and each of the Subsidiaries has all requisite
corporate power and authority to execute, deliver and perform its
obligations under the Indenture. The Indenture meets the requirements
for qualification under the Trust Indenture Act of 1939, as amended
(the "TIA"). The Indenture has been duly and validly authorized,
executed and delivered by the Company and will constitute a valid and
legally binding agreement of the Company, enforceable against the
Company and the Subsidiaries in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer or conveyance or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether the issue of enforceability
is considered in a proceeding in equity or at law).
(f) The Exchange Notes and the Private Exchange Notes (as
defined in the Registration Rights Agreement) have been duly and
validly authorized by the Company, and when the Exchange Notes have
been duly executed and delivered by the Company and authenticated by
the Notes Trustee in accordance with the terms of the Registration
Rights Agreement and the Indenture, will constitute the valid and
legally binding obligations of the Company, entitled to the benefits of
the Indenture, and will be enforceable against the Company in
accordance with their terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer or conveyance or other similar
-4-
<PAGE> 5
laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or at law).
(g) The Company and the Subsidiaries have all requisite
corporate power and authority to execute, deliver and perform their
obligations under the Registration Rights Agreement. The Registration
Rights Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company enforceable against the Company in accordance
with its terms, except (A) as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, fraudulent transfer or
conveyance or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
(regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law), and (B) that any rights to indemnity
or contribution thereunder may be limited by federal or state
securities laws or public policy considerations.
(h) Each of the Subsidiaries has all requisite corporate power
and authority to execute, deliver and perform its obligations under the
Subsidiary Guarantee executed by it. Each Subsidiary Guarantee has been
duly and validly authorized, executed and delivered by the applicable
Subsidiary and will constitute a valid and legally binding agreement of
such Subsidiary enforceable against such Subsidiary in accordance with
its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer or
conveyance or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
(regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law).
(i) The Company and each Subsidiary has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by the Company and each Subsidiary.
(j) No consent, approval, authorization or order of any court
or governmental agency or body or third party is required for the
execution, delivery or performance of this Agreement by the Company and
the Subsidiaries or the consummation by the Company or any Subsidiary
of this Agreement, the Registration Rights Agreement and the Indenture
or the consummation by the
-5-
<PAGE> 6
Company or any of the Subsidiaries of the transactions contemplated
hereby or thereby that are to be completed on or before the Closing
Date, except such as have been obtained or disclosed in the Final
Memorandum and such as may be required under state securities or "Blue
Sky" laws in connection with the purchase and resale of the Notes by
the Initial Purchasers. None of the Company or any of the Subsidiaries
is (i) in violation of its certificate of incorporation or bylaws (or
similar organizational document), (ii) in breach or violation of any
statute, judgment, decree, order, rule or regulation applicable to any
of them or any of their respective properties or assets, or (iii) in
breach of or in default under (nor has any event occurred which, with
notice or passage of time or both, would constitute a default under) or
in violation of any of the terms or provisions of any indenture,
mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other agreement
or instrument to which any of them is a party or to which any of them
or their respective properties or assets is subject (collectively,
"Contracts") except in the case of clauses (ii) and (iii) above for
such violations, breaches or defaults that would not, individually or
in the aggregate, have a Material Adverse Effect.
(k) The execution, delivery and performance by the Company and
the Subsidiaries of this Agreement, the Indenture, the Registration
Rights Agreement and the Subsidiary Guarantees and the consummation by
the Company and the Subsidiaries of the transactions contemplated
hereby and thereby, will not conflict with or constitute or result in a
breach of or a default under (or an event which with notice or passage
of time or both would constitute a default under) or violation of any
of (i) the terms or provisions of any Contract except such conflicts,
breaches, defaults or violations, that would not, individually or in
the aggregate, have a Material Adverse Effect, (ii) the certificate of
incorporation or by-laws (or similar organizational document) of the
Company or any of the Subsidiaries, or (iii) any statute, judgment,
decree, order, rule or regulation applicable to the Company or any of
the Subsidiaries or any of their respective properties or assets except
such conflicts, breaches, defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
(l) The audited consolidated financial statements of the
Company, Eagle Window and Door, Inc. and Subsidiaries and Taylor
Building Products Company, Mallyclad Corporation and Vyn-L Corporation,
Forte Computer Easy, Inc. and Subsidiaries, Western Insulated Glass,
Co., Thermetic Glass, Inc., Danvid Company, Inc. and Danvid Window
Company (collectively "Danvid") and Binnings Building Products, Inc.,
("Binnings") included in the
-6-
<PAGE> 7
Preliminary Memorandum and the Final Memorandum present fairly in all
material respects the financial condition, results of operations and
cash flows of such entities at the dates and for the periods to which
they relate and have been prepared in accordance with generally
accepted accounting principles in the United States applied on a
consistent basis except as otherwise stated therein. The summary and
selected financial and statistical data in the Preliminary Memorandum
and the Final Memorandum present fairly in all material respects the
information shown therein and have been prepared and compiled on a
basis consistent with the audited financial statements included
therein, except as otherwise stated therein. Each of BDO Seidman, LLP,
Semple & Cooper, P.L.C., Clifton Gunderson L.L.C., Fox Byrd & Golden
and Arthur Anderson LLP is an independent public accounting firm within
the meaning of the Act and the rules and regulations promulgated
thereunder.
(m) The pro forma financial information included in the
Preliminary Memorandum and the Final Memorandum, other than the "pro
forma as adjusted" financial information (i) complies as to form in all
material respects with the applicable requirements of Regulation S-X
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (ii) has been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, and (iii) has been properly computed on the bases described
therein; the assumptions used in the preparation of the pro forma
financial data and other pro forma financial information included in
the Preliminary Memorandum and the Final Memorandum are reasonable and
the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(n) There is not pending or, to the knowledge of the Company,
threatened, any action, suit, proceeding, inquiry, investigation or
legislative mandate to which the Company or any of the Subsidiaries is
a party, or to which the property or assets of the Company or any of
the Subsidiaries are subject, before or brought by any court,
arbitrator or governmental agency or body which is reasonably likely
to, individually or in the aggregate, have a Material Adverse Effect or
which seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or sale of the Notes to be sold
hereunder or the consummation of the other transactions described in
the Preliminary Memorandum and the Final Memorandum.
(o) Each of the Company and the Subsidiaries owns or possesses
adequate licenses or other rights to use all material patents,
trademarks, service marks, trade names, copyrights and know-how
necessary to conduct the busi-
-7-
<PAGE> 8
nesses now or proposed to be operated by it as described in the
Preliminary Memorandum and the Final Memorandum, except where the
failure to own or possess the same would not, individually or in the
aggregate, have a Material Adverse Effect, and none of the Company nor
any of the Subsidiaries has received any notice of infringement of or
conflict with (or knows of any such infringement of or conflict with)
asserted rights of others with respect to any patents, trademarks,
service marks, trade names, copyrights or know-how which, if such
assertion of infringement or conflict were sustained, would,
individually or in the aggregate, have a Material Adverse Effect.
(p) The Company and each of the Subsidiaries possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with,
all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals,
presently required or necessary to own or lease, as the case may be,
and to operate its respective properties and to carry on its respective
businesses as now or proposed to be conducted as described in the
Preliminary Memorandum and the Final Memorandum (collectively, the
"Permits"), except where the failure to obtain such Permits would not,
individually or in the aggregate, have a Material Adverse Effect; each
of the Company and the Subsidiaries has fulfilled and performed all of
its obligations with respect to such Permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of
the rights of the holder of any such Permit except where such failure
or such revocation, termination or impairment would not, individually
or in the aggregate, have a Material Adverse Effect; and none of the
Company or the Subsidiaries has received any notice of any proceeding
relating to revocation or modification of any such Permit, except as
described in the Final Memorandum and except where such revocation or
modification would not, individually or in the aggregate, have a
Material Adverse Effect.
(q) Since the date of the most recent financial statements
appearing in the Final Memorandum, except as described therein, (i)
none of the Company nor the Subsidiaries has incurred any liabilities
or obligations, direct or contingent, or entered into or agreed to
enter into any transactions or contracts (written or oral) not in the
ordinary course of business which liabilities, obligations,
transactions or contracts would, individually or in the aggregate, be
material to the general affairs, management, business, condition
(financial or otherwise), prospects or results of operations of the
Company and the Subsidiaries, either individually or taken as a whole
(a "Material Change"), (ii) none of the Company nor the Subsidiaries
has purchased any of its outstanding
-8-
<PAGE> 9
capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock and (iii) other than as
described in the Final Memorandum, there shall not have been any change
in the capital stock or long-term indebtedness of the Company or the
Subsidiaries which would, individually or in the aggregate, constitute
a Material Change.
(r) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
general affairs, management, business, condition, (financial or
otherwise), prospects or results of operations of the Company and the
Subsidiaries, either individually or taken as a whole, from that set
forth in the Preliminary Memorandum and the Final Memorandum.
(s) The Company and each of the Subsidiaries has filed all
necessary federal, state, local and foreign income and franchise tax
returns, and has paid all taxes shown as due thereon; and there is no
tax deficiency that has been asserted against the Company or any of the
Subsidiaries other than tax deficiencies which the Company or such
Subsidiary is contesting in good faith and for which the Company or
such Subsidiary has provided adequate reserves.
(t) The statistical and market-related data included in the
Final Memorandum are based on or derived from sources which the Company
and the Subsidiaries believe to be reliable and accurate.
(u) None of the Company, the Subsidiaries nor any agent acting
on their behalf has taken or will take any action that might cause this
Agreement or the sale of the Notes to violate Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System, in each case
as in effect, or as the same may hereafter be in effect, on the Closing
Date.
(v) Each of the Company and the Subsidiaries has good and
marketable title to all real property and good title to all personal
property described in the Final Memorandum as being owned by it and
good and marketable title to any leasehold estate in the real and
personal property described in the Final Memorandum as being leased by
it free and clear of all liens, charges, encumbrances or restrictions,
except as described in the Final Memorandum or to the extent the
failure to have such title or the existence of such liens, charges,
encumbrances or restrictions would not, individually or in the
aggregate, have a Material Adverse Effect.
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<PAGE> 10
(w) There are no legal or governmental proceedings involving
or affecting the Company or any Subsidiary or any of their respective
properties or assets which would be required to be described in a
prospectus forming part of a registration statement filed with the
Commission pursuant to the Act that are not described in the Final
Memorandum.
(x) Except as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect (A) each of the
Company and the Subsidiaries is in compliance with and not subject to
liability under applicable Environmental Laws (as defined below), (B)
each of the Company and the Subsidiaries has made all filings and
provided all notices required under any applicable Environmental Laws,
and has and is in compliance with all Permits required under any
applicable Environmental Laws and each of them is in full force and
effect, (C) there is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the
knowledge of the Company or any of the Subsidiaries, threatened against
the Company or any of the Subsidiaries under any Environmental Law, (D)
no lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property
owned, operated, leased or controlled by the Company or any of the
Subsidiaries, (E) none of the Company or the Subsidiaries has received
notice that it has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA") or any comparable state
law, (F) no property or facility of the Company or any of the
Subsidiaries is (i) listed or proposed for listing on the National
Priorities List under CERCLA or is (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to CERCLA, or on any comparable list maintained by
any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, relating to pollution or
protection of public or employee health and safety or the environment,
including, without limitation, law relating to (i) emissions,
discharges, releases or threatened releases of hazardous materials,
into the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), (ii)
the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of hazardous materials, and
(iii) underground and
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<PAGE> 11
above ground storage tanks, and related piping, and emissions,
discharges, releases or threatened releases therefrom.
(y) Except as described in the Final Memorandum, there is no
strike, labor dispute, slowdown or work stoppage with the employees of
the Company or any of the Subsidiaries which is pending or, to the
knowledge of the Company or any of the Subsidiaries, threatened.
(z) Each of the Company and the Subsidiaries carries insurance
in such amounts and covering such risks as is adequate for the conduct
of its business and the value of its properties. Neither the Company
nor any of the Subsidiaries has received notice from any insurer or
agent of such insurer that capital improvements or other expenditures
are required or necessary to be made in order to continue such
insurance.
(aa) None of the Company nor the Subsidiaries has any material
liability for any prohibited transaction (within the meaning of Section
4975(c) of the Internal Revenue Code of 1986, as amended (the "Code")
or Part 4 of Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (or an accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of ERISA)
or any complete or partial withdrawal liability (within the meaning of
Section 4201 of ERISA) with respect to any pension, profit sharing or
other plan which is subject to ERISA, to which the Company or any of
the Subsidiaries makes or ever has made a contribution and in which any
employee of the Company or of any Subsidiary is or has ever been a
participant. With respect to such plans, the Company and each
Subsidiary is in compliance in all material respects with all
applicable provisions of ERISA.
(bb) The Company and each of the Subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting
controls which provide reasonable assurance that (A) transactions are
executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(cc) None of the Company nor the Subsidiaries will be an
"investment company" or "promoter" or "principal underwriter" for (i)
an "investment company or a company controlled by an investment company
within the
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<PAGE> 12
meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations thereunder or (ii) a "holding company" or a
"subsidiary company" of a holding company or an "affiliate" thereof
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(dd) The Notes, the Exchange Notes, the Registration Rights
Agreement and the Indenture conform in all material respects to the
descriptions thereof in the Final Memorandum.
(ee) Except as described in the Final Memorandum, no holder of
securities of the Company nor any of the Subsidiaries will be entitled
to have such securities registered under the registration statements
required to be filed by the Company pursuant to the Registration Rights
Agreement other than as expressly permitted thereby.
(ff) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair
saleable value of the assets of each of the Company and the
Subsidiaries (each on a consolidated basis) will exceed the sum of its
stated liabilities and identified contingent liabilities; none of the
Company or the Subsidiaries (each on a consolidated basis) is, nor will
any of the Company or the Subsidiaries (each on a consolidated basis)
be, after giving effect to the execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated
hereby, (a) left with unreasonably small capital with which to carry on
its business as it is currently or proposed to be conducted, (b) unable
to pay its debts (contingent or otherwise) as they mature or otherwise
become due or (c) otherwise insolvent.
(gg) None of the Company, the Subsidiaries or any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under
the Act) has directly, or through any agent (other than the Initial
Purchasers pursuant to this Agreement), (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
"security" (as defined in the Act) which is or could be integrated with
the sale of the Notes in a manner that would require the registration
under the Act of the Notes or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the
Notes or in any manner involving a public offering within the meaning
of Section 4(2) of the Act. The Company has not distributed and will
not distribute any offering material in connection with the offering of
the Notes other than the Final Memorandum and any Preliminary
Memorandum. No securities of the same class as any of the
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<PAGE> 13
Notes have been issued and sold by the Company within the six-month
period immediately prior to the date hereof.
(hh) Assuming the accuracy of the representations and
warranties of the Initial Purchasers in Section 8 hereof, it is not
necessary in connection with the offer, sale and delivery of the Notes
to the Initial Purchasers in the manner contemplated by this Agreement
to register the Notes under the Act or to qualify the Indenture under
the TIA.
(ii) No securities of the Company or any Subsidiary are of the
same class (within the meaning of Rule 144A as promulgated under the
Act ("Rule 144A")) as the Notes and listed on a national securities
exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or quoted in a U.S. automated
inter-dealer quotation system.
(jj) None of the Company or the Subsidiaries has taken, nor
will any of them take, directly or indirectly, any action designed to,
or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Notes.
(kk) None of the Company or the Subsidiaries, or any person
acting on any of their behalf (other than the Initial Purchasers) has
engaged in any directed selling efforts (as that term is defined in
Regulation S under the Act ("Regulation S")) with respect to the Notes;
and the Company and its Affiliates and any person acting on any of
their behalf (other than the Initial Purchasers or any Affiliate of the
Initial Purchasers) have complied with the offering restrictions
requirement of Regulation S.
(ll) Each of the Preliminary Memorandum and the Final
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of any of the Notes,
would be required to be provided to such prospective purchaser pursuant
to Rule 144A(d)(4) under the Act.
(mm) The Notes satisfy the eligibility requirements of Rule
144A(d)(3) under the Act.
(nn) Neither the Company nor any of the Subsidiaries nor, to
the Company's knowledge, any officer or director purporting to act on
behalf of the Company or any of the Subsidiaries has at any time: (i)
made any contributions to any candidate for political office, or failed
to disclose fully any such contributions, in violation of law, (ii)
made any payment of funds to, or
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<PAGE> 14
received or retained any funds from, any state, federal or foreign
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or allowed
by applicable law, (iii) violated or is in violation of any provision
of the Foreign Corrupt Practices Act of 1977, (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment
or (v) engaged in any transaction, maintained any bank account or used
any corporate funds except for transactions, bank accounts and funds
which have been and are reflected in the normally maintained books and
records of the Company and the Subsidiaries.
(oo) Except as disclosed in any Memorandum, there are no
material outstanding loans or advances or material guarantees of
indebtedness by the Company or any of its Subsidiaries to or for the
benefit of any of the officers or directors of the Company or any of
its Subsidiaries or any of the members of the families of any of them.
(pp) Neither the Company nor any affiliate of the Company does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Florida Statutes Section 517.075.
(qq) None of the Company or any of the Subsidiaries has
engaged or retained any person, other than NatWest Capital Markets
Limited and McDonald & Company Securities, Incorporated (the "Initial
Purchasers"), to act as a financial advisor, underwriter or placement
agent in connection with the issuance of any of the Notes and, except
for the fees and expenses payable in connection with the issuance of
the Notes as described in the Final Memorandum, no person other than
the Initial Purchasers has the right to receive a material amount of
financial advisory, underwriting, placement, finder's or similar fees
in connection with, or as a result of, the issuance of the Notes and
the purchase of the Notes by the Initial Purchasers or the consummation
of the other transactions contemplated hereby; provided, that the
foregoing representations shall not apply to any such fees and expenses
that may be claimed by The Miller Group.
(rr) The Company and each Subsidiary Guarantor has all
requisite corporate power and authority to execute, deliver and perform
its obligations under each of (i) the Asset Purchase Agreement, dated
as of November 10, 1997, between the Company, acting through DCI/DCW
Acquisition Corporation, and Danvid, whereby the Company has agreed to
purchase certain of the assets of Danvid and (ii) the Plan and
Agreement of Merger dated as of November 10, 1997, among the Company,
BBPI Acquisition Corporation and
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<PAGE> 15
Binnings, whereby the Company has agreed to acquire all of the issued
and outstanding common stock of Binnings, (iii) the Asset Purchase
Agreement, dated as of November 17, 1997, among the Company, American
Glassmith Acquisition Corporation and American Glassmith, Inc.,
("American Glassmith"), whereby the Company has agreed to purchase
certain assets of American Glassmith and (iv) the Agreement, dated as
of October 3, 1997 between the Company, Modern Window Corporation
("Modern"), Donald B. Lifton, Edmund H. Doyle, Sheldon R. Stone and
Modern Window Acquisition Corporation whereby the Company has agreed to
purchase certain assets of Modern (collectively, the "Acquisition
Agreements"). Each of the Acquisition Agreements has been duly and
validly authorized, executed and delivered by each of the parties
thereto and will constitute a valid and legally binding agreement of
each of the parties thereto enforceable against each of the parties
thereto in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent transfer or conveyance or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law).
3. Purchase, Sale and Delivery of the Notes. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers agree, to
purchase from the Company the principal amount of Notes set forth opposite their
respective names on Schedule 1 hereto at 97% of their principal amount. One or
more certificates in definitive form for the Notes that the Initial Purchasers
have agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as each of the Initial Purchasers requests upon
notice to the Company at least 48 hours prior to the Closing Date, shall be
delivered by or on behalf of the Company to the Initial Purchasers, against
payment by or on behalf of such Initial Purchasers of the purchase price
therefor by wire transfer to such account or accounts as the Company shall
specify prior to the Closing Date, or by such means as the parties hereto shall
agree prior to the Closing Date. Such delivery of and payment for the Notes
shall be made at the offices of White & Case on December 10, 1997, or at such
other place, time or date as the Initial Purchasers, on the one hand, and the
Company, on the other hand, may agree upon, such time and date of delivery
against payment being herein referred to as the "Closing Date." The Company will
make such certificate or certificates for the Notes available for inspection and
packaging by the Initial Purchasers at such place as designated by the Initial
Purchasers at least 24 hours prior to the Closing Date.
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<PAGE> 16
4. Offering by the Initial Purchasers. The Initial Purchasers
propose to make an offering of the Notes at the price and upon the terms set
forth in the Final Memorandum, as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchasers is advisable.
5. Covenants of the Company and the Subsidiaries. The Company
and each of the Subsidiaries covenants and agrees with the Initial Purchasers
that:
(a) The Company will not amend or supplement the Final
Memorandum or any amendment or supplement thereto of which the Initial
Purchasers shall not previously have been advised and furnished a copy
for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchasers shall not have
consented. The Company will promptly, upon the reasonable request of
the Initial Purchasers or counsel for the Initial Purchasers, make any
amendments or supplements to the Final Memorandum that may be necessary
or advisable in connection with the resale of the Notes by the Initial
Purchasers.
(b) The Company will cooperate with the Initial Purchasers in
arranging for the qualification of the Notes for offering and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchasers may designate and will continue such qualifications
in effect for as long as may be necessary to complete the resale of the
Notes; provided, however, that in connection therewith, the Company
shall not be required to qualify as a foreign corporation or to execute
a general consent to service of process in any jurisdiction or subject
itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchasers of the Notes, any event occurs
or information becomes known as a result of which the Final Memorandum
as then amended or supplemented would, in the judgment of the Company
or in the reasonable opinion of counsel for the Initial Purchasers,
include any untrue statement of a material fact, or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if for
any other reason it is necessary at any time to amend or supplement the
Final Memorandum to comply with applicable law, the Company will
promptly notify the Initial Purchasers thereof and will prepare, at the
expense of the Company, an amendment or supplement to the Final
Memorandum that corrects such statement or omission or effects such
compliance.
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<PAGE> 17
(d) The Company will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of
the Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchasers may reasonably request.
(e) The Company will apply the net proceeds from the sale of
the Notes substantially as set forth under "Use of Proceeds" in the
Final Memorandum.
(f) For so long as any of the Notes remain outstanding, the
Company will furnish to the Initial Purchasers copies of all reports
and other communications (financial or otherwise) furnished by the
Company to the Notes Trustee, the holders of the Notes and, as soon as
available, copies of any reports or financial statements furnished to
or filed by the Company with the Commission or any national securities
exchange on which any class of securities of the Company may be listed.
(g) For so long as any of the Notes remain outstanding, the
Company will furnish to the Initial Purchasers, as soon as they have
been prepared, a copy of any unaudited interim financial statements of
the Company for any period subsequent to the period covered by the most
recent financial statements appearing in the Final Memorandum.
(h) None of the Company, the Subsidiaries or any of their
Affiliates will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any "security" (as defined in the
Act) which could be integrated with the sale of any of the Notes in a
manner which would require the registration under the Act of any of the
Notes.
(i) None of the Company nor the Subsidiaries will engage in
any form of "general solicitation" or "general advertising" (as those
terms are used in Regulation D under the Act) in connection with the
offering of the Notes or in any manner involving a public offering of
the Notes within the meaning of Section 4(2) of the Act.
(j) None of the Company, the Subsidiaries nor their Affiliates
nor any person acting on its or their behalf will engage in any
directed selling efforts (as that term is defined in Regulation S) with
respect to the Notes; the Company and its respective Affiliates and any
person acting on their behalf (other than the Initial Purchasers) have
complied with the offering restriction requirements of Regulation S.
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<PAGE> 18
(k) For so long as any of the Notes remain outstanding, the
Company will make available, upon request, to any seller of Notes the
information specified in Rule 144A(d)(4) under the Act, unless the
Company is then subject to Section 13 or 15(d) of the Exchange Act.
(l) For a period of 180 days from the date of the Final
Memorandum, the Company and the Subsidiaries will not offer for sale,
sell, contract to sell or otherwise dispose of, directly or indirectly,
or file a registration statement for, or announce any offer, sale,
contract for sale of or other disposition of any debt securities issued
or guaranteed by the Company or any of its subsidiaries (other than the
Exchange Notes) without the prior written consent of the Initial
Purchasers.
(m) During the period from the Closing Date until two years
after the Closing Date, without the prior written consent of the
Initial Purchasers, the Company and the Subsidiaries will not, and will
not permit any of their affiliates (as defined in Rule 144 under the
Act) to, resell any of the Notes that have been reacquired by them,
except for Notes purchased by the Company or any of its affiliates and
resold in a transaction registered under the Act.
(n) In connection with the offering of the Notes, until the
Initial Purchasers shall have notified the Company of the completion of
the resale of the Notes, the Company and the Subsidiaries will not, and
will cause their affiliated purchasers (as defined in the Exchange Act)
not to, either alone or with one or more other persons, bid for or
purchase, for any account in which it or any of its affiliated
purchasers has a beneficial interest, any Notes, or attempt to induce
any person to purchase any Notes; and will not, and cause its
affiliated purchasers not to, make bids or purchase for the purpose of
creating actual, or apparent, active trading in or of raising the price
of the Notes.
(o) Except as contemplated by the Final Memorandum, the
Company and the Subsidiaries will not take any action prior to the
execution and delivery of the Indenture which, if taken after such
execution and delivery, would have violated any of the covenants
contained therein.
(p) The Company and the Subsidiaries will not take any action
prior to Closing Date which would require the Final Memorandum to be
amended or supplemented pursuant to Section 5(c).
(q) Prior to the Closing Date, the Company and the
Subsidiaries will not issue any press release or other communication
directly or indirectly or hold any
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<PAGE> 19
press conference with respect to the Company, its condition, financial
or otherwise, or earnings, business affairs or business prospects
(except for routine oral marketing communications in the ordinary
course of business and consistent with the past practices of the
Company and of which the Initial Purchasers are notified), without the
prior written consent of the Initial Purchasers, unless in the judgment
of the Company and its counsel, after notification to the Initial
Purchasers, such press release or communication is required by law.
(r) The Company will use its best efforts to permit the Notes
to be designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the Private
Offerings, Resales and Trading through Automated Linkages market (the
"Portal Market") and permit the Notes to be eligible for clearance and
settlement through the Depository Trust Company ("DTC").
6. Expenses. The Company and the Subsidiaries agree, jointly
and severally, to pay all costs and expenses incident to the performance of
their obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is terminated pursuant to
Section 11 hereof, including all costs and expenses incident to (i) the
printing, word processing or other production of documents with respect to the
transactions contemplated hereby, including any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto, and any "Blue Sky" memoranda, (ii) all arrangements relating to the
delivery to the Initial Purchasers of copies of the foregoing documents, (iii)
the fees and disbursements of counsel, accountants and any other experts or
advisors retained by the Company, (iv) preparation (including printing),
issuance and delivery to the Initial Purchasers of the Notes, (v) the
qualification of the Notes under state securities and "Blue Sky" laws, including
filing fees and reasonable fees and disbursements of counsel for the Initial
Purchasers relating thereto, (vi) expenses in connection with any meetings with
prospective investors in the Notes, (vii) fees and expenses of the Trustee
(including reasonable fees and expenses of counsel), (viii) all expenses and
listing fees incurred in connection with the application for quotation of the
Notes on the PORTAL Market, (ix) all expenses incurred in connection with the
approval of the Notes for book-entry transfer by DTC, (x) the reasonable fees
and disbursements of legal counsel retained by the Initial Purchasers, (xi) all
other reasonable out-of-pocket expenses of the Initial Purchasers (including,
without limitation, all road show expenses) incurred by the Initial Purchasers
or any of their affiliates in connection with, or arising out of, the offering
and sale of the Notes and (xii) any fees charged by investment rating agencies
for the rating of the Notes. If the sale of the Notes provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth in Section 7 hereof is not satisfied, because this
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<PAGE> 20
Agreement is terminated pursuant to Section 11 or because of any failure,
refusal or inability on the part of the Company to perform all obligations and
satisfy all conditions on their part to be performed or satisfied hereunder
(other than solely by reason of a default by the Initial Purchasers of their
obligations hereunder after all conditions hereunder have been satisfied in
accordance herewith), the Company agrees to promptly reimburse the Initial
Purchasers upon demand for all out-of-pocket expenses (including all reasonable
fees, disbursements and charges of White & Case and Snell & Wilmer L.L.P.) that
shall have been incurred by the Initial Purchasers in connection with the
proposed purchase and sale of the Notes.
7. Conditions of the Initial Purchasers' Obligations. The
obligation of the Initial Purchasers to purchase and pay for the Notes shall, in
their sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have
received the opinion, dated as of the Closing Date and addressed to the
Initial Purchasers, of Squire, Sanders & Dempsey L.L.P., counsel for
the Company, in form and substance satisfactory to counsel to the
Initial Purchasers, dated the Closing Date, substantially to the effect
that:
(i) The Company and each of the Subsidiaries has been
duly organized under the laws of a state within the United
States of America, is validly existing and is in good standing
as a corporation under the laws of its jurisdiction of
incorporation, with all requisite corporate power and
authority to own, lease and operate its properties and conduct
its business as now conducted, and as described in the Final
Memorandum; each of the Company and the Subsidiaries is duly
qualified to do business as a foreign corporation in good
standing in all other jurisdictions where, to the knowledge of
such counsel, the ownership or leasing of its properties or
the conduct of its business requires such qualification,
except where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse
Effect.
(ii) The Company has the authorized and, to the
knowledge of such counsel, issued capital stock set forth in
the Final Memorandum. The Company owns all of the outstanding
capital stock of the Subsidiaries. All of the outstanding
shares of capital stock of the Company and the Subsidiaries as
of the Closing Date are duly authorized and validly issued,
are fully paid and nonassessable and were not issued
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<PAGE> 21
in violation of any preemptive or similar rights; except as
set forth in the Final Memorandum, to the knowledge of such
counsel, there are no (i) options, warrants or other rights to
purchase from the Company and the Subsidiaries, (ii)
agreements or other obligations of the Company or any of the
Subsidiaries to issue or (iii) other rights to convert any
obligation into, or exchange any securities for, shares of
capital stock of, or other equity securities in, the Company
or any of the Subsidiaries outstanding.
(iii) The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations
under the Notes. The Notes, when issued, will be in the form
contemplated by the Indenture. The Notes have been duly and
validly authorized, executed and delivered by the Company and,
when authenticated by the Notes Trustee in accordance with the
provisions of the Indenture and when delivered to and paid for
by the Initial Purchasers in accordance with the terms of this
Agreement, will constitute valid and legally binding
obligations of the Company, will be entitled to the benefits
of the Indenture and will be enforceable against the Company
in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer or conveyance or other
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of
whether the issue of enforceability is considered in a
proceeding in equity or at law).
(iv) The Global Note (as such term is defined in the
Indenture) is in the form contemplated by the Indenture. The
Global Note has been duly and validly authorized, executed and
delivered by the Company and, when authenticated by the Notes
Trustee in accordance with the provisions of the Indenture and
when delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will constitute
valid and legally binding obligations of the Company, will be
entitled to the benefits of the Indenture and will be
enforceable against the Company in accordance with their
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer or
conveyance or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable
principles (regardless of whether the issue of enforceability
is considered in a proceeding in equity or at law).
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<PAGE> 22
(v) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations
under the Indenture. The Indenture meets the requirements for
qualification under the TIA. The Indenture has been duly and
validly authorized, executed and delivered by the Company and
constitutes a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with
its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, fraudulent transfer
or conveyance or other similar laws affecting the enforcement
of creditors' rights generally and by general equitable
principles (regardless of whether the issue of enforceability
is considered in a proceeding in equity or at law).
(vi) The Exchange Notes and the Private Exchange
Notes have been duly and validly authorized by the Company,
and when the Exchange Notes have been duly executed and
delivered by the Company and authenticated by the Notes
Trustee in accordance with the terms of the Registration
Rights Agreement and the Indenture, will constitute the valid
and legally binding obligations of the Company, entitled to
the benefits of the Indenture, and enforceable against the
Company in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer or conveyance
or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles
(regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law);
(vii) The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations
under the Registration Rights Agreement. The Registration
Rights Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a valid
and legally binding agreement of the Company enforceable
against the Company in accordance with its terms, except (A)
as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer or conveyance
or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles
(regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law), and (B) that
any rights to indemnity or contribution thereunder may be
limited by federal or state securities laws or public policy
considerations.
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<PAGE> 23
(viii) Each of the Subsidiaries has all requisite
corporate power and authority to execute, deliver and perform
its obligations under its respective Subsidiary Guarantee.
Each Subsidiary Guarantee has been duly and validly
authorized, executed and delivered by the applicable
Subsidiary and will constitute a valid and legally binding
agreement of such Subsidiary enforceable against such
Subsidiary in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer or conveyance
or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles
(regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law).
(ix) The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by the Company.
(x) No consent, approval, authorization or order of
any court or governmental agency or body or, to the knowledge
of such counsel, third party is required for the execution,
delivery or performance by the Company or any Subsidiary of
this Agreement, the Registration Rights Agreement or the
consummation by the Company or any of the Subsidiaries of the
transactions contemplated hereby or thereby that are to be
completed prior to or on the date hereof, except such as have
been obtained or disclosed in the Final Memorandum and such as
may be required under state securities or "Blue Sky" laws in
connection with the purchase and resale of the Notes by the
Initial Purchasers. None of the Company or any of the
Subsidiaries is (i) in violation of its certificate of
incorporation or bylaws (or similar organizational document),
(ii) in breach or violation of any statute, judgment, decree,
order, rule or regulation known to such counsel applicable to
any of them or any of their respective properties or assets,
or (iii) in breach of or in default under (nor has any event
occurred which, with notice or passage of time or both, would
constitute a default under) or in violation of any of the
terms or provisions of any Contracts known to such counsel.
(xi) The execution, delivery and performance by the
Company and the Subsidiaries of this Agreement, the Indenture,
the Registration Rights Agreement and the Subsidiary
Guarantees and the consummation
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<PAGE> 24
by the Company and the Subsidiaries of the transactions
contemplated hereby and thereby, and the fulfillment of the
terms hereof and thereof, will not conflict with or constitute
or result in a breach of or a default under (or an event which
with notice or passage of time or both would constitute a
default under) or violation of any of (i) the terms or
provisions of any Contract known to such counsel, except such
conflicts, breaches, defaults or violations, that would not,
individually or in the aggregate, have a Material Adverse
Effect, (ii) the certificate of incorporation or by-laws (or
similar organizational document) of the Company or any of the
Subsidiaries, or (iii) any statute, judgment, decree, order,
rule or regulation known to such counsel and applicable to the
Company or any of the Subsidiaries or any of their respective
properties or assets except such conflicts, breaches, defaults
or violations that would not, individually or in the
aggregate, have a Material Adverse Effect.
(xii) To the knowledge of such counsel, there is not
pending or threatened, any action, suit, proceeding, inquiry,
investigation or legislative mandate to which the Company or
any of the Subsidiaries is a party, or to which the property
or assets of the Company or any of the Subsidiaries are
subject, before or brought by any court, arbitrator or
governmental agency or body which are reasonably likely to,
individually or in the aggregate, have a Material Adverse
Effect or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of
the Notes to be sold hereunder or the consummation of the
other transactions described in the Preliminary Memorandum and
the Final Memorandum.
(xiii) Neither the transactions contemplated by this
Agreement nor the sale, issuance, execution or delivery of the
Notes will violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in
effect, or as the same may hereafter be in effect, on the date
hereof.
(xiv) To the knowledge of such counsel, there are no
legal or governmental proceedings involving or affecting the
Company or any Subsidiary or any of their respective
properties or assets which would be required to be described
in a prospectus forming part of a registration statement filed
with the Commission pursuant to the Act that are not described
in the Preliminary Memorandum or the Final Memorandum.
-24-
<PAGE> 25
(xv) Neither the Company nor any of the Subsidiaries
is or immediately after the sale of the Notes to be sold
hereunder and the application of the proceeds from such sale
(as described in the Final Memorandum under the caption "Use
of Proceeds") will be (i) an "investment company" or
"promoter" or principal "underwriter" for an "investment
company" or a company controlled by an investment company
within the meaning of the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder or (ii) a
"holding company" or a "subsidiary company" of a holding
company or an "affiliate" thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(xvi) The Notes, the Exchange Notes, the Registration
Rights Agreement and the Indenture will conform in all
material respects to the descriptions thereof in the Final
Memorandum.
(xvii) To the knowledge of such counsel, no holder of
securities of the Company nor any of the Subsidiaries will be
entitled to have such securities registered under the
registration statements required to be filed by the Company
pursuant to the Registration Rights Agreement other than as
expressly permitted thereby.
(xviii) The Notes satisfy the eligibility
requirements of Rule 144A(d)(3) under the Act.
(xix) The statements in the Final Memorandum under
the caption "Description of Capital Stock", and "Description
of Notes", insofar as they describe the provisions of the
documents and instruments therein described, constitute fair
summaries thereof and are accurate in all material respects;
(xx) No registration under the Act of the Notes is
required in connection with the sale of the Notes to the
Initial Purchasers or the initial resale of the Notes by the
Initial Purchasers in the manner contemplated by this
Agreement and the Final Memorandum and prior to the
commencement of the Notes Exchange Offer and the Debenture
Exchange Offer or the effectiveness of the Shelf Registration
Statement or the Debenture Shelf Registration Statement (as
defined in the Registration Rights Agreement or the Debenture
Registration Rights Agreement, as the case may be), it being
understood that no opinion is expressed as to any subsequent
resale of the Notes, and the Indenture
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<PAGE> 26
and the Subordinated Indenture are not required to be
qualified under the TIA, in each case assuming (i) that the
purchasers who buy such Notes in the initial resale thereof
are qualified institutional buyers as defined in Rule 144A
promulgated under the Act ("QIBs") or accredited investors as
defined in Rule 501(a) (1), (2), (3) or (7) promulgated under
the Act ("Accredited Investors"), (ii) the accuracy of the
Initial Purchasers's representations in Section 8 hereof and
those of the Company contained in this Agreement regarding the
absence of a general solicitation in connection with the sale
of such Notes to the Initial Purchasers and the initial resale
thereof and (iii) the due performance by the Initial
Purchasers of the agreements set forth in Section 8 hereof.
(xxi) The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations
under the Acquisition Agreements. Each of the Acquisition
Agreements has been duly and validly authorized, executed and
delivered by the Company and constitutes a valid and legally
binding agreement of the Company enforceable against the
Company in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer or conveyance
or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles
(regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law).
(xxii) To the knowledge of such counsel, the Company
and each of the Subsidiaries possesses all Permits presently
required or necessary to own or lease, as the case may be, and
to operate its respective properties and to carry on its
respective businesses as now or proposed to be conducted as
described in the Preliminary Memorandum and the Final
Memorandum, each of the Company and the Subsidiaries has
fulfilled and performed all of its obligations with respect to
such Permits and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the
rights of the holder of any such Permit, and none of the
Company or the Subsidiaries has received any notice of any
proceeding relating to revocation or modification of any such
Permit, except as described in the Final Memorandum.
In rendering such opinion, such counsel may (A) state that
such counsel's opinion is limited to the federal law of the United
States and the laws of the States of Ohio and New York and the General
Corporation Law of the State of
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<PAGE> 27
Delaware, (B) as to matters involving the application of laws of any
jurisdiction other than the State of New York, the State of Ohio, the
United States or the corporation law of the State of Delaware, to the
extent they deem proper and specified in such opinion, upon the opinion
of other counsel of good standing whom they believe to be reliable and
who are satisfactory to counsel for the Initial Purchasers and (C) as
to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.
In addition to the foregoing, such counsel shall state that is
has participated in conferences with directors, executive officers and
other representatives of the Company, representatives of the Company's
independent public accountants, at which conferences the contents of
the Final Memorandum and related matters were discussed, and although
such counsel has not independently verified and has not passed upon or
assumed any responsibility for the accuracy, completeness or fairness
of the statements contained in such documents, no facts have come to
such counsel's attention to lead it to believe that the Final
Memorandum and any further amendments or supplements thereto as of
their respective dates and on the date of such opinion letter contained
or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading (it being understood that such counsel
need not express any view with respect to the financial statements and
related notes, the financial statement schedules and the other
financial, statistical and accounting data included in the Final
Memorandum). The opinion of Squire, Sanders & Dempsey L.L.P. described
in this Section shall be rendered to the Initial Purchasers at the
request of the Company and shall so state therein.
(b) On the Closing Date, the Initial Purchasers shall have
received opinions, in form and substance satisfactory to the Initial
Purchasers, dated as of the Closing Date and addressed to the Initial
Purchasers, of White & Case and Snell & Wilmer L.L.P. counsel for the
Initial Purchasers, with respect to certain legal matters relating to
this Agreement and such other related matters as the Initial Purchasers
may reasonably require. In rendering such opinion, White & Case and
Snell & Wilmer L.L.P. shall have received and may rely upon such
certificates and other documents and information as they may reasonably
request to pass upon such matters.
(c) On the Closing Date, the Initial Purchasers shall have
received good standing certificates for the Company and the
Subsidiaries dated as of a date within five (5) business days prior to
the Closing Date.
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<PAGE> 28
(d) On the Closing Date, the Initial Purchasers shall have
received the following documents duly authorized, executed and
delivered by each of the parties thereto, in form and substance
satisfactory for counsel to the Initial Purchasers, dated the Closing
Date:
(i) the Subsidiary Guarantees;
(ii) the Indenture; and
(iii) the Registration Rights Agreement.
(e) The Initial Purchasers shall have received from BDO
Seidman, LLP and Arthur Andersen LLP comfort letters dated the date
hereof and the Closing Date, in form and substance satisfactory to
counsel for the Initial Purchasers, which describe the procedures as
the Initial Purchasers may request and BDO Seidman, LLP and Arthur
Andersen LLP are willing to perform and report upon.
(f) The representations and warranties of the Company and the
Subsidiaries contained in this Agreement shall be true and correct on
and as of the date hereof and on and as of the Closing Date as if made
on and as of the Closing Date; the statements of the Company's or any
Subsidiaries' officers made pursuant to any certificate delivered in
accordance with the provisions hereof shall be true and correct on and
as of the date made and on and as of the Closing Date; the Company and
the Subsidiaries shall have performed all covenants and agreements and
satisfied all conditions on their part to be performed or satisfied
hereunder at or prior to the Closing Date; and, except as described in
the Final Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), subsequent to the date of the most recent
financial statements in such Final Memorandum, there shall have been no
event or development that, individually or in the aggregate, has had,
or would be reasonably likely to have, a Material Adverse Effect.
(g) The sale of the Notes hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(h) The Notes shall have been approved by the NASD for trading
in the PORTAL Market.
(i) There shall not have occurred any invalidation of Rule
144A under the Act by any court or any withdrawal or proposed
withdrawal of any rule or
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<PAGE> 29
regulation under the Act or the Exchange Act by the Commission or any
amendment or proposed amendment thereof by the Commission which in the
judgment of the Initial Purchasers would materially impair the ability
of the Initial Purchasers to purchase, hold or effect resales of the
Notes as contemplated hereby.
(j) There shall not have occurred any change, or any
development involving a prospective change, in the general business
affairs, condition (financial or otherwise), prospects or results of
operations, of the Company and the Subsidiaries, taken as a whole, from
that set forth in the Final Memorandum that constitutes a Material
Adverse Effect and that makes it, in the Initial Purchasers' judgment,
impracticable to market the Notes on the terms and in the manner
contemplated in the Final Memorandum.
(k) Subsequent to the date of the most recent financial
statements in the Final Memorandum (exclusive of any amendment or
supplement thereto after the date hereof), the conduct of the business
and operations of the Company and the Subsidiaries shall not have been
interfered with by strike, fire, flood, hurricane, accident or other
calamity (whether or not insured) or by any court or governmental
action, order or decree, and, except as otherwise stated therein, the
properties of the Company and the Subsidiaries shall not have sustained
any loss or damage (whether or not insured) as a result of any such
occurrence, except any such interference, loss or damage which would
not, individually or in the aggregate, have a Material Adverse Effect.
(l) No securities of the Company or any Subsidiary shall have
been downgraded or placed on any "watch list" for possible downgrading
by any nationally recognized statistical rating organization.
(m) The Initial Purchaser shall have received certificates of
the Company, dated the Closing Date, signed by its President and the
Chief Financial Officer, to the effect that:
(i) The representations and warranties of the Company
and the Subsidiaries contained in this Agreement are true and
correct as of the date hereof and as of the Closing Date, and
the Company and the Subsidiaries have performed all covenants
and agreements and satisfied all conditions on their part to
be performed or satisfied hereunder at or prior to the Closing
Date;
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<PAGE> 30
(ii) At the Closing Date, since the date hereof or
since the date of the most recent financial statements in the
Final Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), no event or events have
occurred, no information has become known and no condition
exists that, individually or in the aggregate, has had, or
could reasonably be expected to have, a Material Adverse
Effect;
(iii) The sale of the Notes hereunder has not been
enjoined (temporarily or permanently); and
(iv) Such other information as the Initial Purchaser
may reasonably request.
(n) On or before the Closing Date, each of the acquisitions of
Danvid and Binnings shall have been consummated in accordance with the
terms of their respective Acquisition Agreements.
(o) The Initial Purchasers shall have received a certificate
from the corporate secretary of the Company, dated the Closing Date,
attaching certified copies of (i) all resolutions of the Board of
Directors of the Company and the Subsidiaries authorizing the
transactions contemplated by this Agreement and the acquisitions
described in (t) above, including, without limitation, approving the
offering of the Notes, the entering into this Agreement, the Indenture
and the Registration Rights Agreement and (ii) the certificate of
incorporation and by-laws of the Company and the Subsidiaries and
certifying the names and true signatures of the officers of the Company
and each of the Subsidiaries.
On or before the Closing Date, the Initial Purchasers and
counsel for the Initial Purchasers shall have received such further documents,
opinions, certificates, letters and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Company and the
Subsidiaries as they shall have theretofore reasonably requested from the
Company and the Subsidiaries.
All such documents, opinions, certificates, letters, schedules
or instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchasers and counsel for the Initial Purchasers. The
Company and the Subsidiaries shall furnish to the Initial Purchasers such
conformed copies of such documents, opinions, certificates, letters, schedules
and instruments in such quantities as the Initial Purchasers shall reasonably
request.
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<PAGE> 31
8. Offering of Notes; Restrictions on Transfer. Each Initial
Purchaser agrees with the Company that (i) it has not and will not solicit
offers for, or offer or sell, the Notes by any form of general solicitation or
general advertising (as those terms are used in Regulation D under the Act) or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act; (ii) it has and will solicit offers for the Notes only from, and will
offer the Notes only to (A) in the case of offers inside the United States, (x)
persons whom such Initial Purchaser reasonably believes to be QIBs or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
such Initial Purchaser that each such account is a QIB, to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A, and, in
each case, in transactions under Rule 144A or (y) a limited number of other
Accredited Investors reasonably believed by such Initial Purchaser to be
Accredited Investors that, prior to their purchase of the Notes, deliver to the
Initial Purchasers a letter containing the representations and agreements set
forth in Appendix A to the Final Memorandum and (B) in the case of offers
outside the United States, persons other than U.S. persons ("foreign
purchasers," which term shall include dealers or other professional fiduciaries
in the United States acting on a discretionary basis for foreign beneficial
owners (other than an estate or trust)); provided, however, that, in the case of
the case of this clause (B), in purchasing such Notes such persons are deemed to
have represented and agreed as provided under the caption "Transfer Restrictions
on the Notes."
Each Initial Purchaser represents and warrants that it is an
Accredited Investor, with such knowledge and experience in financial and
business matters as are necessary in order to evaluate the merits and risks of
an investment in the Notes. Each Initial Purchaser agrees to comply with the
applicable provisions of Rule 144A, Rule 144 and Regulation S under the Act.
Each Initial Purchaser hereby acknowledges that the Company and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Section 7(a)
hereof, counsel to the Company will rely upon the accuracy and truth of the
representations contained in this Section 8 and each Initial Purchaser hereby
consents to such reliance.
9. Indemnification and Contribution. (a) Each of the Company
and the Subsidiaries agrees to indemnify and hold harmless the Initial
Purchasers and their respective affiliates, directors, officers, agents,
representatives general partners and employees of such Initial Purchaser or its
affiliates, and each other person, if any, who controls such Initial Purchaser
or its affiliates within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, to the full extent lawful against any losses, claims, damages,
expenses or liabilities (or actions in respect thereof, including, without,
limitation, shareholder derivative actions and arbitration proceedings) to which
any Initial Purchaser or such other person may become subject under the Act, the
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<PAGE> 32
Exchange Act or otherwise, insofar as any such losses, claims, damages, expenses
or liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or
supplement thereto or any application or other document, or any
amendment or supplement thereto, executed by the Company or any
Subsidiary or based upon written information furnished by or on behalf
of the Company or any Subsidiary filed in any jurisdiction in order to
qualify the Notes under the securities or "Blue Sky" laws thereof or
filed with any securities association or securities exchange (each an
"Application");
(ii) the omission or alleged omission to state, in any
Memorandum or any amendment or supplement thereto or any Application, a
material fact required to be stated therein or necessary to make the
statements therein not misleading; or
(iii) any breach of any of the representations and warranties
of the Company or any Subsidiary set forth in this Agreement, the
Indenture, the Registration Rights Agreement and the Subsidiary
Guarantees,
and, subject to the provisions thereof, will reimburse, as incurred, the Initial
Purchasers and each such other person for any reasonable legal or other expenses
incurred by the Initial Purchasers or such other person in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
however, neither the Company nor any Subsidiary will be liable 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 alleged untrue statement or omission or
alleged omission made in any Memorandum or any amendment or supplement thereto
or any Application in reliance upon and in conformity with written information
furnished to the Company by the Initial Purchasers specifically for use therein.
This indemnity agreement will be in addition to any liabilities or obligations
that the Company or any Subsidiary may otherwise have to the indemnified
parties. Subject to Section 9(c), the Company or any Subsidiary shall not be
liable under this Section 9 for any settlement of any claim or action effected
without their prior consent, which shall not be unreasonably withheld. The
indemnity set forth in this Subsection (a), as to the Preliminary Memorandum,
shall not inure to the benefit of any Initial Purchaser, or any of the
affiliates, directors, officers, agents, representatives, general partners or
employees of such Initial Purchaser or its affiliates, on account of any loss,
claim, damage or liability arising from the sale of Notes to any person by such
Initial Purchaser is such Initial Purchaser failed to send or give a copy of the
Final
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<PAGE> 33
Memorandum (as the same may be supplemented or amended) to such person at or
prior to the written confirmation of the sale of the Notes to such Person and
the untrue statement or alleged untrue statement or omission or alleged omission
of a material fact in such Preliminary Memorandum was corrected in the Final
Memorandum, unless such failure resulted from noncompliance by the Company with
Section 5(c).
(b) The Initial Purchasers agree to indemnify and hold
harmless the Company, the Subsidiaries, their directors, their officers and each
person, if any, who controls the Company or any Subsidiary within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which the Company, any Subsidiary or any such
director, officer or controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any Memorandum or any amendment or supplement thereto or any Application, or
(ii) the omission or the alleged omission to state therein a material fact
required to be stated in any Memorandum or any amendment or supplement thereto
or any Application, or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by the
Initial Purchasers specifically for use therein; and subject to the limitation
set forth immediately preceding this clause, will reimburse, as incurred, any
reasonable legal or other expenses incurred by the Company, any Subsidiary, or
any such director, officer or controlling person in connection with
investigating or defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action in respect
thereof. This indemnity agreement will be in addition to any liability that the
Initial Purchasers may otherwise have to the indemnified parties. Subject to
Section 9(c), the Initial Purchasers shall not be liable under this Section 9
for any settlement of any claim or action effected without their written
consent, which shall not be unreasonably withheld. The Company and the
Subsidiaries shall not, without the prior written consent of the Initial
Purchasers, effect any settlement or compromise of any pending or threatened
proceeding in respect of which the Initial Purchasers are or could have been a
party, or indemnity could have been sought hereunder by any Initial Purchaser,
unless such settlement (A) includes an unconditional written release of such
Initial Purchaser, in form and substance reasonably satisfactory to such Initial
Purchaser, from all liability on claims that are the subject matter of such
proceeding and (B) does not include any statement as to an admission of fault,
culpability or failure to act by or on behalf of such Initial Purchaser.
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<PAGE> 34
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (b)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances designated by the Initial Purchaser in the case of
paragraph (a) of this Section 9 or either the Company or any of the Subsidiaries
in the case of paragraph (b) of this Section 9, representing the indemnified
parties under such paragraph (a) or
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<PAGE> 35
paragraph (b), as the case may be, who are parties to such action or actions) or
(ii) the indemnifying party has authorized in writing the employment of counsel
for the indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the prior written consent of
the indemnifying party, unless such indemnified party waived in writing its
rights under this Section 9, in which case the indemnified party may effect such
a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable to an
indemnified party in respect of any losses, claims, damages or liabilities (or
actions in respect thereof), each indemnifying party, in order to provide for
just and equitable contribution, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect (i) the relative benefits received by the indemnifying party or
parties on the one hand and the indemnified party on the other from the offering
of the Notes or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions or breaches that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
benefits received by the Company and the Subsidiaries on the one hand and the
Initial Purchasers on the other shall be deemed to be in the same proportion as
the total proceeds from the offering of the Notes (net of commissions and before
deducting expenses) received by the Company or any Subsidiary bears to the total
discounts and commissions received by the Initial Purchasers. The relative fault
of the parties shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or any Subsidiary on the one hand, or the Initial Purchasers on the
other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission or alleged
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Company, the Subsidiaries and the Initial Purchasers agree
that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), neither Initial Purchaser shall be obligated to
make contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Initial Purchaser under this
Agreement, less
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<PAGE> 36
the aggregate amount of any damages that such Initial Purchaser has otherwise
been required to pay by reason of the untrue or alleged untrue statements or the
omissions or alleged omissions to state a material fact, and no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls an Initial Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Initial Purchasers, and each director of the Company or any
Subsidiary, each officer of the Company or any Subsidiary and each person, if
any, who controls the Company or any Subsidiary within the meaning of Section 15
of the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company and such Subsidiary.
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company, the Subsidiaries, their respective officers and the Initial Purchasers
set forth in this Agreement or made by or on behalf of them pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, the Subsidiaries, any of
their respective officers or directors, the Initial Purchasers or any other
person referred to in Section 9 hereof and (ii) delivery of and payment for the
Notes. The respective agreements, covenants, indemnities and other statements
set forth in Sections 6, 9 and 15 hereof shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated in the
sole discretion of NatWest Capital Markets Limited ("NatWest") by notice to the
Company given on or prior to the Closing Date in the event that the Company
shall have failed, refused or been unable to perform all obligations and satisfy
all conditions on their respective part to be performed or satisfied hereunder
at or prior thereto or, if at or prior to the Closing Date any of the following
shall have occurred:
(i) any of the Company or the Subsidiaries shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, earthquakes, hurricane, accident or other
calamity, whether or not covered by insurance, or from any strike,
labor dispute, slow down or work stoppage or any legal or governmental
proceeding, which loss or interference has had or could be reasonably
likely to have a Material Adverse Effect, or there shall have been, in
the sole judgment of NatWest, any other event or development that,
individually or in the aggregate, has or could be reasonably likely to
have a Material Adverse Effect (including without limitation a change
in control of the
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<PAGE> 37
Company or the Subsidiaries), except in each case as described in the
Final Memorandum (exclusive of any amendment or supplement thereto);
(ii) there shall have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, of the Company
and the Subsidiaries, taken as a whole, from that set forth in the
Final Memorandum that is material and adverse and that makes it, in
NatWest's sole judgment, impracticable to market the Notes on the terms
and in the manner contemplated in the Final Memorandum;
(iii) trading generally shall have been suspended or
materially limited on or by, as the case may be, either of the New York
Stock Exchange or the National Association of Securities Dealers, Inc.
or the setting of minimum prices for trading on such exchange or market
shall have occurred or trading of any securities of the Company or the
Subsidiaries shall have been suspended on any exchange or in any
over-the-counter market;
(iv) a banking moratorium shall have been declared by New
York, Ohio or United States authorities;
(v) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States, (C) any material change in the financial
markets of the United States or (D) any other national or international
calamity or emergency which, in the case of (A), (B), (C) or (D) above
and in the sole judgment of NatWest, makes it impracticable or
inadvisable to proceed with the offering or the delivery of the Notes
as contemplated by the Final Memorandum;
(vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs that
has a material adverse effect on the financial markets in the United
States, and would, in the sole judgment of NatWest, make it
impracticable or inadvisable to market the Notes;
(vii) the proposal, enactment, publication, decree, or other
promulgation of any federal or state statute, regulation, rule order of
any court or other governmental authority which, in the sole judgment
of NatWest, would have a Material Adverse Effect;
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<PAGE> 38
(viii) any securities of the Company or any Subsidiary shall
have been downgraded or placed on any "watch list" for possible
downgrading by any nationally recognized statistical rating
organization; or
(ix) the failure by the Company to consummate any of the
Acquisitions.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
this Section 11 and Sections 6 and 10 hereof.
If this Agreement shall be terminated by the NatWest because
of any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement or any
condition of the purchasers, obligations cannot be fulfilled, the Company agrees
to reimburse the Initial Purchasers for all out-of-pocket expenses (including
the reasonable fees and expenses of their counsel) reasonably incurred by such
Initial Purchasers in connection with this Agreement or the offering
contemplated hereunder; provided, however, that the Company shall have no
obligation under this Section if this Agreement is terminated by reason of the
failure of Initial Purchasers' counsel to deliver the opinion referred to in
Section 7(b).
12. Information Supplied by the Initial Purchasers. The
statements set forth in the last paragraph on the cover page of the Final
Memorandum and paragraphs 5, 6 and 7 under the heading "Notes Plan of
Distribution" in the Final Memorandum (to the extent such statements relate to
the Initial Purchasers) constitute the only information furnished by the Initial
Purchasers to the Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing
and, if sent to the Initial Purchasers, shall be mailed or delivered to (i)
NatWest Capital Markets Limited, 135 Bishopsgate, London, England, with a copy
to White & Case, 1155 Avenue of the Americas, New York, New York 10036,
Attention: Timothy B. Goodell, Esq.; if sent to the Company, shall be mailed or
delivered to the Company at American Architectural Products Corporation, 755
Boardman/Canfield Road, Boardman, Ohio 44512, with a copy to, Squire, Sanders &
Dempsey L.L.P., Two Renaissance Square, 40 North Central Avenue, Phoenix,
Arizona 85004, Attention:
Christopher D. Johnson, Esq..
All such notices and communications shall be deemed to have
been duly given: upon successful transmission if given via facsimile; when
delivered by hand,
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<PAGE> 39
if personally delivered; five business days after being deposited in the mail,
postage prepaid, if mailed; and one business day after being timely delivered to
a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers, the Company, the Subsidiaries and
their respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company and the Subsidiaries contained in Section 9 of
this Agreement shall also be for the benefit of any person or persons who
control the Initial Purchasers within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and (ii) the indemnities of the Initial
Purchasers contained in Section 9 of this Agreement shall also be for the
benefit of the directors and officers of the Company and the Subsidiaries and
any person or persons who control the Company or any Subsidiary within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser
of Notes from the Initial Purchasers will be deemed a successor because of such
purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 40
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among the
Company, the Subsidiaries and the Initial Purchasers.
Very truly yours,
AMERICAN ARCHITECTURAL
PRODUCTS CORPORATION
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
DCI/DCW ACQUISITION CORPORATION
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
BBPI ACQUISITION CORPORATION
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
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<PAGE> 41
AMERICAN GLASSMITH ACQUISITION
CORPORATION
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
MODERN WINDOW ACQUISITION
CORPORATION
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
EAGLE & TAYLOR COMPANY
By: /s/ Joseph Dominijanni
-----------------------------------
Name: Joseph Dominijanni
Title: Vice President-Finance
FORTE, INC.
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: President
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<PAGE> 42
WESTERN INSULATED GLASS, CO.
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: Chief Executive Officer
THERMETIC GLASS, INC.
By: /s/ Frank J. Amedia
-----------------------------------
Name: Frank J. Amedia
Title: Chief Executive Officer
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<PAGE> 43
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above
written.
NATWEST CAPITAL MARKETS LIMITED
By: /s/ N.S. Coulbeck
-----------------------------------
Name: N.S. Coulbeck
Title: Director
MCDONALD & COMPANY SECURITIES, INCORPORATED
By: /s/ Edward S. Pentecost
-----------------------------------
Name: Edward S. Pentecost
Title: Sr. Vice President
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<PAGE> 44
SCHEDULE 1
Notes
<TABLE>
<CAPTION>
Initial Purchaser Principal Amount
----------------- ----------------
<S> <C>
NatWest Capital Markets Limited $ 62,500,000
McDonald & Company Securities 62,500,000
-----------------
Incorporated
$125,000,000
</TABLE>
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<PAGE> 45
SCHEDULE 2
List of Subsidiaries
<TABLE>
<CAPTION>
Percentage Number and Jurisdiction of
Subsidiary Ownership Type of Shares Organization
---------- --------- -------------- ------------
<S> <C> <C> <C>
DCI/DCW Acquisition 100% Common Delaware
Corporation
BBPI Acquisition 100% Common Delaware
Corporation
American Glassmith 100% Common Delaware
Acquisition Corporation
Modern Window 100% Common Delaware
Acquisition Corporation
Eagle & Taylor Company 100% Common Delaware
Forte, Inc. 100% Common Ohio
Western Insulated Glass, 100% Common Arizona
Co.
Thermetic Glass, Inc. 100% Common Delaware
</TABLE>
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