<PAGE> 1
FORM 10-Q
U.S. Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For
the transition period from ____________________to____________________.
Commission file number: 0-25634
-------
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
(Exact name of business issuer as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.) 87-0365268
755 BOARDMAN-CANFIELD ROAD, BOARDMAN, OHIO 44512
(Address of principal executive offices)
(330) 965-9910
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common stock, $.001 par value, 13,458,479 shares outstanding at March 31,
1998
<PAGE> 2
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
FORM 10-Q
INDEX
Part I -- FINANCIAL INFORMATION
Item 1. Financial Statements
American Architectural Products Corporation
For the three months ended March 31, 1998 and 1997
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE> 3
Item 1. FINANCIAL STATEMENTS
American Architectural Products Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Unaudited)
December 31 March 31
1997 1998
---------------------------------------
<S> <C> <C>
Assets
------
Current Assets
Cash and cash equivalents $ 40,132,238 $ 23,418,656
Accounts receivable 18,737,290 20,884,572
Inventories 21,458,399 24,964,808
Prepaid expenses and other current assets 1,619,946 1,499,358
---------------------------------------
Total Current Assets 81,947,873 70,767,394
---------------------------------------
Noncurrent Assets
Property and equipment, net 37,947,648 47,696,220
Cost in excess of net assets acquired, net of amortization 29,846,895 32,541,316
Deferred financing costs 5,985,360 6,096,745
Deposits and other assets 2,595,933 4,050,287
---------------------------------------
Total Noncurrent Assets 76,375,836 90,384,568
---------------------------------------
Total Assets $ 158,323,709 $ 161,151,962
=======================================
Liabilities & Stockholders' Equity
----------------------------------
Current Liabilities
Accounts payable $ 9,352,228 $ 9,902,648
Accrued expenses 8,497,788 13,398,493
Accrued warranty obligations--current portion 1,991,544 1,942,507
Capital lease obligations--current portion 573,161 760,832
Long term debt--current maturities 60,848 --
---------------------------------------
Total Current Liabilities 20,475,569 26,004,480
---------------------------------------
Long-Term Liabilities
Long-term debt, less current maturities 125,114,401 125,000,000
Long-term capital lease obligations, less current portion 769,620 470,298
Accrued warranty obligations, less current portion 2,834,183 2,735,379
Other liabilities 3,548,801 3,826,760
---------------------------------------
Total Long-Term Liabilities 132,267,005 132,032,437
---------------------------------------
Total Liabilities 152,742,574 158,036,917
---------------------------------------
Stockholders' Equity:
Common stock, $.001 par, authorized 100,000,000 shares;
outstanding 13,458,479 shares 13,458 13,458
Additional paid in capital 6,310,641 6,453,641
Accumulated deficit (742,964) (3,352,054)
---------------------------------------
Total Stockholders' Equity 5,581,135 3,115,045
---------------------------------------
Total Liabilities & Stockholders' Equity $ 158,323,709 $ 161,151,962
=======================================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 4
American Architectural Products Corporation
Consolidated Statements of Operations
<TABLE>
<CAPTION>
(Unaudited)
For the Three
Months Ended March 31
1997 1998
------------------------------------
<S> <C> <C>
Net Sales $ 16,641,339 $ 45,608,166
Cost of Sales 13,522,998 36,494,178
------------------------------------
Gross Profit 3,118,341 9,113,988
Selling Expense 1,502,168 4,484,131
General and Administrative Expenses 1,846,532 4,918,444
------------------------------------
Loss from Operations (230,359) (288,587)
Interest Expense 614,760 3,678,452
Interest Income - (355,476)
Other Expense 12,587 91,644
------------------------------------
Loss Before Taxes (857,706) (3,703,207)
Income Tax Benefit (343,007) (1,094,117)
------------------------------------
Net Loss $ (514,699) $ (2,609,090)
====================================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 5
American Architectural Products Corporation
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(Unaudited)
For the Three
Months Ended March 31
1997 1998
------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (514,699) $ (2,609,090)
Adjustment to reconcile net loss to cash from
operating activities
Depreciation and amortization 632,936 1,576,803
Changes in operating assets and liabilities:
Accounts receivable, net (402,237) (1,782,119)
Inventories (245,364) (499,765)
Prepaid expenses and other current assets 168,560 (314,548)
Accounts payable (818,839) 332,146
Accrued expenses (762,070) 1,172,883
Other (363,289) 249,832
------------------------------------
Net cash from operating activities (2,305,002) (1,873,858)
------------------------------------
Cash Flows from Investing Activities:
Acquisition of business, net of cash acquired (969,556) (14,419,674)
Sale of business - 1,186,000
Purchase of property and equipment (192,252) (1,319,150)
Other, net (45,247) -
------------------------------------
Net cash from investing activities (1,207,055) (14,552,824)
------------------------------------
Cash Flows from Financing Activities:
Net activity on line-of-credit 2,414,610 -
Payments on long-term debt (194,743) (175,249)
Proceeds from long-term debt 1,100,000 -
Capital lease payments (136,339) (111,651)
------------------------------------
Net cash from financing activities 3,183,528 (286,900)
------------------------------------
Net Decrease in Cash and cash equivalents (328,529) (16,713,582)
Cash and cash equivalents, Beginning Balance 964,062 40,132,238
------------------------------------
Cash and cash equivalents, Ending Balance $ 635,533 $ 23,418,656
====================================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 6
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
American Architectural Products Corporation (the Company) is principally engaged
in the business of manufacturing residential, commercial and architectural
windows and doors through its wholly owned subsidiaries, Eagle & Taylor Company
(ETC), Forte, Inc. (Forte), Western Insulated Glass, Co. (Western), Thermetic
Glass, Inc. (Thermetic), Binnings Building Products, Inc. (Binnings), Danvid
Window Company (Danvid), American Glassmith Corporation (American Glassmith),
Modern Window Corporation (Modern) and VinylSource, Inc. (VinylSource).
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of financial position
and results of operations have been made. Operating results for interim periods
are not necessarily indicative of results that may be expected for a full year.
The information included in this Form 10-Q should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the financial statements and notes thereto of the Company for the
year ended December 31, 1997 included in the annual report on Form 10-K.
2. Acquisitions & Divestitures
Acquisition of Western
On March 14, 1997, the Company acquired all of the stock of Western. Western is
based in Phoenix, Arizona and manufactures custom residential aluminum windows
and doors. The acquisition was accounted for as a purchase. The purchase price
approximated $2,400,000 and was allocated to net assets acquired based on
estimated fair market values including current assets of $1,976,000, property
and equipment and other noncurrent assets of $961,000 and current liabilities of
$537,000. Notes to sellers approximating $779,000 and term notes to banks in the
amounts of $200,000 and $900,000 were used to finance this acquisition. The
accounts of Western are included in the Company's consolidated financial
statements from the March 14, 1997 acquisition date.
Acquisition of Thermetic
On July 18, 1997, the Company acquired all of the stock of Thermetic, a Toluca,
Illinois manufacturer of residential vinyl windows. The acquisition was
accounted for as a purchase. The purchase price approximated $4,500,000 and was
allocated to net assets acquired based on estimated fair market values including
current assets of $1,700,000, property and equipment of $2,300,000, current
liabilities of $1,400,000 and long-term liabilities of $2,100,000. Costs in
excess of net assets acquired of $4,000,000 were recorded and is being amortized
over 25 years.
The Thermetic acquisition was financed through the issuance of $2,500,000 in
convertible secured debentures to the seller, the issuance of 384,000 shares of
the Company's common stock and a commitment to issue an aggregate number of
additional shares of the Company's common stock eighteen months after closing,
having a market price of $1,000,000 when issued. The accounts of Thermetic are
included in the Company's consolidated financial statements from the July 18,
1997 acquisition date. The convertible secured debentures were settled in
December 1997 with a portion of the proceeds from the issuance of $125,000,000
of 11 3/4% Senior Notes due on December 1, 2007 (Senior Notes).
<PAGE> 7
Acquisitions of Binnings, Danvid, American Glassmith and Modern
On December 10, 1997, the Company acquired all of the outstanding common stock
of Binnings and substantially all of the assets of Danvid, American Glassmith
and Modern. Binnings, located in Lexington, North Carolina, manufactures
residential vinyl windows and aluminum windows and storm doors. Danvid, located
in Carrollton, Texas, manufactures and installs residential aluminum windows and
doors and vinyl windows. American Glassmith, located in Columbus, Ohio,
manufactures decorative glass lites and laminated glass. Modern, located in Oak
Park, Michigan, manufactures residential vinyl windows and doors. Each of these
acquisitions was accounted for as a purchase. The purchase prices and
allocations of these purchase prices are as follows:
<TABLE>
<CAPTION>
Modern &
American
Binnings Danvid Glassmith
-------------- --------------- -----------
<S> <C> <C> <C>
Purchase Price $ 26,987,000 $ 19,374,000 $ 5,704,000
============ ============ ===========
Allocation
Current assets $ 13,281,000 $ 5,343,000 $ 2,526,000
Property and equipment 14,667,000 1,876,000 2,785,000
Other assets 157,000 2,151,000 50,000
Current liabilities 4,521,000 3,048,000 907,000
Long-term liabilities 1,323,000 2,151,000 342,000
------------ ------------ -----------
Net Assets Acquired $ 22,261,000 $ 4,171,000 $ 4,112,000
============ ============ ===========
Cost in Excess of Net Assets Acquired $ 4,726,000 $ 15,203,000 $ 1,592,000
============ ============ ===========
</TABLE>
The accounts of Binnings, Danvid, American Glassmith and Modern are included in
the Company's consolidated financial statements from the December 10, 1997
acquisition date. These acquisitions were financed primarily with a portion of
the proceeds from the issuance of the Senior Notes. Cost in excess of net
assets acquired is being amortized over 25 years.
Acquisition of VinylSource
On January 23, 1998, the Company acquired substantially all of the assets of the
vinyl division of Easco Corporation, an Austintown, Ohio manufacturer of vinyl
extrusions for the fenestration industry, and operates the facility through its
wholly-owned subsidiary VinylSource. The purchase price approximated $13,475,000
and was allocated to net assets acquired based on estimated fair market values
including current assets of $4,654,000, property and equipment and other
noncurrent assets of $9,929,000 and current liabilities of $1,108,000. The
Company used cash to finance the acquisition. The accounts of VinylSource are
included in the Company's consolidated financial statements from the January 23,
1998 acquisition date.
The following pro forma information for the three months ended March 31, 1997
has been prepared assuming that the acquisition of Western, Thermetic, Binnings,
Danvid, American Glassmith and Modern and the offering of the Senior Notes had
occurred at the beginning of that period. The acquisition made in 1998 was not a
material business combination for the Company, and accordingly, no pro forma
effect is given to this acquisition. The pro forma information includes
adjustments to interest expense for the offering of the Senior Notes,
adjustments to selling, general
<PAGE> 8
and administrative expenses for decreases in compensation expenses for certain
officers and members of Board of Directors of the acquired companies,
adjustments to depreciation expense based on the fair market value of the
property and equipment acquired and amortization of cost in excess of net assets
acquired arising from the acquisitions. The pro forma earnings per share
information reflect the effects of a reverse stock split in April 1997. The pro
forma sales and net income (loss) amounts are as follows for the quarter ended
March 31, 1997:
<TABLE>
<S> <C>
Sales $ 40,955
Net loss (44)
Net loss per share --
</TABLE>
In February 1998, the Company signed a Letter of Intent with Louisiana-Pacific
Corporation to purchase its Weather-Seal division. This division consists of six
manufacturing facilities throughout Ohio producing aluminum and vinyl
extrusions, and wood and vinyl windows. The Letter of Intent required the
Company to make a $1 million deposit into an escrow account which will be
applied toward the purchase price. The deposit will be considered a termination
fee payable to Louisiana-Pacific in the event the transaction does not close
because the Company abandons or otherwise fails to consummate the transaction
unless because of the discovery or occurrence of any material or adverse
condition.
On March 1, 1998, the Company sold its Mallyclad division to a related party for
$1.2 million. Mallyclad manufactures vinyl laminates for steel and aluminum
consumer and commercial customers. The Company sold this division at its basis
and therefore recognized no gain or loss on the sale.
3. Net Loss Per Share
Basic loss per common share amounts were computed by dividing net loss by the
weighted average number of common shares outstanding. The effect of common stock
options and warrants are not dilutive and therefore, the Company's diluted loss
per share would not differ. A summary of the basic loss per share amounts for
the quarters ended March 31 is follows.
<TABLE>
<CAPTION>
1997 1998
------------------------------------
<S> <C> <C>
Net loss $ (514,699) $ (2,609,090)
Shares 12,581,054 13,458,479
Basic loss per share $ (0.04) $ (0.14)
</TABLE>
4. Inventories
Inventories at March 31, 1998 consisted of the following:
<TABLE>
<CAPTION>
<S> <C>
Raw materials $12,632,000
Work-in-process 3,506,000
Finished goods 8,827,000
------------
$24,965,000
============
</TABLE>
<PAGE> 9
5. Comprehensive Income
On January 1, 1998, the Company adopted the Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (SFAS 130) which establishes standards for reporting and displaying
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. For the quarter ended March
31, 1998, comprehensive income (loss) for the Company does not differ from net
income (loss).
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
Management's Discussion and Analysis of Results of Operations
Comparison of three months ended March 31, 1998 and 1997
Sales
Sales for the three months ended March 31, 1998 increased to $45.6 million from
$16.6 million for the quarter ended March 31, 1997. The $29.0 million increase
is primarily due to $27.2 million in sales volume from the inclusion of Western,
Thermetic, Binnings, Danvid, American Glassmith, Modern and VinylSource, the
companies acquired in 1997 and 1998, and a $1.8 million increase in sales at
the Company's wood and aluminum-clad wood window manufacturer. This unit's
increase in sales has resulted primarily from higher volumes associated with
more favorable weather conditions during the first quarter.
Gross Profit
The Company's gross profit increased to $9.1 million for the quarter ended March
31, 1998 from $3.1 million for the quarter ended March 31, 1997. The increase of
$6.0 million resulted primarily from $5.8 million of gross profit added by the
acquired companies. The Company's gross margin was 20.0% and 18.7% for the
quarters ended March 31, 1998 and 1997, respectively. The acquired companies
discussed above are generating a weighted-average gross margin of 23.9%.
Additionally, the Company's wood and aluminum-clad wood window manufacturer has
benefited from higher volumes absorbing overhead.
Selling, General & Administrative Expenses
Selling, general & administrative expenses were $9.4 million for the quarter
ended March 31, 1998 as compared with $3.3 million for the quarter ended March
31, 1997. Selling, general & administrative expenses relating to the inclusion
of the acquired companies were $4.7 million. The remainder of the $6.1 million
increase is due to $1.4 million in increased costs associated with the operation
and administration of a larger and more diversified window and door
manufacturer.
Loss from Operations
The Company had a loss from operations of $0.3 million during the quarter ended
March 31, 1998 as compared with $0.2 million for the quarter ended March 31,
1997. Operating income from the newly acquired companies amounted to $1.2
million and was offset by the increased operational and administrative costs
discussed above.
Interest Expense
Interest expense for the quarter ended March 31, 1998 was $3.7 million compared
to interest expense of $0.6 million for the quarter ended March 31, 1997. The
increase is due to the additional indebtedness the Company incurred in late
1997. In December 1997, the Company issued $125 million of 11 3/4 % Senior Notes
due 2007. Approximately $33.0 million of the proceeds of the Notes were used to
pay down existing debt facilities. The weighted-average interest rate on the
Company's debt and leases during the first quarter of 1997 was approximately
9.8%.
<PAGE> 11
Income Taxes
The Company has recorded income tax benefits in the amount of $1.1 million.
The Company has established a seasonal pattern of losses in the first quarter
offset by income in later quarters of the year. Therefore, income tax benefits
of $1.1 million have been realized in the quarter ended March 31, 1998 because
the tax benefits are expected to be realized during the year.
Liquidity and Capital Resources
Cash used in investing activities amounted to $14.6 million for the quarter
ended March 31, 1998 and resulted primarily from the acquisition of VinylSource
and the deposit in connection with the proposed acquisition of the
Louisiana-Pacific Weather-Seal division. Additionally, the Company purchased
approximately $1.3 million in property and equipment during the period. The
Company received approximately $1.2 million in cash from the sale of its
Mallyclad division.
Cash used in financing activities in the quarter ended March 31, 1998 amounted
to $0.4 million. The Company paid off $0.2 million in principal on one
outstanding term note maintained at a subsidiary. Additionally, the Company made
$0.2 million in payments on capital lease obligations.
The Company believes that cash flow from operations together with other sources
of funds, will be adequate to meet its anticipated requirements for working
capital, capital expenditures and debt service costs.
Seasonality
The Company's business is seasonal since its primary revenues are driven by
residential construction. Inclement weather during the winter months,
particularly in the northeast and midwest regions of the United States, usually
reduces the level of building and remodeling activity in both the home
improvement and new construction markets and, accordingly, has an adverse
impact on the demand for fenestration products. Traditionally, the Company's
lowest sales levels occur in the first and fourth quarters which is generally
consistent with the cycle of the building products industry. The Company
believes that its 1997 acquisitions in the southwestern and southeastern United
States will minimize the risk to the Company for potentially unusual inclement
weather conditions in the midwest and the northeast. Because a high percentage
of the Company's manufacturing overhead and operating expenses are relatively
fixed throughout the year, operating income has historically been lower in
quarters with lower sales. Working capital, and borrowings to satisfy working
capital requirements, are usually at their highest level during the second and
third quarters.
FORWARD-LOOKING STATEMENTS
Certain statements in the Company's Form 10-K and in future filings by the
Company with the Securities and Exchange Commission and in the Company's written
and oral statements made by or with the approval of an authorized executive
officer constitute "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, and the Company contends that such forward-looking statements be
subject to the safe harbors created thereby. These forward-looking statements
reflect the Company's current view with respect to future events and financial
performance, but are subject to many uncertainties and factors relating to the
Company's operations and business environment which may cause the actual results
of the Company to be materially different from any future results expressed or
implied by such forward-looking statements. Examples of such uncertainties
include, but are not limited to, changes in customer demand and requirements,
changes in general economic conditions, changes in federal income tax laws and
regulations, competition, unanticipated expenses and delays in the integration
of newly-acquired companies and industry specific factors. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements whether as a result of new information, future events or otherwise.
<PAGE> 12
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.3 Amendment No. 1, dated as of April 15, 1998, to the Indenture
dated as of December 10, 1997 with respect to 11 3/4% Senior
Notes due 2007.
4.4 First Supplemental Indenture, dated as of April 15, 1998, by and
among American Architectural Products Corporation, Eagle &
Taylor Company, Forte, Inc., Western Insulated Glass, Co.,
Thermetic Glass, Inc., Binnings Building Products, Inc., Danvid
Window Company, American Glassmith Acquisition Corporation,
Modern Window Acquisition Corporation, VinylSource, Inc., AAPC
One Acquisition Corporation, AAPC Two Acquisition Corporation,
Denver Window Acquisition Corporation, Eagle Window & Door
Center, Inc., Weather-Seal Acquisition Corporation and United
States Trust Company of New York.
<PAGE> 13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
Date: May 15, 1998 /s/ Frank J. Amedia
-----------------------
Frank J. Amedia
President & Chief Executive Officer
/s/ Richard L. Kovach
-----------------------
Richard L. Kovach
Chief Financial Officer
<PAGE> 1
Exhibit 4.3
AMENDMENT NO. 1 TO THE INDENTURE
This Amendment No. 1 to the Indenture (the "Amendment") is dated as of
April 15, 1998, among American Architectural Products Corporation, a Delaware
corporation (the "Company"), each of Eagle & Taylor Company, Forte, Inc.,
Western Insulated Glass, Co., Thermetic Glass, Inc., Binnings Building Products,
Inc. (successor by merger to BBPI Acquisition Corporation), Danvid Window
Company (f/k/a DCI/DWC Acquisition Corporation), American Glassmith Acquisition
Corporation and Modern Window Acquisition Corporation, as Subsidiary Guarantors
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"). Each defined term used herein shall have the meaning assigned
to it in the Indenture (hereinafter defined), unless the context hereof
otherwise requires or provides.
RECITALS
1. As of December 10, 1997, the Company, the Subsidiary Guarantors and
the Trustee executed an Indenture (the "Indenture") providing for the issuance
of $125,000,000 of the Company's 11 3/4% Senior Notes due 2007 (the "Notes").
2. Section 1.01 of the Indenture erroneously defines "Secured
Indebtedness" as "any Indebtedness of a Subsidiary Guarantor secured by a Lien."
The Prospectus delivered to the Noteholders correctly defines "Secured
Indebtedness" as "any indebtedness of the Company or of a Subsidiary Guarantor
secured by a Lien."
3. Section 1.01 of the Indenture also erroneously refers to
Subordinated PIK Debentures, which were not offered to the Noteholders, in the
definition of "Issue Date."
3. Section 9.01(a)(i) of the Indenture permits the Indenture to be
amended to cure any ambiguity, omission, defect or inconsistency without the
consent of any Noteholder, provided that such amendment does not adversely
affect the rights of any Noteholder in any respect.
4. 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 Noteholders:
AMENDMENT
Section 1.01 DEFINITIONS. The definition of "Secured Indebtedness" and
of "Issue Date" in Section 1.01 of the Indenture is hereby amended and restated
in its entirety as follows:
"Secured Indebteness" means any Indebtedness of the Company or of a
Subsidiary Guarantor secured by a Lien.
"Issue Date" means the dated on which the Notes are originally issued.
Section 1.02 FURTHER ASSURANCES. The parties will execute and deliver
such further instruments and do such further acts and things as may be
reasonably required to carry out the intent
<PAGE> 2
Exhibit 4.3
and purpose of this Amendment.
Section 1.03 TRUST INDENTURE ACT CONTROLS. If any provision of this
Amendment limits, qualifies or conflicts with another provision hereof that is
required to be included in this Amendment by the TIA, the required provision
shall control.
Section 1.04 COUNTERPART ORIGINALS. This Amendment 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 1.04 HEADINGS. Headings of the Sections of this Amendment have
been inserted for convenience of reference only, are not to be considered a part
of this Amendment, and shall in no way modify or restrict any of the terms of
provisions hereof.
Section 1.05 GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York, but without
giving effect to applicable principals of conflicts of law to the extent that
the application of the laws of another jurisdiction would be required thereby.
Section 1.06 SUCCESSORS. All agreements of the Company, the Subsidiary
Guarantors and the Trustee in this Amendment shall bind their successors.
Section 1.07 SEVERABILITY. In case any provision of this Amendment
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.
Section 1.08 INDENTURE REMAINS IN FULL FORCE AND EFFECT. Except to the
extent amended hereby or in connection herewith, all terms, provisions and
conditions of the Indenture, and all documents executed in connection therewith,
shall continue in full force and effect and shall remain enforceable and binding
in accordance with their terms. Except as specifically modified herein, the
Indenture remains unchanged and in full force and effect.
Section 1.09 NO THIRD PARTY BENEFITS. Nothing in this Amendment,
express or implied, shall give to any Person, other than the parties hereto and
their successors under the Indenture, and the Noteholders, any benefit or any
legal or equitable right, remedy or claim under the Indenture.
Section 1.10 THE TRUSTEE. The Trustee shall not be responsible in any
manner for or in respect of the validity or sufficiency of this Amendment, or
for or in respect of the recitals contained herein, all of which recitals are
made by the Company solely.
<PAGE> 3
Exhibit 4.3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
American Architectural Products Corporation
By: /s/ Frank J. Amedia
-----------------------------------
Frank J. Amedia
President
Eagle & Taylor Company
By: /s/ Joseph Dominijanni
-----------------------------------
Joseph Dominijanni
Vice President
Forte, Inc.
By: /s/ Frank J. Amedia
-----------------------------------
Frank J. Amedia
President
Western Insulated Glass, Co.
By: /s/ Frank J. Amedia
-----------------------------------
Frank J. Amedia
Chief Executive Officer
Thermetic Glass, Inc.
By: /s/ Frank J. Amedia
-----------------------------------
Frank J. Amedia
President
<PAGE> 4
Exhibit 4.3
Binnings Building Products, Inc.
By: /s/ Frank J. Amedia
-----------------------------------
Frank J. Amedia
President
Danvid Window Company
By: /s/ Frank J. Amedia
-----------------------------------
Frank J. Amedia
President
American Glassmith Acquisition Corporation
By: /s/ Frank J. Amedia
-----------------------------------
Frank J. Amedia
President
Modern Window Acquisition Corporation
By: /s/ Frank J. Amedia
-----------------------------------
Frank J. Amedia
President
United States Trust Company of New York
By: /s/ Cynthia Chaney
-----------------------------------
Cynthia Chaney
Assistant Vice President
<PAGE> 1
Exhibit 4.4
FIRST SUPPLEMENTAL INDENTURE
This First Supplemental Indenture is dated as of April 15, 1998, among
American Architectural Products Corporation, a Delaware corporation (the
"Company"), each of Eagle & Taylor Company, Forte, Inc., Western Insulated
Glass, Co., Thermetic Glass, Inc., Binnings Building Products, Inc. (successor
by merger to BBPI Acquisition Corporation), Danvid Window Company (f/k/a DCI/DWC
Acquisition Corporation), American Glassmith Acquisition Corporation and Modern
Window Acquisition Corporation, as Subsidiary Guarantors, VinylSource, Inc., a
Delaware corporation ("VinylSource"), AAPC One Acquisition Corporation, a
Delaware corporation ("AAPC One"), AAPC Two Acquisition Corporation, a Delaware
corporation ("AAPC Two"), Denver Window Acquisition Corporation, a Delaware
corporation ("Denver Window"), Eagle Window & Door Center, Inc., a Delaware
corporation ("EWDC"), Weather-Seal Acquisition Corporation, a Delaware
corporation ("Weather-Seal") (VinylSource, AAPC One, AAPC Two, Denver Window,
EWDC and Weather-Seal are, collectively, the "New Subsidiary Guarantors") 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"). Each defined term used herein shall have the meaning assigned
to it in the Indenture (hereinafter defined), unless the context hereof
otherwise requires or provides.
RECITALS
1. As of December 10, 1997, the Company, the Subsidiary Guarantors and
the Trustee executed an Indenture (the "Indenture") providing for the issuance
of $125,000,000 of the Company's 11 3/4% Senior Notes due 2007 (the "Notes").
2. Section 4.20 of the Indenture permits, among other things,
Restricted Subsidiaries to guarantee Indebtedness if the Restricted Subsidiary
becomes a Subsidiary Guarantor by executing a supplemental indenture in which
such Restricted Subsidiary agrees to be bound by the terms of the Indenture as a
Subsidiary Guarantor and executes a Subsidiary Guarantee.
3. VinylSource is a Restricted Subsidiary that proposes to guarantee
certain Indebtedness of the Company.
4. AAPC One is a Restricted Subsidiary that proposes to guarantee
certain Indebtedness of the Company.
5. AAPC Two is a Restricted Subsidiary that proposes to guarantee
certain Indebtedness of the Company.
6. Denver Window is a Restricted Subsidiary that proposes to guarantee
certain Indebtedness of the Company.
7. EWDC is a Restricted Subsidiary that proposes to guarantee certain
Indebtedness of the Company.
8. Weather-Seal is a Restricted Subsidiary that proposes to guarantee
certain
<PAGE> 2
Exhibit 4.4
Indebtedness of the Company.
9. Section 9.01(a)(iv) of the Indenture permits the Indenture to be
amended or supplemented to add Subsidiary Guarantors with respect to the Notes
without the consent of any Noteholder.
10. The Company, the Subsidiary Guarantors, the New Subsidiary
Guarantors and the Trustee agree as follows for the benefit of each other and
for the equal and ratable benefit of the Noteholders:
ARTICLE 1
ADDITIONAL SUBSIDIARY GUARANTOR
Section 1.01 GUARANTY. Each of the New Subsidiary Guarantors, by
executing this First Supplemental Indenture, agrees to be bound by the terms of
the Indenture as a Subsidiary Guarantor and agrees to execute a Subsidiary
Guarantee in the form attached hereto as Exhibit A.
Section 1.02 FURTHER ASSURANCES. The parties will execute and deliver
such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purpose of this First
Supplemental Indenture.
Section 1.03 TRUST INDENTURE ACT CONTROLS. If any provision of this
First Supplemental Indenture limits, qualifies or conflicts with another
provision hereof that is required to be included in this First Supplemental
Indenture by the TIA, the required provision shall control.
Section 1.04 COUNTERPART ORIGINALS. This First Supplemental 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 1.04 HEADINGS. Headings of the Article and the Sections of this
First Supplemental Indenture have been inserted for convenience of reference
only, are not to be considered a part of this First Supplemental Indenture, and
shall in no way modify or restrict any of the terms of provisions hereof.
Section 1.05 GOVERNING LAW. This First Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the State of New
York, but without giving effect to applicable principals of conflicts of law to
the extent that the application of the laws of another jurisdiction would be
required thereby.
Section 1.06 SUCCESSORS. All agreements of the Company, the Subsidiary
Guarantors, the New Subsidiary Guarantors and the Trustee in this First
Supplemental Indenture shall bind their successors.
Section 1.07 SEVERABILITY. In case any provision of this First
Supplemental Indenture shall be invalid, illegal, or unenforceable, the
validity, legality, and enforceability of the remaining
<PAGE> 3
Exhibit 4.4
provisions shall not in any way be affected or impaired thereby.
Section 1.08 INDENTURE REMAINS IN FULL FORCE AND EFFECT. Except to the
extent amended hereby or in connection herewith, all terms, provisions and
conditions of the Indenture, and all documents executed in connection therewith,
shall continue in full force and effect and shall remain enforceable and binding
in accordance with their terms. Except as specifically modified herein, the
Indenture remains unchanged and in full force and effect.
Section 1.09 NO THIRD PARTY BENEFITS. Nothing in this First
Supplemental Indenture, express or implied, shall give to any Person, other than
the parties hereto and their successors under the Indenture, and the
Noteholders, any benefit or any legal or equitable right, remedy or claim under
the Indenture.
Section 1.10 THE TRUSTEE. The Trustee shall not be responsible in any
manner for or in respect of the validity or sufficiency of this First
Supplemental Indenture, or for or in respect of the recitals contained herein,
all of which recitals are made by the Company solely.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the date first written above.
American Architectural Products Corporation
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
Eagle & Taylor Company
By: /s/ Joseph Dominijanni
----------------------------------------
Joseph Dominijanni
Vice President
Forte, Inc.
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
Western Insulated Glass, Co.
<PAGE> 4
Exhibit 4.4
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
Chief Executive Officer
Thermetic Glass, Inc.
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
Binnings Building Products, Inc.
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
Danvid Window Company
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
American Glassmith Acquisition Corporation
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
Modern Window Acquisition Corporation
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
<PAGE> 5
Exhibit 4.4
VinylSource, Inc.
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
AAPC One Acquisition Corporation
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
AAPC Two Acquisition Corporation
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
Denver Window Acquisition Corporation
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
Eagle Window & Door Center, Inc.
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
Weather-Seal Acquisition Corporation
By: /s/ Frank J. Amedia
----------------------------------------
Frank J. Amedia
President
<PAGE> 6
Exhibit 4.4
United States Trust Company of New York
By: /s/ Cynthia Chaney
----------------------------------------
Cynthia Chaney
Assistant Vice President
<PAGE> 7
Exhibit 4.4
FORM OF NOTATION ON SECURITY Exhibit "A"
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
hereinafter referred to as a "Subsidiary Guarantor," which term includes any
successor person under the 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
Noteholder 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 of the successors and assigns 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.
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
<PAGE> 8
Exhibit 4.4
BY REFERENCE.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Guarantors:
VINYLSOURCE, INC.
By: /s/ Frank J. Amedia
----------------------------------------
Name: Frank J. Amedia
Title: President
AAPC ONE ACQUISITION CORPORATION
By: /s/ Frank J. Amedia
----------------------------------------
Name: Frank J. Amedia
Title: President
AAPC TWO ACQUISITION CORPORATION
By: /s/ Frank J. Amedia
----------------------------------------
Name: Frank J. Amedia
Title: President
DENVER WINDOW ACQUISITION
CORPORATION
By: /s/ Frank J. Amedia
----------------------------------------
Name: Frank J. Amedia
Title: President
EAGLE WINDOW & DOOR CENTER, INC.
By: /s/ Frank J. Amedia
----------------------------------------
Name: Frank J. Amedia
<PAGE> 9
Exhibit 4.4
Title: President
WEATHER-SEAL 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
FORTE, INC.
By: 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
THERMETIC GLASS, INC.
By: /s/ Frank J. Amedia
----------------------------------------
Name: Frank J. Amedia
Title: President
<PAGE> 10
Exhibit 4.4
BBPI ACQUISITION CORPORATION
By: /s/ Frank J. Amedia
----------------------------------------
Name: Frank J. Amedia
Title: President
DANVID WINDOW COMPANY
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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN ACHITECTURAL PRODUCTS CORPORATION
AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 23,418,656
<SECURITIES> 0
<RECEIVABLES> 20,884,572
<ALLOWANCES> 863,293
<INVENTORY> 24,964,808
<CURRENT-ASSETS> 70,767,394
<PP&E> 47,696,220
<DEPRECIATION> 4,598,830
<TOTAL-ASSETS> 161,151,962
<CURRENT-LIABILITIES> 25,004,480
<BONDS> 126,231,000
13,459
0
<COMMON> 0
<OTHER-SE> 3,101,587
<TOTAL-LIABILITY-AND-EQUITY> 161,151,962
<SALES> 45,608,166
<TOTAL-REVENUES> 45,608,166
<CGS> 36,494,178
<TOTAL-COSTS> 36,494,178
<OTHER-EXPENSES> 9,402,575
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,678,452
<INCOME-PRETAX> (3,703,207)
<INCOME-TAX> (1,094,117)
<INCOME-CONTINUING> (2,609,090)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,609,090)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
</TABLE>
