THIS AGREEMENT CONTAINS INDEMNIFICATION
PROVISIONS IN ARTICLE 7 AND SECTION 9.13,
NOTICE OF WHICH IS HEREBY GIVEN
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, made and entered into as of the 27th day of
March, 1997, by and between the parties listed on Schedule I hereto (the
"Stockholders") and Reliant Partners, L.P., a Texas limited partnership
("Purchaser").
W I T N E S S E T H:
WHEREAS, the Stockholders are the owners of all the issued and outstanding
shares of capital stock of RBPI Holding Corporation, a Delaware corporation (the
"Company"), other than the Series B Preferred Stock, which is owned by Guardian
Industries Corp. (the "Guardian Shares"); and
WHEREAS, the parties listed on Schedule I hereto designated with an
asterisk (the "Warrantholders") hold warrants (the "Warrants") to acquire Class
A Voting Common Stock and Class B Nonvoting Common Stock of the Company which
are currently exercisable for the respective number of shares of capital stock
of the Company set forth opposite their names on Schedule I; and
WHEREAS, the Stockholders intend to cause the Warrantholders to exercise
the Warrants prior to the Closing (as defined in Section 2.1 hereof); and
WHEREAS, the Stockholders desire to sell to Purchaser all of the capital
stock owned by the Stockholders and to cause the Warrantholders to sell all
shares of capital stock obtainable upon exercise of the Warrants to Purchaser,
and Purchaser desires to purchase all such shares of capital stock, subject to
the terms and conditions of this Agreement; and
WHEREAS, the Stockholders desire to appoint the Stockholders'
Representative referred to in Section 9.13 hereof;
NOW, THEREFORE, in consideration of the recitals and the mutual and
dependent covenants herein contained, it is agreed as follows:
1. PURCHASE AND SALE OF STOCK.
1.1 GENERAL. On the terms and subject to the conditions set forth in this
Agreement at the Closing, the Stockholders hereby agree to sell, assign,
transfer, convey and deliver to Purchaser, and Purchaser hereby agrees to
purchase from the Stockholders, the Purchase Shares (as hereinafter defined).
1.2 DELIVERY OF STOCK. On the terms and subject to the conditions hereof,
at the Closing, the Stockholders and the Warrantholders (the "Holders") shall
deliver to Purchaser and
the Company, as applicable, against receipt of the consideration set forth in
Section 1.3 hereof, certificates representing all the shares of Class A
Voting Stock and Class B Nonvoting Common Stock held by the Holders (the
"Stock"), duly endorsed in blank or accompanied by stock powers duly executed.
1.3 PURCHASE PRICE. (a) In reliance on the representations, warranties
and agreements of the Stockholders contained herein and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Stockholders and Purchaser agree that the following shall take place at the
Closing:
(i) Purchaser shall pay to the Holders, in immediately available
funds, an aggregate amount equal to the remainder of $30,100,000 less the sum of
(A) the Seller Transaction Costs (as hereinafter defined), (B) $250,000 to be
paid by the Company to Xxxxx X. Xxxxx as of the Closing as an extraordinary
bonus, (C) the aggregate cash payments required to be made to the Unitholders
pursuant to Section 1.4 hereof and (D) $250,000 to be delivered to the
Stockholders' Representative for satisfaction of Seller Transaction Costs that
are payable after the Closing;
(ii) the Company shall issue and deliver to the Holders notes in the
form of Exhibit A hereto (the "Holder Notes") in an aggregate principal amount
equal to $9,800,000 less the sum of the aggregate principal amount of Holder
Notes required to be issued to the Unitholders pursuant to Section 1.4 hereof,
in such denominations and names as may be designated in writing to Purchaser by
the Stockholder Representative in accordance with the terms of this Article I,
it being agreed that each Holder shall be entitled to its pro rata share of the
cash payments and Holder Notes issuable pursuant to this Section 1.3 based on
its relative ownership interest of Class A Common Stock and Class B Common
Stock, as set forth in Schedule I hereto.
(b) "Seller Transaction Costs" shall mean all costs and expenses incurred
and paid by the Company or Xxxxxx Building Products, Inc. ("Building Products")
incident to the negotiation, preparation and execution of this Agreement and the
transactions contemplated hereby; provided, however, that Seller Transaction
Costs shall not include any such costs or expenses related to Purchaser
obtaining financing for the consummation of the transactions contemplated
hereby.
1.4 PAYMENT OF UNITHOLDER CONSIDERATION. At the Closing, the Company
shall cause each person that is a party to a RBPI Incentive Unit Agreement (each
a "Unitholder"), a true and complete list of which is set forth on Schedule 1.4
hereto, to be paid cash and issued Holder Notes in the amounts determined by the
implementation on Closing Date of the formula set forth in Exhibit B hereto (the
"Unitholder Calculation"); it being expressly understood that the final
Unitholder Calculation cannot be made until such time as certain factors used in
the computation thereof are known to the parties and that the calculation set
forth in Exhibit B hereto is for illustrating the methodology by which the final
Unitholder Calculation shall be made at Closing. The Stockholders agree to use
reasonable efforts to obtain from each Unitholder at Closing a Release and
Waiver in substantially the form of Exhibit C hereto.
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1.5 REDEMPTION OF CERTAIN SHARES. Notwithstanding anything contained
elsewhere herein, it is acknowledged by the parties hereto that the issuance by
the Company of Holder Notes to the Holders pursuant to Section 1.3 above shall
be in redemption of such number of the Holders' shares of Class A Common Stock
and Class B Nonvoting Common Stock (the "Redemption Shares") as are determined
at the Closing based on the calculation set forth in Exhibit C hereto. Any
Shares of Class A Voting Stock owned by the Stockholders not so redeemed shall
be "Purchase Shares."
2. CLOSING.
2.1 GENERAL. Subject to waiver or satisfaction of the conditions set
forth in Article 5 hereof, the closing of the transactions provided for in this
Agreement (the "Closing") shall be held (i) at the offices of Xxxxx, Xxxx &
Xxxxxxx, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxxx, Xxxxx, at 10:00 a.m., local
time, on the first business day immediately following the date on or by which
each of the conditions set forth in Article 5 hereof (other than closing
deliveries) shall have been fulfilled or waived in accordance therewith, or (ii)
at such other place, date and time as may be mutually agreed upon by the
parties. The time and date of Closing are herein called the "Closing Date."
2.2 NECESSARY ACTION. At the Closing, subject to all of the terms and
conditions of this Agreement, the parties shall take such action as may be
necessary or appropriate in order to consummate the transactions provided for
herein. All proceedings to be taken and all documents to be executed and
delivered by the parties at Closing shall be deemed to have been taken and
executed and delivered simultaneously, and no proceeding shall be deemed taken
nor any document executed and delivered until all have been taken, executed and
delivered.
3. REPRESENTATIONS AND WARRANTIES.
3.1 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Xxxxxxx Partners,
L.P. ("Xxxxxxx Partners") and Xxxxxxx Affiliates, L.P. ("Xxxxxxx Affiliates"),
jointly and severally as to Xxxxxxx Partners and Xxxxxxx Affiliates, represent
and warrant to Purchaser, and the other Stockholders severally represent and
warrant to Purchaser, as follows:
(a) SUBSIDIARIES. The Company owns, directly or indirectly, all of
the outstanding capital stock of the corporations listed in Schedule 3.1(a)
hereto (collectively, the "Company Subsidiaries") in the amounts and
proportions stated therein. Except as set forth in Schedule 3.1(a) and
other than the Company Subsidiaries, neither the Company nor any of the
Company Subsidiaries owns any interest in or controls any corporation,
partnership, joint venture or other business association or enterprise.
Any reference herein to the "Companies" shall be a reference to any of the
Company, the Company Subsidiaries, all of the Company and the Company
Subsidiaries or any combination of them.
(b) DUE ORGANIZATION, GOOD STANDING AND POWER OF THE COMPANY AND THE
COMPANY SUBSIDIARIES. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
each of the Company Subsidiaries is a corporation duly organized, validly
existing and in good standing under
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the laws of the jurisdiction set forth opposite its name on Schedule
3.1(b)(i). Atemco ("Atemco") is a general partnership duly organized and
validly existing under the laws of Texas. Each of the Companies and
Atemco has all requisite corporate or partnership power, as applicable,
and authority to own, lease and operate its respective properties and to
carry on its respective businesses as presently conducted. Each of the
Companies and Atemco is duly qualified or licensed and authorized as a
foreign corporation or partnership, as applicable, to do business and is
in good standing in every jurisdiction where the respective properties
owned, leased or operated by it or the nature of its respective
businesses makes such qualification necessary, except where the failure
of such entity to be so qualified would not have a Material Adverse
Effect, and all of such jurisdictions are listed in Schedule 3.1(b)(ii)
hereto. As used herein, the term "Material Adverse Effect" means any
change or effect that is or is reasonably likely to be materially adverse
to the assets, business, financial condition or results of operations of
the Companies taken as a whole. A copy of the charter and all bylaws, or
partnership agreement, as applicable, of each of the Companies and Atemco
are attached hereto as Schedule 3.1(b)(iii), and each is true, correct
and complete, as amended to the date hereof.
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on
the part of the Stockholders. The Stockholders have all necessary power
and authority to execute, deliver and perform this Agreement, and this
Agreement, upon the due execution and delivery by the Stockholders assuming
the execution and delivery by Purchaser, shall constitute a valid and
binding obligation of the Stockholders enforceable against the Stockholders
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
the rights of creditors generally and general equitable principles.
(d) GOOD TITLE TO CAPITAL STOCK; CAPITALIZATION.
(i) The authorized capital stock of the Company consists solely
of (A) 1,500,000 shares of Class A Voting Common Stock, par value $.01
per share, (B) 50,000 shares of Class B Nonvoting Common Stock, par
value $.01 per share, and 30,000 shares of Preferred Stock, par value
$.01 per share. Assuming exercise of all Warrants and excluding the
Guardian Shares, on the Closing Date, the shares of capital stock
reflected on Schedule 3.1(d)(i)(a) will constitute all the issued and
outstanding shares of capital stock of the Company. The authorized
capital stock and the shares of capital stock outstanding of the
Company Subsidiaries are set forth on Schedule 3.1(d)(i)(b) hereto.
(ii) Except as set forth in Schedule 3.1(d) (ii) hereto, the
Stockholders own, and as of the Closing Date will own, good, valid and
marketable title to the shares of the Stock set forth on Schedule I as
being owned by the Stockholders, free and clear of all mortgages,
claims, liens, security interests, options, pledges or encumbrances of
any kind whatsoever ("Liens").
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(iii) Except as set forth in Schedule 3.1(d) (iii) hereto,
the Company owns, directly or indirectly, and as of the Closing Date
will so own, good, valid and marketable title to all of the issued and
outstanding shares of the capital stock of the Company Subsidiaries,
free and clear of all mortgages, claims, liens, security interests,
options, pledges or encumbrances of any kind whatsoever and Building
Products owns 50% of the issued and outstanding partnership interests
in Atemco free and clear of all Liens.
(iv) All shares of the Stock and all issued and outstanding
shares of the capital stock of the Company Subsidiaries are duly
authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. The partnership interests in Atemco owned by
Building Products have been validly issued and all capital
contributions required to be made with respect to such interests have
been made.
(v) As of the Closing Date and immediately after giving effect
to the exercise of all Warrants and the sale of the Stock and the
redemption by the Company of the Redemption Shares as contemplated
hereby, all of the issued and outstanding shares of the capital stock
of the Company will be owned by Purchaser with the exception of the
Guardian Shares, all of the issued and outstanding shares of the
capital stock of the Company Subsidiaries will be owned, directly or
indirectly, by the Company and 50% of the partnership interests in
Atemco will be owned by Building Products, free and clear, in each
case, of all Liens other than such as may be created by Purchaser
effective on the Closing.
(vi) Except as set forth on Schedule 3.1(d)(vi), none of the
Companies has any outstanding securities convertible into or
evidencing the right to purchase shares or subscribe for any of the
capital stock of such entity nor does such entity have any outstanding
or authorized subscriptions, options, warrants, calls, rights,
commitments or any other agreements or arrangements, preemptive or
contractual, oral or written, obligating it to issue, deliver or sell,
or cause to be issued, delivered or sold, any shares of its capital
stock or any securities convertible into or evidencing the right to
purchase or subscribe for any shares of such stock.
(vii) Other than this Agreement, and except as set forth on
Schedule 3.1(d)(vii), there are no agreements, understandings or
arrangements with respect to the dividend rights, voting, sale or
transfer of shares of the capital stock of the Companies.
(e) NO APPROVALS REQUIRED. Neither the execution, delivery and
performance of this Agreement, nor the consummation and performance of the
transactions contemplated hereby, nor compliance by the Stockholders with
any of the provisions hereof, will violate (with or without the giving of
notice or the lapse of time or both), or conflict with, or result in any
violation of or default or loss of benefit under, or permit the
acceleration of any obligation under, or require any consent, approval,
waiver, filing or notice under, the charter or bylaws, or partnership
agreement, as applicable of the
5
Companies or Atemco or any statute, rule or regulation applicable to the
Stockholders or the Companies, other than as may be required by the
provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "H-S-R Act"), or, except as set forth on Schedule 3.1(e)
and except where same would not have a Material Adverse Effect, any
indenture, mortgage, deed of trust, loan agreement, lease or contract or
any order, writ, injunction, judgment or decree to which the Stockholders
or the Companies are a party. Except for compliance with the H-S-R Act,
no consent, approval, order or authorization of, or registration,
declaration or filing with, any national, state or local governmental or
regulatory agency or authority (collectively, "Authorizations") is
required to be made or obtained by the Stockholders in order to execute
or deliver this Agreement or to consummate the transactions or fulfill
the obligations of the Stockholders provided for hereby.
(f) FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES. Attached as
Schedule 3.1(f)(i) hereto are true and complete copies of (i) the audited
consolidated balance sheets as of and the consolidated statements of income
and changes in shareholders equity and cash flows for the fiscal years
ended March 31, 1996, April 1, 1995, and April 2, 1994, of the Company
Subsidiaries (ii) the unaudited consolidated balance sheet as of, and the
consolidated statement of income and changes in shareholders equity and
cash flows for the month ended, February 28, 1997, of the Company and (iii)
the applicable notes to and opinions of certified public accountants, if
any, on these financial statements (all of such financial statements and
notes being hereinafter referred to as the "Company Financial Statements"),
which notes and opinions set forth statements of the accounting principles
and practices employed and information required to be disclosed in
connection with the preparation of the Company Financial Statements. The
Company Financial Statements are prepared in accordance with GAAP and are
from the books and records of the Company and/or Building Products and its
consolidated subsidiaries at the dates shown and for the periods therein
indicated and fairly present the financial condition of such companies on a
consolidated basis as of the dates indicated and the results of their
operations for the periods indicated, except that the interim financial
statements do not contain footnotes and are subject to normal year-end
adjustments in accordance with past practice. Since March 31, 1996, the
Companies have not made any changes in their practices of reserving for
certain contingent liabilities whether or not such changes are allowed by
GAAP. The unaudited consolidated balance sheet of the Company and its
consolidated subsidiaries at February 28, 1997, is sometimes hereinafter
referred to as the "February Balance Sheet." The interim financial
statements include all adjustments, which consist only of normal recurring
accruals, necessary for such fair presentation, and such statements do not
contain any items of special or nonrecurring income or any other income not
earned in the ordinary course of business except as expressly specified
therein. None of the Companies has any debts, liabilities or obligations
whatsoever, either accrued, absolute, contingent or otherwise, except (i)
as and to the extent reflected or reserved against on the February Balance
Sheet (ii) those arising after the date of the February Balance Sheet in
the ordinary course of business and (iii) as set forth on Schedule
3.1(f)(ii). There is no oral or written guarantee by the Companies of any
obligation of any person or entity other than such corporations for the
borrowing of money, for the payment of any monetary obligation of any
nature whatsoever (whether
6
due or to become due), or for the performance of any obligation of any
nature whatsoever or otherwise except as set forth on Schedule 3.1(f)(iii).
(g) DISTRIBUTION ARRANGEMENTS. Schedule 3.1(g)(i) contains a listing
of each distributor of the Companies' products that purchased over $250,000
of the Companies' products for the twelve-month period ended January 31,
1997, with a notation of the aggregate revenues generated from each such
distributor during such period. Schedule 3.1(g)(ii) contains a summary of
all material terms of the business relationship between the Companies and
such distributors, including oral agreements. Except as set forth on
Schedule 3.1(g)(iii), the Companies have no written or oral agreements
designating a particular distributor as the exclusive distributor of the
Companies' products in a particular area.
(h) TAX MATTERS. Except as set forth on Schedule 3.1(h):
(i) For taxable periods beginning on or after April 1, 1989, and
ending on or before September 23, 1993, the Companies were included
within the consolidated federal income tax returns of which Xxxxxx
Industries, Inc. ("Xxxxxx") was the common parent to the extent such
Companies existed during such period.
(ii) For taxable periods beginning on or after September 24,
1993, through the date hereof, the Companies have been included
within the consolidated federal income tax returns of which the
Company is the common parent to the extent such Companies existed
during such period. The Company has filed or caused to be filed all
Tax (as hereinafter defined) returns, information returns and reports
required to be filed by it on behalf of itself and the Companies for
each of its 1992, 1993, 1994, 1995 and 1996 fiscal years and Xxxxxx
has filed or caused to be filed all Tax returns, information returns
and reports required to be filed by it on behalf of itself and the
Companies for its 1992 fiscal year and that portion of its 1993 fiscal
year ending on September 23, 1993.
(iii) The Companies and Xxxxxx (solely with respect to periods
that include September 23, 1993, and prior periods) have paid or made
adequate provision in accordance with GAAP for (and in the case of the
Companies such provision is shown on the Company Financial Statements)
the payment of all Taxes (as hereinafter defined) with respect to
present and prior periods to the extent they have become due and
payable and all items, information and computations reported or
reflected on such returns are true, accurate and complete and, with
respect to the Companies, will not be adjusted or changed by the
Company at any time (before or after Closing).
(iv) The provisions for taxes payable reflected on the Company
Financial Statements are adequate for the payment of all unpaid Taxes
(whether or not due and payable and whether or not disputed) of the
Companies accrued through the dates thereof with respect to the
business operations through such dates and with respect to all fiscal
years prior thereto including, but not limited to, any Taxes
7
attributable to the inclusion of the Companies in the consolidated
federal income tax return of which Xxxxxx was the common parent. None
of the Companies is a party to or aware of any claims or any pending
or, to the Stockholders' knowledge, threatened action, suit,
proceeding, audit or tax investigation against the Companies or Xxxxxx
(with respect to its consolidated federal income tax returns for
periods that include September 23, 1993, or prior periods), as
applicable, for the purpose of assessment or collection of Taxes, fees
or charges by any governmental authority.
(v) No deficiencies for any Taxes have been proposed, asserted
or assessed against any of the Companies or Xxxxxx, as applicable,
and, to the knowledge of the Stockholders, no state of facts exists or
has existed that would constitute grounds for the assessment of
liability for Taxes against any of the Companies or Xxxxxx (with
respect to its consolidated federal income tax returns for periods
that include September 23, 1993, or prior periods) as applicable.
None of the Companies or Xxxxxx (with respect to its consolidated
federal income tax returns for periods that include September 23,
1993, or prior periods), as applicable, has waived any applicable
statute of limitation or extended the time for the assessment of any
Tax, fee or governmental charge. Except as above set forth, none of
the Companies is liable for the Taxes of any other corporation.
For purposes of this Agreement, the terms "Tax" and "Taxes" shall
include (i) all taxes, assessments, levies, duties, license fees,
registration fees, withholding, or other similar governmental charges,
including, without limitation, income taxes, franchise taxes, transfer
taxes or fees, sales taxes, excise taxes, ad valorem taxes, withholding
taxes, minimum taxes and social security taxes, and (ii) any interest,
penalties or additions to tax imposed on a Tax described in clause (i)
hereof, imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof.
No consent has been filed by or relating to any of the Companies
pursuant to Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code").
None of the Companies has made any payments, is obligated to make any
payments or is a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under
Section 280G of the Code.
Each of the Companies has withheld from its employees and timely paid
to the appropriate governmental entity proper and accurate amounts for all
periods through the date hereof in compliance with all tax withholding
provisions of all applicable national, federal, state and local laws,
including, without limitation, income, social security and employment tax
withholding for all types of compensation.
(i) RECEIVABLES AND PAYABLES. Schedule 3.1(i)(i) hereto is a listing
of all accounts receivable (collectively, "Receivables") of the Companies
as of February 28, 1997. The Receivables, including but not limited to
those reflected in Schedule 3.1(i)(i) and in the February Balance Sheet and
all Receivables arising after the dates thereof to the Closing Date, arose
or will arise, as applicable, in the ordinary course of business
8
of the Companies or in a bona fide transaction. None of the Receivables is
presently in dispute, unless adequately reserved for in the February
Balance Sheet.
Schedule 3.1(i)(ii) hereto lists and describes all Affiliate
transactions in effect or in the last year between or among the
Stockholders and the Stockholders' Affiliates, on the one hand, and the
Companies, on the other hand. "Affiliate," for the purposes of this
Agreement, shall mean any corporation or organization of which a
Stockholder is a general partner or of which a Stockholder and/or any of
the Companies is directly or indirectly the beneficial owner of 5% or more
of any class of equity securities, and a trust or other estate in which a
Stockholder and/or any of the Companies serves as grantor, trustee or in a
similar fiduciary capacity.
Schedule 3.1(i)(iii) hereto is a listing of all accounts payable
(collectively, "Payables") of the Companies as of February 28, 1997. The
Payables, including but not limited to those reflected in Schedule
3.1(i)(iii) and in the February Balance Sheet and all Payables arising
after the dates thereof to the Closing Date, arose or will arise, as
applicable, from bona fide transactions in the ordinary course of business
of the Companies and have been paid, are being contested with appropriate
proceedings or are not yet due and payable.
(j) TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES. Each of
the Companies has good, valid and marketable title to all of its properties
and assets (except those held pursuant to leaseholds) including without
limitation the assets reflected in the February Balance Sheet, except as
sold or otherwise disposed of in the ordinary course of business since such
date, subject to no Liens, except (a) as disclosed in the February Balance
Sheet, (b) Permitted Liens and (c) such imperfections of title,
restrictions and security interests, as are listed in Schedule 3.1(j)
hereto.
The term "Permitted Liens" means (i) Liens for Taxes, assessments and
other governmental charges which are not due and payable, (ii) Liens for
security claims for labor, materials or supplies, (iii) deposits in the
ordinary course with respect to workers compensation or unemployment
insurance, (iv) warehousemen and mechanic's Liens, and (v) with respect to
any real property, those consisting of zoning or planning restrictions,
easements, permits or other restrictions or limitations on the use of such
property or irregularities thereto which do not materially detract from the
value of such property or materially impair the use of such property.
(k) PROPERTIES, ASSETS, CONTRACTS AND OTHER DATA.
(i) Schedule 3.1(k)(i) lists all real property owned of record
or leased by the Companies.
(ii) Schedule 3.1(k)(ii) lists separately all material tangible,
personal property leased or owned by any of the Companies.
(iii) Schedule 3.1(k)(iii) lists (a) all service marks,
patents, trademarks, trade names, trademark and service xxxx or trade
name registrations, copyrights and
9
copyright registrations of the Companies, and all pending applications
for any of the foregoing, and (b) all licenses granted by or to the
Companies and all other agreements to which any of the Companies is
a party which relate in whole or in part to any items of the
categories mentioned above.
(iv) Schedule 3.1(k)(iv) lists all policies of insurance in force
(with a notation as to the status of premiums paid or payable thereon)
with respect to the Companies, including without limitation those
covering the properties, buildings, machinery, equipment, fixtures,
liabilities and, operations of the Companies, specifying the insurer,
the amount of coverage, the deductible amount, the type of insurance,
the policy number, the cash surrender value, loans against such
policies, the owner, the beneficiary, the loss payee and all pending
claims thereunder. Each of such policies is in force, and no notice
of cancellation or non-renewal of any such policy has been received
and no such notice reasonably is expected to be received. The
insurance carried by the Companies is sufficient to cover (a) all
reasonably forseeable damage material to the Companies taken as a
whole and (b) all reasonably forseeable liabilities or contingencies
relating to the conduct by the Companies of their business and
material to the Companies taken as a whole.
(v) Schedule 3.1(k)(v) lists as of the date of this Agreement
all written contracts, leases, notes, bonds, debentures, obligations,
understandings and commitments (including, without limitation,
mortgages, deeds of trust, indentures, credit agreements and loan
agreements) to which any of the Companies is a party or by which any
properties or assets of any of them is bound which expressly require
future payment or receipt by the Company of in excess of $100,000.
(vi) Schedule 3.1(k)(vi) lists all employment, severance, "golden
parachute" or termination or compensation agreements, consulting,
agency or representation agreements, executive compensation plans,
bonus plans, deferred compensation agreements, employee pension plans
or retirement plans, retiree benefit or compensation plans, severance
pay arrangements, employee profit-sharing plans, employee stock
purchase and stock option plans, collective bargaining agreements,
oral or written agreements with labor unions or other collective
bargaining organizations with respect to employees of the Companies,
group life insurance, hospitalization insurance or other plans or
arrangements providing for benefits for the officers, directors or
employees of the Companies. Except as set forth in Schedule
3.1(k)(vi), none of the agreements disclosed in Schedule 3.1(k)(vi)
provides for payments in connection with any change in control of the
Companies and no amount will become due to any employee, consultant,
officer or director of the Companies solely as a result of the
consummation of the transactions contemplated by this Agreement.
(vii) Schedule 3.1(k)(vii) lists as of December 31, 1996, the
names, titles and current annual salary rates of each of the present
directors and officers of the Companies and the names and current
annual salary rates of each of the employees of the Companies whose
current annual rate of compensation is
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$50,000 or more, and the aggregate annual compensation of all
employees of the Companies, specifying the numbers of employees of
each of the Companies. None of such compensation rates is in the
process of being changed except in connection with ongoing merit
reviews by the Companies.
(viii) Schedule 3.1(k)(viii) lists the name of each bank or other
financial institution from which loans to the Companies are
outstanding.
(ix) Schedule 3.1(k)(ix) lists the name of each bank or other
financial institution in which the Companies have an account or safe
deposit box, the number of any such account, and the names of all
persons authorized to draw thereon or have access thereto.
(x) Schedule 3.1(k)(x) lists all material licenses,
certificates, permits, consents, approvals, authorizations,
qualifications, authorities and orders issued by any governmental
authority excluding environmental permits (collectively, the
"Permits") presently held by the Companies. The Permits listed in
Schedule 3.1(k)(x) are all of the Permits required or necessary to
conduct the businesses and operations of the Companies as presently
conducted. All Permits listed on Schedule 3.1(k)(x) are valid and
outstanding and each of the Companies is in compliance in all material
respects with all of the terms and conditions under which each of such
Permits is held. None of the Companies has received notice that the
issuer of any of the Permits intends to cancel or terminate any of the
Permits or that valid grounds for such cancellation or termination
currently exist.
True, complete and legible copies of all documents referred to in
Schedules 3.1(k)(i) through 3.1(k)(x) have been made available to Purchaser
other than those insurance policies the receipt of which are pending. With
respect to the contracts and agreements referred to in such Schedules, (i)
all are valid and enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization or other laws relating to
or affecting the enforcement of the rights of creditors generally and
general equitable principles, (ii) none of the Companies is in default in
the performance of any of its obligations thereunder and (iii) to the
knowledge of the Stockholders, no other parties thereto are in default in
the performance of any of their obligations thereunder except in the case
where any of the foregoing would not have a Material Adverse Effect.
(l) CONDITION OF ASSETS. Each of the buildings (including, without
limitation, roofs thereon) and other structures and improvements owned or
leased by the Companies is in good repair and operating condition, normal
wear and tear excepted, and is fit for its intended purpose, is free from
defects which would impair its ordinary commercial utility, and each such
building and other structure and improvement complies and conforms in all
material respects with all applicable ordinances and regulations and
building, zoning and other laws. Each of the material operating assets of
the Companies is in good repair and operating condition normal wear and
tear excepted, and fit for the purpose for which it is presently being
used. The manufacturing equipment
11
used by the Companies is of a sufficient design and capacity so as to
enable the Companies to produce products in accordance with the Companies'
operating plans.
The real and personal property listed in Schedules 3.1(k)(i) and
3.1(k)(ii) constitute all the tangible properties and assets of the
Companies used in the business of the Companies as presently conducted,
excluding inventories and other assets and properties expended in the
ordinary course of business and such assets and properties that are
immaterial in the aggregate.
(m) NO VIOLATION OF LAW (EXCLUDING ENVIRONMENTAL MATTERS). Except as
set forth on Schedule 3.1(m), none of the Companies has been during the
last five years or is currently engaged in any activity or has omitted to
take any action in violation in any material respect of any law, ordinance
or regulation of any national, state or local governmental or regulatory
agency or authority (excluding environmental matters), and there is no
pending or, to the knowledge of the Stockholders, threatened investigation
or review with respect to same. The operations of RBP Transportation, Inc.
have been conducted in compliance in all material respects with all
applicable laws, including, without limitation, the Interstate Commerce Act
and the rules and regulations of the Interstate Commerce Commission
thereunder.
(n) NO LITIGATION. There is no pending or, to the knowledge of the
Stockholders, threatened litigation, action, suit, proceeding or
governmental investigation (collectively, "Litigation") against the
Companies, except that disclosed in Schedule 3.1(n)(i) hereto. Schedule
3.1(n)(ii) hereto sets forth a listing of all actions brought against the
Companies filed at any time since January 1, 1992, other than as set forth
on Schedule 3.1(n)(i).
Except as set forth on Schedule 3.1(f)(ii), there is no judgment,
decree, injunction, rule or order of any court, national, state or local
governmental or regulatory agency or authority, or arbitrator outstanding
against any of the Companies or by which any of the Companies are bound.
Attached hereto as Schedule 3.1(n)(iii) is a list of major litigation
for fiscal years 1992 through 1996, together with estimated expenses for
each case in each such year. Schedule 3.1(n)(iii) also sets forth
aggregate legal expenses for each of fiscal years 1992 through 1996.
(o) LABOR CONTROVERSIES. Except as set forth in Schedule 3.1(o)
hereto, there are no ongoing controversies pending or, to the knowledge of
the Stockholders, threatened and there have not been any controversies at
any time during the last three years, between any of the Companies and any
of their employees, former employees, job applicants or any association or
group of such persons except for such as would not have a Material Adverse
Effect. The Companies have complied in all material respects with all laws
applicable to them relating to the employment of labor, including, any
provisions thereof relating to wages, hours and payment of social security
taxes. To the knowledge of the Stockholders, there are no organizing
efforts underway by employees of any of the Companies and there are no
claims or actions pending before the National Labor Relations Board by
employees of any of the Companies.
12
(p) PATENTS, TRADEMARKS AND RELATED CONTRACTS; MANAGEMENT INFORMATION
SYSTEMS.
(i) Each of the Companies owns or is licensed to use all
patents, trade names, trademarks, service marks, copyrights, know-how
and processes (collectively, "Proprietary Rights") now used by it,
except that know-how and those processes nonproprietary in nature.
There are no Proprietary Rights which are necessary for the conduct of
the business of the Companies as now conducted, except as listed in
Schedule 3.1(p) (i) hereto. To the knowledge of the Stockholders, (i)
no other person has any rights to any of the Proprietary Rights owned
by any of the Companies, (ii) no other person is infringing upon any
such Proprietary Right and (iii) no Proprietary Right is subject to
any Litigation.
(ii) The Companies own or have valid licenses to use all
management information systems necessary for the operations of the
Companies. Attached as Schedule 3.1(p)(ii) is a listing of all
management information systems equipment and processes used by the
Companies with a notation as to the Companies' ownership thereof or
valid right to use same.
(q) ABSENCE OF CERTAIN CHANGES OF EVENTS. Except as set forth in
Schedule 3.1(q), since the date of the February Balance Sheet to the date
hereof, none of the Companies has:
(i) Incurred any obligation or liability (contingent or
otherwise) except (x) normal trade or business obligations incurred in
the ordinary course of business, and (y) obligations under contracts,
agreements and leases described or cross-referenced in Schedule
3.1(k)(v) hereto;
(ii) Mortgaged, pledged or subjected to any lien, charge,
security interest or other encumbrance other than Permitted Liens any
of its properties or assets;
(iii) Sold, assigned, transferred, leased or otherwise disposed
of any of its properties or assets, except in the ordinary course of
business;
(iv) Made or granted any general wage or salary increase or
entered into any employment contract or other agreement providing for
payments in respect of services with any director, officer or employee
except in the ordinary course of business;
(v) Suffered any material casualty loss or damage, whether or
not such loss or damage shall have been covered by insurance, other
than in the ordinary course of business;
(vi) Suffered any Material Adverse Effect;
13
(vii) Declared any dividend or made any payment or other
distribution in respect of its capital stock other than in respect of
the Series B Preferred Stock of the Company;
(viii) Purchased, redeemed, issued, sold or otherwise acquired or
disposed of any shares of its capital stock; or
(ix) Engaged in any other transaction outside the ordinary
course of its business.
(r) EMPLOYEE BENEFIT PLANS AND RELATED MATTERS
(i) Schedule 3.1(k)(vi) sets forth a true and complete list of
each "employee benefit plan," as such term is defined in section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), whether or not subject to ERISA, and each bonus, incentive
or deferred compensation, severance, termination, retention, change of
control, stock option, stock appreciation, stock purchase, phantom
stock or other equity-based plan, program, agreement, or policy that
provides or may provide benefits or compensation in respect of any
employee or former employee of the Companies or the beneficiaries or
dependents of any such employee or former employee (such employees,
former employees, beneficiaries and dependents, collectively, the
"Employees") or under which any Employee is or may become eligible to
participate or derive a benefit and that is or has been maintained or
established by the Companies or any other trade or business, whether
or not incorporated, which, together with the Companies is or would
have been at any date of determination occurring within the preceding
six years treated as a single employer under Section 414 of the Code
(such other trades and businesses, collectively, the "Related
Persons"), or to which the Companies or any Related Person contributes
or is or has been obligated or required to contribute or with respect
to which the Companies may have any liability or obligation
(collectively, the "Plans"). With respect to each such Plan, the
Stockholders have provided the Purchaser with complete and correct
copies of: all Plans; all trust agreements, insurance contracts or
other funding arrangements; the two most recent actuarial and trust
reports; a statement demonstrating satisfaction of all
non-discrimination requirements of ERISA for the last two years; the
two most recent Forms 5500 and all schedules thereto; the most recent
IRS determination letter; current summary plan descriptions; all
material communications received from or sent to the Internal Revenue
Service, the Pension Benefit Guaranty Corporation or the Department
of Labor; an actuarial study of any post-employment life or medical
benefits provided under any such Plan, if any; statements or other
communications regarding withdrawal or other multiemployer plan
liabilities, if any; and all amendments and modifications to any such
document. None of the Companies has communicated to any Employee any
intention or commitment to modify any Plan or to establish or
implement any other employee or retiree benefit or compensation
arrangement and none of the Companies have communicated any intention
or commitment to
14
permanently maintain any employee or retiree benefit or compensation
arrangement.
(ii) Each Plan intended to be qualified under Section 401(a) of
the Code, and the trust (if any) forming a part thereof, has received
a favorable determination letter from the IRS as to its qualification
under the Code and to the effect that each such trust is exempt from
taxation under Section 501(a) of the Code, and nothing has occurred
since the date of such determination letter that could adversely
affect such qualification or tax-exempt status.
(a) Each of the Plans has been operated and administered in
all respects in compliance with all applicable laws, except for
any failure so to comply that, individually or together with all
other such failures, has not and will not result in a material
liability or obligation on the part of the Companies, and has not
had or resulted in, and will not have or result in, a Material
Adverse Effect. There are no material pending or, to the
knowledge of the Stockholders, threatened claims against or
relating to any Plan, by any Employee or otherwise involving any
such Plan or the assets of any Plan (other than routine claims
for benefits by persons entitled to such benefits).
(b) No Plan is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA or is a "multiple employer plan"
within the meaning of Section 4063 or 4064 or ERISA.
(c) All contributions required to have been made by the
Companies and each Related Person to any Plan pursuant to the
terms of any such Plan or any applicable collective bargaining
agreement or applicable law have been made within the time
prescribed by any such Plan, agreement or applicable law.
(s) TERMINATION BY EMPLOYEE OR CLIENTS. Except as disclosed in
Schedule 3.1(s), since September 30, 1996, no employee of the Companies has
terminated or, to the knowledge of the Stockholders, threatened to
terminate his relationship with the Companies either as a result of the
transactions contemplated by this Agreement or otherwise other than in the
ordinary course of business and no distributor or other customer or group
of same which, singly or in the aggregate, accounted for revenue of more
than $1,000,000 for the twelve-month period ended January 31, 1997, has
terminated or threatened to terminate, in whole or in part, its
relationship with the Companies either as a result of the transactions
contemplated by this Agreement or otherwise.
(t) ENVIRONMENTAL MATTERS. Except as set forth in Schedule 3.1(t)
hereof,
(i) the Companies have obtained all licenses, permits,
certificates, approvals, applications, registrations and other
authorizations (collectively
15
"Environmental Permits") which are required under all Environmental
Laws (as such term is hereinafter defined);
(ii) the Companies are in full compliance with all Environmental
Laws and have not violated any Environmental Laws;
(iii) none of the Companies' operations is or has been
subject to any judicial or administrative proceeding alleging the
violation of any Environmental Law;
(iv) no real estate owned or leased by the Companies or, to the
knowledge of the Stockholders, formerly owned or leased by the
Companies, is on the "CERCLIS" list of hazardous waste sites or the
"National Priorities List" of the U.S. Environmental Protection
Agency, or any similar state list, or, to the knowledge of the
Stockholders, the subject of any federal, state or local investigation
evaluating whether any remedial action is needed to respond to a
release of any Hazardous Material (as such term is hereinafter
defined);
(v) None of the Companies has filed any notice under any
federal, state or local law indicating past or present treatment,
storage or Release (as such term is hereinafter defined) of a
Hazardous Material or reported a Release of a Hazardous Material into
the environment;
(vi) The Companies have not performed or, to the knowledge of the
Stockholders, suffered any act which could give rise to liability to
any person or entity (governmental or not) under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 or any
other Environmental Laws, nor have the Companies received notice of
any such liability or any claim therefor or submitted notice pursuant
to Section 103 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 to any governmental or
regulatory agency;
(vii) No Hazardous Material is present or has been Released on,
at, beneath or near any of the Companies' assets or properties or any
surface waters or ground waters thereon or thereunder in violation of
Environmental Laws; and
(viii) The Companies do not own or operate an underground
storage tank, nor is any such tank located on or in any of the real
properties leased or owned by the Companies.
As used herein, the term "Environmental Laws" shall mean all
applicable laws and regulations (federal, state, and local) relating to
pollution or to the protection of the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including without limitation (i) those laws and
regulations relating to the Release or threatened Release of Hazardous
Materials and to the manufacture, generation, management, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, (ii) duties or requirements arising
16
out of common law, and (iii) legally binding judicial and administrative
interpretations thereof.
As used herein, the term "Hazardous Material" shall mean (i) any
chemicals, materials, wastes or substances that are defined, regulated,
determined or identified as toxic or hazardous in any Environmental Law
(including, without limitation, substances defined as "hazardous
substances", "hazardous materials", or "hazardous waste", "pollutant or
contaminant", "petroleum" or "natural gas liquids" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Hazardous Materials Transportation Act, the Resource Conservation and
Recovery Act, or comparable state and local statutes or in the regulations
adopted pursuant to said statutes), and (ii) any asbestos, polychlorinated
biphenyls, urea formaldehyde, lead based paint, petroleum, petroleum
products, oil, solid waste, pollutants, and other contaminants (whether or
not regulated under any Environmental Law).
As used herein, the term "Release" shall mean emitting, depositing,
leaking, spilling, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, dumping or disposing.
(u) WARRANTY; PRODUCTS LIABILITY. Schedule 3.1(u)(i) contains the
representative product warranty policies of the Companies generally in
effect in connection with the sale of their products. Schedule 3.1(u)(ii)
contains Warranty Analysis Reports for fiscal years 1995 and 1996, together
with the aggregate warranty and service expense for the Companies for
fiscal years 1992 through 1996. The Stockholders know of no material
design defects in any of the Companies' products nor any material flaws in
the manufacturing processes employed by the Companies. Set forth on
Schedule 3.1(u)(iii) is a listing of all products liability cases filed
against the Companies since January 1, 1992.
(v) CUSTOMERS. Schedule 3.1(v) contains a listing of each customer
of the Companies that generated at least $250,000 in revenues for the
Companies for the twelve-month period ended January 31, 1997, together with
the amount of revenues generated during such period. Schedule 3.1(k)(v)
contains a listing of all material contracts with customers that either
require a customer to purchase a certain quantity or portion of its
requirements for certain product(s) from the Companies or require the
Companies to sell a certain quantity or portion of its production of
certain products to a customer.
(w) INVENTORY. The inventories included in the Company Financial
Statements have been reflected in the Company Financial Statements at the
lower of cost or market value in accordance with GAAP. Such inventories do
not include any items which are not usable or saleable in the ordinary
course of business of the Companies or are obsolete or discounted items
except to the extent there are adequate reserves in the Company Financial
Statements in accordance with GAAP.
17
(x) SECTION 280G. Stockholders holding at least 75% of the voting
power of the Company have approved the payments to be made pursuant to the
RBPI Incentive Unit Agreements Plan.
(y) FULL DISCLOSURE. No representation or warranty set forth in this
Agreement (as modified by the Schedules hereto) or in any certificate
required to be delivered by Section 5.1 hereof contains or will contain any
untrue statement of a material fact or omits or will omit to state a
material fact necessary, in light of the circumstances in which it was, or
will be, made, in order to make the statements herein or therein, not
misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to the Stockholders as follows:
(a) DUE ORGANIZATION, GOOD STANDING AND POWER. Purchaser is a limited
partnership validly existing under the laws of the State of Texas, with
requisite partnership power and authority to enter into this Agreement and
to perform its obligations hereunder.
(b) AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on
the part of Purchaser. Purchaser has all necessary power and authority to
execute, deliver and perform this Agreement, and this Agreement, upon the
due execution and delivery by the Stockholders, shall constitute a legal,
valid and binding obligation of Purchaser, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
the rights of creditors generally and general equitable principles.
(c) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH CERTAIN
INSTRUMENTS. The execution, delivery and performance of this Agreement by
Purchaser will not require any consent, approval or notice under and will
not conflict with or result in the breach of any provision of, or
constitute a default under, Purchaser's Agreement of Limited Partnership,
or any indenture, mortgage, deed of trust, loan agreement, lease, licensing
agreement, contract, instrument or other agreement or any order, judgment
or decree, to which Purchaser is a party or by which Purchaser or any of
its properties or assets is bound, and to the knowledge of Purchaser will
not violate (with or without the giving of notice or the lapse of time or
both), or require consent, approval, filing or notice under, any provision
of law applicable to Purchaser, other than as may be required by the
provisions of the H-S-R Act. Except as aforesaid, no Authorizations are
required to be made or obtained by Purchaser in order to execute or deliver
this Agreement or to consummate the transactions or fulfill the obligations
of Purchaser provided for hereby.
(d) FULL DISCLOSURE. None of the information contained in the
representations and warranties of Purchaser set forth in this Agreement or
in any of the certificates, Schedules or documents delivered or to be
delivered to the Stockholders pursuant hereto contains or will contain any
untrue statement of a material fact or omits or will omit to
18
state a material fact necessary to make the statements contained herein
or therein, in light of the circumstances under which they were made, not
misleading.
(e) FINANCING. Attached as Schedule 3.2(e) hereto are copies of a
commitment letter respecting the senior credit facility to be incurred by
Building Products as of the Closing, a highly confident letter respecting
the proposed issuance of Senior Subordinated Notes by Building Products and
an equity commitment letter from Keystone, Inc. respecting the equity to be
contributed to Purchaser (collectively, the "Commitment Letters").
4. PRE-CLOSING COVENANTS.
4.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS. The
Stockholders agree that, during the period commencing on the date hereof and
ending on the Closing Date, (a) they will give or cause to be given to Purchaser
and its representatives full access during normal business hours to the
properties, books, contracts and records of any of the Companies, (b) they will
furnish or cause to be furnished to Purchaser and its representatives such
financial and operating data and other information with respect to the
businesses and properties of any of the Companies as Purchaser may reasonably
request, (c) they will furnish or cause to be furnished to Purchaser copies of
all documents and information concerning any of the Companies that Purchaser may
reasonably request and (d) they will afford Purchaser and its representatives an
opportunity to consult with the representatives, officers, employees, legal
counsel and accountants of the Companies.
4.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING DATE. The Stockholders
agree that, except pursuant to the prior written consent of Purchaser, as
contemplated hereby or as set forth on Schedule 4.2 hereto, during the period
commencing on the date hereof and ending on the Closing Date, they will cause
the Companies to:
(a) Operate their respective businesses only in the usual, regular
and ordinary manner and, to the extent consistent with such operation, use
reasonable efforts to preserve the present relationships with persons
having business dealings with any of them and to keep available the
services of their present officers and employees;
(b) Take all actions reasonably necessary and appropriate to
preserve, protect and maintain all of their assets other than disposable
assets in customary repair, order and condition, reasonable wear and tear
excepted;
(c) Make no disposition, other than the disposition of obsolete and
otherwise unusable assets, including any sale or transfer, of their assets,
other than sales in the ordinary course of business consistent with past
practice;
(d) Make no amendment to their charter or bylaws in any manner;
19
(e) Make no change in the number of shares of their capital stock
issued and outstanding, and grant or give no option, warrant or any other
right to purchase or to convert any obligation into shares of their capital
stock;
(f) Not declare, pay or make a dividend or other distribution or
payment in respect of shares of their capital stock other than dividends on
the Series B Preferred Stock or purchase or redeem any of such shares or
dispose of any evidence of indebtedness or other securities of any other
person;
(g) Not merge or consolidate with any other corporation, sell all or
substantially all of their assets, or acquire any stock or, except in the
ordinary course of business consistent with past practice, any property or
assets of any other person, firm, association, corporation or other
business organization, or enter into any contract or agreement or other
commitment to effect any of the foregoing except in the ordinary course of
business;
(h) Not incur any indebtedness for borrowed money except in
accordance with Building Product's revolving line of credit or vary the
terms of any existing debt securities, nor issue or sell any debt
securities, nor enter into any other material transaction or commitment;
(i) Not mortgage, pledge or subject to any lien, lease, security
interest or other charge or encumbrance (other than Permitted Liens) any of
its properties or assets, tangible or intangible, other than in the
ordinary course of business consistent with prior practice;
(j) Except as may occur in the ordinary course of business, not
discharge or satisfy any lien or encumbrance or pay or satisfy any material
obligation or liability (fixed or contingent) or compromise, settle or
otherwise adjust any material claim or litigation;
(k) Not grant to any director, officer, employee or consultant any
increase in compensation in any form (other than pursuant to existing
employment agreements), or any severance or termination pay, or enter into
or vary the terms of any employment agreement with any such person except
performance increases in the ordinary course of business to employees who
do not participate in the Company's management bonus plan;
(l) Not make any capital expenditures, or enter into any commitment
to make, on any particular capital item or series of related items that
exceed(s) $50,000 or make aggregate capital expenditures in excess of
$250,000 except that Building Products may make those capital expenditures
specified by Xxxxxx Xxxx in his letter to Xxxx Xxxxxx dated March 24, 1997,
a copy of which is attached as Annex I to Schedule 4.2 hereof;
(m) Not adopt, amend in any material respect or terminate, any Plan
or other employee benefit program of general applicability; and
20
(n) Not engage in any transaction with the Stockholders.
4.3 COMPLIANCE WITH LAWS. The Stockholders shall cause the Companies to,
and Purchaser shall, comply with all applicable laws as may be required for the
sale and transfer of the Stock and for the performance of all other acts and
things contemplated by this Agreement.
4.4 NOTICE OF BREACH. In the event of, and promptly after, the taking of
any action or occurrence or threatened occurrence of any event, the taking or
occurrence of which would make untrue, inaccurate or misleading or would
constitute or result in a breach or violation of any of the representations,
warranties, covenants or agreements of a party set forth herein, or would, if it
had occurred prior to the date hereof, make any representation or warranty made
by such party herein untrue, inaccurate or misleading, such party shall promptly
give written notice thereof to the other party.
4.5 CONSENTS. The Stockholders shall cause the Companies to use their
reasonable efforts to obtain the consent, waiver or approval of each person or
entity whose consent or approval is required for the consummation by the
Companies of the transactions contemplated hereby and to take any action
necessary or advisable to accomplish the transactions contemplated hereby,
provided, however, the Companies shall not be required to expend material sums
of money to comply with this provision.
4.6 ACQUISITION PROPOSALS. Until the close of business on May 15, 1997,
neither the Stockholders nor any of the Companies shall, directly or indirectly,
through any officer, director, agent, representative (including, without
limitation, investment bankers, attorneys and accountants) or otherwise, (i)
solicit, initiate or encourage submission of inquiries, proposals or offers from
any person, corporation, partnership or other entity or group other than
Purchaser (a "Third Party"), relating to any acquisition or purchase of all or a
portion of the assets of, or any equity interest in, any of the Companies; or
(ii) participate in any discussions or negotiations regarding, or furnish to any
Third Party any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any Third Party to do or seek any of the foregoing. The Stockholders
and the Companies shall promptly notify Purchaser if any such proposal or offer,
or any inquiry or contact with any Third Party with respect thereto, is made,
and shall in any such notice set forth in reasonable detail the identity of the
Third Party and the terms and conditions of such inquiry, proposal or offer.
4.7 REASONABLE EFFORTS. Each of the parties hereto agrees to use its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper or advisable to
satisfy promptly all conditions required hereby to be satisfied by such party in
order to consummate and make effective the transactions contemplated hereby.
4.8 NOTIFICATION. The Stockholders shall notify Purchaser, and Purchaser
shall notify the Stockholders, of any litigation, arbitration or administrative
proceeding pending or, to its knowledge, threatened against the Companies, the
Stockholders or Purchaser, as the case may be, which challenges the transactions
contemplated hereby.
21
4.9 INJUNCTIONS. If any United States, state or foreign court having
jurisdiction over any party issues or otherwise promulgates any injunction,
decree or similar order prior to the Closing which prohibits the consummation of
the transactions contemplated hereby, the parties will use their respective
reasonable efforts to have such injunction dissolved or otherwise eliminated as
promptly as possible and, prior to or after the Closing, to pursue the
underlying litigation diligently and in good faith.
4.10. FILINGS. As promptly as practicable after the execution of this
Agreement, each party shall use its reasonable efforts to obtain, and to
cooperate with the other party in obtaining, all authorizations, consents,
orders and approvals of any governmental authority that may be or become
necessary in connection with the consummation of the transactions contemplated
by this Agreement, and to take all reasonable actions to avoid the entry of any
order or decree by any governmental authority prohibiting the consummation of
the transactions contemplated hereby, including without limitation, any reports
or notifications that may be required to be filed by it under the H-S-R Act, and
shall furnish to the other all such information in its possession as may be
necessary for the completion of the reports or notifications to be filed by the
other. Purchaser and the Stockholders agree that any filing fee required to be
paid in connection with any filing under the H-S-R Act shall be paid one-half by
the Stockholders and one-half by Purchaser.
4.11. PUBLICITY. Prior to the Closing, no party will issue or cause
the publication of any press release or other public announcement with respect
to this Agreement or the transactions contemplated hereby without the prior
consent of the other party, which consent will not be unreasonably withheld;
provided, however, that nothing herein will prohibit either party from issuing
or causing publication of any such press release or public announcement to the
extent that such party determines such action to be required by law, in which
event the party making such determination will, if practicable in the
circumstances, use reasonable efforts to allow the other party reasonable time
to comment on such release or announcement in advance of its issuance.
4.12. FINANCING. Purchaser shall use its reasonable efforts to obtain
and have available at the Closing the financing contemplated by the Commitments.
4.13 EXERCISE OF WARRANTS. Xxxxxxx Partners agrees to exercise its rights
pursuant to Section 2 of the Take Along/Drag Along Rights Agreement dated
September 8, 1994, among Xxxxxxx Partners and the Holders named therein, as
amended (the "Take Along Agreement"), to cause each of the Holders named therein
to exercise their Warrants, to sell the underlying shares of Class B Nonvoting
Common Stock received upon exercise thereof to Purchaser in accordance with the
terms of this Agreement and to make representations and warranties to Purchaser
as required by the Take Along Agreement.
5. CONDITIONS PRECEDENT.
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER. The obligations
of Purchaser to consummate and effect the transactions contemplated under this
Agreement are subject to the satisfaction on or before the Closing Date of each
of the following conditions (unless waived by Purchaser in writing):
22
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of the Stockholders contained in this Agreement shall be
true and correct in all material respects on and as of the date when made
and on and as of the Closing Date.
(b) PERFORMANCE OF AGREEMENT. The Stockholders shall have performed
and complied with in all material respects, and caused each of the
Companies to have performed and complied with in all material respects, all
agreements required by this Agreement to be performed or complied with by
them on or prior to the Closing Date.
(c) THE STOCKHOLDERS' CERTIFICATE. The Stockholders shall have
executed and delivered to Purchaser a certificate, dated the Closing Date,
to the effect set forth in Section 5.1(a) and 5.1(b) hereof, such
certificate to be in the form of Exhibit E attached hereto.
(d) NO LITIGATION. No action, suit, investigation or legal or
administrative claim or proceeding shall be pending or threatened before
any court, governmental agency or regulatory authority which may result in
the restraint, prohibition, or the obtaining of damages or other relief in
respect of, or which is related to or arises out of, this Agreement or the
transactions contemplated hereby.
(e) OPINION OF COUNSEL FOR THE STOCKHOLDERS. Purchaser shall have
received an opinion of counsel for the Stockholders dated the Closing Date
and in the form and to the effect of Exhibit F hereto.
(f) CHARTER, BYLAWS, QUALIFICATIONS TO TRANSACT BUSINESS AS FOREIGN
CORPORATIONS AND GOOD STANDING CERTIFICATES. Purchaser shall have received
a certified copy of the charter and the bylaws of each of the Companies;
certificates of existence and good standing of each of the Companies from
the appropriate official of each of their states of incorporation or
organization; and certificates of qualification to transact business as a
foreign corporation for the Companies from each state listed in Schedule
3.1(b)(iii) hereto.
(g) NO MATERIAL ADVERSE EFFECT. No Material Adverse Effect shall
have occurred from the date hereof to the Closing Date, and no damage,
destruction or loss, whether or not covered by insurance, adversely
affecting in any material respect the properties, businesses, prospects or
assets of the Companies shall have occurred or been threatened. The
Stockholders shall have executed and delivered to Purchaser a certificate,
dated the Closing Date, to such effect, such certificate to be in the form
of Exhibit G attached hereto.
(h) RESIGNATION OF DIRECTORS; RELEASES. Each director and officer of
the Companies shall have offered to Purchaser, and shall have delivered to
Purchaser, if Purchaser shall have accepted such offer, his or her
resignation as a director and/or officer and the Stockholders shall use
their reasonable efforts to cause each of such persons to offer to execute
and deliver to Purchaser if Purchaser shall have accepted such offer, a
written release, in form and substance acceptable to Purchaser, of all
23
claims which such person might have against the Companies for compensation
or otherwise.
(i) THIRD-PARTY CONSENTS. Each consent set forth on Schedule 5.1(i)
shall have been obtained without resulting in the acceleration or
renegotiation of any such debt, termination, modification or cancellation
of any such lease, contract or any other right or authorization.
(j) APPROVAL OF COUNSEL. All instruments of transfer, resolution,
papers and other documents to be executed shall be reasonably satisfactory
in legal form and effect to counsel for Purchaser.
(k) TERMINATION OF INTERCOMPANY AGREEMENTS. Purchaser shall have
received an agreement in the form of Exhibit H attached hereto by which the
Stockholders and the Companies terminate the management and other
intercompany agreements (including the cancellation of any intercompany
indebtedness) among the Companies and the Stockholders and Affiliates of
the Stockholders and any other agreements among such parties, all as set
forth on Schedule 5.1(k) attached hereto.
(l) MANAGEMENT EQUITY. Each of Xxxxx X. Xxxxx, Xxxxxx X. Xxxx, Xxxx
X. Xxxxxx, Xxxxxxx X. Still and Xxxxx X. Xxxxx, Xx. shall have executed the
agreement in the form of Exhibit I attached hereto respecting his
investment of amounts to be received pursuant to his RBPI Incentive Unit
Agreements Plan (the "Incentive Agreement") into equity in Purchaser. The
respective amounts of such investments shall not be less than the net cash
payments, after taxes, received by Xx. Xxxxx pursuant to his Incentive
Agreement as of the Closing or 80% of the net cash payments, after taxes,
received by Messrs. Lowe, Morris, Still and Xxxxx pursuant to each of their
Incentive Agreements as of the Closing.
(m) FINANCING. Purchaser shall have obtained the financing
contemplated by the Commitments.
(n) PAYMENTS UNDER RBPI INCENTIVE UNITS AGREEMENTS PLAN. The Company
shall have made payments to the Unitholders provided in Section 1.4 hereof
and each such party shall have executed and delivered a Release in favor of
the Company.
(o) H-S-R ACT. Any waiting period (and any extension thereof) under
the H-S-R Act applicable to the consummation of the Merger shall have
expired or been earlier terminated.
(p) APPROVAL OF CERTAIN PAYMENTS. The Stockholders shall have
approved, in accordance with Section 280G of the Code, the payment by the
Company of amounts to certain members of its management pursuant to the
Transaction Incentive Agreement and the RBPI Incentive Unit Agreements.
(q) WARRANTS. Xxxxxxx Partners shall have exercised its rights under
the Take Along Agreement to (i) cause all of the Warrants to be exercised,
(ii) all shares of Stock obtainable thereby to be sold to Purchaser
pursuant to this Agreement and (iii)
24
the Warrantholders to make the representations and warranties to Purchaser
as required by the Take Along Agreement.
(r) PREFERRED STOCK. All shares of Series B Preferred Stock shall
have been redeemed either in accordance with the terms of same or
otherwise.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE STOCKHOLDERS. The
obligations of the Stockholders under this Agreement are subject to the
satisfaction on or before the Closing Date of each of the following conditions
(unless waived by the Stockholders in writing):
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Purchaser contained in this Agreement shall be true and
correct in all material respects on and as of the date when made and on and
as of the Closing Date.
(b) PERFORMANCE OF AGREEMENT. Purchaser shall have performed and
complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with by Purchaser on
or prior to the Closing Date.
(c) NO LITIGATION. No action, suit, investigation or legal or
administrative claim or proceeding shall be pending or threatened before
any court, governmental agency or regulatory authority which may result in
the restraint, prohibition, or the obtaining of substantial damages or
other relief in respect of, or which is related to or arises out of, this
Agreement or the transactions contemplated hereby.
(d) APPROVAL OF COUNSEL. All instruments of transfer, restrictions,
papers and other documents to be executed, shall be reasonably satisfactory
in legal form and effect to counsel for the Stockholders.
(e) OPINION OF COUNSEL FOR PURCHASER. The Stockholders shall have
received an opinion of counsel for Purchaser dated the Closing Date and in
the form and the effect of Exhibit J hereto.
(f) H-S-R ACT. Any waiting period (and any extension thereof) under
the H-S-R Act applicable to the consummation of the Merger shall have
expired or been earlier terminated.
(g) THIRD-PARTY CONSENTS. Each consent set forth on Schedule 5.2(g)
shall have been obtained.
(h) PURCHASER'S CERTIFICATE. Purchaser shall have executed and
delivered to the Stockholders a certificate, dated the Closing Date, to the
effect set forth in Section 5.2(a) and 5.2(b) hereof, such certificate to
be in the form of Exhibit K hereto.
(i) PAYMENT OF INDEBTEDNESS. All indebtedness of the Companies
identified on Schedule 5.2(i) hereto shall have been paid in full.
6. POST-CLOSING OBLIGATIONS.
25
6.1 FURTHER DOCUMENTS AND REQUESTS. Each of the parties shall execute and
deliver, at its own expense, such further instruments of transfer and
conveyance, documents and certificates as may be reasonably required for the
consummation of the transactions contemplated by this Agreement.
6.2 NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) From and after the Closing, the parties agree, and will use
reasonable efforts to cause their Affiliates, (i) not to use Confidential
Information for any purpose and (ii) not to disclose Confidential
Information, to any third party other than as necessary to its accountants,
representatives and advisors.
(b) For purposes of this Agreement, "Confidential Information" shall
mean with respect to the covenant running from the Purchaser to the
Stockholders any information, know how, data, process, technique, design,
drawing, formula or test data relating to any research project, work in
process, future development, engineering, manufacturing, marketing,
business plan, financial or personnel matter relating to the business or
assets of any of the Stockholders, their present or future products, sales,
suppliers, distributors, customers, employees, investors or business,
whether in oral, written, graphic or electronic form, and with respect to
the covenant running from the Stockholders to the Purchaser any
information, know how, data, process, technique, design, drawing, formula
or test data relating to any research project, work in process, future
development, engineering, manufacturing, marketing, business plan,
financial or personnel matter relating to the business or assets of any of
the Companies or the Purchaser, their present or future products, sales,
suppliers, distributors, customers, employees, investors or business,
whether in oral, written, graphic or electronic form.
(c) Confidential Information shall not include any information which
(i) is or becomes public knowledge without breach of this Agreement, (ii)
which is or becomes publicly available without a confidentiality
restriction and without breach of this Agreement from a source other than
the Companies or Purchaser, (iii) the recipient can demonstrate was known
by the recipient without a confidentiality restriction at the time of the
receipt of such information, or (iv) was independently developed by the
recipient by persons who did not have access to the disclosed information.
(d) Notwithstanding anything to the contrary contained herein, the
Stockholders shall not be deemed to have violated this Section 6.2 by the
making of any disclosure required by valid legal process.
6.3 NONCOMPETITION.
(a) Xxxxxxx Partners hereby agrees that, for a period of five (5)
years from the Closing Date, Xxxxxxx Partners will not, acting alone or in
conjunction with others, directly or indirectly, as a sole proprietor,
member of a partnership, or stockholder, investor, officer or director of a
corporation, or as an employee, agent, associate or consultant of any
person, firm or corporation:
(i) solicit business of the type conducted by the Companies as
of the Closing Date from or engage in such business with any actual or
prospective
26
distributor, account, customer or client of the Companies at any time
during the three-year period prior to the Closing Date;
(ii) induce or attempt to influence any actual or prospective
distributor, account, customer or client of the Companies at any time
during the three-year period prior to the Closing Date to curtail or
cancel its business or relationship with the Companies;
(iii) induce or attempt to influence any employee of the
Companies to terminate such employee's employment; or
(iv) participate or engage in the business of manufacturing and
distributing aluminum or vinyl windows and doors, and wooden windows
and doors, and related component parts, within any metropolitan area
or within a 100 mile radius of any metropolitan area in which the
Companies engaged in such business at any time during the three year
period prior to the Closing Date;
provided, however, that nothing herein shall preclude Xxxxxxx Partners from
owning an equity interest of 5% or less in any publicly traded entity.
(b) The Stockholders and Purchaser recognize that the laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section 6.3. It is the intention of the Stockholders and Purchaser that
the provisions of this Section 6.3 be enforced to the fullest extent
permissible under the laws and policies of each jurisdiction in which
enforcement may be sought, and that the unenforceability (or the
modification to conform to such laws or policies) of any provision hereof
shall not render unenforceable, or impair, the remainder of the provisions
hereof. Accordingly, if any provision of this Section 6.3 shall be
determined to be invalid or unenforceable, either in whole or in part, this
Section 6.3 shall be deemed amended to delete or modify, as necessary, the
offending provision in order to render this Section 6.3 valid and
enforceable, such amendment to apply only with respect to the operation of
this Section 6.3 in the particular jurisdiction in which such determination
is made.
(c) Because the remedy at law for any breach of the provisions of
this Section 6.3 would be inadequate, the Stockholders hereby consent to
the granting by any court of an injunction or other equitable relief,
without the necessity of actual monetary loss being proved, in order that
any breach or threatened breach of such provisions may be effectively
restrained.
(d) The Stockholders hereby agree that the restraints imposed by this
Section 6.3 are reasonable as to time, scope and geographic coverage and
are reasonably necessary to preserve the legitimate business interests of
the Purchaser.
27
7. INDEMNIFICATION.
7.1 INDEMNIFICATION. If the transactions contemplated hereby are
consummated, the Stockholders agree, jointly and severally as to Xxxxxxx
Partners and Xxxxxxx Affiliates, and severally and not jointly as to the other
Stockholders (pro rata in accordance with their interests as set forth on
Schedule I hereto), to indemnify, defend and hold harmless Purchaser, its
affiliates, officers, directors, owners, employees, agents and representatives
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, actual, punitive and consequential damages (excluding
punitive and consequential damages in a Direct Claim (as defined in Section
7.4)), recoveries and deficiencies, including interest, penalties and reasonable
attorneys' fees, net of any insurance proceeds (collectively "Damages") that
Purchaser shall incur or suffer, which arise, result from or relate to, directly
or indirectly, in whole or in part:
(a) (i) Taxes with respect to taxable periods (or portions thereof)
ending on or before February 28, 1997, but only to the extent that Damages
in respect of such Taxes exceed amounts reserved or accrued for Taxes in
the February Balance Sheet, (ii) Taxes with respect to taxable periods (or
portions thereof) beginning on or after March 1, 1997 and ending on or
before the Closing Date which arise other than (x) in the ordinary course
of business and (y) as set forth on Schedule 7.1(a) and or (iii) any
liabilities for Taxes attributable to or associated with inclusion of the
Companies in the consolidated income tax returns of Xxxxxx;
(b) Any inaccuracy, misrepresentation or breach of any of the
representations, warranties or agreements made herein by the Stockholders
or any breach or nonfulfillment by the Stockholders of any agreement or
covenant of the Stockholders contained herein;
(c) the RBPI Incentive Unit Agreements and claims of Unitholders
thereunder; and
(d) To the extent Purchaser prevails in its prosecution of a claim
for indemnification hereunder, any and all actions, suits, proceedings,
claims, demands, assessments, judgments, attorneys' fees, fines, costs and
legal and other expenses incident to any of the foregoing or the
enforcement by any such means of a valid right of indemnity pursuant
hereto.
The Stockholders agree to reimburse Purchaser, in accordance with this
Section 7.1, for any payment made by Purchaser at any time after the Closing in
respect of any liability or claim to which the foregoing indemnity relates. Any
amounts ultimately determined to be owing to Purchaser pursuant to the
provisions of this Article 7 shall be deemed to have been due and payable on the
thirtieth (30th) day following the Stockholders' receiving notice of a claim
hereunder. From and after the date on which payment is due, any amount owing
pursuant to this Section 7.1 shall bear interest at the prime rate of The Chase
Manhattan Bank, but in no event to exceed the maximum lawful rate permitted by
applicable law.
7.2 PURCHASER'S INDEMNIFICATION. If the transactions contemplated hereby
are consummated, Purchaser agrees to indemnify and hold harmless the
Stockholders, their affiliates, officers, directors, owners, employees, agents
and representatives against and in
28
respect of Damages that the Stockholders shall incur or suffer, which arise,
result from or relate to, directly or indirectly, in whole or in part:
(a) Any inaccuracy, misrepresentation or breach of any of the
representations, warranties or agreements made herein by Purchaser or any
breach or nonfulfillment by Purchaser of any agreement or covenant of
Purchaser contained herein; and
(b) To the extent the Stockholders prevail in their Prosecution of a
claim for indemnification hereunder, any and all actions, suits,
proceedings, claims, demands, assessments, judgments, attorneys' fees,
fines, costs and legal and other expenses incident to any of the foregoing
or the enforcement by any such means of a valid right of indemnity pursuant
hereto.
Purchaser agrees to reimburse the Stockholders, in accordance with this
Section 7.2, for any payment made by the Stockholders at any time after the
Closing in respect of any liability or claim to which the foregoing indemnity
relates. Any amounts ultimately determined to be owing to the Stockholders
pursuant to the provisions of this Article 7 shall be deemed to have been due
and payable on the thirtieth (30th) day following Purchaser's receiving notice
of a claim hereunder. From and after the date on which payment is due, any
amount owing pursuant to this Article 7 shall bear interest at the prime rate of
The Chase Manhattan Bank but in no event to exceed the maximum lawful rate
permitted by applicable law.
7.3 CERTAIN PROCEDURES. If any action, suit, proceeding, claim or demand
is instituted or asserted by a third party in respect of which indemnity will be
sought hereunder (any such matter being hereinafter referred to as a "Third
Party Claim"), the following provisions shall apply:
(a) The party against whom indemnity is sought hereunder (the
"Indemnifying Party") shall have the right, at its option and at its own
expense, to be represented by counsel of its choice in connection with such
matter, and to assume and control the defense of and settle or otherwise
deal with such Third Party Claim, provided that it acts in good faith.
Failure by the Indemnifying Party to notify the party seeking
indemnification (the "Indemnified Party") of its election to defend
against and otherwise control a Third Party Claim within twenty (20) days
after written notice of such Third Party Claim shall have been given to the
Indemnifying Party by the Indemnified Party shall be deemed a waiver by the
Indemnifying Party of its right to assume and control the defense of and
otherwise control such matter. If the Indemnifying Party assumes defense
and control of a Third Party Claim, the Indemnified Party shall in all
events be entitled to indemnity with respect to such matter, to the extent
provided in this Agreement. The Indemnifying Party may not settle any
Third Party Claim without the consent of the Indemnified Party, which will
not unreasonably be withheld or delayed. In the event that the
Indemnifying Party does not elect to defend and otherwise control a Third
Party Claim, the Indemnified Party may defend against or otherwise deal
with such matter in such manner as it may deem appropriate, provided that
it acts in good faith and provided it may not settle a Third Party Claim
without the consent of the Indemnifying Party which may not be unreasonably
withheld and the Indemnifying Party shall be liable for indemnification
with respect to such matter, including without limitation the cost of such
defense, to the extent provided in this Agreement. If the Indemnifying
Party does not assume the
29
defense of a Third Party Claim for any reason, it may still participate in,
but not control, the defense of such Third Party Claim at the Indemnifying
Party's sole cost and expense.
(b) The parties agree that they will cooperate fully with each other
in connection with the defense or settlement of any Third Party Claim. It
is further agreed that the party controlling any Third Party Claim will
keep the other party advised as to the status of such Third Party Claim.
(c) The Indemnifying Party shall be subrogated to, and the
Indemnified Party shall assign to the Indemnifying Party, any claim which
is the subject of reimbursement or payment under the foregoing Sections 7.1
or 7.2.
7.4 DIRECT CLAIMS. The Indemnifying Party will have a period of 30
calendar days within which to respond in writing to any claim by an Indemnified
Party on account of Damages which do not result from a Third Party Claim (a
"Direct Claim"). If the Indemnifying Party does not so respond within such 30
calendar day period, the Indemnifying Party will be deemed to have rejected such
claim, in which event the Indemnified Party will be free to pursue such remedies
as may be available to the Indemnified Party on the terms and subject to the
provisions of this Article 7. If the Indemnifying Party has disputed such
Direct Claim within such 30-day period, the Indemnifying Party and the
Indemnified Party agree to proceed in good faith to negotiate a resolution of
such dispute. If all such disputes are not resolved through negotiations within
30 days after such negotiations begin, either the Indemnifying Party or the
Indemnified Party may initiate litigation to resolve such disputes.
7.5 LIMITATIONS. Except with respect to the representations set forth in
Sections 3.1(d) and the matter set forth in Section 7.1(c) neither party
(considering Purchaser as a party and the Stockholders, collectively, as a
party) shall be required to indemnify the other party pursuant to this Article 7
until Damages incurred or suffered by such party, individually, with respect to
a single claim for indemnification, or in the aggregate, with respect to
multiple claims for indemnification, exceed $300,000, at which point the
Indemnifying Party shall be responsible to the Indemnified Party for all
Damages. Notwithstanding anything to the contrary contained herein, in the
absence of intentional fraud, the aggregate amount of indemnification claims
that either party may assert against the other pursuant to this Article 7 shall
not exceed $5,000,000, except for claims by Purchaser against the Stockholders
relating to the matters covered by Sections 3.1(d), 3.1(h), 3.1(t) and 7.1(c)
hereof (the "Excluded Matters"), as to which the foregoing limitation will not
apply; PROVIDED, HOWEVER, that such limitation will apply to claims relating to
the Excluded Matters solely to the extent that prior to the Closing the
Stockholders notify Purchaser in writing pursuant to Section 4.4 hereof of a
breach or breaches of the representations contained in Sections 3.1(d), (h) and
(t) that individually, or in the aggregate, exceed $5,000,000, in which case,
following the Closing, the aggregate amount of indemnification claims that
Purchaser may assert against the Stockholder solely with respect to such
breaches shall not exceed $5,000,000. Notwithstanding anything to the contrary
contained herein, the amount of Damages in respect of Taxes that Purchaser may
recover against the Stockholders pursuant to Section 7.1(a) or Section 7.1(b)
shall be reduced by the sum of (i) $76,000 and (ii) tax benefits (as calculated
below) realized by any of the Companies, the Purchaser or any affiliate (the
"Benefitted Party") attributable to or relating to the payment referred to in
Section 1.3(i)(B) hereof and payments of original issue discount in connection
with satisfaction of indebtedness with respect to which the Warrants
30
were issued. For purposes of this Section 7.5, the tax benefits received by
the Benefitted Party are calculated as follows: the excess of the Benefitted
Party's liability for federal income taxes for the period in which the
deductions, losses or credits are claimed or deducted, computed without
regard to such deductions, losses or credits, over the Benefitted Party's
liability for federal income taxes in such period, computed by taking such
deductions, losses or credits into account. In the event the Benefitted
Party does not fully realize such tax benefit for the year in which the
deductions, losses or credits are deducted or claimed, then the foregoing
computation shall be applied with respect to any other applicable period. In
the event that a tax benefit is realized hereunder after payment of Damages
by the Stockholders, Purchaser shall promptly following filing of any Tax
Return in which such tax benefit is realized pay the amount of such tax
benefit to the Stockholders. If the Internal Revenue Service disallows a
deduction, loss or credit which was taken into account in computing tax
benefits hereunder and such disallowance is sustained after commercially
reasonable efforts to contest same at the IRS administrative levels, then the
amount, if any, by which Purchaser's claim for Damages was reduced by such
disallowed tax benefit shall be promptly repaid by the Stockholders to the
Purchaser.
7.6 OFFSET. In the event the Purchaser complies with the foregoing
procedures with respect to a claim for indemnification pursuant to this Article
7 (an "Indemnification Claim"), the Company may offset an amount of principal
and interest (the "Withheld Amount") that it would otherwise be obligated to pay
to the payees under the Holder Notes equal to the amount of the Indemnification
Claim until it is finally determined whether Purchaser is entitled to
indemnification from the Stockholders hereunder with respect to such
Indemnification Claim (a "Final Determination"); provided, however, that the
Withheld Amount shall not exceed the aggregate sum of $5,000,000 plus the
amounts as to which the Company has exercised its right of offset relating to
the Excluded Matters. Purchaser covenants that prior to the exercise of any of
the other remedies available to it for claims relating to the Excluded Matters,
it will first utilize the offset right granted the Company against the Holder
Notes. Upon a Final Determination, the Company shall be entitled (as its
exclusive remedy for recovery of Damages against the Stockholders pursuant to
this Article 7 or otherwise for all matters except for claims relating to the
matters covered by Sections 3.1(d), 3.1(h), 3.1(t) and Section 7.1(c)) to retain
by way of set-off an amount equal to the amount as to which it is established
that the Stockholders are obligated to indemnify the Purchaser pursuant to this
Article 7 and shall remit the balance of the Withheld Amount, if any, to the
payees under the Holder Notes (the "Refunded Amount") together with interest on
the Refunded Amount at the then current rate of interest under the Holder Notes.
Notwithstanding the foregoing, the right of offset will extend beyond June 30,
1998, with respect to any matter as to which the Company has made an
Indemnification Claim prior to the close of business on June 30, 1998, but as to
which no Final Determination has been issued as of such date.
7.7 EXCLUSIVITY OF REMEDY. Except as otherwise specifically set forth
herein, and except in cases of intentional fraud, the indemnification and offset
provisions contained in this Article 7 shall be deemed to be, to the extent
permitted by law, the exclusive remedy or exclusive means to obtain relief, as
the case may be, of any party hereto in the event of any breach of any
representation, warranty, covenant or agreement contained herein (or in any
certificates or other documents delivered pursuant hereto) by any other party
hereto or with respect to any claim of any third party arising out of or in
connection with this Agreement or the transactions contemplated hereby, and the
provisions of this Article 7 shall be in lieu of, any other rights or remedies
that may be available to any party at law, in equity or otherwise.
31
8. TERMINATION AND ABANDONMENT.
(a) Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated and abandoned at any time after the date hereof but
not later than the Closing:
(i) by the mutual consent of the Stockholders' Representative and
Purchaser;
(ii) by Purchaser, if without fault on the part of Purchaser, at any
time after May 15, 1997, if, by that date, the conditions set forth in
Section 5.1 hereof shall not have been fulfilled or waived;
(iii) by the Stockholders' Representative, if without fault on the
part of the Stockholders, at any time after May 15, 1997, if, by that date,
the conditions set forth in Section 5.2 hereof shall not have been
fulfilled or waived;
(iv) by the Stockholders' Representative or the Purchaser if at any
time there has been a material breach of any representation or warranty
made by the other party or parties, as applicable, herein or in any
certificate or other document delivered pursuant hereto or if there has
been any failure by the other party or parties, as applicable, to perform
in all material respects all obligations or to comply with all covenants on
its part to be performed hereunder; or
(v) by the Stockholders' Representative or the Purchaser, if there
shall have been any statute, rule, order or regulation enacted, issued or
promulgated or deemed applicable to the transactions contemplated hereby by
any government or governmental agency in the United States of America that,
in the reasonable judgment of Purchaser or of the Stockholders'
Representative, as the case may be, (x) restrain the consummation of the
transactions contemplated hereby; (y) render the parties unable to
consummate the transactions contemplated hereby; (z) make such consummation
illegal; or (xx) otherwise result in a Material Adverse Effect;
provided, however, no party may terminate this Agreement if such party is then
in material breach of any of its obligations under this Agreement.
(b) PROCEDURE UPON AND EFFECT OF TERMINATION. In the event of any
termination and abandonment pursuant to subsection (a) hereof, written notice
thereof shall forthwith be given to the other parties and the transactions
contemplated hereby shall thereupon be terminated and abandoned, without further
action by Purchaser or by the Stockholders (except for the provisions of
Sections 6.2, 9.1, 9.2 and 9.4 and 8(b) hereof), and there shall be no liability
on the part of any of Purchaser or the Stockholders or their respective
officers, directors or shareholders, except for the provisions of Sections 6.2,
9.1, 9.2 and 9.4 hereof or except for the material breach of any representation,
warranty or covenant contained herein that is within the control of the party in
breach.
9. MISCELLANEOUS PROVISIONS.
9.1 NO BROKERAGE. Purchaser hereby represents and warrants to the
Stockholders that it has not, and the Stockholders hereby represent and warrant
to Purchaser that neither the
32
Stockholders nor the Companies have, incurred any obligation or liability,
contingent or otherwise, for brokerage or finder's fees or agent's
commissions or other like payment in connection with this Agreement or the
transactions contemplated hereby, except the fees of Chase Securities, Inc.,
which will be paid by Purchaser, and Purchaser, on the one hand, and the
Stockholders, on the other hand, hereby agree to indemnify and hold the other
harmless in respect of any costs, liabilities or expenses, including, but not
limited to, attorneys' fees, arising out of or relating to a breach by such
party of the representation and warranty contained in this Section 9.1.
9.2 EXPENSES. Except as otherwise provided herein, whether or not the
transactions contemplated hereby are consummated, Purchaser and the Stockholders
shall each pay their respective fees and expenses, including but not limited to,
attorneys' and accountants' fees incident to the negotiation, preparation and
execution of this Agreement and the consummation of the transactions provided
for herein. It is understood and agreed by the Stockholders and Purchaser that
no such fees or expenses shall be paid or borne by the Companies if the
transactions contemplated hereby are consummated except as may otherwise be
specified herein.
9.3 [Intentionally Omitted]
9.4 NOTICES. Any notice required or permitted to be given hereunder shall
be in writing to the other party or parties hereto and shall be deemed given
when delivered personally or, on the date transmitted if given by facsimile of
if sent by prepaid registered or certified mail, return receipt requested, on
the third business day following the date upon which the envelope containing the
notice is posted. All notices for purposes hereof shall be delivered or
addressed as follows:
If to the Stockholders:
c/o Wingate Partners, L.P.
000 X. Xx. Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx and
Xxxxxxxxx X. Xxxx, Xx.
Facsimile No. (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx, L.L.P.
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxx
Facsimile No. (000) 000-0000
If to Purchaser:
Keystone, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
00
Xxxx Xxxxx, Xxxxx 00000
Attention: W. Xxxxxx Xxxxxx
Facsimile No. (000) 000-0000
with copies to:
Oak Hill Partners, Inc.
Xxxx Xxxxxx Xxxxx
00 Xxxx 00xx Xxxxxx
32nd Floor
New York, New York 10022
Attention: Xxxx Xxxxxxxxx
Xxxx Xxxxxx
Facsimile No. (000) 000-0000
Xxxxx, Xxxx & Xxxxxxx
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile No. (000) 000-0000
or to such other address as any party shall have specified by notice given in
compliance with this Section 9.4.
9.5 ENTIRE AGREEMENT; AMENDMENTS AND SUPPLEMENTS. This Agreement
(including the Schedules and Exhibits referred to herein, which are a part
hereof for all purposes) constitutes the entire agreement between the parties
with respect to the subject matter hereof and can be amended, supplemented or
changed, and any provision hereof can be waived, only by a written instrument
making specific reference to this Agreement and duly executed by Purchaser and
the Stockholders' Representative on behalf of the Stockholders in accordance
with Section 9.13 hereto. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the transactions contemplated
hereby. The Schedules to this Agreement are incorporated herein in full.
9.6 BINDING EFFECT; BENEFIT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns. Except as set forth in
Section 7 hereof, nothing contained in this Agreement, express or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, legal representatives, successors and permitted assigns, any
rights, remedies or obligations or liabilities under or by reason of this
Agreement.
9.7 ASSIGNABILITY. Neither this Agreement nor any of the parties' rights
hereunder may be assigned or otherwise transferred by any party without the
prior written consent of the other parties, which consent shall not unreasonably
be withheld or delayed; PROVIDED, HOWEVER, that Purchaser's, or its successors'
or assigns', rights hereunder may be assigned or otherwise transferred, in whole
or in part, without the Stockholders' consent, (i) to any successor by merger or
consolidation; (ii) to any bank, financial institution, individual, partnership,
corporation or other entity providing any financing to Purchaser, its successors
or assigns; or
34
(iii) to any individual, partnership, corporation or other entity deriving
title from Purchaser, or its successors or assigns, to all or substantially
all of the assets and goodwill of the business being carried on by the
Companies immediately prior to the Closing and provided further the
Stockholders may distribute the Notes in accordance with their terms.
9.8 CAPTIONS. The captions of the various Sections and Articles are for
reference purposes only and shall not be deemed in any manner to affect the
meaning or interpretation of any of the provisions of this Agreement.
9.9 SEVERABILITY. If any provision of this Agreement shall be
determined to be illegal, void or unenforceable, all other provisions of this
Agreement shall not be affected and shall remain in full force and effect.
9.10 APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Texas (without regard to
principles of conflicts of laws).
9.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
9.12 SURVIVAL. Notwithstanding any investigation conducted or notice or
knowledge obtained by or on behalf of any party hereto, the warranties,
representations, covenants and agreements contained in this Agreement and the
indemnities herein shall survive the execution and delivery of this Agreement
and the Closing of the transactions contemplated hereby until June 30, 1998,
except that the representations and warranties set forth in Sections 3.1(d)
(Good Title to Capital Stock; Capitalization), (h) (Tax Matters) and (t)
(Environmental Matters) and indemnification respecting the matters set forth
in such sections and the covenant and agreement set forth in Section 7.1(c)
shall survive until the expiration of the relevant statutes of limitation,
and except for claims made prior to the expiration of such periods.
9.13 STOCKHOLDERS' REPRESENTATIVE.
(i) Each of the Stockholders hereby irrevocably appoints Xxxxxxx
Partners (the "Stockholders' Representative") as such Stockholder's agent
and attorney-in-fact to take any action required or permitted to be taken
by such Stockholder under the terms of this Agreement, including, without
limiting the generality of the foregoing, the giving and receipt of any
notices to be delivered or received by or on behalf of any or all of the
Stockholders, the payment of expenses relating to the transactions
contemplated by this Agreement, the representation of the Stockholders in
indemnification proceedings hereunder, and the right to waive, modify or
amend any of the terms of this Agreement, and agrees to be bound by any and
all actions taken by such agent on such Stockholder's behalf. Each
Stockholder further agrees that the Stockholders' Representative, its
agents, general partners and representatives, shall be fully indemnified by
the other Stockholders to the fullest extent permitted by law for damages
arising out of the Stockholders' Representative's actions or omissions in
such capacity. Each Stockholder hereby acknowledges that the foregoing
indemnity shall be applicable to all claims, liabilities, losses, damages
or expenses that have resulted from
35
or are alleged to have resulted from the active or passive, or the sole,
joint or concurrent, ordinary negligence of the Stockholders'
Representative.
(ii) Purchaser shall be entitled to rely exclusively upon any
communications or writings given or executed by the Stockholders'
Representative and shall not be liable in any manner whatsoever for any
action taken or not taken in reliance upon the actions taken or not taken
or communications or writings given or executed by the Stockholders'
Representative. Purchaser shall be entitled to disregard any notices or
communications given or made by the Stockholders unless given or made
through the Stockholders' Representative.
(iii) Subsequent to the Closing Date, in the event of the
inability of the Stockholders' Representative to perform its functions
hereunder, the former Stockholders shall promptly appoint a new agent or
agents as attorney-in-fact or attorneys-in-fact, and such appointment or
appointments shall be deemed to have been made when communicated to
Purchaser in writing signed by the Stockholders (or the personal
representatives thereof) owning at least 51% of the Common Stock of the
Company outstanding immediately prior to the Closing Date. If the
Stockholders do not within fifteen days appoint a new agent or agents, then
the former Stockholder then living or existing who previously owned the
greatest number of shares of Common Stock of the Company outstanding
immediately prior to the Closing Date shall serve as Stockholders'
Representative if he or it is able and willing to do so, until a successor
agent or agents shall have been appointed in accordance with the provisions
hereof.
(iv) The manner and form by which the Stockholders shall decide upon
any new agent and attorney-in-fact shall be decided solely by the
Stockholders owning 51% of the shares of Common Stock of the Company
outstanding immediately prior to the Closing Date. The Stockholders
recognize, and hereby acknowledge, that the Stockholders' Representative
has an interest in the subject matter of this Agreement and that the
appointment of such Stockholders' Representative (which shall include any
successor Stockholders' Representative) as the Stockholders' Representative
constitutes an irrevocable power-of-attorney coupled with an interest.
9.14 WAIVER. At any time prior to the Closing, each of the parties
hereto may (i) extend the time for the performance of any of the obligations
or other acts of any other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (iii) waive compliance with any of the covenants,
agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed by the party granting such waiver. Such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or future failure.
9.15 TAX MATTERS. (a) The Purchaser shall provide the Stockholders'
Representative with the opportunity to review and comment upon any Tax
returns of the Companies due after the Closing Date and relating to periods
through the Closing Date at least twenty business days prior to the filing
thereof.
36
(b) After the Closing Date, none of the Companies shall file any
amended Tax Return which may give rise to a claim for indemnification
hereunder without the prior written consent of the Stockholders'
Representative, which will not unreasonably be withheld.
(c) The Purchaser and the Companies and the Stockholders will
cooperate with one another in connection with the preparation and filing of
Tax returns relating to the Companies and any audits or administrative or
judicial proceedings relating to Taxes due from the Companies and will
provide one another with access, at any reasonable time, at the business
location at which the books and records are maintained, after the Closing
Date, to such Tax data in such party's possession as is reasonably related to
such matters.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
37
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement as of
the day and year first above written.
PURCHASER: STOCKHOLDERS:
RELIANT PARTNERS, X.X. XXXXXXX PARTNERS, L.P.
By: Group 31, Inc., By: Xxxxxxx Partners Mangement
Company, L.P.,
General Partner its general partner
By: /s/ W. Xxxxxx Xxxxxx By: /s/ X.X. Xxxx, Xx.
----------------------- -----------------------------
Name: W. XXXXXX XXXXXX Name: X.X. Xxxx, Xx.
--------------------- ---------------------------
Its: Vice President Its:
---------------------- ---------------------------
XXXXXXX AFFILIATES, L.P.
By: /s/ X.X. Xxxx, Xx.
-----------------------------------
Name: X.X. Xxxx, Xx.
---------------------------------
Its:
---------------------------------
XXXXXXX X. XXXXXX AND
XXXXXXXXX XXXXXX
REVOCABLE TRUST
U/A/D 07/30/92
By: /s/ X.X. Xxxx, Xx.
-----------------------------------
Name: X.X. Xxxx, Xx.
---------------------------------
Its:
---------------------------------
/s/ V. Xxxxxx Xxxxxxxxxx
---------------------------------------
V. XXXXXX XXXXXXXXXX, XX.
MAY FINANCIAL CORPORATION
FBO XXXX X. XXXXXXX XXX
By: /s/ X.X. Xxxx, Xx.
-----------------------------------
Name: X.X. Xxxx, Xx.
---------------------------------
Its:
---------------------------------
38
SCHEDULE I
Class A Voting Common Stock
Percentage of
Name of Stockholder No. of Shares Cash Purchase Price
------------------- ------------- -------------------
Xxxxxxx Partners, L.P. 953,948 87.76
Xxxxxxx Affiliates, L.P. 17,763 1.63
The Trustees of the
Xxxxxxx X. Xxxxxx and
Xxxxxxxxx Xxxxxx Revocable
Trust U/A/D 07/30/92 6,579 .61
V. Xxxxxx Xxxxxxxxxx, Xx. 3,289 .30
May Financial Corporation
FBO Xxxx X. Xxxxxxx XXX 18,421 1.69
*Xxxxxxx Partners, L.P. 53,216 4.90
*Xxxxxxx Affiliates, L.P. 1,043 .10
Class B Nonvoting Common Stock
------------------------------
Percentage of
Name of Stockholder No. of Shares Cash Purchase Price
------------------- ------------- -------------------
Xxxxxx Financial, Inc. 16,307 1.50
Sanwa Business Credit 6,251 .58
First National Bank of Boston 6,251 .58
Girocredit Bank Aktiengesellschaf
Der Sparkassen, Grand Cayman
Island Branch 3,802 .35
--------- ------
1,086,870 100.00%
39
SCHEDULE I
Class A Voting Common Stock
Xxxxxxx Partners, L.P. --- 953,948
Xxxxxxx Affiliates, L.P. -- 17,763
The Trustees of the
Xxxxxxx X. Xxxxxx and
Xxxxxxxxx Xxxxxx Revocable
Trust U/A/D 07/30/92 -- 6,579
V. Xxxxxx Xxxxxxxxxx, Xx. -- 3,289
May Financial Corporation
FBO Xxxx X. Xxxxxxx XXX -- 18,421
*Xxxxxxx Partners, L.P. -- 53,216
*Xxxxxxx Affiliates, L.P. -- 1,043
Class B Nonvoting Common Stock
------------------------------
Xxxxxx Financial, Inc. -- 16,307
Sanwa Business Credit -- 6,251
First National Bank of Boston -- 6,251
Girocredit Bank Aktiengesellschaf
Der Sparkassen, Grand Cayman
Island Branch -- 3,802
40
EXHIBIT A
THIS NOTE IS SUBJECT TO A RIGHT OF OFFSET IN THE MANNER AND TO THE EXTENT SET
FORTH IN SECTION 6.4 BELOW.
THIS NOTE CONTAINS INDEMNIFICATION PROVISIONS IN SECTION 6.4, NOTICE OF WHICH
IS HEREBY GIVEN.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAW. IT MAY NOT BE OFFERED
FOR SALE OR SOLD IN THE ABSENCE OF: (1) REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2)
APPLICABLE EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS.
RBPI HOLDING CORPORATION
SUBORDINATED NOTE
$_______________________ _________________, 1997
FOR VALUE RECEIVED, RBPI Holding Corporation, a Delaware corporation
("Maker"), whose address is 0000 XXX Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000
promises to pay to each of the persons listed on Annex I hereto in accordance
with their respective interests set forth therein (collectively, "Payee"), at
the respective addresses of such persons set forth on Annex I hereto, the
aggregate principal sum of __________________________ DOLLARS
($__________________), together with interest thereon at the rates
hereinafter provided.
Section 1. INTEREST. Interest on the principal amount of this Note
shall be payable, at Maker's option from time to time, either (a) in cash; (b)
by Capitalization of the Interest (as defined herein) as set forth in Section
3.2; or (c) any combination of (a) and (b) hereof. Interest paid in cash shall
accrue at the rate of ten percent (10.00%) per annum (the "Cash Interest Rate")
and interest paid by Capitalization of the Interest shall accrue at the rate of
twelve percent (12.00%) per annum (the "Capitalized Interest Rate") (such
interest rate, whether the Cash Interest Rate or the Capitalized Interest Rate
or a combination thereof, being hereinafter referred to as the "Interest Rate");
PROVIDED, HOWEVER, that, upon the fourth anniversary of this Note, the Interest
Rate shall automatically increase by two percent (2%) per annum and upon the
fifth anniversary of this Note, the Interest Rate shall automatically increase
by one percent (1%) per annum. Interest shall be payable semi-annually on the
first business day of ____________________ and __________________ of each year,
commencing on _______, 1997 (each, an "Interest Payment Date"), based on a three
hundred sixty-five (365) day year for actual number of days elapsed.
Section 2. PAYMENT. The remaining outstanding principal amount of this
Note shall be due and payable on ____________, 2007.
Section 3. METHOD OF PAYMENT.
3.1 CASH PAYMENTS. Cash payments of principal, interest and
other amounts due hereunder shall be made in lawful money of the United
States of America by (a) in the case of payments of principal, wire transfer
of immediately available funds to the respective accounts of each of the
persons constituting Payee designated in the records maintained by Maker, and
(b) in the case of interest and any and all other payments, company check to
each of the persons constituting Payee at the respective addresses set forth
in Maker's records unless and until any such person provides written notice
to Maker to the contrary.
3.2 CAPITALIZED INTEREST. To the extent that Maker elects to
add accrued interest at any Interest Payment Date to the principal of this
Note ("Capitalization of the Interest"), such accrued interest shall
thereafter be included in the principal amount of this Note for all purposes.
In connection with any such election by Maker, Maker shall notify in writing
each of the persons constituting Payee of its election and include in such
notice a statement setting forth the new principal of the Note as of such
Interest Payment Date. Any notice hereunder to each of the persons
constituting Payee shall be delivered to the respective addresses set forth
in Maker's records unless and until any such person provides written notice
to Maker to the contrary.
Section 4. DEFAULT INTEREST. If any installment of interest, or the
principal amount hereof, is not paid within fifteen (15) days after the due
date thereof, interest shall accrue on such unpaid amount at a default rate
equal to the lesser of (a) two percent (2%) per annum above the then
applicable Capitalized Interest Rate or (b) the highest rate permitted under
applicable law, until such amount is paid in full (the "Default Rate").
Section 5. PREPAYMENT.
5.1 VOLUNTARY PREPAYMENTS. This Note may be prepaid by Maker in
whole or in part at any time without prepayment premium or penalty.
5.2 MANDATORY PREPAYMENTS.
(a) Not later than the date 120 days after the end of each
fiscal year of Maker ending after the date of this Note, subject to
restrictions contained in documents evidencing Senior Debt, Maker shall
prepay this Note in an aggregate amount equal to the excess (if any) of (i)
50% of Consolidated Available Cash Flow over (ii) the sum of (x) cash
interest paid on this Note during such fiscal year and (y) the cumulative
amount, if any (calculated by reference to the aggregate principal amount of
this Note outstanding at the beginning and at the end of such fiscal year),
by which the aggregate principal amount of this Note has been reduced by
prepayments of this Note made during such fiscal year pursuant to Section 5.1
hereof.
(b) Not later than the date 15 days after the closing of a
Public Equity Offering by Maker, Maker shall prepay this Note in an aggregate
amount equal to the excess (if any) of (i) the Net Available Proceeds of the
Public Equity Offering over (b) the amount of Net Available Proceeds required
to be applied to Senior Debt, which amount shall not exceed 50% of Net
Available Proceeds.
Section 6. DEFAULTS AND REMEDIES.
6.1 EVENTS OF DEFAULT. Any one or more of the following shall
constitute an Event of Default hereunder: (a) default shall be made in the
payment of the principal of this
2
Note when and as the same shall become due and payable, whether at stated
maturity, by acceleration, or otherwise after five (5) days notice of such
failure from Payee; (b) Maker shall fail to pay within ten (10) days
following the due date any installment of interest hereof; (c) Maker or the
Operating Company shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or be generally unable to pay its debts as such debts
become due; (d) an involuntary case or other proceeding shall be commenced
against Maker or the Operating Company seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property or an order for relief shall be entered
against Maker under the federal bankruptcy laws or the laws of the
jurisdiction of organization of Maker as now or hereafter in effect, and such
involuntary case or other proceeding or order shall remain undismissed or
unstayed for a period of sixty (60) days, and if stayed, such involuntary
case or other proceeding or order shall be dismissed upon termination of
such stay; (e) default shall be made in the performance or observance of any
other covenant, agreement or condition contained herein and such default
shall have continued for a period of thirty (30) days after such default
shall first have become known to Maker; or (f) a Change in Control of Maker
shall occur.
6.2 ACCELERATION. If (a) an Event of Default shall occur
pursuant to Sections 6.1(c) or (d), the principal of, and accrued interest
on, and all other amounts due under this Note shall become immediately due
and payable, and (b) any other Event of Default shall occur, the principal
of, and accrued interest on, and all other amounts due under, this Note shall
become immediately due and payable upon notice by Payee to Maker.
6.3 WAIVER OF PRESENTMENT, ETC. Maker hereby waives
presentment, demand, protest or notice of any kind in connection with this
Note.
6.4 RIGHTS OF THIRD PARTIES. Notwithstanding anything contained
herein to the contrary, payments under this Note are subject to offset in the
event that there are indemnification claims made by Purchaser (as defined in
the Stock Purchase Agreement) against Payee to the extent and in the manner
provided in that certain Stock Purchase Agreement by and among Reliant
Partners, L.P. and the Stockholders of Maker named therein, dated as of March
__, 1997 (the "Stock Purchase Agreement"). Each of the persons listed on
Annex I hereto (and, by acceptance of an assignment of all or a portion of
this Note, their successors and assigns) hereby irrevocably appoints Xxxxxxx
Partners, L.P. ("Xxxxxxx") as its agent and attorney-in-fact to take any
action required or permitted to be taken by Payee under this Note, including,
without limiting the generality of the foregoing, the giving and receipt of
any notices to be delivered by or on behalf of any or all of such persons,
the payment of expenses relating to any dispute hereunder, the representation
of such person in indemnification proceedings or in respect of any dispute
hereunder, and the right to waive, modify or amend any of the terms of this
Note or settle any dispute in respect hereof and agrees to be bound by any
and all actions taken by such agent on such person's behalf. Each of such
persons further agrees to indemnify and hold
3
harmless Xxxxxxx, its general partners, agents and representatives
(collectively, for purposes of this Section 6.4, "Xxxxxxx") to the fullest
extent permitted by law for damages arising out of Xxxxxxx'x actions or
omissions in such capacity. Each of such persons hereby acknowledges that the
foregoing indemnity shall be applicable to all claims, liabilities, losses,
damages or expenses that have resulted from or are alleged to have resulted from
the active or passive or the sole, joint or concurrent ordinary negligence of
Xxxxxxx.
Section 7. FINANCIAL STATEMENTS AND INFORMATION. Maker shall furnish
to the Payee, so long as this Note shall be outstanding:
(a) as soon as available and in any event within 45 days
after the end of the first, second and third quarterly accounting periods in
each fiscal year of Maker, copies of the consolidated balance sheet of Maker
and its Subsidiaries as of the end of such accounting period and copies of
the related consolidated statements of income and changes in shareholders
equity and cash flows of Maker and its Subsidiaries for the portion of the
fiscal year ended with the last day of such quarterly accounting period
certified by the principal financial officer of Maker to present fairly in
all material respects the information contained therein; PROVIDED, HOWEVER,
that delivery of a copy of a Quarterly Report on Form 10-Q (without exhibits
unless requested by Payee) of the Operating Company for such quarterly period
filed with the Commission shall be deemed to satisfy the requirements of this
paragraph (a); and
(b) as soon as available and in any event within 90 days
after the end of each fiscal year of Maker, copies of the consolidated
balance sheet of Maker and its Subsidiaries as of the end of such fiscal year
and copies of the related audited consolidated statements of income and
changes in shareholders equity and cash flows of Maker and its Subsidiaries
for such fiscal year; PROVIDED, HOWEVER, that delivery of a copy of an Annual
Report on Form 10-K (without exhibits unless requested by Payee) of the
Operating Company for such year filed with the Commission shall be deemed to
satisfy the requirements of this paragraph (b).
Section 8. COVENANTS. Maker covenants and agrees that on and after the
date hereof, so long as this Note shall be outstanding:
8.1 PAYMENT OF NOTE. Maker shall pay the principal of and
interest on this Note on the dates and in the manner provided herein.
8.2 LEGAL EXISTENCE. Maker shall do or cause to be done all
things necessary to preserve and keep in full force and effect its legal
existence and the legal existence of its Subsidiaries in accordance with the
rights, licenses and franchises of Maker and its Subsidiaries, except where
the failure to so act would not have a material adverse effect on Maker and
its Subsidiaries taken as a whole; PROVIDED, HOWEVER, Maker may merge or
consolidate with a corporation provided that the surviving corporation has a
Consolidated Net Worth equal to or in excess of that of Maker prior to such
merger or consolidation and PROVIDED FURTHER, that such corporation executes
an assumption agreement evidencing such corporation's assumption of all of
Maker's obligations under this Note and such other documents as Payee may
reasonably request; and PROVIDED FURTHER that one or more of its Subsidiaries
may merge with and into another Subsidiary or Maker.
8.3 LIMITATIONS ON RESTRICTED PAYMENTS. Maker shall not and
shall not permit any of its Subsidiaries to declare or pay any dividend on,
or make any distribution in respect of
4
(other than dividends and distributions payable exclusively in
non-participating common equity interests or preferred equity interests as to
which dividends are payable solely in kind of Maker or a Subsidiary), or
purchase, redeem or retire for value any equity interests of Maker or a
Subsidiary (other than in exchange for Maker's or a Subsidiary's own
non-participating common equity interests or preferred equity interests as to
which dividends are payable solely in kind) (collectively, "Restricted
Payments"), except for the following: (i) dividends and distributions among
wholly-owned Subsidiaries; (ii) dividends and distributions from the
Subsidiaries to Maker solely to the extent all sums so dividended or
distributed are used by Maker for one of the following purposes: (x) to make
mandatory prepayments pursuant to Section 5.2 hereof; (y) to make voluntary
prepayments pursuant to Section 5.1 hereof; (z) to pay expenses of Maker to
the extent permitted by Senior Debt; and (xxx) to pay tax liabilities of
Maker and its consolidated group; and (iii) payments to repurchase equity
interests and other rights and obligations owned by former employees and
others of up to $1,000,000 in the aggregate. The foregoing provisions will
not prevent the purchase or redemption of equity interests in Maker or a
Subsidiary with proceeds from concurrent sales of equity interests in Maker
or a Subsidiary; PROVIDED, HOWEVER, that in the event the proceeds of such
sale exceed $1,000,000, Maker shall apply one-half of such proceeds in excess
of $1 million toward the prepayment of this Note.
8.4 LIMITATION ON OTHER DEBT. Other than Permitted
Indebtedness, Maker shall not incur, and shall not permit any of its
Subsidiaries to incur, any Indebtedness unless the ratio of Maker's EBITDA
(taking into account on a pro forma basis for historic operations without
regard to synergies the results of operations of any person acquired as if
such acquisition had occurred at the beginning of the period) for the
preceding four fiscal quarters (or if fewer than four fiscal quarters have
elapsed since the date of this Note, then for the number of fiscal quarters
elapsed since the date of this Note) to Total Interest Expense (taking into
account on a pro forma basis interest expense on the Indebtedness to be
incurred as if it were incurred at the beginning of the period) for the four
fiscal quarters (or if fewer than four fiscal quarters have elapsed since the
date of this Note, then for the number of quarters elapsed since the date of
this Note), is at least 1.75:1.
8.5 LIMITATION ON LIENS. Maker shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien upon any of its assets now owned or hereafter
acquired except for Permitted Liens.
8.6 DISTRIBUTIONS FROM SUBSIDIARIES. Maker shall cause its
Subsidiaries to distribute sums to Maker to enable it to satisfy its
obligations set forth in Section 5.2 subject to restrictions contained in
documents evidencing Senior Debt and applicable law.
8.7 MANAGEMENT FEES. Maker shall not and shall not permit any
of its Subsidiaries to pay any management or consulting fees, or fees of a
like nature, to any affiliate of Maker except payments of compensation to
Xxxxxx Group, Inc. in exchange for consulting services to be provided by
Xxxxxx Group, Inc. to Maker and its Subsidiaries, reasonable compensation in
connection with valid services rendered, payable to employees of Maker and
its Subsidiaries (other than partners and Affiliates of Reliant Partners,
L.P., a Texas limited partnership) in connection with their employment and
payments being made simultaneously with the issuance of this Note.
8.8 NOTIFICATION OF CALCULATION. Maker shall notify Payee not
later than 90 days after the end of each fiscal year of Maker ending after
the date of this Note of its
5
calculation of Consolidated Available Cash Flow for such fiscal year (whether
or not any amounts will be due and payable hereunder in respect thereof),
with reasonable support for such calculation.
8.9 CERTAIN CREDIT AGREEMENT PROVISIONS. Maker will use its
reasonable efforts to insure that the provisions of the Senior Debt allow the
payments called for by Section 5.2(a) above. Maker shall provide written
notice to Xxxxxxx prior to amending, restating or modifying the terms of the
Senior Debt.
Section 9. DEFINITIONS. The following terms, as used herein, have the
following respective meanings:
ACQUIRED INDEBTEDNESS means any Indebtedness incurred in connection
with the financing of all or any part of the acquisition or construction of
any property, whether incurred prior to, at the time of or within 120 days
after, the acquisition or completion of construction by Maker of such
property.
AFFILIATE of any specified person shall mean any other person
controlling or controlled by or under common control with such specified
person. For purposes of this definition, "control" when used with respect to
any specified person means the power to direct the management and policies of
such person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
CAPITALIZED LEASE OBLIGATIONS means all obligations to pay rent or
other amounts under a lease of (or other agreement conveying the right to
use) property to the extent such obligations are required to be classified
and accounted for under GAAP as a capital lease on the balance sheet of the
lessee.
CHANGE IN CONTROL means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Operating
Company): (i) prior to the first public offering of Voting Equity Interests
of Maker or the Operating Company, either (x) the Permitted Holders cease to
be the "beneficial owner" or "beneficial owners" (as defined in Rule 13d-3
and 13d-5 under the Exchange Act), directly or indirectly, of at least a
majority of the total voting power of the then outstanding Voting Equity
Interests of Maker or of the Operating Company, or (y) the Permitted Holders
cease to be entitled by voting power, contract or otherwise to elect or cause
the election of directors of Maker or the Operating Company having a majority
of the total voting power of the Board of Directors of Maker or the Operating
Company, as the case may be, in each case, whether as a result of issuance of
securities of Maker or the Operating Company, as the case may be, any merger
consolidation, liquidation or dissolution of Maker or the Operating Company,
as the case may be, any direct or indirect transfer of securities by any
Permitted Holder or otherwise (for purposes of this clause (i) and clause
(ii) below, Permitted Holders shall be deemed to beneficially own any Voting
Equity Interests of an entity (the "specified entity") held by any other
entity (the "parent entity") so long as the Permitted Holders beneficially
own (as so defined), directly or indirectly, a majority of the voting power
of the then outstanding Voting Equity Interests of the parent entity); (ii)
following the first public offering of Voting Equity Interests of Maker or
the Operating Company, any Person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, including any group acting for the purpose of
acquiring, holding or disposing of securities within
6
the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than one or
more Permitted Holders, is or becomes the beneficial owner (as defined in
clause (i) above, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time, upon the happening of an event or otherwise), directly or indirectly,
of more than 35% of the total voting power of the then outstanding Voting
Equity Interests of Maker or the Operating Company; PROVIDED, HOWEVER, that
the Permitted Holders beneficially own (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the then outstanding Voting Equity Interests of Maker or the
Operating Company, as the case may be, than such other Person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of Maker or the
Operating Company, as the case may be; (iii) Maker or the Operating Company
consolidates with, or merges with or into, another Person or, Maker or any of
its Subsidiaries sell, assign, convey, transfer, lease or otherwise dispose
of all or substantially all of the assets of Maker and its Subsidiaries
(determined on a consolidated basis) to any Person (other than the Operating
Company or any Wholly Owned Restricted Subsidiary) or the Operating Company
or the Restricted Subsidiaries sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of the assets of the Operating
Company and the Restricted Subsidiaries (determined on a consolidated basis)
to any Person (other than a Wholly Owned Restricted Subsidiary), or any
Person consolidates with, or merges with or into, Maker or the Operating
Company, other than any such transaction where immediately after such
transaction the Person or Persons that "beneficially owned" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time) immediately prior to such transaction, directly or
indirectly, the then outstanding Voting Equity Interests of Maker or the
Operating Company, as the case may be, "beneficially own" (as so determined),
directly or indirectly, a majority of the total voting power of the then
outstanding Voting Equity Interests of the surviving or transferee Person; or
(iv) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Maker or the
Operating Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of
Maker or the Operating Company, as the case may be, was approved by a vote of
a majority of the directors of Maker or the Operating Company, as the case
may be, then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of Maker or the Operating Company, as the case may be, then in
office.
COMMISSION means the Securities and Exchange Commission.
CONSOLIDATED AVAILABLE CASH FLOW means EBITDA MINUS payments made in
respect of capital expenditures, Total Interest Expense, principal payments
on indebtedness, increases in working capital and payments of taxes.
CONSOLIDATED NET INCOME means, for any fiscal period, the
consolidated net earnings or loss of Maker and its Subsidiaries as the same
would appear on a consolidated statement of earnings of Maker for such fiscal
period prepared in accordance with GAAP.
7
CREDIT AGREEMENT means the Credit Agreement dated as of __________,
1997 among ______________________, the lenders listed on the signature pages
thereof and ____________________, as Agent, as the same may be amended,
restated, modified, extended or supplemented from time to time in accordance
with its terms and any successor financial institution credit agreement
refinancing all or a portion of the Credit Agreement and designated by Maker
as the Credit Agreement for purposes hereof.
EBITDA means Consolidated Net Income plus Total Interest Expense,
income taxes, depreciation and amortization.
EQUITY INTEREST in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
GAAP means generally accepted accounting principles applied on a
consistent basis.
INDEBTEDNESS means (a) any obligation for borrowed money, (b) any
obligation owed for all or any part of the purchase price of property or other
assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current
liabilities and incurred in the ordinary course of business, (c) any obligations
secured by any lien in respect of property even though the person owning the
property has not assumed or become liable for the payment of such obligation,
(d) any lease obligation capitalized on Maker's books, (e) any guarantee with
respect to Indebtedness (of the kind otherwise described in this definition) of
another person and (f) obligations in respect of letters of credit.
INDENTURE means the Indenture dated as of __________, 1997 between the
Operating Company and ______________________, as the same may be amended,
restated, modified, extended or supplemented from time to time in accordance
with its terms.
INTEREST EXPENSE means, for any period, the sum, for Maker and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP) all interest in respect of Indebtedness (including,
without limitation, the interest component of any payments in respect of capital
lease obligations) accrued or capitalized during such period (whether or not
actually paid during such period).
LIEN means any lien, security interest, charge or encumbrance of any
kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any security interest).
NET AVAILABLE PROCEEDS means the aggregate amount of cash received by
Maker in respect of a Public Equity Offering, net of all expenses incurred by
Maker in connection therewith and any underwriting fees and expense.
OPERATING COMPANY means Xxxxxx Building Products, Inc., a Delaware
corporation and wholly-owed subsidiary of Maker.
8
PERMITTED HOLDER means any of (i) Reliant Partners, L.P. and its
direct and indirect general and limited partners on the date hereof; (ii) any of
the Permitted Transferees of the persons referred to in clause (i); and (iii)
any person or group controlled by each or any of the Persons referred to in
clauses (i) and (ii).
9
PERMITTED INDEBTEDNESS means any of the following:
(i) Senior Debt in an aggregate principal amount at any one time
outstanding not to exceed the sum of (A) the greater of (i) $25.0 million
and (ii) the sum of (a) 85% of [Eligible Receivables] (as defined in the
Credit Agreement as in effect on the date hereof whether or not the Credit
Agreement is in effect on the date of determination), PLUS (b) 50% of
[Eligible Inventory] (as defined in the Credit Agreement as in effect on
the date hereof whether or not the Credit Agreement is in effect on the
date of determination), PLUS (B) any amounts outstanding under the Credit
Agreement that utilize subparagraph (vii) of this definition plus the
aggregate amount outstanding under the Indenture;
(ii) intercompany Indebtedness;
(iii) Indebtedness in respect of this Note;
(iv) Indebtedness in respect of any performance bonds, letters of
credit or other similar instruments and obligations entered into in the
ordinary course of business consistent with past practices;
(v) Indebtedness in respect of Capitalized Lease Obligations,
purchase money obligations and Acquired Indebtedness, not to exceed $10
million;
(vi) Indebtedness existing on the date of this Note;
(vii) other Indebtedness not to exceed $15 million;
(viii) Indebtedness in respect of any interest rate protection or
hedging arrangements entered into in order to fix the floating interest
rate of any Permitted Indebtedness, to the extent that such Permitted
Indebtedness is incurred prior to or at the time of entry into such
arrangement or is reasonably expected to be incurred within thirty days
thereafter, in an amount not exceeding the notional principal amount of
such Permitted Indebtedness; and
(ix) any Indebtedness incurred in exchange for or the proceeds of
which are used to exchange, refinance or refund Indebtedness referenced in
any of (i) through (viii) above; PROVIDED, HOWEVER, that the principal
amount of the Indebtedness so incurred does not exceed the principal amount
(plus any premium) of the Indebtedness so exchanged, refinanced or
refunded.
PERMITTED LIENS means any of the following:
(i) any Lien on property if such Lien is in existence at the time of
acquisition by Maker of such property or is to secure any Indebtedness
permitted hereunder that is incurred (prior to, at the time of or within
120 days after, the acquisition or completion of construction by Maker of
such property) for the purpose of, or in connection with, financing all or
any part of the acquisition or the cost of construction thereof;
(ii) any Lien on property of a corporation if such Lien is in
existence at the time such corporation is merged into or consolidated with
Maker or at the time of a sale, lease or other disposition of the
properties of a corporation as an entirety or substantially as an entirety
to Maker or any Lien on property of a person not a corporation if such Lien
is in existence at the time of a sale, lease or other disposition of the
properties of such
10
person as an entirety or substantially as an entirety to Maker, PROVIDED,
in each such case, that (i) such Lien is not created in contemplation of
such merger, consolidation or disposition and does not extend to properties
not subject thereto immediately prior to such merger, consolidation or
disposition and (ii) any Indebtedness incurred or assumed in connection
therewith is permitted hereunder;
(iii) any Lien existing on the date of this Note;
(iv) Liens to secure the Senior Debt;
(v) Encumbrances consisting of minor easements, zoning restrictions,
or other restrictions on the use of real property that do not (individually
or in the aggregate) materially affect the value of the assets encumbered
thereby or materially impair the ability of Maker to use such assets in
their respective businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(vi) Liens for taxes, assessments, or other governmental charges which
are not delinquent or which are being contested in good faith and for which
adequate reserves have been established;
(vii) Liens of mechanics, materialmen, warehousemen, carriers or other
similar statutory Liens securing obligations that are not yet due and are
incurred in the ordinary course of business or which are being contested in
good faith and for which adequate reserves have been established;
(viii) Liens resulting from good faith deposits to secure payments of
worker's compensation or other social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, or contracts (other than for payment of Indebtedness) in the ordinary
course of business;
(ix) Liens for purchase money obligations and Capitalized Lease
Obligations; PROVIDED that any such Lien encumbers only the asset so
purchased or leased and the associated Indebtedness is otherwise permitted
hereunder;
(x) Leases or subleases granted to others for fair market value
consideration, in any such case not interfering in any material respect
with the business of Maker;
(xi) Liens held by operators under operating agreements for amounts
not yet due and payable;
(xii) Liens securing Permitted Indebtedness; or
(xiii) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Lien
referred to in the foregoing clauses (i) through (xii), inclusive;
PROVIDED, HOWEVER, that the principal amount of Indebtedness secured
thereby shall not exceed the principal amount of Indebtedness so secured at
the time of such extension, renewal or replacement, and that such
extension, renewal, or replacement Lien shall be limited to all or part of
the asset which secured the Indebtedness secured by the Lien so extended,
renewed or replaced (plus improvements on such asset).
11
PERMITTED TRANSFEREE means, with respect to any Person: (a) in the
case of any Person who is a natural person, such individual's spouse or
children, any trust for such individual's benefit or the benefit of such
individual's spouse or children, or any corporation or partnership in which the
direct and beneficial owner of all of the equity interest is such Person or such
individual's spouse or children or any trust for the benefit of such persons;
(b) in the case of any Person who is a natural person, the heirs, executors,
administrators or personal representatives upon the death of such Person or upon
the incompetency or disability of such Person for purposes of the protection and
management of such individual's assets; and (c) in the case of any Person who is
not a natural person, any Affiliate of such Person.
PERSON means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, limited liability
limited partnership, trust, unincorporated organization or government or any
agency or political subdivision thereof.
PREFERRED EQUITY INTEREST, in any person, means an Equity Interest of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person.
PUBLIC EQUITY OFFERING means a public offering of some or all of
Maker's equity interests, which yields Net Available Proceeds of at least
$30,000,000.
RESTRICTED SUBSIDIARY means any Subsidiary of the Operating Company
that has not been designated as an Unrestricted Subsidiary pursuant to the
Indenture.
SENIOR DEBT means (a) the principal amount under the Credit Agreement
and premium, if any, and interest thereon (including, without limitation, any
interest (Post-Petition Interest) which accrues (or which would accrue but for
such case, proceeding or other action) after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of Maker (whether or not such interest is allowed as a claim in
such case, proceeding or other action)), and all Notes issued pursuant to, the
Credit Agreement, (b) the principal amount under the Indenture and premium, if
any, and interest thereon (including, without limitation, any interest
(Post-Petition Interest) which accrues (or which would accrue but for such case,
proceeding or other action) after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency or reorganization of Maker
(whether or not such interest is allowed as a claim in such case, proceeding or
other action)), and all Notes issued pursuant to, the Indenture; (c) any
renewals, refinancings or extensions of any of the foregoing (or any portion
thereof) (including Post-Petition Interest), and any increases in the foregoing
and (d) all fees, expenses, indemnities and all other amounts payable by Maker
thereunder or with respect thereto, including under any other Financing
Document. Terms used in this definition that are not defined herein have the
meaning specified in the Credit Agreement or the Indenture, as appropriate.
SUBSIDIARY means any corporation, partnership or other entity of
which at least a majority of the securities or other ownership interests
having by the terms thereof ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at
the time securities or other ownership interests of any other class or
classes of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening
12
of any contingency) is at the time directly or indirectly owned or controlled
by Maker or one or more Subsidiaries of Maker or by Maker and one or more
Subsidiaries of Maker.
TOTAL INTEREST EXPENSE means, for any period, the Interest Expense
(net of interest income) of Maker and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, whether paid or
accrued, to the extent such expense was deducted in computing Consolidated Net
Income.
UNRESTRICTED SUBSIDIARY means any Subsidiary of the Operating Company
designated as such pursuant to the Indenture.
VOTING EQUITY INTERESTS means Equity Interests in a corporation or
other Person with voting power under ordinary circumstances entitling the
holders thereof to elect the board of directors or other governing body of such
corporation or Person.
WHOLLY OWNED RESTRICTED SUBSIDIARY means any Restricted Subsidiary all
of the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Operating Company.
Section 10. MISCELLANEOUS.
10.1 NO WAIVER. It is expressly agreed that any waiver by Payee of
any item or provision hereof or of any right, remedy or option under this
Note shall not be controlling, nor shall it prevent or estop Payee from
thereafter enforcing such term, provision, right, remedy or option in any
other instance, and neither the failure or refusal of Payee to insist in any
one or more instances upon the strict performance of this Note, nor the
acceptance by Payee of any payment less than the amount then due hereunder,
shall be construed as a waiver or relinquishment for the future of any such
term or provision or the amount remaining due, but the same shall continue in
full force and effect, it being understood and agreed that Payee's rights,
remedies and options under this Note are and shall be cumulative and are in
addition to all of the rights, remedies and options of Payee in law or in
equity, or under any other agreement.
10.2 SAVINGS CLAUSE. If at any time the Interest Rate or Default
Rate, together with all fees and charges, if any, contracted for, charged,
received, taken or reserved by Payee in connection with this Note that may be
treated as interest under applicable law (collectively, the "Charges"), computed
over the full term of this Note, exceeds the maximum lawful rate (the "Maximum
Rate") which may be contracted for, charged, taken, received or reserved by
Payee in accordance with the laws of the State of Texas from time to time in
effect, except to the extent federal law permits Payee to contract for, charge
or receive a greater amount of interest, due credit being given for all charges
made in connection with this Note that may be treated as interest under
applicable law, the rate of interest payable hereunder, together with all
Charges, shall be limited to the Maximum Rate; PROVIDED, HOWEVER, that upon any
subsequent increase in the Maximum Rate from time to time, the interest charged
on the unpaid principal amount of this Note shall remain equal to the Maximum
Rate, and any subsequent reduction in the Interest Rate shall not reduce the
rate borne by this Note, until the total amount of interest earned hereunder,
together with all Charges, equals the total amount of interest which would have
accrued at the Interest Rate if the Interest Rate had at all times been in
effect; and PROVIDED, FURTHER, that if at maturity or final payment of this Note
the total amount of interest paid or accrued under the foregoing provisions is
less than the total amount of interest which
13
would have accrued if the Interest Rate had at all times been in effect,
Maker agrees to pay Payee, to the extent allowed by the then applicable law,
an amount equal to the difference between (a) the lesser of (i) the amount of
interest which would have been accrued on this Note if the Maximum Rate had
at all times been in effect, and (ii) the amount of interest which would have
accrued if the Interest Rate had at all times been in effect, and (b) the
amount of interest actually accrued in accordance with the provisions of this
Note.
10.3 AMENDMENTS; BINDING EFFECT. This Note may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
This Note shall be binding upon the successors, permitted assigns and legal
representatives of Maker.
10.4 ASSIGNMENT; ENTIRE AGREEMENT. Neither Maker nor Payee may assign
its rights under this Note or any interest therein without the prior written
consent of the other party. This Note constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
10.5 NOTICES. All notices hereunder shall be in writing (including
prepaid overnight courier, facsimile transmission or similar writing) and shall
be delivered to Maker at its address set forth in the first paragraph of this
Note and to each of the persons constituting Payee at the respective addresses
of such persons set forth on Annex 1 hereto (or at such other address as shall
be specified by like notice to each of the persons constituting Payee and
Maker). All notices shall be deemed given as of the date when such notice is
first delivered by hand or sent by telecopier (receipt confirmed, with a copy
simultaneously mailed registered mail), one day after depositing for delivery,
fee prepaid, with a Federal Express or similar overnight deliver service and
five days after mailing, postage prepaid and properly addressed in the U.S.
mails.
10.6 GOVERNING LAW. This Note shall be governed by, and the
terms and provisions hereof and the rights and duties created hereby shall be
interpreted, construed and enforced in accordance with, the laws of the State of
Texas, without giving effect to conflicts of law provisions.
10.7 WAIVER OF JURY TRIAL. THE MAKER AND PAYEE HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[Remainder of Page Intentionally Left Blank.]
14
IN WITNESS WHEREOF, Maker has caused this Subordinated Note to be executed
and delivered by its duly authorized officer, as of the day and year and at the
place first above written.
RBPI HOLDING CORPORATION
By:
-------------------------------------
Title:
----------------------------------
15
ANNEX I TO SUBORDINATED NOTE
EXHIBIT B
UNITHOLDER CALCULATION
(Illustrative Example)
1. Determine net proceeds for each of the cash and note components of the
purchase price after deducting transactions costs, which are estimated for
purposes of this example as $500,000 to be deducted solely from the cash
proceeds:
Cash Proceeds $30,100,000 Note $9,800,000
(Transaction costs) 500,000 Transaction costs 0
----------- ----------
Net Cash Proceeds $29,600,000 Net Note $9,800,000
2. Determine shares for Unitholder Calculation by dividing the total number
of shares of Stock and Warrants owned by the Stockholders, on a fully
diluted basis, by 1,000 and add the number of Incentive Units to determine
Total Units:
Stockholder shares of Stock: 1,000,000
Stockholder Warrants: 54,259
---------
1,054,259
Adjusted Stockholder Units
(divide by 1,000): 1,054.26
Incentive Units: 113.70
--------
Total Units: 1,167.96
3. Determine amount of cash to be paid and Holder Notes to be issued to
each Unitholder by: (i) determining the Redemption Value; (ii) determining
the Redemption Base for incentive Units held by RBPI Unitholders (i.e.,
all Unitholders except RII Unitholders: Xxxx Xxxxxxx, Xxxx Xxxxxxxxxxx and
Xxxxxx Xxxxxx); (iii) determining the Note Value of Incentive Units; and
(iv) determining Cash Value of Incentive Units:
Redemption Value
(Net Cash Proceeds/Total Units): $25,343/unit
Redemption Base
($8,431,000/Adjusted Stockholder Units): $ 7,997/unit
Note Value to all Unitholders
(Net Note/Total Units): $ 8,391/unit
Cash Value (RBPI Unitholders)
(Redemption Value - Redemption Base) $17,346/unit
Cash Value (RII Unitholders)
(Redemption Value): $25,343/unit
4. Determine earnback on Warrants owned by Xxxxxxx and Affiliates by (i)
calculating the cash available to pay Stockholders after deducting the
above payments to Unitholders and the transaction costs (estimated as
$500,000) and adding proceeds from the exercise of
the Warrants ($31,468), on a fully diluted per share basis (i.e.,
$25,307 per share), and (ii) adjusting such amount to reflect a 30%
Internal Rate of Return to Xxxxxxx on the $2.6 million Xxxxxxx Note.
The total value of the Xxxxxxx and Affiliates Warrants (collectively,
54,259 Warrants) is, therefore approximately $1,373,133 (i.e., 54,259 x
$25.307). Assuming the Closing Date is April 15, 1997, Xxxxxxx will
have earned $322,535 in interest on the $2.6 million Xxxxxxx Note,
resulting in a total return to Xxxxxxx of $1,695,668. The allowed 30%
return on the $2.6 million Xxxxxxx Note would be $750,082 as of April
15, 1997, resulting in an adjustment of $427,547 to the value of the
Warrants owned by Xxxxxxx and Affiliates, or an earnback of $945,586.
Dividing the total earnback by the adjusted number of shares of Common
Stock owned by the Stockholders (not including Warrants) plus the
number of incentive Units (i.e., 1,113.70), produces the total value of
the earnback to each Unitholder of $849 per unit. This earnback is
subject to change over time as the amount of interest earned on the
$2.6 million Xxxxxxx Note changes.
EXHIBIT C
RELEASE AND WAIVER
In consideration of the willingness of Xxxxxxx Partners, L.P., a Delaware
limited partnership, and its affiliates ("Xxxxxxx") to enter into that
certain Stock Purchase Agreement dated as of the __ day of March, 1997, by
and between the parties listed on Schedule I thereto and Reliant Partners,
L.P., a Texas limited partnership, a copy of which is attached hereto as
EXHIBIT A (the "Agreement"), the undersigned hereby agrees as follows (the
"Release and Waiver"):
1. The undersigned is a party to that certain Incentive Units Agreement
with Xxxxxx Building Products, Inc., a Delaware corporation ("RBPI"), and
RBPI Holding Corporation, a Delaware corporation ("Holding"), dated as of
___________________, as amended to the date hereof (the "Incentive Agreement").
2. The undersigned agrees and acknowledges that the undersigned's
execution of this Release and Waiver is a condition precedent to Xxxxxxx'x
entering into and performing under the Agreement and that Xxxxxxx would not
have executed the Agreement without an agreement by the undersigned to enter
into this Release and Waiver.
3. The undersigned has reviewed the calculation of the Redemption Base
(as defined in the Incentive Agreement) as set forth on EXHIBIT B attached
hereto. The undersigned acknowledges and agrees that the calculation of the
final Redemption Base cannot be made until such time as certain factors used
in the computation thereof (E.G., transaction costs and adjustments to the
value of warrants held by certain Stockholders of Holding) are known to the
parties and that the calculation set forth in EXHIBIT B hereto is for
illustrating the methodology by which the final Redemption Base will be
calculated at the closing of the transactions contemplated by the Agreement
(the "Closing"). EXHIBIT B hereto assumes that closing will occur on April
15, 1997. If closing occurs before or after such date, the exact amount of
the Redemption Base will change, as calculated in accordance with the
methodology set forth on EXHIBIT B. The undersigned understands and agrees
that an aggregate of $250,000 in cash compensation otherwise available for
distribution to stockholders of Holding and Incentive Unitholders (as defined
in the Agreement) will be deposited with Xxxxxxx at Closing for the purpose
of paying certain costs and expenses incurred incident to the negotiation,
preparation and execution of the Agreement and the transactions contemplated
thereby (including, without limitation, the Notes (as defined in the
Agreement) (the "Expenses") and not paid on or prior to the Closing and that
any amounts not used for such purposes will be distributed to the
Stockholders and the Unitholders, as determined in accordance with the
methodology set forth in EXHIBIT B, at such time as Xxxxxxx in its sole
discretion determines that all such Expenses have been reasonably estimated
and paid. Based upon the factors set forth above, and acknowledging that the
exact amount of the Redemption Base will change if the Closing occurs before
or after April 15, 1997, but will in any event be based upon the methodology
set forth on EXHIBIT B hereto, the undersigned acknowledges and agrees that
the methodology used in such calculation, as set forth on EXHIBIT B hereto,
is correct and that the amount of the Redemption Base, when so calculated,
is the correct amount to be paid to the undersigned at Closing.
4. In consideration of the foregoing, and for other good and sufficient
consideration, the receipt and adequacy of which is hereby acknowledged, the
undersigned hereby, for himself, his attorneys, heirs, executors,
administrators, successors and assigns does hereby irrevocably and
unconditionally release, acquit, and forever discharge Xxxxxxx, RBPI and
Holding and each of its respective owners, stockholders, predecessors,
successors, assigns, agents, directors, officers, employees, representatives,
attorneys, affiliates (and agents, directors, officers, employees,
representatives and attorneys of such affiliates), and all persons acting by,
through, under or in concert with any of them (collectively "Releases"), or
any of them, from any and all charges, complaints, claims, liabilities,
obligations, promises, agreements, controversies, damages, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses (including
attorneys fees and costs actually incurred), of any nature whatsoever, known
or unknown, which the undersigned now has, owns, or holds, or claims to have,
own, or hold, or which he at any time heretofore had, owned or held, or
claimed to have, own, or hold, or which he at any time hereafter may have,
own, or hold, or claim to have, own, or hold against each or any of the
Releases in respect of or in connection with the Incentive Agreement.
5. This Release and Waiver is made and entered into in the State of Texas
and shall in all respects be interpreted, enforced and governed under the
laws of said state. The language of all parts of this Release and Waiver
shall in all cases be construed as a whole, according to its fair meaning,
and not strictly for or against any of the parties. Should any provision of
this Release and Waiver be declared or be determined by any court to be
illegal or invalid, the validity of the remaining parts, terms or provisions
shall not be affected thereby and said illegal or invalid part, term, or
provision shall be deemed not to be a part of this Release and Waiver. This
Release and Waiver, including attachments, sets forth the entire agreement
between the parties hereto as to the subject matter hereof and fully
supersedes any and all prior agreements or understandings among the
undersigned and the Releases pertaining to the subject matter hereof.
PLEASE READ CAREFULLY. THIS WAIVER AND RELEASE INCLUDES A RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS.
Executed this ____ day of ____________, 1997.
----------------------------------------
Signature of Incentive Unitholder
Print Name:
-----------------------------
2
EXHIBIT A
STOCK PURCHASE AGREEMENT
[Intentionally Omitted]
3
EXHIBIT B
UNITHOLDER CALCULATION
[Intentionally Omitted-See Exhibit D to Stock Purchase Agreement]
4
EXHIBIT D
The number of Redemption Shares to be redeemed by the issuance of Holder
Notes is calculated as follows:
1. Calculate the aggregate Note value to all Incentive Unitholders
pursuant to paragraph 3 of Exhibit B, and deduct such aggregate Note value
from $9,800,000 to determine the "Stockholder Note Value".
2.
(i) Determine the "Net Cash Proceeds to Unitholders" by adding (x)
the Cash Value (RBPI Unitholders) timed the number of RBPI Units PLUS (y) the
Cash Value (RII Unitholders) times the number of RII Units PLUS (z) the
aggregate amount of the earnback on Warrants owned by Xxxxxxx and Affiliates
payable to Unitholders, as determined pursuant to paragraphs 3 and 4 of
Exhibit B.
(ii) Determine the "Net Cash Proceeds Available to Stockholders" by
subtracting (x) the Net Cash Proceeds to Unitholders (determined in
accordance with paragraph (i) above) from (y) the Net Cash Proceeds
(determined in accordance with paragraph 1 of Exhibit B).
3. Determine the "Net Proceeds per Share" by dividing (x) the Net Cash
Proceeds Available to Stockholders PLUS the Stockholder Note Value by (y) the
number of fully-diluted shares of Stock.
4. Divide the Stockholder Note Value by the Net Proceeds per Share to
determine the number of Redemption Shares.
EXHIBIT E
COMPLIANCE CERTIFICATE
This certificate is delivered to Reliant Partners, L.P., a Texas limited
partnership (the "Purchaser"), pursuant to Section 5.1(c) of the Stock
Purchase Agreement (the "Purchase Agreement"), dated as of March ___, 1997,
by and among the Purchaser and each of the undersigned (the "Stockholders"),
relating to the acquisition of capital stock of RBPI Holding Corporation, a
Delaware corporation (the "Corporation"). Capitalized terms used herein
without definition shall have the meanings set forth in the Purchase
Agreement. The Stockholders hereby certify as follows:
1. All representations and warranties of the Stockholders contained in
the Purchase Agreement are true and correct in all material respects
on and as of the date when made and on and as of the date hereof.
2. The Stockholders have performed and complied with in all material
respects, and caused each of the Companies to have performed and
complied with in all material respects, all agreements and conditions
required by the Purchase Agreement to be performed or complied with by
them on or prior to the Closing Date.
IN WITNESS WHEREOF, the undersigned have signed this Certificate effective
as of the ___ day of _____________, 1997.
XXXXXXX PARTNERS, X.X. XXXXXXX X. XXXXXX AND
XXXXXXXXX XXXXXX REVOCABLE
By: Xxxxxxx Management Company, L.P., TRUST U/A/D 07/30/92
its general partner
By: By:
-------------------------------- -------------------------------
Name: Name:
------------------------------ -----------------------------
Its: Its:
------------------------------- ------------------------------
XXXXXXX AFFILIATES, L.P. -------------------------------------
V. XXXXXX XXXXXXXXXX, XX.
By:
--------------------------------
Name:
------------------------------
Its:
------------------------------- MAY FINANCIAL CORPORATION
FBO XXXX X. XXXXXXX XXX
By:
-----------------------------
Name:
---------------------------
Its:
----------------------------
EXHIBIT G
CERTIFICATE
This certificate is delivered to Reliant Partners, L.P., a Texas limited
partnership (the "Purchaser"), pursuant to Section 5.1(g) of the Stock
Purchase Agreement (the "Purchase Agreement"), dated as of March ___, 1997,
by and among the Purchaser and each of the undersigned (the "Stockholders"),
relating to the acquisition of capital stock of RBPI Holding Corporation, a
Delaware corporation (the "Corporation"). Capitalized terms used herein
without definition shall have the meanings set forth in the Purchase
Agreement.
The Stockholders hereby certify that no Material Adverse Effect has
occurred from the date of the Purchase Agreement to the Closing Date, and no
damage, destruction or loss, whether or not covered by insurance, adversely
affecting in any material respect the properties, businesses, prospects or
assets of the Companies has occurred or been threatened.
IN WITNESS WHEREOF, the undersigned have signed this Certificate
effective as of the ___ day of ___________________, 1997.
XXXXXXX PARTNERS, X.X. XXXXXXX X. XXXXXX AND
XXXXXXXXX XXXXXX REVOCABLE
By: Xxxxxxx Management Company, L.P., TRUST U/A/D 07/30/92
its general partner
By: By:
-------------------------------- -------------------------------
Name: Name:
------------------------------ -----------------------------
Its: Its:
------------------------------- ------------------------------
XXXXXXX AFFILIATES, L.P. --------------------------------------
V. XXXXXX XXXXXXXXXX, XX.
By:
--------------------------------
Name:
------------------------------
Its:
------------------------------- MAY FINANCIAL CORPORATION
FBO XXXX X. XXXXXXX XXX
By:
------------------------------
Name:
---------------------------
Its:
----------------------------
EXHIBIT H
TERMINATION OF INTERCOMPANY AGREEMENTS
This Termination Agreement (the "Agreement"), dated effective as of the
____ day of ____________, 1997 (the "Effective Date"), is by and among RBPI
Holding Corporation, a Delaware corporation ("Holding"), each of the
Stockholders of Holding (the "Stockholders'), Xxxxxx Building Products, Inc.,
a Delaware corporation (the "Operating Company"), and each of its
subsidiaries noted on the signature pages hereto (collectively with the
Operating Company, the "Companies").
RECITALS
In connection with the Stock Purchase Agreement dated as of March ___,
1997 by and among Reliant Partners, L.P. and the Stockholders (the "Purchase
Agreement"), the parties hereto desire to terminate all management and other
intercompany agreements among the Companies and the Stockholders and
Affiliates of the Stockholders as of the Effective Date. Capitalized terms
used herein without definition shall have the meanings as set forth in the
Purchase Agreement.
NOW, THEREFORE, in consideration of the provisions and respective
agreements hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. TERMINATION OF AGREEMENTS. As of the Effective Date, all management
and other intercompany agreements among the Companies, on the one hand, and
the Stockholders and Affiliates of the Stockholders, on the other hand,
including, without limitation, the Oral Management and Consulting Fee
Agreement by and between Xxxxxxx Partners, L.P. and Holding, are hereby
terminated and are of no further force or effect.
2. CANCELLATION OF INDEBTEDNESS. As of the Effective Date, all
indebtedness of the Companies to the Stockholders and the Affiliates of the
Stockholders is hereby cancelled and of no further force or effect.
3. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
Agreement.
4. ENTIRE AGREEMENT. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
COMPANIES
RBPI HOLDING CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
XXXXXX BUILDING PRODUCTS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
RBP OF ARIZONA, INC.
RBP CUSTOM GLASS, INC.
RBP FENESCO, INC.
RBP OF TEXAS, INC.
RBP TRANS, INC.
XXXXX BUILDERS SUPPLY,
INCORPORATED
NUPRIME OF DENVER, INC.
TIMBER TECH, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
STOCKHOLDERS
XXXXXXX PARTNERS, L.P.
By: Xxxxxxx Management Company, L.P.,
its general partner
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
XXXXXXX AFFILIATES, L.P.
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
2
XXXXXXX X. XXXXXX AND
XXXXXXXXX XXXXXX
REVOCABLE TRUST
U/A/D 07/30/92
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
--------------------------------------------
V. XXXXXX XXXXXXXXXX, XX.
MAY FINANCIAL CORPORATION
FBO XXXX X. XXXXXXX XXX
By:
--------------------------------------
Name:
------------------------------------
Its:
-------------------------------------
3
EXHIBIT I
RELIANT PARTNERS, L.P.
000 XXXX XXXXXX, XXXXX 0000
XXXX XXXXX, XXXXX 00000
March ___, 1997
[Certain Members of Senior Management]
--------------------------
--------------------------
Re: Application of Net Incentive Payments
Dear Mr. __________:
Reference is made to (i) that certain Stock Purchase Agreement, dated as
of even date herewith (the "Purchase Agreement"), by and between the parties
listed on Schedule I thereto (the "Stockholders") and Reliant Partners, L.P.,
a Texas limited partnership ("Purchaser"), pertaining to Purchaser's purchase
of capital stock of RBPI Holding Corporation, a Delaware corporation
("RBPI"), from the Stockholders; and (ii) that certain RBPI Incentive Unit
Agreement by and between you and RBPI (the "Incentive Agreement").
You hereby acknowledge and agree that immediately upon your receipt of
payments pursuant to the Incentive Agreement you will pay [80% of] the net
cash payments, after taxes, ^ to be made to you by RBPI as of the Closing of
the transactions contemplated by the Stock Purchase Agreement in respect of
the Incentive Agreement as a direct or indirect result of the consummation of
the transactions contemplated by the Purchase Agreement (the "Net Incentive
Payments") to Purchaser in consideration of the purchase by you of an
interest in Purchaser, such purchase to be at the same price, on the same
terms and subject to the same conditions as interests in Purchaser are sold
to others.
[Remainder of Page Intentionally Left Blank]
If the foregoing sets forth the agreement of the parties with regard to
the matters addressed herein, please so evidence by signing the attached
duplicate original of this letter in the space provided for your signature
and returning it to the undersigned, whereupon the provisions hereof will
constitute a binding agreement.
Sincerely,
RELIANT PARTNERS, L.P.
By: Reliant Investment Partners, L.P., its
General Partner
By: Group 31, Inc., its General Partner
By:
---------------------------------------
Title:
------------------------------------
AGREED TO AND
ACKNOWLEDGED BY:
--------------------------------------
[CERTAIN MEMBERS OF SENIOR MANAGEMENT]
RBPI HOLDING CORPORATION
By:
---------------------------------------
Title:
------------------------------------
2
EXHIBIT J
--------------
Xxxxxxx Partners, X.X.
Xxxxxxx Affiliates, X.X.
Xxxxxxx X. Xxxxxx and Xxxxxxxxx
Xxxxxx Revocable Trust U/A/D 07/30/92
V. Xxxxxx Xxxxxxxxxx
May Financial Corporation
FBO Xxxx X. Xxxxxxx XXX
c/x Xxxxxxx Partners, L.P.
000 X. Xx. Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Re: Stock Purchase Agreement (the "Agreement") dated as of March ____,
1997 by and among Reliant Partners, L.P., a Texas limited partnership
(the "Purchaser") and Xxxxxxx Partners, L.P.; Xxxxxxx Affiliates,
L.P.; Xxxxxxx X. Xxxxxx and Xxxxxxxxx Xxxxxx Revocable Trust U/A/D
07/30/92; V. Xxxxxx Xxxxxxxxxx; and May Financial Corporation FBO Xxxx
X. Xxxxxxx XXX (collectively, the "Stockholders")
Ladies and Gentlemen:
This firm has acted as legal counsel to Purchaser, for the purpose of
delivering this opinion letter to you, as provided by Section 5.2(e) of the
Agreement.
Except as otherwise indicated herein, capitalized terms used in this
opinion letter are defined as set forth in the Agreement.
In rendering this opinion, we have examined (a) the Agreement; and (b)
the Limited Partnership Agreement of Purchaser and a certified copy of its
certificate of limited partnership.
[ASSUMPTIONS ]
Based upon and subject to the foregoing, and the other limitations and
qualifications set forth herein, we are of the opinion that:
1. The Purchaser was formed and exists as a limited partnership under
the laws of the State of Texas.
2. The Purchaser has the partnership power and authority to execute and
deliver the Agreement and to perform its obligations under the Agreement.
3. The Agreement has been authorized, executed and delivered by the
Purchaser, and constitutes the legal and enforceable obligation of the
Purchaser.
4. The execution and delivery of the Agreement by the Purchaser do
not, and the performance of the Agreement by the Purchaser will not,
render the Purchaser in violation of its Limited Partnership Agreement
or Certificate of Limited Partnership, or any statute or regulation by
which the Purchaser is bound. We have no knowledge that the execution
and delivery of the Agreement by the Purchaser will (i) result in the
violation of any order or judgment of any court, government agency or
arbitrator in which the Purchaser is named, or (ii) constitute a breach
of any other agreement to which the Purchaser is a party.
5. We have no knowledge that the execution, delivery and performance
by the Purchaser of the Agreement will require the consent or approval
of, or filing with, any person or governmental entity; PROVIDED, HOWEVER,
that we express no opinion with respect to any filing requirements under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
[LIMITATIONS]
Respectfully submitted,
XXXXX, XXXX & XXXXXXX
(a professional corporation)
2
EXHIBIT K
COMPLIANCE CERTIFICATE
This certificate is delivered to Xxxxxxx Partners, L.P., Xxxxxxx
Affiliates, L.P., Xxxxxxx X. Xxxxxx and Xxxxxxxxx Xxxxxx Revocable Trust U/A/D
07/30/92, V. Xxxxxx Xxxxxxxxxx, Xx., and May Financial Corporation FBO Xxxx X.
Xxxxxxx XXX (collectively, the "Stockholders") by Reliant Partners, L.P., a
Texas limited partnership (the "Purchaser"), pursuant to Section 5.2(h) of the
Stock Purchase Agreement (the "Purchase Agreement"), dated as of March ___,
1997, by and among the Purchaser and the Stockholders, relating to the
acquisition by Purchaser of capital stock of RBPI Holding Corporation, a
Delaware corporation (the "Corporation"). Capitalized terms used herein without
definition shall have the meanings as set forth in the Purchase Agreement. The
Purchaser hereby certifies as follows:
1. All representations and warranties of the Purchaser contained in the
Purchase Agreement are true and correct in all material respects on
and as of the date when made and on and as of the date hereof.
2. The Purchaser has performed and complied in all material respects with
all agreements and conditions required by the Purchase Agreement to be
performed or complied with by it on or prior to the Closing Date.
IN WITNESS WHEREOF, the undersigned has signed this Certificate effective
as of the ____ day of _________, 1997.
RELIANT PARTNERS, L.P.
By: Reliant Investment Partners, L.P.,
General Partner
By: Group 31, Inc., General Partner
By:
------------------------------------
Name:
----------------------------------
Title:
----------------------------------
