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EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made and
entered into this 25th day of October, 1996, by and between Forte Computer Easy,
Inc., a Utah corporation ("FCEI"), and AAP Holdings, Inc., a Delaware
corporation ("AAPH").
R E C I T A L S :
A. AAPH is the owner of all of the issued and outstanding shares of
capital stock of American Architectural Products, Inc., a Delaware Corporation
("AAP").
B. FCEI desires to acquire all of the issued and outstanding shares of
capital stock of AAP (the "AAP Shares") solely in exchange for 1,000,000 shares
of FCEI's $.01 par value preferred stock ("FCEI Preferred Shares") for the
purpose of carrying out a tax-free reorganization within the meaning of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code") (the
"Reorganization").
C. AAPH desires to exchange the AAP Shares for the FCEI Preferred
Shares.
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P R O V I S I O N S :
NOW THEREFORE, in consideration of the mutual promises, agreements,
representations and warranties hereinafter set forth and other valuable
consideration, the parties hereby agree as follows:
ARTICLE I.
EXCHANGE OF SHARES AND CLOSING
1.1. EXCHANGE OF SHARES. On the Closing Date (as hereinafter defined),
AAPH shall deliver to FCEI certificates for the AAP Shares, representing all of
the issued and outstanding capital stock of AAP, duly delivered and endorsed in
blank on the reverse side of each certificate. In exchange therefor, on the
Closing Date, FCEI shall issue and deliver to AAPH stock certificates for the
FCEI Preferred Shares, duly executed by the President and Secretary of FCEI. The
Preferred Shares shall have the designations, rights, privileges, preferences
and limitations described in Section 1.2 below. In addition, on the Closing
Date, FCEI shall issue to AAPH options (the "AAPH Options") to purchase up to
1.5 times the number of shares of FCEI common stock subject to options
previously issued by FCEI which are outstanding on the Closing Date (the "Prior
Options"). The AAPH Options shall be identical in price and exercise term to the
Prior Options, shall be exercisable only to the extent that the Prior Options
which
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are the equivalents of the AAPH Options are actually exercised, and shall
otherwise be in form and substance reasonably satisfactory to AAPH.
1.2. TERMS OF PREFERRED SHARES. Prior to the Closing Date, the Board of
Directors of FCEI shall designate a series of preferred stock from the
authorized but unissued shares of preferred stock, $.01 par value, of FCEI, in
accordance with FCEI's Articles of Incorporation and the applicable provisions
of the Utah Business Corporation Act ("UBCA"). The FCEI Preferred Shares shall
be issued from such series of preferred stock. The designations, rights,
preferences, privileges and limitations of such series of preferred stock shall
be as follows:
(a) DESIGNATION. The series shall be designated "Series A
Convertible Preferred Stock" (the "Series A Preferred").
(b) AUTHORIZED NUMBER. The authorized number of shares of
Series A Preferred shall be 1,000,000.
(c) CONVERSION. The Series A Preferred shall be convertible
into that aggregate number of shares of common stock, $.01 par value (the "FCEI
Common Shares"), which would equal sixty percent (60%) of the issued and
outstanding shares of common stock of FCEI on the Closing Date, assuming all
shares of Series A Preferred were converted in full on the Closing Date and
assuming that the Allocated Shares (as defined in SCHEDULE 4.1) which have not
yet been issued are issued and outstanding on the Closing Date. The Series A
Preferred shall only be convertible, and shall be automatically converted, into
FCEI common
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stock at such time as FCEI, or any successor corporation, has sufficient
authorized shares of common stock to permit such conversion. Each share of
Series A Preferred shall initially be convertible into that number of shares of
FCEI common stock determined by dividing the FCEI Common Shares by 1,000,000.
Thereafter, the conversion ratio shall be subject to customary anti-dilution
provisions to take into account the effect of any stock splits, stock dividends,
mergers, recapitalizations and the like.
(d) VOTING RIGHTS. The Series A Preferred shall be voting
preferred stock and the holders of Series A Preferred shall have the right to
vote together with the holders of common stock as a single class on all matters
submitted to a vote of the shareholders of FCEI, with each share of Series A
Preferred having the same number of votes as the number of shares of FCEI common
stock into which such share of Series A Preferred would be convertible if
converted in full on the record date for such shareholder vote. The Series A
Preferred shall have no other voting rights, except (i) as specifically required
by the UBCA; and (ii) no amendment may be made to the terms of the Series A
Preferred and no additional shares of FCEI preferred stock may be issued without
the affirmative vote or prior written consent of the holders of all of the
Series A Preferred.
(e) DIVIDENDS. No dividends may be paid with respect to the
shares of FCEI common stock unless, at the same time, a dividend is paid with
respect to the Series A Preferred. Any dividends paid shall be allocated pro
rata among the holders of the FCEI common stock and Series A Preferred as though
the Series A Preferred had been converted in full to FCEI common stock on the
date of such dividend payment.
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(f) LIQUIDATION. The Series A Preferred shall have a
liquidation preference over the FCEI common stock in the amount of $.10 per
share. Any amounts remaining to be paid to the shareholders of FCEI upon
liquidation after payment of such liquidation preference to the holders of
Series A Preferred shall be allocated pro rata among the holders of common stock
and Series A Preferred as though the Series A Preferred had been converted in
full to FCEI common stock upon such liquidation.
(g) MISCELLANEOUS. The remaining rights, preferences,
privileges and limitations of the Series A Preferred shall be as set forth in
the resolution of the Board of Directors of FCEI which designates the Series A
Preferred, and shall be reasonably satisfactory in form and substance to AAPH.
1.3. OTHER DELIVERIES AT CLOSING.
(a) On or prior to the Closing Date, AAPH shall deliver to
FCEI each of the following:
(i) a certified copy of a resolution or resolutions duly
adopted by the Board of Directors of AAPH approving the Reorganization,
this Agreement and each of the transactions contemplated by this
Agreement;
(ii) certificates of good standing issued by the Secretary of
State of Delaware confirming the good standing of AAPH and the AAP
Subsidiaries as of a date not more than five (5) days prior to the
Closing Date;
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(iii) an opinion, dated the Closing Date, of Xxxxx & Xxxxxx,
counsel for AAPH and AAP, addressed to FCEI, substantially in the form
of EXHIBIT 1.3(A)(III) hereto and otherwise in form and substance
reasonably satisfactory to FCEI;
(iv) a certificate of the President of AAPH to the effect
that an appropriate inquiry has been made of the officers of AAPH and
AAP and, after such inquiry, neither AAPH nor the individual executing
such certificate has any reason to believe that the conditions set
forth in Article VIII of this Agreement have not been fulfilled; and
(v) such other documents, certificates and instruments as
may be reasonably requested by FCEI in order to consummate the
transactions contemplated by this Agreement.
(b) On or prior to the Closing Date, FCEI shall deliver to AAPH each
of the following:
(i) a certified copy of a resolution or resolutions duly
adopted by the Board of Directors of FCEI approving the Reorganization,
this Agreement and each of the transactions contemplated by this
Agreement;
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(ii) a certificate of good standing issued by the Secretary
of State of Utah confirming the good standing of FCEI as of a date not
more than five (5) days prior to the Closing Date;
(iii) an opinion, dated the Closing Date, of Squire, Xxxxxxx
& Xxxxxxx L.L.P., counsel for FCEI, addressed to AAPH, substantially in
the form of EXHIBIT 1.3(B)(III) hereto and otherwise in form and
substance reasonably satisfactory to AAPH;
(iv) a certificate of the President of FCEI to the effect
that an appropriate inquiry has been made of the officers of FCEI and,
after such inquiry, neither FCEI nor the individual executing such
certificate has any reason to believe that the conditions set forth in
Article IX of this Agreement have not been fulfilled;
(v) an irrevocable proxy from Xxxxx X. Xxxxxx, expiring on
December 31, 1997, in form and substance reasonably acceptable to AAPH,
granting AAPH the proxy to vote all shares of FCEI common stock held by
Mr. Amedia in favor of (A) the Reincorporation (as hereinafter
defined); and (B) any matters submitted to the shareholders of FCEI
relating to the repayment of amounts owning to MascoTech, Inc. under
those certain Promissory Notes dated August 29, 1996 in the original
aggregate principal amount of $8,000,000 (the "Promissory Notes")
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in accordance with the terms of the Promissory Notes as in effect on
the date of this Agreement;
(vi) an agreement, in form and substance reasonably
satisfactory to AAPH, pursuant to which Xxxxx X. Xxxxxx agrees to
indemnify and hold harmless AAPH from and against any losses,
liabilities and obligations arising as a direct result of action taken
by the SEC or the NASD with respect to (A) the failure of FCEI to file
with the SEC any filing which FCEI was required to make under the
Exchange Act prior to the date of this Agreement which have not
previously been made, or (B) any material failure to comply with
applicable SEC regulations of any filing which FCEI filed with the SEC
prior to the date of this Agreement; and
(vii) such other documents, certificates and instruments as
may be reasonably requested by AAPH in order to consummate the
transactions contemplated by this Agreement.
(c) On the Closing Date, FCEI and AAPH shall enter into a Registration
Rights Agreement substantially in the form of EXHIBIT 1.3(C) hereto.
1.4. CLOSING. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 a.m., Eastern Standard Time,
on the later of (a)
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December 31, 1996, or (b) the thirtieth (30th) day after filing of the Required
SEC Filings (as hereinafter defined) as provided in Section 6.8, below, at the
offices of FCEI, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000, or at such other time
or place as shall be agreed upon by the parties to this Agreement (such date and
time being hereinafter referred to as the "Closing Date").
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF AAPH
CONCERNING THE TRANSACTION
As an inducement to FCEI to enter into this Agreement and to consummate
the transactions contemplated hereby, AAPH represents and warrants to FCEI as
follows:
2.1. BINDING OBLIGATION; NO CONFLICT. This Agreement and the other
agreements and documents to be executed and delivered by AAPH pursuant to the
provisions of this Agreement have been duly authorized, executed and delivered
by AAPH and are valid and binding obligations of AAPH, enforceable in accordance
with their respective terms. Neither the execution and delivery by AAPH of this
Agreement and such other agreements and documents, nor the consummation by it of
the transactions contemplated hereby or thereby or the performance by it of the
covenants provided for herein and therein will: (a) conflict with or violate any
provision of the Certificate of Incorporation or Bylaws of AAP or AAPH, or of
any law, ordinance or regulation or any judgment, writ, injunction, decree or
order of any court or administrative or other governmental body which is
applicable to, binding upon or enforceable
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against AAP and AAPH or either of them; (b) upon obtaining consents of the
parties specified in SCHEDULE 3.5, result in any breach of or default under any
mortgage, contract, indenture, will, trust or other instrument which is either
binding upon or enforceable against AAP and AAPH or either of them; or (c)
cause, or give any person grounds to cause (with or without notice, the passage
of time or both), the maturity of any liability or obligation of AAP or AAPH or
either of them to be accelerated or increased. No permit, consent, approval or
authorization of, or declaration to or filing with, any regulatory or other
governmental authority is required in connection with the execution and delivery
by AAPH of this Agreement or such other agreements and documents or the
consummation by AAPH of the transactions contemplated hereby or thereby or the
performance by AAPH of the covenants provided for herein or therein.
2.2. STATUS AND EFFECT OF DELIVERY OF AAP SHARES.
(a) AAPH is the lawful owner of 100% of the issued and
outstanding AAP Shares, and has valid marketable title thereto. Except as set
forth on SCHEDULE 2.2, AAPH owns the AAP Shares free and clear of any adverse
claim (other than claims of persons claiming an interest through AAPH), and
there are no outstanding options or rights of any kind to acquire from AAPH any
of the AAP shares owned by AAPH. The delivery to FCEI by AAPH of the AAP Shares
in accordance with this Agreement will vest title to the AAP Shares in FCEI.
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2.3. NO LITIGATION. There is no claim, action, suit or other proceeding
pending or, to the best knowledge of AAPH, threatened or contemplated against
AAPH or AAP which, if decided adversely, would interfere with the consummation
of the transactions contemplated hereby.
ARTICLE III.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF AAPH CONCERNING AAP, EAGLE WINDOW & DOOR OF BELLEVUE, INC., AND
EAGLE SERVICE CO.
As an inducement to FCEI to enter into this Agreement and to consummate
the transactions contemplated hereby, AAPH represents and warrants to FCEI as
follows:
3.1. ORGANIZATION AND CAPITAL STRUCTURE OF AAP.
(a) AAP (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, (ii) has full
power and authority to own or lease and operate its properties and to carry on
its business as now conducted and (iii) except as set forth in SCHEDULE 3.1, has
all requisite permits, licenses and other authority necessary to own its assets
and to engage in the business in which it is engaged.
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(b) Effective August 29, 1996, Eagle Window & Door, Inc., an
Iowa corporation ("Eagle"), and Xxxxxx Building Products Company, a Michigan
corporation ("Xxxxxx"), were merged with and into AAP, with AAP as the surviving
corporation.
(c) AAP is the lawful owner of 100% of the capital stock of
Eagle Window & Door of Bellevue, Inc., a Delaware corporation ("EAGLE B") and
Eagle Service Co., a Delaware corporation ("EAGLE S"), and has valid marketable
title thereto. EAGLE B and EAGLE S are hereinafter collectively referred to as
the "AAP Subsidiaries". Except as set forth on SCHEDULE 3.1, AAP owns all such
capital stock free and clear of any adverse claims (other than claims of persons
claiming an interest through AAP). EAGLE B and EAGLE S (i) are duly organized
and validly existing under the laws of the state of Delaware, (ii) have full
power and authority to own or lease and operate their properties and to carry on
their businesses as now conducted, and (iii) except as set forth in SCHEDULE
3.1, have all required permits, licenses and other authority necessary to own
their assets and engage in the businesses in which they are now engaged.
(d) The authorized capital of AAP consists of 100,000 shares
of $.01 par value common stock, of which one hundred (100) shares are issued and
are outstanding, all of which are owned by AAPH. Except as set forth in SCHEDULE
3.1, there are no options, warrants, convertible securities or any other rights
or agreements to issue or sell any capital stock, options, warrants, convertible
securities or rights for stock of AAP, EAGLE B or EAGLE S. All of the
outstanding AAP Shares are validly issued, fully paid and nonassessable.
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(e) Set forth in SCHEDULE 3.1 are complete and correct copies
of AAP's Certificate of Incorporation and all amendments thereto and of its
Bylaws, as amended to date, and Certificates of Good Standing of AAP issued by
the Delaware, Iowa, Michigan and Ohio Secretaries of State.
(f) AAP and each of the AAP Subsidiaries are duly qualified
as foreign corporations to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held under lease
or the nature of their activities makes such qualification necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect.
3.2. FINANCIAL STATEMENTS.
(a) Set forth in SCHEDULE 3.2(a) are copies of the balance
sheets of EAGLE and XXXXXX as of August 29, 1996, and the related statements of
income of each of EAGLE and XXXXXX for the period from January 1, 1996 to August
29, 1996 (collectively referred to in this Agreement as the "AAP Subsidiary
Financial Statements").
(b) Except for post-closing adjustments and year-end
adjustments to be made to the AAP Subsidiary Financial Statements which do not
have a material adverse impact on the information set forth therein (taken as a
whole) and except as set forth in SCHEDULE 3.2(b), the AAP Subsidiary Financial
Statements fairly present the financial positions of EAGLE and XXXXXX as of the
dates thereof and the results of operations of EAGLE and XXXXXX for the
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fiscal periods then ended.
(c) Set forth in SCHEDULE 3.2(c) are copies of the
consolidated balance sheet of AAP as of September 30, 1996, and the related
consolidated statement of income of AAP for the period from August 29, 1996 to
September 30, 1996 (the "AAP Consolidated Financial Statements").
(d) Except for post-closing adjustments and year-end
adjustments to be made to the AAP Consolidated Financial Statements which do not
have a material adverse impact on the information set forth therein (taken as a
whole) and except as set forth in SCHEDULE 3.2(d), the AAP Consolidated
Financial Statements fairly present the consolidated financial position of AAP
and the AAP Subsidiaries as of the date thereof and consolidated results of
operations of AAP and the AAP Subsidiaries for the fiscal period then ended.
3.3. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 3.3, since September 30, 1996, there has been:
(a) no increase in the indebtedness for borrowed money
incurred by AAP or the AAP Subsidiaries and no incurrence of any other
obligation or liability (fixed or contingent), except for borrowings under the
revolving credit facility of AAP and trade obligations and other liabilities
incurred in the ordinary course of business consistent with past practice;
(b) no material adverse change in the assets, liabilities,
properties, business,
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profits, prospects or condition of AAP or the AAP Subsidiaries and, to the best
knowledge of AAPH, no occurrence of any fact or existence of any condition which
might reasonably be expected to cause such a change in the future;
(c) no damage, destruction, loss or claim to or against any
property or assets of AAP or the AAP Subsidiaries, whether or not covered by
insurance, which materially affects the assets, liabilities, properties,
business, profits, prospects or condition of AAP or the AAP Subsidiaries;
(d) no sale, transfer, other disposition, mortgage or pledge
of, and no imposition of any lien, charge or encumbrance on, any of the
properties or assets of AAP or the Subsidiaries, other than resulting from
transactions in the ordinary course of business consistent with past practice;
(e) no contribution to the capital, no dividend or other
distribution or payment in respect of, and no subdivision, consolidation or
other recapitalization of, the capital stock of AAP or the AAP Subsidiaries and
no declaration or authorization of any of the foregoing;
(f) no issuance or payment of any special bonuses to
employees of AAP or the AAP Subsidiaries;
(g) no agreements or understandings with respect to the
merger, consolidation, liquidation or reorganization of AAP or the AAP
Subsidiaries;
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(h) no termination or receipt of notice of any termination of
any material agreement of AAP or the AAP Subsidiaries, nor has AAP or the AAP
Subsidiaries entered into any material agreement or made any material
commitment; and
(i) no actual or overtly threatened employee strikes, work
stoppages, slow- downs or lock-outs affecting AAP or the AAP Subsidiaries, nor
any material change in the relationship of AAP and the, AAP Subsidiaries with
any of its employees, salesmen, distributors, sales representatives or
independent contractors.
3.4. NO DEFAULT OR LITIGATION. Except as set forth in SCHEDULE 3.4:
(a) Neither AAP nor the AAP Subsidiaries are in material
default or material violation under any agreement, lease or other instrument to
which any of them is a party, or under any law, regulation, writ, injunction,
order or decree of any court or any foreign, federal, state, local or other
governmental department, commission, board, bureau, agency or instrumentality
(including, without limitation, applicable laws, rules and regulations relating
to environmental protection, anti-trust, civil rights, health and occupational
health and safety);
(b) there is no claim, action, suit or other proceeding
pending, or to the best knowledge of AAPH, threatened or contemplated against
AAP or the AAP Subsidiaries, which, if decided adversely, would materially
adversely affect the assets or business of AAP or the AAP Subsidiaries, or would
interfere with the consummation of the transactions contemplated hereby; and
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(c) no action, suit or proceeding has been instituted or, to
the best knowledge of AAPH, threatened to restrain or prohibit or otherwise
challenge the legality or validity of the transactions contemplated hereby.
3.5. APPROVALS. Except as set forth in SCHEDULE 3.5, no authorization,
approval or consent of, or filing with, any governmental authority or third
party is required in connection with the execution and delivery by AAPH of this
Agreement and the consummation by AAPH of the transactions contemplated hereby
and by any agreements or documents delivered by AAPH hereunder.
3.6. COMPLETENESS AND CONDITION OF ASSETS. The assets owned or leased
by AAP and the AAP Subsidiaries constitute all of the assets which are being
used in the businesses of AAP and the AAP Subsidiaries. To the best knowledge of
AAPH, such assets (a) constitute all of the assets necessary to continue the
operations of AAP and the AAP Subsidiaries after the date hereof and (b) are in
operating condition adequate to operate the businesses of AAP and the AAP
Subsidiaries as presently conducted.
3.7. TITLE TO PROPERTY. AAP and the AAP Subsidiaries have good and
marketable title to all of the assets purported to be owned by them, subject to
no mortgage, lien, security interest or other encumbrance or adverse interest of
any kind except (a) as set forth in SCHEDULE 3.7 or (b) any lien for current
taxes which are not yet due and payable.
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3.8. TAX LIABILITIES. AAP and the AAP Subsidiaries have filed all
federal, state, county and local income, excise, withholding, property, sales,
franchise and other tax returns and related information which are required to be
filed by them, and have paid all such taxes (including any interest and
penalties thereon) which have become due pursuant to such returns or pursuant to
any assessment which has become payable, except for returns which have been
appropriately extended and for taxes which are being contested in good faith.
All federal, state, county and local tax returns required to be filed by AAP and
the AAP Subsidiaries on or before the Closing Date will either be timely filed
or appropriately extended. All returns hereinabove referred to are true and
correct in all material respects. AAP and the AAP Subsidiaries have complied
with all applicable laws, rules and regulations relating to the payment and
withholding of taxes and have withheld all amounts required by law to be
withheld from the wages or salaries of employees and are not liable for any
taxes or penalties for failure to comply with any of the foregoing. The amounts
reflected in the AAP Consolidated Financial Statements will be sufficient for
the payment of all accrued, unpaid, or deferred federal, state, county and local
income, excise, withholding, property, sales, franchise and other taxes
(including any interest or penalties) of AAP and the AAP Subsidiaries for the
fiscal period ended on the most recent date of the AAP Consolidated Financial
Statements and for all prior fiscal years.
3.9. PATENTS, TRADE NAMES, TRADEMARKS, COPYRIGHTS AND OTHER RIGHTS. AAP
and the AAP Subsidiaries do not own or control, nor do they have any right,
license or interest in, any United States or foreign patent or patent
application or any United States, state or foreign trade name, trademark or
servicemark registration or application or any United States, foreign or state
copyright registration (collectively, "Intellectual Property Rights"), except as
listed on
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SCHEDULE 3.9 hereto, which contains a list and description of: (i) all trade
names, trademarks and servicemarks (a) owned or controlled by AAP and the AAP
Subsidiaries, or (b) under which AAP and the AAP Subsidiaries hold any right,
license or interest; (ii) all agreements, commitments, contracts,
understandings, licenses, assignments and indemnities relating or pertaining to
such registrations to which AAP or the AAP Subsidiaries are a party; (iii) all
patents, patent applications, copyrights, licenses or agreements pertaining to
know-how, trade secrets, inventions, disclosures or uses of ideas and
intellectual property to which AAP or the Subsidiaries are a party; and (iv) all
registered, assumed or fictitious names under which AAP and the Subsidiaries are
conducting business. To the best knowledge of AAPH, (i) AAP and the AAP
Subsidiaries are not infringing upon the Intellectual Property Rights of any
third party, and (ii) no third party is infringing upon any Intellectual
Property Rights owned, controlled, licensed or used by AAP or the AAP
Subsidiaries, or in which AAP or the AAP Subsidiaries has any other right or
interest.
3.10. REAL ESTATE. SCHEDULE 3.10 contains a list of (a) each lease or
agreement under which AAP or the Subsidiaries are lessees of, or hold or
operate, any real estate owned by any third party, and (b) each parcel of real
estate owned by AAP and the AAP Subsidiaries. Except as disclosed in SCHEDULE
3.10, (a) each of the leases and agreements described therein is in good
standing and in full force and effect and is the valid and binding obligation of
AAP or the AAP Subsidiaries and the other parties thereto in accordance with its
respective terms and will continue in effect after the Closing Date without the
consent, approval or act of any other party; and (b) each parcel of real estate
owned by AAP or the AAP Subsidiaries conforms in all material respects to all
applicable building, zoning and fire laws, ordinances and regulations.
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AAP and the AAP Subsidiaries are not in default in any material respect under
any real estate lease or agreement, and AAP and the AAP Subsidiaries have not
received any notice of default thereunder which has not been cured.
3.11. CONTRACTS. Except as set forth in SCHEDULE 3.11, neither AAP and
the AAP Subsidiaries, nor any of them, is a party to:
(a) any contract for the lease or sublease of personal
property from or to any third party or group of contracts for the lease or
sublease of similar kinds of personal property from or to third parties;
(b) any contract or agreement for the purchase or sale of raw
materials, commodities, merchandise, supplies, other materials or personal
property or for the furnishing or receipt of services, except for those
contracts and agreements (i) which were entered into in the ordinary course of
business and (ii) which individually involve an obligation or liability on the
part of AAP or the AAP Subsidiaries in an amount less than Fifty Thousand
Dollars ($50,000);
(c) any distributor, dealer, manufacturer's representative,
sales, agency or advertising contract which is not terminable by AAP or the AAP
Subsidiaries, without penalty, on notice of 30 days or less;
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(d) any guarantee of the obligations of customers,
suppliers, officers, directors, employees or others; or
(e) any other contract, whether or not made in the ordinary
course of business, which is material to the business or assets of AAP or the
AAP Subsidiaries, except for bid bonds, performance bonds and payment bonds
contracted in the ordinary course of business.
No purchase commitment by AAP and the AAP Subsidiaries is in
excess of their ordinary business requirements or at a price in excess of fair
market price at the date thereof. Except as set forth in SCHEDULE 3.11, (i) none
of the contracts or agreements listed in SCHEDULE 3.11 or any other Schedule
hereto will expire or be terminated or be subject to any modification of terms
or conditions upon the consummation of the transactions contemplated hereby;
(ii) AAP and the AAP Subsidiaries are not in default in any material respect
under the terms of any such contract or agreement nor in default on the payment
of any principal of or interest on any indebtedness for borrowed money, and no
event has occurred which, with the passage of time or giving of notice, or both,
would constitute such a default by AAP or the AAP Subsidiaries; and (iii) to the
best knowledge of AAPH, no other party to any such contract or agreement is in
default in any respect thereunder and no such event has occurred with respect to
such party.
3.12. EMPLOYEE AGREEMENTS; EMPLOYEE RELATIONS.
(a) Except as disclosed on SCHEDULE 3.12, there is no plan,
contract or
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arrangement, oral or written, including, but not limited to, deferred
compensation plans, supplemental death, disability, and retirement plans,
medical reimbursement plans, employee welfare benefit plans (within the meaning
of Section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), pension plans (within the meaning of Section 3(2) of ERISA),
employee severance plans, bonus plans or any other employee benefit plans of any
kind or character, whether oral or written, whereunder AAP or the AAP
Subsidiaries have any obligations to their officers, directors, employees or
agents or whereunder any of such persons owes money or any obligation to AAP or
the AAP Subsidiaries. Except as disclosed in SCHEDULE 3.12, AAP and the AAP
Subsidiaries are not a party to any (i) agreement with any director, officer or
employee of AAP or the AAP Subsidiaries (A) the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
the transactions contemplated by this Agreement, (B) providing any term of
employment or compensation guarantee, or (C) providing severance benefits or
other benefits (which are conditioned upon a change of control) after the
termination of employment of such employee regardless of the reason for such
termination of employment, or (ii) agreement or plan which provides rights in
the stock or equity of AAP or the AAP Subsidiaries, including, without
limitation, any incentive or bonus plan, stock option plan, stock appreciation
rights plan or stock purchase plan.
(b) SCHEDULE 3.12 lists the names and positions of each
officer and director of AAP and the AAP Subsidiaries. Except as set forth in
SCHEDULE 3.12, no officer or director is subject to any condition or
circumstance which would be requested to be disclosed pursuant to Item 401(d) of
SEC Regulation S-B.
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(c) Except as set forth in SCHEDULE 3.12, AAP and the AAP
Subsidiaries, or any of them, (i) have not engaged in any unfair labor practice,
unlawful employment practice or unlawful discriminatory practice in the conduct
of their businesses; (ii) have complied in all material respects with all
applicable laws, rules and regulations relating to wages, hours and collective
bargaining; and (iii) have not had notice of any claim that AAP or the AAP
Subsidiaries have engaged in any such practice or has failed to so comply. The
relations of AAP and the AAP Subsidiaries with their employees are satisfactory
from an operational point of view.
3.13. PERMITS. AAP and the AAP Subsidiaries possess all franchises,
permits, licenses, certificates, approvals and other authorizations necessary to
own or lease and operate their properties and to conduct their businesses as now
conducted (all of which are hereinafter collectively called the "Permits"), and
all Permits are in full force and effect, except to the extent that the failure
to possess or maintain any Permit would not, individually or in the aggregate,
have a material adverse effect. AAP and the AAP Subsidiaries are not in default
in any material respect under the terms of any such Permit and have not received
notice of any default thereunder, and, to the best knowledge of AAPH, no other
party to any such Permit is in default in any material respect thereunder.
3.14. INSURANCE. SCHEDULE 3.14 includes copies of all certificates of
insurance listing all property, liability and related insurance maintained by
AAP or the AAP Subsidiaries on the date hereof. AAP and the AAP Subsidiaries
have complied in all material respects with each of such insurance policies and
have not failed to give any notice or present any claim thereunder
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in a due and timely manner.
3.15. ENVIRONMENTAL CONDITIONS. To the best knowledge of AAPH, except
as set forth in SCHEDULE 3.15, (a) AAP and the AAP Subsidiaries are currently in
compliance in all material respects with all federal, state and local
environmental or health and safety-related laws, regulations, rules or
ordinances applicable to their facilities and operations; (b) except in
accordance with applicable law, AAP and the AAP Subsidiaries have not generated,
manufactured, refined, transported, treated, stored, handled, disposed,
transferred, produced or processed, nor has there been any spill, leak or
discharge of, any pollutant, toxic substance, hazardous waste, hazardous
material, hazardous substance, solid waste or oil as defined in or pursuant to
the Resource Conservation and Recovery Act, as amended, the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended, the Federal
Clean Water Act, as amended, or any other federal, state or local environmental
law, regulation, ordinance or rule; (c) AAP and the AAP Subsidiaries have
received all material permits and approvals and have made all material filings
required by applicable federal, state, or local laws with respect to emissions
into the environment (including solids, liquids, and gases) and the proper
disposal of hazardous materials (including solid waste materials); and (d) no
underground storage tanks or surface impoundments are located at, on or under
any property now or previously owned or now leased by AAP or the AAP
Subsidiaries.
3.16. ACCOUNTS RECEIVABLE. All accounts receivable of AAP and the AAP
Subsidiaries have arisen from bona fide transactions in the ordinary course of
their business. Except as set
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forth in SCHEDULE 3.16, there is no account receivable debtor among the
Significant Customers (as defined in SECTION 3.17 of this Agreement) who is, to
the best knowledge of AAPH, insolvent, unable to pay its debts as they become
due, or in bankruptcy.
3.17. CUSTOMERS AND SUPPLIERS. Except as set forth in SCHEDULE 3.17,
there exists no actual or, to the best knowledge of AAPH, threatened
termination, cancellation or material limitation of, or any material
modification or change in, the business relationships of AAP and the AAP
Subsidiaries with any Significant Supplier or Significant Customer (each as
defined below) or group of suppliers or customers and there exists no present or
future condition or state of facts or circumstances known to AAPH involving any
Significant Supplier or Significant Customer or group of suppliers or customers,
which would adversely affect the businesses of AAP and the AAP Subsidiaries or
prevent AAP and the AAP Subsidiaries from conducting their businesses after the
consummation of the transactions contemplated by this Agreement in essentially
the same manner in which they have heretofore conducted such business. For
purposes of this Section 3.17, (a) "Significant Supplier" means any of the ten
(10) largest suppliers, by dollar volume, of AAP and the AAP Subsidiaries, on an
aggregate basis, during the 1995 calendar year, and (b) "Significant Customer"
means any of the twenty (20) largest customers, by dollar volume, of AAP and the
AAP Subsidiaries, on an aggregate basis, during the 1995 calendar year.
3.18. FINDER. Except as set forth in SCHEDULE 3.18, neither AAP nor the
AAP Subsidiaries nor AAPH, nor any party acting on behalf of any of them, has
paid or become
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obligated to pay any fee or commission to any broker, finder or intermediary for
or on account of the transactions contemplated hereby.
3.19. NO OMISSIONS. None of the representations or warranties of AAPH
contained herein, none of the information contained in the Schedules referred to
in this Article III and none of the other information or documents furnished by
AAPH to FCEI or its representatives pursuant to the provisions of this
Agreement, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading. There is no fact
known by AAPH which materially and adversely affects or in the future might
reasonably be expected to materially and adversely affect the business, profits
or financial condition of AAP and the AAP Subsidiaries, which has not been set
forth or referred to in this Agreement or in the Schedules hereto.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF FCEI
As an inducement to enter into this Agreement and to consummate the
transactions contemplated herein, FCEI hereby represents and warrants to AAPH as
follows:
4.1. ORGANIZATION AND CAPITAL STRUCTURE OF FCEI.
(a) FCEI (i) is a corporation duly organized, validly
existing and in good
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standing under the laws of the State of Utah, (ii) has full power and authority
to own or lease its properties and to carry on its business as now conducted and
(iii) except as set forth in SCHEDULE 4.1, has all requisite permits, licenses
and other authority necessary to own its assets and engage in the business in
which it is engaged.
(b) The authorized capital stock of FCEI consists of
50,000,000 shares of common stock, $.01 par value, of which 48,610,111 shares
are issued and outstanding, and 20,000,000 shares of preferred stock, $.01 par
value, of which no shares are issued and outstanding. All of the issued and
outstanding shares of common stock have been duly authorized, and are validly
issued, fully paid and nonassessable. Except as set forth on SCHEDULE 4.1, there
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other contracts or
commitments that could require FCEI to issue, sell or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation or similar rights with
respect to FCEI. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of FCEI.
(c) The common stock of FCEI is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"), and
is eligible for trading on the NASDAQ OTC Electronic Bulletin Board market. No
action has been taken (whether by FCEI or otherwise) or has occurred which is
designed to terminate, or likely to have the effect of terminating, such
registration or disqualifying such registration or eligibility. Neither the U.S.
Securities and Exchange Commission ("SEC"), the National Association of
Securities Dealers,
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Inc. ("NASD"), nor any similar securities commission or regulatory authority of
any state or other jurisdiction has issued any order suspending or preventing
the trading or the registration of any securities of FCEI, and no such actions
are known by FCEI to be threatened or contemplated.
(d) Upon delivery of the FCEI Preferred Shares to AAPH at the
Closing as contemplated by this Agreement, AAPH shall have lawful record
ownership and good and marketable title thereto, free and clear of any adverse
claim (other than any claims of persons claiming an interest through AAPH). The
FCEI Preferred Shares, when issued and delivered in accordance with the terms
hereof, will be validly issued, fully paid and nonassessable. Upon conversion of
the FCEI Preferred Shares to FCEI Common Shares in accordance with the terms of
the Series A Preferred, the FCEI Common Shares will be validly issued, fully
paid and nonassessable, will be owned by AAPH free and clear of any adverse
claim (other than any claims of persons claiming an interest through AAPH), and
will equal 60% of the total shares of FCEI common stock issued and outstanding
as of the date of conversion.
(e) Set forth in SCHEDULE 4.1 are complete and correct copies
of FCEI's Articles of Incorporation and all amendments thereto and of its
Bylaws, as amended to date, and Certificates of Good Standing of FCEI issued by
the Utah Secretary of State.
(f) FCEI is the lawful owner of 100% of the issued and
outstanding capital stock of Forte, Inc., an Ohio corporation (the "FCEI
Subsidiary"), and has valid and marketable title thereto. FCEI does not own
(directly or indirectly) any other subsidiaries, divisions or joint
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ventures. Except as set forth on SCHEDULE 4.1, FCEI owns all such capital stock
free and clear of any adverse claim (other than claims of persons claiming an
interest through FCEI), pledges, encumbrances, claims and equities of every
kind. The FCEI Subsidiary (i) is duly organized and validly existing under the
laws of the state of Ohio, (ii) has full power and authority to own and operate
its properties and to carry on its business and now conducted, and (iii) except
as set forth in SCHEDULE 4.1, has all required permits, licenses and other
authority necessary to own its assets and engage in the business in which it is
now engaged.
(g) FCEI and the FCEI Subsidiary are duly qualified as
foreign corporations to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held under lease
or the nature of their activities makes such qualification necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect.
4.2. BINDING OBLIGATION; NO CONFLICT. This Agreement and the other
agreements and documents to be executed and delivered by FCEI pursuant to the
provisions of this Agreement have been duly authorized, executed and delivered
by FCEI and are valid and binding obligations of FCEI, enforceable in accordance
with their respective terms. Neither the execution and delivery by FCEI of this
Agreement and such other agreements and documents, nor the consummation by it of
the transactions contemplated hereby or thereby or the performance by it of the
covenants provided for herein and therein will: (a) conflict with or violate any
provision of the Articles of Incorporation or Bylaws of FCEI, or of any law,
ordinance or regulation or any judgment, writ, injunction, decree or order of
any court or
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administrative or other governmental body which is applicable to, binding upon
or enforceable against FCEI; (b) upon obtaining consents of the parties
specified in SCHEDULE 4.7, result in any breach of or default under any
mortgage, contract, indenture, will, trust or other instrument which is either
binding upon or enforceable against FCEI; or (c) cause, or give any person
grounds to cause (with or without notice, the passage of time or both), the
maturity of any liability or obligation of FCEI to be accelerated or increased.
Other than as provided for herein, no permit, consent, approval or authorization
of, or declaration to or filing with, any regulatory or other governmental
authority is required in connection with the execution and delivery by FCEI of
this Agreement or such other agreements and documents or the consummation by
FCEI of the transactions contemplated hereby or thereby or the performance by
FCEI of the covenants provided for herein or therein.
4.3. NO LITIGATION. There is no claim, action, suit or other proceeding
pending or, to the best knowledge of FCEI, threatened or contemplated against
FCEI which, if decided adversely, would interfere with the consummation of the
transactions contemplated hereby.
4.4. FINANCIAL STATEMENTS. Set forth in SCHEDULE 4.4 is a copy of an
audited consolidated balance sheet of FCEI for the year ended December 31, 1995,
an unaudited consolidated balance sheet of FCEI for the nine months ended
September 30, 1996, and the related statements of income for the periods then
ended (the "FCEI Financial Statements"). The FCEI Financial Statements fairly
reflect the consolidated assets, liabilities and operating results of FCEI at
the dates and for the periods shown, and have been prepared in accordance with
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generally accepted accounting principles consistently applied (subject in the
case of the unaudited financial statements to normal audit adjustments and the
absence of footnote disclosure).
4.5. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 4.5, since September 30, 1996, there has been:
(a) no increase in the indebtedness for borrowed money
incurred by FCEI or the FCEI Subsidiary and no incurrence of any other
obligation or liability (fixed or contingent), except for trade obligations and
other liabilities incurred in the ordinary course of business consistent with
past practice;
(b) no material adverse change in the assets, liabilities,
properties, business, profits, prospects or condition of FCEI or the FCEI
Subsidiary and, to the best knowledge of FCEI, no occurrence of any fact or
existence of any condition which might reasonably be expected to cause such a
change in the future;
(c) no damage, destruction, loss or claim to or against any
property or assets of FCEI or the FCEI Subsidiary, whether or not covered by
insurance, which materially affects the assets, liabilities, properties,
business, profits, prospects or condition of FCEI or the FCEI Subsidiary;
(d) no sale, transfer, other disposition, mortgage or pledge
of, and no imposition of any lien, charge or encumbrance on, any of the
properties or assets of FCEI or
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the FCEI Subsidiary, other than resulting from transactions in the ordinary
course of business consistent with past practice;
(e) no contribution to the capital, no dividend or other
distribution or payment in respect of, and no subdivision, consolidation or
other recapitalization of, the capital stock of FCEI or the FCEI Subsidiary and
no declaration or authorization of any of the foregoing;
(f) no issuance or payment of any special bonuses to
employees of FCEI or the FCEI Subsidiary;
(g) no agreements or understandings with respect to the
merger, consolidation, liquidation or reorganization of FCEI or the FCEI
Subsidiary;
(h) no termination or receipt of notice of any termination of
any material agreement of FCEI or the FCEI Subsidiary, nor has FCEI or the FCEI
Subsidiary entered into any material agreement or made any material commitment;
and
(i) no actual or overtly threatened employee strikes, work
stoppages, slow- downs or lock-outs affecting FCEI or the FCEI Subsidiary, nor
any material change in the relationship of FCEI or the FCEI Subsidiary with any
of its employees, salesmen, distributors, sales representatives or independent
contractors.
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4.6. NO DEFAULT OR LITIGATION. Except as set forth in SCHEDULE 4.6:
(a) Neither FCEI nor the FCEI Subsidiary is in material
default or material violation under any agreement, lease or other instrument to
which it is a party, or under any law, regulation, writ, injunction, order or
decree of any court or any foreign, federal, state, local or other governmental
department, commission, board, bureau, agency or instrumentality (including,
without limitation, applicable laws, rules and regulations relating to
environmental protection, anti-trust, civil rights, health and occupational
health and safety);
(b) there is no claim, action, suit or other proceeding
pending, or to the best knowledge of FCEI, threatened or contemplated against
FCEI or the FCEI Subsidiary, which, if decided adversely, would materially
adversely affect the assets or business of FCEI or the FCEI Subsidiary, or would
interfere with the consummation of the transactions contemplated hereby; and
(c) no action, suit or proceeding has been instituted or, to
the best knowledge of FCEI, threatened to restrain or prohibit or otherwise
challenge the legality or validity of the transactions contemplated hereby.
4.7. APPROVALS. Except as set forth in SCHEDULE 4.7, no authorization,
approval or consent of, or filing with, any governmental authority or third
party is required in connection with the execution and delivery by FCEI of this
Agreement and the consummation by FCEI of
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the transactions contemplated hereby and by any agreements or documents
delivered by FCEI hereunder.
4.8. COMPLETENESS AND CONDITION OF ASSETS. The assets owned or leased
by FCEI and the FCEI Subsidiary constitute all of the assets which are being
used in the business of FCEI and the FCEI Subsidiary. To the best knowledge of
FCEI, such assets (a) constitute all of the assets necessary to continue the
operations of FCEI and the FCEI Subsidiary after the date hereof and (b) are in
operating condition adequate to operate the business of FCEI and the FCEI
Subsidiary as presently conducted.
4.9. TITLE TO PROPERTY. FCEI and the FCEI Subsidiary have good and
marketable title to all of the assets purported to be owned by them, subject to
no mortgage, lien, security interest or other encumbrance or adverse interest of
any kind except (a) as set forth in SCHEDULE 4.9 or (b) any lien for current
taxes which are not yet due and payable.
4.10. TAX LIABILITIES. FCEI and the FCEI Subsidiary have filed all
federal, state, county and local income, excise, withholding, property, sales,
franchise and other tax returns and related information which are required to be
filed by them, and have paid all such taxes (including any interest and
penalties thereon) which have become due pursuant to such returns or pursuant to
any assessment which has become payable, except for returns which have been
appropriately extended and for taxes which are being contested in good faith.
All federal, state, county and local tax returns required to be filed by FCEI
and the FCEI Subsidiary on or before the Closing Date will either be timely
filed or appropriately extended. All returns hereinabove
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referred to are true and correct in all material respects. FCEI and the FCEI
Subsidiary have complied with all applicable laws, rules and regulations
relating to the payment and withholding of taxes and have withheld all amounts
required by law to be withheld from the wages or salaries of employees and are
not liable for any taxes or penalties for failure to comply with any of the
foregoing. The amounts reflected in the FCEI Financial Statements will be
sufficient for the payment of all accrued, unpaid, or deferred federal, state,
county and local income, excise, withholding, property, sales, franchise and
other taxes (including any interest or penalties) of FCEI and the FCEI
Subsidiary for the fiscal period ended September 30, 1996 and for all prior
fiscal years.
4.11. PATENTS, TRADE NAMES, TRADEMARKS, COPYRIGHTS AND OTHER RIGHTS.
FCEI and the FCEI Subsidiary do not own or control, nor do they have any right,
license or interest in, any United States or foreign patent or patent
application or any United States, state or foreign trade name, trademark or
servicemark registration or application or any United States, foreign or state
copyright registration (collectively, "Intellectual Property Rights"), except as
listed on SCHEDULE 4.11 hereto, which contains a list and description of: (i)
all trade names, trademarks and servicemarks (a) owned or controlled by FCEI and
the FCEI Subsidiary, or (b) under which FCEI and the FCEI Subsidiary hold any
right, license or interest; (ii) all agreements, commitments, contracts,
understandings, licenses, assignments and indemnities relating or pertaining to
such registrations to which FCEI and the FCEI Subsidiary are a party; (iii) all
patents, patent applications, copyrights, licenses or agreements pertaining to
know-how, trade secrets, inventions, disclosures or uses of ideas and
intellectual property to which FCEI or the FCEI Subsidiary is a party; and (iv)
all registered, assumed or fictitious names under which
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FCEI and the FCEI Subsidiary are conducting business. To the best knowledge of
FCEI, FCEI and the FCEI Subsidiary are not infringing any Intellectual Property
Right of any third party, and no third party is infringing any Intellectual
Property Right owned, controlled, licensed or used by FCEI or the FCEI
Subsidiary, or in which either of them has any right or interest.
4.12. REAL ESTATE. SCHEDULE 4.12 contains a list of (a) each lease or
agreement under which FCEI or the FCEI Subsidiary is a lessee of, or holds or
operates, any real estate owned by any third party, and (b) each parcel of real
estate owned by FCEI or the FCEI Subsidiary. Except as disclosed in SCHEDULE
4.12, (a) each of the leases and agreements described therein is in good
standing and in full force and effect and is the valid and binding obligation of
FCEI or the FCEI Subsidiary and the other parties thereto in accordance with its
respective terms and will continue in effect after the Closing Date without the
consent, approval or act of any other party; and (b) each parcel of real estate
owned by FCEI or the FCEI Subsidiary conforms in all material respects to all
applicable building, zoning and fire laws, ordinances and regulations. FCEI and
the FCEI Subsidiary are not in default in any material respect under any real
estate lease or agreement, and FCEI and the FCEI Subsidiary have not received
any notice of default thereunder which has not been cured.
4.13. CONTRACTS. Except as set forth in SCHEDULE 4.13, neither FCEI and
the FCEI Subsidiary, nor either of them, is a party to:
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(a) any contract for the lease or sublease of personal
property from or to any third party or group of contracts for the lease or
sublease of similar kinds of personal property from or to third parties;
(b) any contract or agreement for the purchase or sale of raw
materials, commodities, merchandise, supplies, other materials or personal
property or for the furnishing or receipt of services, except for those
contracts and agreements (i) which were entered into in the ordinary course of
business and (ii) which individually involve an obligation or liability on the
part of FCEI or the FCEI Subsidiary in an amount less than Fifty Thousand
Dollars ($50,000);
(c) any distributor, dealer, manufacturer's representative,
sales, agency or advertising contract which is not terminable by FCEI or the
FCEI Subsidiary, without penalty, on notice of 30 days or less;
(d) any guarantee of the obligations of customers,
suppliers, officers, directors, employees or others; or
(e) any other contract, whether or not made in the ordinary
course of business, which is material to the business or assets of FCEI or the
FCEI Subsidiary, except for bid bonds, performance bonds and payment bonds
contracted in the ordinary course of business.
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No purchase commitment by FCEI or the FCEI Subsidiary is in
excess of its ordinary business requirements or at a price in excess of fair
market price at the date thereof. Except as set forth in SCHEDULE 4.13, (i) none
of the contracts or agreements listed in SCHEDULE 4.13 or any other Schedule
hereto will expire or be terminated or be subject to any modification of terms
or conditions upon the consummation of the transactions contemplated hereby;
(ii) FCEI and the FCEI Subsidiary are not in default in any material respect
under the terms of any such contract or agreement nor in default on the payment
of any principal of or interest on any indebtedness for borrowed money, and no
event has occurred which, with the passage of time or giving of notice, or both,
would constitute such a default by FCEI or the FCEI Subsidiary; and (iii) to the
best knowledge of FCEI, no other party to any such contract or agreement is in
default in any respect thereunder and no such event has occurred with respect to
such party.
4.14. EMPLOYEE AGREEMENTS; EMPLOYEE RELATIONS.
(a) Except as disclosed on SCHEDULE 4.14, there is no plan,
contract or arrangement, oral or written, including, but not limited to,
deferred compensation plans, supplemental death, disability, and retirement
plans, medical reimbursement plans, employee welfare benefit plans (within the
meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), pension plans (within the meaning of Section 3(2) of
ERISA), employee severance plans, bonus plans or any other employee benefit
plans of any kind or character, whether oral or written, whereunder FCEI or the
FCEI Subsidiary has any obligations to its officers, directors, employees or
agents or whereunder any of such persons owes money or any obligation to FCEI or
the FCEI Subsidiary. Except as disclosed in SCHEDULE
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4.14, FCEI and the FCEI Subsidiary are not a party to any (i) agreement with any
director, officer or employee of FCEI or the FCEI Subsidiary (A) the benefits of
which are contingent, or the terms of which are materially altered, upon the
occurrence of the transactions contemplated by this Agreement, (B) providing any
term of employment or compensation guarantee, or (C) providing severance
benefits or other benefits (which are conditioned upon a change of control)
after the termination of employment of such employee regardless of the reason
for such termination of employment, or (ii) agreement or plan which provides
rights in the stock or equity of FCEI or the FCEI Subsidiary, including, without
limitation, any incentive or bonus plan, stock option plan, stock appreciation
rights plan or stock purchase plan.
(b) SCHEDULE 4.14 lists the names and positions of each
officer and director of FCEI and the FCEI Subsidiary. No such officer or
director is subject to any condition or circumstance which would be required to
be disclosed pursuant to Item 401(d) of SEC Regulation S-B.
(c) Except as set forth in SCHEDULE 4.14, neither FCEI and
the FCEI Subsidiary, nor either of them, (i) has engaged in any unfair labor
practice, unlawful employment practice or unlawful discriminatory practice in
the conduct of its business; (ii) has failed to comply in all material respects
with all applicable laws, rules and regulations relating to wages, hours and
collective bargaining; or (iii) has had notice of any claim that FCEI or the
FCEI Subsidiary has engaged in any such practice or has failed to so comply. The
relations of FCEI and the FCEI Subsidiary with its employees are satisfactory
from an operational point of view.
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4.15. PERMITS. FCEI and the FCEI Subsidiary possess all franchises,
permits, licenses, certificates, approvals and other authorizations necessary to
own or lease and operate their properties and to conduct their business as now
conducted, (all of which are hereinafter collectively called the "Permits"), all
of which are in full force and effect, except to the extent that the failure to
possess or maintain any such Permit would not, individually or in the aggregate,
have a material adverse effect. FCEI and the FCEI Subsidiary are not in default
in any material respect under the terms of any such Permit and have not received
notice of any default thereunder, and, to the best knowledge of FCEI, no other
party to any such Permit is in default in any material respect thereunder.
4.16. INSURANCE. SCHEDULE 4.16 includes copies of all certificates of
insurance listing all property, liability and related insurance maintained by
FCEI and the FCEI Subsidiary on the date hereof. FCEI and the FCEI Subsidiary
have complied in all material respects with each of such insurance policies and
have not failed to give any notice or present any claim thereunder in a due and
timely manner.
4.17. ENVIRONMENTAL CONDITIONS. To the best knowledge of FCEI, except
as set forth in SCHEDULE 4.17, (a) FCEI and the FCEI Subsidiary are currently in
compliance in all material respects with all federal, state and local
environmental or health and safety-related laws, regulations, rules or
ordinances applicable to its facilities and operations; (b) except in accordance
with applicable law, FCEI and the FCEI Subsidiary have not generated,
manufactured, refined, transported, treated, stored, handled, disposed,
transferred, produced or processed, nor has there been any spill, leak or
discharge of, any pollutant, toxic substance,
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hazardous waste, hazardous material, hazardous substance, solid waste or oil as
defined in or pursuant to the Resource Conservation and Recovery Act, as
amended, the Comprehensive Environmental Response, Compensation, and Liability
Act, as amended, the Federal Clean Water Act, as amended, or any other federal,
state or local environmental law, regulation, ordinance or rule; (c) FCEI and
the FCEI Subsidiary have received all material permits and approvals and have
made all material filings required by applicable federal, state, or local laws
with respect to emissions into the environment (including solids, liquids, and
gases) and the proper disposal of hazardous materials (including solid waste
materials); and (d) no underground storage tanks or surface impoundments are
located at, on or under any property now or previously owned or now leased by
FCEI or the FCEI Subsidiary.
4.18. ACCOUNTS RECEIVABLE. All accounts receivable of FCEI and the FCEI
Subsidiary have arisen from bona fide transactions in the ordinary course of
their business. Except as set forth in SCHEDULE 4.18, there is no account
receivable debtor among the Significant Customers (as defined in SECTION 4.19 of
this Agreement) who is, to the best knowledge of FCEI, insolvent, unable to pay
its debts as they become due, or in bankruptcy.
4.19. CUSTOMERS AND SUPPLIERS. Except as set forth in SCHEDULE 4.19,
there exists no actual or, to the best knowledge of FCEI, threatened
termination, cancellation or material limitation of, or any material
modification or change in, the business relationships of FCEI and the FCEI
Subsidiary with any Significant Supplier or Significant Customer (each as
defined below) or group of suppliers or customers and there exists no present or
future condition or state of facts or circumstances known to FCEI involving any
Significant Supplier or Significant
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Customer or group of suppliers or customers, which would adversely affect the
businesses of FCEI and the FCEI Subsidiary or prevent FCEI and the FCEI
Subsidiary from conducting their businesses after the consummation of the
transactions contemplated by this Agreement in essentially the same manner in
which they have heretofore conducted such businesses. For purposes of this
Section 4.19, (a) "Significant Supplier" means any of the ten (10) largest
suppliers, by dollar volume, of FCEI and the FCEI Subsidiary, on an aggregate
basis, during the nine months ended September 30, 1996 and (b) "Significant
Customer" means any of the twenty (20) largest customers, by dollar volume, of
FCEI and the FCEI Subsidiary, on an aggregate basis, during the nine months
ended September 30, 1996.
4.20. FINDER. Except as set forth in SCHEDULE 4.20, neither FCEI nor
the FCEI Subsidiary, nor any party acting on behalf of any of them, has paid or
become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated hereby.
4.21. CERTAIN TAX MATTERS.
(a) FCEI has no plan or intention to liquidate or merge AAP
into another corporation, to cause AAP to sell or otherwise dispose of any of
its assets, except for dispositions made in the ordinary course of business, or
to sell or otherwise dispose of any of the AAP shares, except for transfers
described in Section 368(a)(2)(C) of the Code.
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(b) FCEI has no plan or intention to repurchase any of the
FCEI shares issued to AAPH.
(c) FCEI does not own, directly or indirectly, nor has it
owned during the past five years, directly or indirectly, any AAP shares. FCEI
has no plan or intention to purchase any shares of AAP other than pursuant to
the terms of this Agreement.
(d) After the Closing Date, FCEI will cause AAP to continue
its historic business and continue to use a significant portion of its historic
business assets in such business.
4.22. NO OMISSIONS. None of the representations or warranties of FCEI
contained herein, none of the information contained in the Schedules referred to
in this Article IV, and none of the other information or documents furnished to
AAPH or its representatives by FCEI pursuant to the provisions of this
Agreement, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading. There is no fact
known by FCEI which materially and adversely affects or in the future might
reasonably be expected to materially and adversely affect the business, profits
or financial condition of FCEI which has not been set forth or referred to in
this Agreement or in the Schedules hereto.
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ARTICLE V.
PRE-CLOSING
COVENANTS OF AAPH
Until the Closing, AAPH hereby agrees to keep, perform and fully
discharge the following covenants and agreements:
5.1. INVESTIGATION OF BUSINESS OF AAP AND THE AAP SUBSIDIARIES BY FCEI.
AAPH shall cause AAP and the AAP Subsidiaries to afford to the officers,
employees and authorized representatives of FCEI (including, without limitation,
independent public accountants and attorneys) reasonable access during normal
business hours to the offices, properties, customers, suppliers, employees and
business and financial records (including computer files, retrieval programs and
similar documentation) of AAP and the Subsidiaries to the extent FCEI shall deem
necessary or desirable, and shall furnish to FCEI or its authorized
representatives such additional information concerning the operations,
properties and business of AAP and the Subsidiaries as shall be reasonably
requested, including all such information as shall be necessary to enable FCEI
or its authorized representatives to verify the accuracy of the representations
and warranties contained in Article III and to verify the accuracy of the
financial statements referred to in Section 3.2, and to determine whether the
conditions set forth in Article VIII have been satisfied. Notwithstanding the
foregoing, FCEI and its representatives shall not contact any customer, supplier
or employee of AAP or the AAP Subsidiaries without the prior consent of AAPH,
which shall not be unreasonably withheld. FCEI agrees that its investigation
shall be conducted in such manner as not to interfere unreasonably with the
operation of the business of
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AAP and the AAP Subsidiaries. No investigation made by FCEI or its authorized
representatives hereunder shall affect the scope or validity of the
representations and warranties of AAPH, and FCEI shall continue to have the
right to rely solely on such representations and warranties. The parties agree
to keep all such information obtained confidential except to the extent
necessary to comply with applicable laws.
5.2. ORDINARY COURSE OF BUSINESS. AAPH shall use its best efforts to
cause AAP and the AAP Shareholders to be operated in the ordinary course of
business and, subject to the provisions of this Agreement, not to cause or
permit AAP or the AAP Subsidiaries to take any action which would have the
effect of denying FCEI the right to acquire the AAP Shares in the manner
contemplated by this Agreement.
5.3. MAINTAIN BUSINESS AS A GOING CONCERN. AAPH shall use its best
efforts to cause AAP and the AAP Subsidiaries to preserve their business
organizations intact, to maintain their assets in operating condition and
repair, to retain the services of their employees and to preserve the goodwill
of their suppliers and customers.
5.4. DIVIDENDS. Except as set forth on SCHEDULE 3.3, AAPH agrees that
it will not cause or permit AAP or the AAP Subsidiaries to declare or pay any
dividends or to make any distributions without the prior written consent of
FCEI.
5.5. EMPLOYEE COMPENSATION. Except in the ordinary course of business
or as otherwise set forth on SCHEDULE 3.3, AAPH will not cause or permit AAP or
the AAP
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Subsidiaries to increase employee compensation levels or pay any bonuses to
employees without the prior written consent of FCEI.
5.6. NO MATERIAL CHANGES IN THE BUSINESS OF AAP. Except as set forth on
SCHEDULE 3.3, AAPH will not cause or permit AAP or any of the AAP Subsidiaries,
without the written consent of FCEI, to:
(a) purchase, sell, lease or dispose of any material property
or assets or incur any material liability or enter into any material transaction
other than in the ordinary course of business;
(b) issue, sell or otherwise distribute any treasury shares
or any of its stock, or effect any stock split or reclassification of any shares
of capital stock or grant or commit to grant any option, warrant or other right
to subscribe for or purchase or otherwise acquire any share of its capital stock
or security convertible or exchangeable for such shares;
(c) effect any amendment to its Articles of Incorporation or
Bylaws, except as may be necessary to remain in existence;
(d) authorize any director, or authorize or permit any
officer or employee or any attorney, accountant or other representative retained
by it to solicit or encourage any inquiries or the making of any proposal which
it reasonably expects may lead to any proposal
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for a merger, tender offer or other business combination involving it, or for
the acquisition of a substantial equity interest in it or a substantial portion
of its assets; or
(e) enter into any transaction with any affiliate of AAP or
AAPH, other than in the ordinary course of business.
5.7. NECESSARY CONSENTS AND GOVERNMENTAL APPROVALS. AAPH shall cause
AAP and the AAP Subsidiaries to use their best efforts to obtain all consents
from parties to contracts, licenses, leases and other agreements of AAP and the
AAP Subsidiaries, and all consents or permits from governmental authorities
which are required by the terms thereof, by this Agreement or otherwise for the
consummation of the transactions contemplated hereby.
5.8. FINANCIAL STATEMENTS. As promptly as practicable hereafter, (a)
AAPH shall, and shall cause AAP and the AAP Subsidiaries to, cooperate with FCEI
in all reasonable respects in connection with the preparation of audited and
unaudited financial statements of AAP and the AAP Subsidiaries, and certain pro
forma financial information, which will be required to be included in FCEI's
reports to the SEC following the completion of the Reorganization, as specified
by applicable SEC regulations (the "Required Financial Statements"); (b) AAPH
shall cause AAP and the AAP Subsidiaries to engage Xxxxxx & Xxxxxx, P.L.C. to
audit the Required Financial Statements to the extent required by applicable SEC
regulations, and (c) AAPH shall cause AAP and the AAP Subsidiaries to take all
other actions reasonably necessary to permit the preparation of the Required
Financial Statements as soon as practicable after the date hereof.
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ARTICLE VI.
PRE-CLOSING
COVENANTS OF FCEI
Until the Closing, FCEI hereby agrees to keep, perform and fully
discharge the following covenants and agreements:
6.1. INVESTIGATION OF BUSINESS OF FCEI AND THE FCEI SUBSIDIARY BY AAPH.
FCEI shall afford, and shall cause the FCEI Subsidiary to afford, to the
officers, employees and authorized representatives of AAPH (including, without
limitation, independent public accountants and attorneys) reasonable access
during normal business hours to the offices, properties, customers, suppliers,
employees and business and financial records (including computer files,
retrieval programs and similar documentation) of FCEI and the FCEI Subsidiary to
the extent AAPH shall deem necessary or desirable, and shall furnish to AAPH or
its authorized representatives such additional information concerning the
operations, properties and business of FCEI and the FCEI Subsidiary as shall be
reasonably requested, including all such information as shall be necessary to
enable AAPH or its authorized representatives to verify the accuracy of the
representations and warranties contained in Article IV and to verify the
accuracy of the financial statements referred to in Section 4.4, and to
determine whether the conditions set forth in Article IX have been satisfied.
Notwithstanding the foregoing, AAPH and its representatives shall not contact
any customer, supplier or employee of FCEI or the FCEI Subsidiary without the
prior consent of FCEI, which shall not be unreasonably withheld. AAPH
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agrees that its investigation shall be conducted in such manner as not to
interfere unreasonably with the operation of the business of FCEI and the FCEI
Subsidiary. No investigation made by AAPH or its authorized representatives
hereunder shall affect the scope or validity of the representations and
warranties of FCEI, and AAPH shall continue to have the right to rely solely on
such representations and warranties. The parties agree to keep all such
information obtained confidential except to the extent necessary to comply with
applicable laws.
6.2. ORDINARY COURSE OF BUSINESS. FCEI shall use its best efforts to
operate, and to cause the FCEI Subsidiary to operate, in the ordinary course of
business and, subject to the provisions of this Agreement, not to take or cause
or permit the FCEI Subsidiary to take any action which would have the effect of
denying AAPH the right to acquire the FCEI Preferred Shares in the manner
contemplated by this Agreement.
6.3. MAINTAIN BUSINESS AS A GOING CONCERN. FCEI shall use its best
efforts, and shall cause the FCEI Subsidiary to use its best efforts, to
preserve its business organization intact, to maintain its assets in operating
condition and repair, to retain the services of its employees and to preserve
the goodwill of its suppliers and customers.
6.4. DIVIDENDS. Except as set forth in SCHEDULE 4.5, FCEI agrees that
it will not declare or pay any dividends or make any distributions without the
prior written consent of AAPH.
6.5. EMPLOYEE COMPENSATION. Except in the ordinary course of business
or as
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otherwise set forth in SCHEDULE 4.5, FCEI will not increase employee
compensation levels or pay any bonuses to employees without the prior written
consent of AAPH.
6.6. NO MATERIAL CHANGES IN THE BUSINESS OF FCEI. Except as set forth
in SCHEDULE 4.5, neither FCEI nor the FCEI Subsidiary will, without the written
consent of AAPH:
(a) purchase, sell, lease or dispose of any material property
or assets or incur any material liability or enter into any material transaction
other than in the ordinary course of business;
(b) issue, sell or otherwise distribute any treasury shares
or any of its stock, or effect any stock split or reclassification of any shares
of capital stock or grant or commit to grant any option, warrant or other right
to subscribe for or purchase or otherwise acquire any share of its capital stock
or security convertible or exchangeable for such shares;
(c) effect any amendment to its Articles of Incorporation or
Bylaws, except as may be necessary to remain in existence;
(d) authorize any director, or authorize or permit any
officer or employee or any attorney, accountant or other representative retained
by it to solicit or encourage any inquiries or the making of any proposal which
it reasonably expects may lead to any proposal for a merger, tender offer or
other business combination involving it, or for the acquisition of a substantial
equity interest in it or a substantial portion of its assets; or
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(e) enter into any transaction with any affiliate of FCEI,
other than in the ordinary course of business.
6.7. NECESSARY CONSENTS AND GOVERNMENTAL APPROVALS. FCEI shall use, and
shall cause the FCEI Subsidiary to use, its best efforts to obtain all consents
from parties to contracts, licenses, leases and other agreements of FCEI or the
FCEI Subsidiary, and all consents or permits from governmental authorities which
are required by the terms thereof, by this Agreement or otherwise for the
consummation of the transactions contemplated hereby.
6.8. EXCHANGE ACT FILINGS. As promptly as practicable after the date
hereof, FCEI will prepare and file with the SEC any and all filings which FCEI
was required to make under the Exchange Act which have not previously been made,
and will file any amendments to previous filings made by FCEI with the SEC as
necessary to ensure that such filings comply in all material respects with
applicable SEC regulations (the "Required SEC Filings"). FCEI will also prepare
and file with the SEC any and all filings which FCEI is required to make under
the Exchange Act between the date of this Agreement and the Closing Date. FCEI
will provide AAPH with copies of all of the Required SEC Filings and other
filings made by FCEI with the SEC prior to the Closing Date promptly after each
such filing has been made and with copies of all correspondence received by FCEI
from the SEC or from any state securities regulatory agency.
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ARTICLE VII.
ADDITIONAL PRE-CLOSING COVENANTS
Until the Closing, each of the parties hereto hereby agrees to keep,
perform and fully discharge the following covenants and agreements:
7.1. APPROVALS. Each of the parties hereto shall use its best efforts
to obtain any authorization, approval or consent of vendors, suppliers, lenders
or other parties whose consent is required for the consummation of the
transactions contemplated hereby.
7.2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
parties hereto shall refrain from taking any action which would render any
representation or warranty made by such party herein inaccurate in any material
respect as of the Closing Date. Each party shall promptly notify the other party
of any lawsuit, proceeding, claim or investigation that may be threatened,
brought, asserted or commenced against the notifying party involving in any way
the transactions contemplated by this Agreement.
7.3. MALLYCLAD. It is acknowledged by AAPH and FCEI that Mallyclad
Corp., a Michigan corporation ("Mallyclad"), was originally intended to be
merged into AAP prior to the Closing Date. FCEI has agreed that AAP may sell its
interest in Mallyclad to a third party; provided, however, that the proceeds of
any such sale shall remain in AAP as additional working capital. In the event
that AAP has not sold its interest in Mallyclad prior to the Closing Date, AAPH
shall take all action necessary to merge Mallyclad with and into AAP prior to
the Closing
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Date. In that event, Mallyclad shall for all purposes be considered to be an AAP
Subsidiary hereunder, except that references to the State of Delaware as they
relate to Mallyclad shall be deemed to be references to the State of Michigan.
ARTICLE VIII.
CONDITIONS PRECEDENT TO OBLIGATIONS OF FCEI
The obligations of FCEI to effect the transactions contemplated by this
Agreement shall, at the option of FCEI, be subject to the satisfaction, on or
prior to the Closing Date, of the following conditions:
8.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES. (a)
There shall have been no material breach by AAPH in the performance of any of
its covenants and agreements herein; (b) each of the representations and
warranties of AAPH contained herein shall be true and correct in all material
respects on the Closing Date as though made on the Closing Date; and (c) there
shall have been delivered to FCEI a certificate to such effect, dated the
Closing Date, signed on behalf of AAPH by an authorized representative of AAPH.
8.2. DELIVERY OF DOCUMENTS. AAPH shall have executed and delivered to
FCEI all documents required to be so executed and delivered by AAPH hereunder.
8.3. NO CHANGES OR DESTRUCTION OF PROPERTY. (a) Between the date hereof
and the Closing Date, there shall have been (i) no material adverse change in
the assets, liabilities,
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business, properties, profits, prospects or condition of AAP or the
Subsidiaries; (ii) no material adverse federal or state legislative or
regulatory change affecting the products, services or business of AAP or the
Subsidiaries; and (iii) no material damage to the properties and assets of AAP
or the Subsidiaries, by fire, flood, casualty, act of God or the public enemy or
other cause, regardless of insurance coverage for such damage; and (b) there
shall have been delivered to FCEI a certificate or certificates to such effect,
dated the Closing Date, signed on behalf of AAPH by an authorized representative
of AAPH.
8.4. NO RESTRAINT OR LITIGATION. No action, suit, investigation or
proceeding shall have been instituted or threatened to restrain or prohibit or
otherwise challenge the legality or validity of the transactions contemplated
hereby.
8.5. NECESSARY GOVERNMENTAL APPROVALS. AAP shall have received all
governmental and regulatory approvals and actions necessary for it to consummate
the transactions contemplated hereby which are either required to be obtained
prior to the Closing Date by applicable law or regulation or are necessary to
prevent a material adverse change in the assets, liabilities, business,
properties, profits, prospects or condition of AAP.
8.6. NECESSARY CONSENTS. AAP shall have received consents, in form and
substance reasonably satisfactory to FCEI, to the transactions contemplated
hereby from all parties to all contracts, leases, agreements and permits to
which AAP is a party or by which it is affected and which require such consent
in connection with the execution and performance by AAPH of this
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Agreement or are necessary to prevent a material adverse change in the assets,
liabilities, business, properties, profits, prospects or condition of AAP.
8.7. REQUIRED FINANCIAL STATEMENTS. The Required Financial Statements
shall have been completed and delivered to FCEI, with such audit reports as are
required under applicable SEC regulations, issued by Xxxxxx & Xxxxxx, PLC.
8.8. ABSENCE OF MATERIAL ADVERSE FINDINGS. AAPH shall not have
discovered any material adverse fact or circumstance regarding FCEI or the
ability of FCEI to consummate the transactions contemplated by this Agreement
which has not been disclosed to AAPH prior to the date hereof and which cannot
reasonably be remedied.
ARTICLE IX.
CONDITIONS PRECEDENT TO OBLIGATIONS
OF AAPH
The obligations of AAPH to effect the transactions contemplated hereby
shall, at its option, be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
9.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES. (a)
There shall have been no material breach by FCEI in the performance of any of
its covenants and
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agreements herein; (b) each of the representations and warranties of FCEI
contained or referred to in this Agreement shall be true and correct in all
material respects on the Closing Date as though made on the Closing Date, except
as affected by transactions contemplated by this Agreement; and (c) there shall
have been delivered to AAPH a certificate or certificates to such effect, dated
the Closing Date, signed on behalf of FCEI by one of its authorized
representatives.
9.2. DELIVERY OF DOCUMENTS. FCEI shall have executed and delivered to
AAPH all documents required to be so executed and delivered by FCEI hereunder.
9.3. NO CHANGES OR DESTRUCTION OF PROPERTY. (a) Between the date hereof
and the Closing Date, there shall have been (i) no material adverse change in
the assets, liabilities, business, properties, profits, prospects or condition
of FCEI; (ii) no material adverse federal or state legislative or regulatory
change affecting the products, services or business of FCEI; and (iii) no
material damage to the properties and assets of FCEI, by fire, flood, casualty,
act of God or the public enemy or other cause, regardless of insurance coverage
for such damage; and (b) there shall have been delivered to AAPH a certificate
or certificates to such effect, dated the Closing Date, signed on behalf of FCEI
by an authorized representative of FCEI.
9.4. NO RESTRAINT OR LITIGATION. No action, suit or proceeding by any
governmental agency shall have been instituted or threatened to restrain or
prohibit or otherwise challenge the legality or validity of the transactions
contemplated hereby.
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9.5. NECESSARY GOVERNMENTAL APPROVALS. FCEI shall have received all
governmental and regulatory approvals and actions necessary for it to consummate
the transactions contemplated hereby which are required to be obtained prior to
the Closing Date by applicable law or regulation or are necessary to prevent a
material adverse change in the assets, liabilities, business, properties,
profits, prospects or condition of FCEI.
9.6. NECESSARY CONSENTS. FCEI shall have received consents, in form and
substance reasonably satisfactory to AAPH, to the transactions contemplated
hereby from all parties to all contracts, leases, agreements and permits to
which FCEI is a party or by which it is affected and which require such consent
in connection with the execution and performance by FCEI of this Agreement or
are necessary to prevent a material adverse change in the assets, liabilities,
business, properties, profits, prospects or condition of FCEI.
9.7. EXCHANGE ACT FILINGS. All of the Required SEC Filings shall have
been made as provided in Section 6.8 hereof, and the SEC shall not have taken
any action, or communicated any intention to FCEI thereafter that the SEC
intends to take any action, which would have the purpose or effect of: (a)
suspending or terminating FCEI's registration under Section 12 of the Exchange
Act; (b) suspending or terminating the eligibility of FCEI's common stock for
trading on the NASDAQ OTC Electronic Bulletin Board; or (c) implementing
enforcement or other proceedings against FCEI.
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9.8. NASDAQ LISTING ELIGIBILITY. As of the Closing Date, FCEI shall
meet all requirements for listing of its common stock for trading on the Nasdaq
Small-Cap Market, with the exception of the minimum bid price requirement.
9.9. ABSENCE OF MATERIAL ADVERSE FINDINGS. FCEI shall not have
discovered any material adverse fact or circumstance regarding AAPH or the
ability of AAPH to consummate the transactions contemplated by this Agreement
which has not been disclosed to FCEI prior to the date hereof and which cannot
reasonably be remedied.
ARTICLE X.
POST-CLOSING COVENANTS
10.1. FCEI BOARD MEETING. Immediately after Closing, FCEI shall hold a
special meeting of its directors, duly noticed, for the following purposes:
(a) Accepting the resignations of all officers and directors
of FCEI (except Xxxxx X. Xxxxxx and Xxxx Xxxxxxxxxx), which resignations shall
have been submitted prior to the Closing and shall be contingent upon the
Closing;
(b) Appointing a new board of directors and officers of FCEI
and the FCEI Subsidiary as listed and set forth on SCHEDULE 10.1;
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(c) Appointing a new board of directors and officers of AAP
and the AAP Subsidiaries as listed and set forth on SCHEDULE 10.1;
(d) Authorizing the indemnification of the officers and
directors of FCEI, AAP, the FCEI Subsidiary and the AAP Subsidiaries;
(e) Authorizing the necessary actions to undertake the
listing of the common stock of FCEI on the Nasdaq Small-Cap Market or another
appropriate exchange;
(f) Authorizing the reincorporation of FCEI in Delaware
pursuant to a change of domicile merger (the "Reincorporation"), in which the
following terms, among others, would apply:
(i) The surviving corporation would be a Delaware
corporation;
(ii) The Certificate of Incorporation and Bylaws of the
Delaware corporation would be the Certificate of Incorporation and
Bylaws of the surviving corporation;
(iii) The directors and officers of FCEI would be the
directors and officers of the surviving corporation;
(iv) The authorized capital of the surviving corporation
would consist
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of 50 million common shares and 20 million preferred shares, with the
preferred shares issuable in series as designated by the board of
directors;
(v) Each outstanding share of common stock of FCEI would be
converted into one-tenth (1/10th) of a share of common stock of the
surviving corporation;
(vi) Each outstanding share of Series A Preferred should be
converted into one-tenth (1/10th) of a share of common stock of the
surviving corporation; and
(vii) The name of the surviving corporation would be
"American Architectural Products Corporation;"
(g) Approving the submission of the reincorporation to a
vote of the shareholders of FCEI at a meeting to be held as soon as practicable
thereafter in compliance with SEC requirements and Utah law;
(h) Approving a key employee incentive stock plan under
which officers and other key employees of FCEI designated by the board of
directors or an authorized committee would be eligible to receive grants of
incentive and non-qualified stock options in an amount not to exceed at any time
a percentage of the outstanding common stock of FCEI reasonably acceptable to
FCEI and AAPH.
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(i) Approving the selection of auditors and legal counsel for
FCEI; and
(j) Conducting such other business as may properly come
before the special meeting of the board.
10.2. FCEI SHAREHOLDERS MEETING. As soon as practicable after the
Closing Date, FCEI will call a special meeting of its shareholders (the "FCEI
Shareholders Meeting") to approve the Reincorporation, as described in Section
10.1. The notice of such meeting shall be accompanied by a proxy statement or
information statement, as applicable (the "Proxy Statement"), which has been
filed with the SEC and which meets the applicable requirements of Section 14 of
the Exchange Act and the rules and regulations promulgated thereunder. The FCEI
Shareholders Meeting shall be called, held and conducted, and any proxies will
be solicited, in compliance with applicable law. FCEI shall use its best efforts
to obtain from the FCEI shareholders the approval of the Reincorporation.
10.3. PROXY STATEMENT. As promptly as practicable after the Closing
Date, FCEI shall prepare and file with the SEC the Proxy Statement and any other
documents required to be filed in connection therewith. AAPH shall cooperate
with FCEI in all reasonable respects in connection with the preparation and
filing of the Proxy Statement with the SEC, and in responding to any SEC
comments with respect to the Proxy Statement.
10.4. REINCORPORATION; VOTING. AAPH agrees that it will vote all
shares of Series A Preferred, and any shares of FCEI common stock and proxies
held by AAPH, in favor of the
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Reincorporation at the FCEI Shareholders Meeting. FCEI will cause the
Reincorporation to occur as soon as practicable after the necessary approval is
obtained at the FCEI Shareholders Meeting.
10.5. MASCOTECH OPTION AND PLEDGE AGREEMENT. AAPH is a party to that
certain Option and Pledge Agreement dated August 29, 1996 (the "Option
Agreement") between AAPH and MascoTech, Inc., a Delaware corporation
("MascoTech"), pursuant to which AAPH has granted MascoTech an option to
purchase certain of the shares of AAP common stock (the "Option Shares") and has
pledged the Option Shares to secure the performance by AAPH of its obligations
under the Option Agreement. As of the Closing Date, FCEI and AAPH agree that
FCEI will, and will cause AAP to, use its best efforts to cause all amounts owed
by AAP to MascoTech under the Promissory Notes (as defined in the Option
Agreement) to be paid in full on or prior to December 31, 1997. Without limiting
the foregoing sentence, such best efforts shall include, if necessary, obtaining
third-party financing on terms reasonably acceptable to FCEI to provide the
funds necessary to pay such amounts. In the event that all amounts owed by AAP
to MascoTech under the Promissory Notes are not paid in full on or prior to
December 31, 1997 and MascoTech exercises its option to acquire any of the
Option Shares at any time subsequent to the Closing Date: (i) AAPH shall deliver
to MascoTech, in accordance with the terms of the Option Agreement, such number
of the FCEI Preferred Shares or, after conversion, the FCEI Common Shares as
shall be required by the terms of the Option Agreement; and (ii) FCEI shall
issue to AAPH a number of FCEI Common Shares equal to (A) the number of FCEI
Common Shares delivered by AAPH to MascoTech in accordance with the preceding
clause (i) or (B) the number of FCEI Common Shares into which any FCEI Preferred
Shares delivered
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by AAPH to MascoTech in accordance with the preceding clause (i) would convert.
Notwithstanding the foregoing, FCEI shall not be obligated to issue to AAPH any
FCEI Common Shares pursuant to the preceding clause (ii) if all amounts owed by
AAP to MascoTech under the Promissory Notes are paid in full in accordance with
the terms thereof (as in effect on the date of this Agreement) on or prior to
December 31, 1997.
10.6. GUARANTIES OF AMEDIA, MASTERNICK AND XXXXXXXXXX. Xxxxx X. Xxxxxx
("Amedia") and Xxxx Xxxxxxxxxx ("Masternick") have been required to be either a
co-obligor or guarantor of debt of FCEI. Xxxxxx Xxxxxxxxxx ("Xxxxxxxxxx") has
been required to be either a co-obligor or guarantor of debt of AAP. As of the
Closing Date, FCEI and AAPH agree that FCEI will, and will cause AAP to, use
their best efforts to secure the release of Amedia, Masternick and Xxxxxxxxxx
from all obligations as either a co-obligor or guarantor of FCEI or AAP debt. In
addition, effective as of the Closing Date, FCEI will indemnify, defend and hold
harmless Amedia, Masternick and Xxxxxxxxxx, and their respective heirs,
successors and assigns, against any loss, cost or expense, including reasonable
attorneys fees, which any of them may incur as a result of being a co-obligor or
guarantor of any FCEI or AAP debt. FCEI will not, and will not cause or permit
AAP to, sell, exchange, transfer or otherwise dispose of assets securing any
FCEI or AAP debt without the prior written consent of any such person who is a
co-obligor or guarantor of such debt, which consent shall not be unreasonably
withheld. Amedia, Masternick and Xxxxxxxxxx are hereby expressly made third
party beneficiaries of this Section 10.6, but not of any other section of this
Agreement.
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ARTICLE XI.
NOTICES
All notices and other communications hereunder shall be in writing and
shall be sufficiently given if made by hand delivery, by telex, by telecopier or
by registered or certified mail (postage prepaid and return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by it by like notice):
If to AAPH: AAP Holdings, Inc.
000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx
If to FCEI: Forte Computer Easy, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxxx X. Xxxxxx
All such notices or other communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if delivered by mail; when
answered back, if telexed; and when receipt acknowledged, if telecopied.
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ARTICLE XII.
CONFIDENTIALITY
Each party hereto shall treat this Agreement and the transactions
contemplated by this Agreement in strict confidence and shall make no disclosure
or public announcement thereof, except as required by applicable law, without
the prior consent of the other party. The parties have previously agreed on a
form of press release to be issued with respect to the signing of this
Agreement, and no other public announcement of such signing will be made by
either party without the prior consent of the other. If the transactions
contemplated by this Agreement are not consummated, each party agrees to return
to the other party all written information furnished to it by such other party
and all copies thereof, to preserve and protect such confidential information
and not to use such confidential information to be made available to any third
party, except to the extent contemplated hereby. This Article shall not apply to
any information that (a) is or becomes generally available to the public other
than as a result of a disclosure by the receiving party, (b) was available to
the receiving party on a nonconfidential basis prior to the disclosure to the
receiving party by the disclosing party, or (c) is independently developed by
the receiving party or becomes available to the receiving party from a source
having no confidentiality obligation to the disclosing party.
ARTICLE XIII.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
13.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
Notwithstanding any
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investigation conducted before or after the Closing Date, and notwithstanding
any actual or implied knowledge or notice of any facts or circumstances which
FCEI or AAPH may have as a result of such investigation or otherwise, each party
will be entitled to rely upon the other party's representations, warranties and
covenants set forth in this Agreement. The obligations of a party with respect
to its representations, warranties and covenants in this Agreement will survive
the Closing of the transactions contemplated by this Agreement and continue in
full force and effect until the date which is eighteen months after the Closing
Date (the "Termination Date"), at which time the representations, warranties and
covenants of the parties set forth in this Agreement and all liability of the
parties with respect to such representations, warranties and covenants will
terminate; provided, however, that thereafter a party will remain liable to the
extent set forth below in connection with any claim for indemnity made against
such party on or before the Termination Date until such time as such indemnity
claim has been finally decided, settled or adjudicated.
13.2 INDEMNIFICATION OBLIGATIONS OF AAPH. Subject to the provisions of
this Agreement, from and after the Closing, AAPH shall indemnify, defend and
hold harmless FCEI and its subsidiaries and affiliates, each of their respective
officers, directors, employees, agents and representatives and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "FCEI Indemnified Parties") from, against and in respect of any and all
claims, liabilities, obligations, losses, costs, expenses, penalties, fines and
other judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to the following:
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(a) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or
investigations filed against any FCEI Indemnified Party that relate to
AAP or the AAP Subsidiaries or the business of AAP or the AAP
Subsidiaries to the extent the principal event giving rise thereto
occurred prior to the Closing Date or which result from or arise out of
any action or inaction prior to the Closing Date of AAPH, AAP, any of
the AAP Subsidiaries or any affiliate, officer, director, employee,
agent, representative or subcontractor of any thereof;
(b) any breach of any representation, warranty,
covenant, agreement or undertaking made by AAPH in this Agreement or in
any certificate, agreement, exhibit, schedule or other writing
delivered by AAPH, AAP or any of the AAP Subsidiaries to FCEI in
connection with the matters contemplated thereby or pursuant to the
provisions thereof (collectively, the "AAPH Ancillary Documents") which
is not cured or resolved promptly by AAPH, AAP or any of the AAP
Subsidiaries;
(c) notwithstanding any disclosure on Schedule 3.4 to
this Agreement, any and all actions, suits, claims or similar
proceedings brought by the owners or licensors of the patents listed on
Schedule 3.9 to this Agreement if such claims relate to sales of
infringing products by AAP or the AAP Subsidiaries occurring prior to
the Closing Date; and
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(d) any fraud, willful misconduct, bad faith or any
intentional breach of any representation, warranty, covenant, agreement
or undertaking made by AAPH, AAP or any of the AAP Subsidiaries in this
Agreement or the AAPH Ancillary Documents.
The claims, liabilities, obligations, losses, costs, expenses, penalties, fines
and damages of the FCEI Indemnified Parties described in this Section 13.2 as to
which the FCEI Indemnified Parties are entitled to indemnification are
hereinafter collectively referred to as "FCEI Losses."
13.3 INDEMNIFICATION OBLIGATIONS OF FCEI. Subject to the provisions of
this Agreement, from and after the Closing, FCEI shall indemnify, defend and
hold harmless AAPH and its affiliates, each of their respective officers,
directors, employees, agents and representatives and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"AAPH Indemnified Parties") from, against and in respect of any and all claims,
liabilities, obligations, losses, costs, expenses, penalties, fines and other
judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to the following:
(a) any and all actions, suits, claims or legal,
administrative, arbitration, governmental or other proceedings or
investigations of AAP or the AAP Subsidiaries or the business of AAP or
the AAP Subsidiaries to the extent the principal event giving rise
thereto occurred subsequent to the Closing Date or
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which would result from or arise out of any action or inaction
subsequent to the Closing Date of FCEI, AAP, any of the AAP
Subsidiaries or any affiliate, officer, director, employee, agent,
representative or subcontractor of any thereof;
(b) any breach of any representation, warranty,
covenant, agreement or undertaking made by FCEI in this Agreement or in
any certificate, agreement, exhibit, schedule or other writing
delivered by FCEI or the FCEI Subsidiary to AAPH in connection with the
matters contemplated thereby or pursuant to the provisions thereof (the
"FCEI Ancillary Documents") which is not cured or resolved promptly by
FCEI or any of its affiliates; or
(c) any fraud, willful misconduct, bad faith or any
intentional breach of any representation, warranty, covenant, agreement
or undertaking made by FCEI or the FCEI Subsidiary in this Agreement or
the FCEI Ancillary Documents.
The claims, liabilities obligations, losses, costs, expenses, penalties, fines
and damages of the AAPH Indemnified Parties described in this Section 13.3 as to
which the AAPH Indemnified Parties are entitled to indemnification are
hereinafter collectively referred to as "AAPH Losses."
13.4 SATISFACTION OF INDEMNIFICATION OBLIGATIONS. In the event FCEI
shall have any liability to any of the AAPH Indemnified Parties in respect of
AAPH Losses, FCEI shall satisfy such liability by the payment of cash to such
AAPH Indemnified Party, or upon the agreement
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of such AAPH Indemnified Party, by delivering to such AAPH Indemnified Party a
number of shares of FCEI common stock having an aggregate fair market value on
the date of delivery equal to the amount of such liability. In the event AAPH
shall have any liability to any of the FCEI Indemnified Parties in respect of
FCEI Losses, AAPH shall satisfy such liability by the payment of cash to such
FCEI Indemnified Party, or upon the agreement of such FCEI Indemnified Party, by
delivering to such FCEI Indemnified Party a number of shares of FCEI common
stock having an aggregate fair market value on the date of delivery equal to the
amount of such liability.
ARTICLE XIV.
TERMINATION
14.1. TERMINATION. This Agreement may be terminated and the
Reorganization abandoned at any time prior to the Closing Date:
(a) by FCEI if there has been a material breach by AAPH of
any covenant or agreement of AAPH set forth in this Agreement or in any other
agreement or instrument delivered by AAPH to FCEI, which breach has not been
cured within ten (10) days of the date on which written notice of such breach
was first given to AAPH;
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(b) by AAPH if there has been a material breach by FCEI of
any covenant or agreement of FCEI in this Agreement or in any other agreement or
instrument delivered by FCEI to AAPH, which breach has not been cured within ten
(10) days of the date on which written notice of such breach was first given to
FCEI;
(c) by FCEI if it reasonably determines that the timely
satisfaction of any condition set forth in Article VIII by the Final Date (as
hereinafter defined) has become impossible (other than as a result of any
failure on the part of FCEI to comply with or perform any covenant or obligation
of FCEI set forth in this Agreement or in any other agreement or instrument
delivered by FCEI to AAPH);
(d) by AAPH if it reasonably determines that the timely
satisfaction of any condition set forth in Article IX by the Final Date has
become impossible (other than as a result of any failure on the part of AAPH to
comply with or perform any covenant or obligation set forth in this Agreement or
in any other agreement or instrument delivered by AAPH to FCEI);
(e) by FCEI if the Closing has not taken place on or before
the Final Date (other than as a result of any failure on the part of FCEI to
comply with or perform any covenant or obligation of FCEI set forth in this
Agreement or in any other agreement or instrument delivered by FCEI to AAPH);
(f) by AAPH if the Closing has not taken place on or before
the Final Date (other than as a failure on the part of AAPH to comply with or
perform any covenant or
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obligation set forth in this Agreement or in any other agreement or instrument
delivered by AAPH to FCEI);
(g) by the mutual consent of FCEI and the AAPH.
As used herein, the Final Date shall be January 31, 1997, except that
if a temporary, preliminary or permanent injunction or other order by any
federal or state court that would prohibit or otherwise restrain consummation of
the Reorganization shall have been issued and shall remain in effect on January
31, 1997, and such injunction shall not have become final and nonappealable,
either party, by giving the other written notice thereof on or prior to January
31, 1997, may extend the time for consummation of the Reorganization up to and
including the earlier of the date such injunction shall become final and
nonappealable or March 31, 1997, so long as such party shall, at its own
expense, use its best efforts to have such injunction dissolved.
14.2. TERMINATION PROCEDURES. If FCEI wishes to terminate this
Agreement pursuant to Section 14.1(a), Section 14.1(c), Section 14.1(e), FCEI
shall deliver to AAPH a written notice stating that FCEI is terminating this
Agreement and setting forth a brief description of the basis on which FCEI is
terminating this Agreement. If AAPH wishes to terminate this Agreement pursuant
to Section 14.1(b), Section 14.1(d) or Section 14.1(f), AAPH shall deliver to
FCEI a written notice stating that AAPH is terminating this Agreement and
setting forth a brief description of the basis on which AAPH is terminating this
Agreement.
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14.3. EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 14.1, all further obligations of the parties under this Agreement
shall terminate; provided, however, that neither AAPH nor FCEI shall be relieved
of any obligation or liability arising from any prior breach by such party of
any provision of this Agreement.
ARTICLE XV.
FEDERAL SECURITIES LAW
15.1. FEDERAL SECURITIES LAW. FCEI and AAPH understand that the
certificates for common stock to be issued to them will be restricted from
transfer, that the securities are not freely tradeable and might be required to
be held by them indefinitely or until such time, if any, as such securities are
either registered under the Securities Act of 1933, as amended, (the "Act") or
transfers may be made pursuant to an exemption from registration as is accorded
by the Act or the rules and regulations promulgated thereunder. The stock
certificates to be issued to the shareholders shall carry an appropriate legend
to be printed on the form of the certificates to ensure that the transfer,
distribution and any proposed sale or subsequent distribution of any such
securities is not in violation of the Act or the terms thereof.
15.2. LEGEND. Pursuant to paragraph (a) above, it is agreed and
understood by FCEI and AAPH that the certificates shall each conspicuously set
forth on the face or back thereof, a legend in substantially the following form:
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
ARTICLE XVI.
MISCELLANEOUS
16.1. EXPENSES. Each party hereto will pay its own costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with.
16.2. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
16.3. PARTIAL INVALIDITY. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement,
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but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision or provisions had never been contained herein.
16.4. SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and its
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests, or obligations hereunder is assignable, or shall be assigned,
by either of the parties without the prior written consent of the other. Nothing
in this Agreement, expressed or implied, is intended or shall be construed to
confer upon any person other than the parties and successors and assigns
permitted by this Section 16.4 any right, remedy or claim under or by reason of
this Agreement.
16.5. EXECUTION IN COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be considered an original counterpart,
and shall become a binding agreement when FCEI and AAPH shall have each executed
one counterpart.
16.6. TITLES AND HEADINGS. The titles and headings to Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
16.7. RECITALS, SCHEDULES AND EXHIBITS. The Recitals, Schedules and
Exhibits referred to in this Agreement shall be construed with and are an
integral part of this Agreement to the same extent as if the same had been set
forth verbatim herein.
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16.8. ADVICE OF COUNSEL. Each party hereby acknowledges that they are
entitled to and have been afforded the opportunity to consult legal counsel of
its choice regarding the terms, conditions and legal effects of this Agreement,
as well as the advisability and propriety thereof. Each party hereby further
acknowledges having so consulted with legal counsel of its choosing or having
chosen not to so consult, hereby waives any right to such legal representation
and any right to raise or rely upon the lack of such representation or effective
representation and any right to raise or rely upon the lack of representation or
effective representation in any future proceeding or in connection with any
future claim.
16.9. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement,
including the Schedules and Exhibits, contains the entire understanding of the
parties hereto with regard to the subject matter contained herein and supersedes
any prior oral or written understanding or agreement of the parties with respect
to the transactions contemplated hereby. The parties hereto, by mutual agreement
in writing, may amend, modify and supplement this Agreement in any respect, and
any party, as to such party, may (i) extend the time for performance of any
obligations of any other party, (ii) waive any inaccuracies in representations
and warranties by any other party, (iii) waive performance of any obligations by
any other party, and (iv) waive the fulfillment of any condition that is
precedent to the performance by such party of any of
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its obligations hereunder. Any such amendment or waiver must be in writing and
signed by an officer or authorized representative of AAPH and an officer or
authorized representative of FCEI.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
FORTE COMPUTER EASY, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
President
AAP HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
----------------------------------
President
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EXHIBIT 1.3(a)(iii)
__________, 19__
Forte Computer Easy, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Re: Agreement and Plan of Reorganization dated
October __, 1996 between Forte Computer Easy,
Inc. and AAP Holdings, Inc.
Ladies and Gentlemen:
We have acted as special counsel to AAP Holdings, Inc., a
Delaware corporation (the "Company"), in connection with the transactions
contemplated by that certain Agreement and Plan of Reorganization dated October
__, 1996 (the "Agreement") between the Company and Forte Computer Easy, Inc., a
Utah corporation. Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Agreement.
We have examined facsimile, certified or photostatic copies of
the Agreement and such other documents and opinions as we have deemed relevant
or necessary as the basis for the opinions set forth herein. In our examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as facsimile, certified or photostatic copies and
the authenticity of the originals of such copies. For purposes of the opinions
expressed in this letter, we have assumed, without independent investigation,
that all representations, warranties and statements with respect to factual
matters in the documents and instruments we have examined are true and accurate
as of the date of this opinion letter and have relied upon such documents and
instruments in rendering such opinions.
Based upon our examination as described herein, relying upon
the statements of fact contained in the documents and instruments that we have
examined and subject to the assumptions, limitations and qualifications
expressed in this letter, we are of the opinion that:
1. Each of the Company, AAP and the AAP Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation, and each has full corporate power, authority and
legal right to carry on its business as now conducted. The Company is duly
authorized and empowered to execute and deliver the
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Agreement and to perform its obligations thereunder in accordance with the
conditions and provisions thereof.
2. Except as contemplated by the Agreement, no filing with,
notice to or authorization or approval from any governmental or public body or
authority of the United States of America or the State of Delaware is required
in connection with the execution, delivery and performance by the Company of the
Agreement.
3. Neither the execution and delivery by the Company of the
Agreement nor the consummation of the transactions therein contemplated or the
fulfillment of, or compliance with, the terms and provisions thereof will
conflict with, or result in a breach of, any of the terms, conditions or
provisions of any applicable law or regulation or of the Certificate of
Incorporation or By-Laws of the Company.
4. The Agreement has been duly and validly executed and
delivered by the Company, and is a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, reorganization, insolvency,
moratorium and other similar laws of general application relating to or
affecting the enforcement of creditors' rights generally and by general equity
principles (regardless of whether such enforceability is considered in a
proceeding at law or in equity) and the discretion of the courts as to equitable
remedies and their application of principles of public policy.
5. The shares of common stock, $0.01 par value, of American
Architectural Products, Inc., a Delaware corporation, to be acquired by the
Company pursuant to the Agreement have been duly and validly issued.
This letter is furnished by us to you in connection with the
transactions contemplated by the Agreement and is not to be relied upon for any
other purpose or by any other party. This opinion is limited to the matters
stated herein, and no opinion is implied or may be inferred beyond the matters
expressly stated herein. This opinion shall not be published or reproduced in
any manner or distributed or circulated to any Person without our express
written consent, except to your counsel, accountants, regulators and as required
by law or regulation.
Very truly yours,
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EXHIBIT 1.3(b)(iii)
__________, 19__
AAP Holdings, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxx 00000
Re: Agreement and Plan of Reorganization dated
October __, 1996 between Forte Computer Easy,
Inc. and AAP Holdings, Inc.
Ladies and Gentlemen:
We have acted as special counsel to Forte Computer Easy, Inc.,
a Utah corporation (the "Company"), in connection with the transactions
contemplated by that certain Agreement and Plan of Reorganization dated October
__, 1996 (the "Agreement") between the Company and AAP Holdings, Inc., a
Delaware corporation. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Agreement.
We have examined facsimile, certified or photostatic copies of
the Agreement and such other documents and opinions as we have deemed relevant
or necessary as the basis for the opinions set forth herein. In our examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as facsimile, certified or photostatic copies and
the authenticity of the originals of such copies. For purposes of the opinions
expressed in this letter, we have assumed, without independent investigation,
that all representations, warranties and statements with respect to factual
matters in the documents and instruments we have examined are true and accurate
as of the date of this opinion letter and have relied upon such documents and
instruments in rendering such opinions.
Based upon our examination as described herein, relying upon
the statements of fact contained in the documents and instruments that we have
examined and subject to the assumptions, limitations and qualifications
expressed in this letter, we are of the opinion that:
1. Each of the Company and the FCEI Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and each has full corporate power, authority and
legal right to carry on its business as now conducted and is duly authorized and
empowered to execute and deliver the Agreement and to perform its obligations
thereunder in accordance with the conditions and provisions thereof.
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2. Except as contemplated by the Agreement, no filing with,
notice to or authorization or approval from any governmental or public body or
authority of the United States of America or the State of Utah is required in
connection with the execution, delivery and performance by the Company of the
Agreement.
3. Neither the execution and delivery by the Company of the
Agreement nor the consummation of the transactions therein contemplated or the
fulfillment of, or compliance with, the terms and provisions thereof will
conflict with, or result in a breach of, any of the terms, conditions or
provisions of any applicable law or regulation or of the Articles of
Incorporation or By-Laws of the Company.
4. The Agreement has been duly and validly executed and
delivered by the Company, and is a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, reorganization, insolvency,
moratorium and other similar laws of general application relating to or
affecting the enforcement of creditors' rights generally and by general equity
principles (regardless of whether such enforceability is considered in a
proceeding at law or in equity) and the discretion of the courts as to equitable
remedies and their application of principles of public policy.
5. The FCEI Preferred Shares to be acquired by the Company
pursuant to the Agreement, when so acquired in accordance with the terms of the
Agreement, will have been duly and validly issued. Upon conversion of the FCEI
Preferred Shares into the FCEI Common Shares in accordance with the terms of the
Series A Preferred, the FCEI Common Shares will have been duly and validly
issued.
This letter is furnished by us to you in connection with the
transactions contemplated by the Agreement and is not to be relied upon for any
other purpose or by any other party. This opinion is limited to the matters
stated herein, and no opinion is implied or may be inferred beyond the matters
expressly stated herein. This opinion shall not be published or reproduced in
any manner or distributed or circulated to any Person without our express
written consent, except to your counsel, accountants, regulators and as required
by law or regulation.
Very truly yours,
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EXHIBIT 1.3(c)
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of __________, 19__, by and between Forte Computer Easy, Inc., a
Utah corporation ("FCEI"), and AAP Holdings, Inc., a Delaware corporation
("AAPH").
This Agreement is made pursuant to the Agreement and Plan of
Reorganization, dated as of October __, 1996 (the "REORGANIZATION AGREEMENT"),
between FCEI and AAPH. In order to induce AAPH to consummate the transactions
contemplated by the Reorganization Agreement, FCEI has agreed to provide the
registration rights set forth in this Agreement. The execution of this Agreement
is a condition to the closing under the Reorganization Agreement.
The parties hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized terms shall have
the following meanings:
"AAPH" has the meaning ascribed to such term in the first paragraph of
this Agreement.
"AGENT" means any Person authorized to act and who acts on behalf of
AAPH or any Holder with respect to the transactions contemplated by this
Agreement, the Reorganization Agreement or any other related documents.
"COMMON STOCK" means the Common Stock of FCEI, par value $.01 per
share.
"EFFECTIVENESS DATE" means the date upon which an offering of
Registrable Securities of FCEI pursuant to this Agreement is declared effective
by the SEC.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"HOLDER" has the meaning ascribed to such term in SECTION 2 hereof.
"INDEMNIFIED HOLDER" has the meaning ascribed to such term in SECTION
8(a) hereof.
"MAJORITY HOLDERS" has the meaning ascribed to such term in SECTION
3(a) hereof.
"NASD" means the National Association of Securities Dealers, Inc.
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"OTHER SHARES" has the meaning ascribed to such term in SECTION 3(c)
hereof.
"OTHER STOCKHOLDERS" has the meaning ascribed to such term in SECTION
3(c) hereof.
"PERSON" means an individual, partnership, corporation, trust or
unincorporated association, or a government agency or political subdivision
thereof.
"PIGGYBACK REGISTRATION" has the meaning ascribed to such term in
SECTION 4 hereof.
"PROSPECTUS" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Transfer Restricted
Securities pursuant to a Registration Statement, and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"PUBLIC OFFERING" means a public offering of equity securities by FCEI
registered under the Securities Act.
"REORGANIZATION AGREEMENT" has the meaning ascribed to such term in the
second paragraph of this Agreement.
"RECOMMENDED NUMBER" shall have the meaning ascribed to such term in
SECTION 3(f).
"REGISTRABLE SECURITIES" means the FCEI common shares to be acquired by
AAPH upon conversion of the FCEI Preferred Shares (in accordance with the terms
of the Series A Preferred) pursuant to the Reorganization Agreement; provided
that such Common Stock ceases to be Registrable Securities when such Common
Stock is no longer a Transfer Restricted Security.
"REGISTRATION EXPENSES" has the meaning ascribed to such term in
SECTION 7 hereof.
"REGISTRATION STATEMENT" means any registration statement of FCEI that
covers any of the Common Stock pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, and all exhibits and all
material incorporated by reference in such Registration Statement.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SEC" means the Securities and Exchange Commission.
"SHARES" means shares of Common Stock outstanding.
"STOCKHOLDERS AGREEMENT" has the meaning ascribed to such term in
Section 3(c) hereof.
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"TRANSFER RESTRICTED SECURITIES" means the Registrable Securities upon
original issuance thereof, and at all times subsequent thereto until (i) such
Registrable Securities have been effectively registered under Section 5 of the
Securities Act and disposed of in accordance with the Registration Statement
covering them or (ii) such Registrable Securities have been distributed to the
public pursuant to Rule 144 (or any similar provisions then in force) of the
Securities Act.
"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" means a
registration in which securities of FCEI are sold to an underwriter for
reoffering to the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT.
(a) REGISTRABLE SECURITIES. The securities entitled to the benefits of
this Agreement are the Registrable Securities.
(b) HOLDERS OF REGISTRABLE SECURITIES. A Person is deemed to be a
"HOLDER" of Registrable Securities whenever such Person is the beneficial owner
of Registrable Securities. FCEI is entitled to treat the record holder of
Registrable Securities as beneficial owner of Registrable Securities unless
otherwise notified by such holder.
3. DEMAND REGISTRATION.
(a) Upon the written demand of the holders of at least [51%] of
Registrable Securities (the "MAJORITY HOLDERS"), FCEI shall prepare and file a
Registration Statement under the Securities Act covering an offering of such
number of shares of Common Stock as shall have been requested by the Majority
Holders in such demand, and shall use its best efforts to cause such
Registration Statement to become effective, all in accordance with the
provisions of this Agreement; PROVIDED that FCEI shall not be obligated to
effect registration pursuant to this SECTION 3(a) (i) more than [1] time, (ii)
prior to January 1, 1998, or (iii) within 90 days following any Public Offering.
(b) Whenever FCEI shall have received a demand to effect registration
pursuant to SECTION 3(a), FCEI shall promptly give written notice of such
proposed registration to all other Holders. Any Holder may, within 30 days after
receipt of such notice, request in writing that all of such Holder's Shares, or
any portion thereof designated by such Holder, be included in the offering.
(c) Whenever FCEI shall have received a demand to effect registration
pursuant to SECTION 3(a), FCEI shall give written notice of the proposed
registration no less than 90 days prior to the filing of a Registration
Statement to any other stockholders (the "OTHER STOCKHOLDERS") of FCEI. Any
Other Stockholder may, within 30 days after receipt of such notice, request in
writing that all of such Other Stockholder's shares (the "OTHER SHARES") or any
portion thereof designated by such Other Stockholder, be included in the
offering.
(d) FCEI shall have the right to include in a registration undertaken
pursuant to SECTION 3(a) authorized but unissued shares of Common Stock.
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(e) FCEI shall proceed as expeditiously as reasonably possible after
receipt of a demand pursuant to SECTION 3(a) to file a Registration Statement
and use its best efforts to effect, within 120 days after the giving of such
written demand (or, in the case of a demand made within 60 days prior to the end
of FCEI's then fiscal year, within 210 days after the giving of such written
demand), the registration of an offering under the Securities Act.
(f) If the managing underwriter of any offering undertaken pursuant to
SECTION 3(a) advises that the number of Shares and Other Shares sought to be
registered pursuant to SECTIONS 3(a), (b), (c) AND (d) in its opinion will have
and material adverse impact on the offering (including without limitation
causing the proceeds or the price per share the Holders of Shares to be
registered will derive from such registration to be reduced or causing the
number of Shares and Other Shares to be registered to be too large a number to
be reasonably sold), the number of Shares and Other Shares to be registered
shall be reduced as follows:
(i) the number of Shares sought to be registered by FCEI shall
be reduced to the extent necessary to reduce the offering to the
aggregate number of Shares and Other Shares recommended by the managing
underwriter (the "RECOMMENDED NUMBER");
(ii) if the reduction provided for in clause (i) above does
not reduce the number of Shares to be registered to the Recommended
Number, the number of Shares sought to be registered pursuant to
SECTIONS 3(a) AND (b) shall be reduced pro rata to the extent necessary
to reduce the aggregate number of Shares and Other Shares to be
registered to the Recommended Number;
(iii) if the reductions provided for in clauses (i) and (ii)
above do not reduce the number of Shares to be registered to the
Recommended Number, the Other Shares sought to be registered pursuant
to SECTION 3(c) shall be reduced pro rata to the extent necessary to
reduce the aggregate number of Shares and Other Shares to the
Recommended Number.
(g) The Majority Holders, with the consent of FCEI (which shall not be
unreasonably withheld), shall select the representative, if any, of the
underwriters to be engaged in connection with any such registration. Any such
underwriter shall be a member firm of the New York Stock Exchange with a net
capital of at least $15,000,000.
4. PIGGYBACK REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If at any time FCEI
proposes to register any of its equity securities (other than a registration
effected solely to implement an employee benefit plan, a transaction to which
Rule 145 promulgated under the Securities Act is applicable or a transaction
eligible to be registered on Form S-4 or any successor form) under the
Securities Act, whether or not for its own account, and there are Transfer
Restricted Securities outstanding which, at such time, cannot be sold under Rule
144(k) (or any similar provision then in force), then FCEI shall give written
notice of such proposed filings to the Holders of such Transfer Restricted
Securities at least 20 business days before the anticipated filing date. Such
notice shall offer such Holders the opportunity to register such amount of
Transfer Restricted Securities
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as each such Holder may request (a "PIGGYBACK REGISTRATION"). Subject to the
provisions of SECTION 5(b) below, FCEI shall include in each such Piggyback
Registration all Transfer Restricted Securities with respect to which FCEI has
received written requests for inclusion therein within 15 business days after
notice has been duly given to the applicable Holder. The Holder of Transfer
Restricted Securities shall be permitted to withdraw all or any part of the
Transfer Restricted Securities from a Piggyback Registration at any time prior
to the effective date of such Piggyback Registration.
(b) PRIORITY ON PIGGYBACK REGISTRATION. FCEI shall use its reasonable
efforts to cause the managing underwriter of a proposed underwritten offering to
permit Holders of Transfer Restricted Securities requested to be included in the
registration for such offering to include such Transfer Restricted Securities in
such offering on the same terms and conditions as any other securities included
therein. Notwithstanding the foregoing, if the managing underwriter of such
offering advises that the number of securities such Holders, FCEI and any other
persons or entities having registration rights intend to include in such
offering would have and material adverse impact on the offering, then the amount
of Transfer Restricted Securities to be offered for the account of Holders of
Transfer Restricted Securities shall be reduced pro rata to the extent necessary
to reduce the total amount of securities to be included in such offering to the
Recommended Number.
5. HOLD-BACK AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDER OF REGISTRABLE SECURITIES.
Each Holder whose Registrable Securities are covered by a Registration Statement
filed pursuant to SECTION 3 OR 4 hereof agrees, if requested by the managing
underwriter in an underwritten offering, not to effect any public sale or
distribution of securities of the same class as the securities included in such
Registration Statement, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such underwritten registration), during the
10-day period prior to, and during the 120-day period beginning on, the closing
date of each underwritten offering made pursuant to such Registration Statement.
(b) RESTRICTIONS ON PUBLIC SALE BY FCEI AND OTHERS.
FCEI agrees:
(i) not to effect any public or private sale or distribution
of its equity securities, including a sale pursuant to Regulation D
under the Securities Act, during the 10-day period prior to, and during
the 120-day period beginning on, the closing date of each underwritten
offering made pursuant to a Registration Statement filed under SECTION
3, to the extent timely requested in writing by the managing
underwriter (except as part of such underwritten registration or
pursuant to registrations on Form S-4 or S-8 or any successor form to
such Forms), and
(ii) use its reasonable efforts to cause each holder of
privately placed equity securities issued by FCEI at any time on or
after the date of this Agreement to agree on or before the date such
securities are issued not to effect
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any public sale or distribution of any such securities, including a
sale pursuant to Rule 144 under the Securities Act, during such period
to the extent timely requested in writing by the managing underwriter
of an underwritten offering made pursuant to a Registration Statement
filed under SECTION 3 (except as part of such underwritten
registration, if permitted).
6. REGISTRATION PROCEDURES.
In connection with FCEI's obligations to file Registration Statements
pursuant to SECTIONS 3 AND 4 hereof, FCEI will use its reasonable efforts to
effect such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto FCEI will as expeditiously as reasonably possible:
(a) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement, and such supplements to the
Prospectus, as may be reasonably requested by any holder of Registrable
Securities or any underwriter of Registrable Securities or as may be required by
the rules, regulations or instructions applicable to the registration form
utilized by FCEI or by the Securities Act or rules and regulations thereunder
necessary to keep the Registration Statement effective for a period sufficient
to permit the distribution of the Registrable Securities as provided in such
Registration Statement and cause the Prospectus as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(b) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing;
(i) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective;
(ii) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information;
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; and
(iv) of the receipt by FCEI of any notification with respect to
the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.
(c) if requested, furnish, without charge, to (i) counsel to the
selling holders of Registrable Securities and each managing underwriter, at
least one signed copy of the Registration Statement and (ii) each selling holder
of Registrable Securities, at least one conformed copy of the Registration
Statement, and, with respect to copies furnished pursuant
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to both CLAUSES (i) AND (ii) hereof, any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference);
(d) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request;
(e) prior to any public offering of Registrable Securities, register or
qualify or reasonably cooperate with the selling holders of Registrable
Securities, the underwriters, if any, and their respective counsel in connection
with the registration or qualification of such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions as any
seller or underwriter reasonably requests in writing and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by Registration Statement;
provided that FCEI will not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process in any such jurisdiction where it
is not then so subject;
(f) reasonably cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends; and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters may request at least two business days prior to any sale
of Registrable Securities to the underwriters;
(g) reasonably cooperate with the selling holders of Registrable
Securities and the managing underwriter, if any, to facilitate the registration
of the Registrable Securities covered by the Registration Statement to be
registered with, and the approval thereof by, such other governmental agencies
or authorities as may be necessary to enable the seller or sellers thereof or
the underwriters, if any, to consummate the disposition of such Registrable
Securities; and
(h) use its reasonable efforts to cause all Registrable Securities
covered by the Registration Statement to be listed on each securities exchange
or quotation system on which similar securities issued by FCEI are then listed,
if requested by the holders of a majority in aggregate principal amount of such
Registrable Securities or the managing underwriters, if any.
7. REGISTRATION EXPENSES. All expenses incident to FCEI's performance of
or compliance with this Agreement, including without limitation:
(a) all registration and filing fees (including with respect to filings
required to be made with the NASD);
(b) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of FCEI's counsel in connection
with blue sky qualifications of the Registrable Securities and determination of
their eligibility for investment under the laws
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of such jurisdictions as the managing underwriter or holders of a majority in
principal amount of the Registrable Securities being sold may reasonably
designate):
(c) printing, messenger, telephone and delivery expenses;
(d) fees and disbursements of counsel for FCEI;
(e) fees and disbursements of all independent certified public
accountants of FCEI (including the expenses of any special audit necessary to
satisfy the requirements of the Securities Act and any "cold comfort" letters
required by or incident to such performance);
(f) fees and disbursements of underwriters as reasonably approved by
FCEI (excluding discounts, commissions or fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals relating to the
distribution of the Registrable Securities or legal expenses of such underwriter
or any other Person other than FCEI);
(g) fees and expenses of other Persons retained by FCEI; and
(h) filing fees and expenses associated with any NASD filing required
to be made in connection with the Registration Statement, including, if
applicable, the fees and expenses of any "qualified independent underwriter"
(and its counsel) that is required to be retained in accordance with the rules
and regulations of the NASD;
(all such expenses being herein called "REGISTRATION EXPENSES") will be borne by
FCEI regardless of whether the Registration Statement becomes effective.
FCEI will, in any event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange or quotation system on which similar
securities issued by FCEI are then listed, and the fees and expenses of any
Person, including special experts, retained by FCEI.
8. INDEMNIFICATION.
(a) INDEMNIFICATION BY FCEI. FCEI agrees to indemnify and hold harmless
each holder of Registrable Securities, its officers, directors, employees and
Agents and each Person who controls such holder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each such
person being sometimes hereinafter referred to as an "INDEMNIFIED HOLDER") from
and against all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and legal expenses) arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any such untrue statement or omission or allegation
thereof based upon
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information furnished in writing to FCEI by such holder expressly for use
therein; PROVIDED, HOWEVER, that FCEI shall not be liable in any such case to
the extent that any such loss, claim, damage, liability or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus if (i) such holder failed to
send or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale of Registrable Securities and (ii) the
Prospectus would have corrected such untrue statement or omission in all
material respects; and PROVIDED FURTHER, that FCEI shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission in the Prospectus, if such untrue statement or
alleged untrue statement, omission or alleged omission is corrected in all
material respects in an amendment or supplement to the Prospectus and if, having
previously been furnished by or on behalf of FCEI with copies of the Prospectus
as so amended or supplemented, such holder thereafter fails to deliver such
Prospectus as so amended or supplemented, prior to or concurrently with the sale
of a Registrable Security to the Person asserting such loss, claim, damage,
liability or expense who purchased such Registrable Security which is the
subject thereof from such holder. This indemnity will be in addition to any
liability which FCEI may otherwise have. FCEI will also indemnify underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, their officers, directors and employees and
each Person who controls such Persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same extent as provided
above with respect to the indemnification of the holders of Registrable
Securities.
If any action or proceeding (including any governmental investigation
or inquiry) shall be brought or asserted against an Indemnified Holder in
respect of which indemnity may be sought from FCEI, such Indemnified Holder
shall promptly notify FCEI in writing, and FCEI may assume the defense thereof
with counsel mutually satisfactory to FCEI and the Indemnified Holder. Such
Indemnified Holder shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be the expense of such Indemnified Holder unless the named
parties to any such action or proceeding (including any impleaded parties)
include such Indemnified Holder and FCEI, and such Indemnified Holder shall have
been advised by counsel that there may be one or more legal defenses available
to such Indemnified Holder which are different from or additional to those
available to FCEI (in which case, if such Indemnified Holder notifies FCEI in
writing that it elects to employ separate counsel at the expense of FCEI, FCEI
shall not have the right to assume the defense of such action or proceeding on
behalf of such Indemnified Holder, it being understood, however, that FCEI shall
not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for such Indemnified Holder and any other Indemnified Holders, which firm
shall be designated in writing by such Indemnified Holders). FCEI shall not be
liable for any settlement of any such action or proceeding effected without its
written consent, but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, FCEI agrees to
indemnify and hold harmless such Indemnified Holders from and against any loss
or liability by reason of such settlement or judgment. Any amounts advanced to
an Indemnified Holder for expenses for
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which the Indemnified Holder is ultimately determined by a court of competent
jurisdiction not to be entitled to indemnity shall be repaid immediately to
FCEI.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. Each holder of
Registrable Securities agrees to indemnify and hold harmless FCEI, its
respective directors and officers and each Person, if any, who controls FCEI
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act and any other Person ("OTHER PERSON") selling securities in a
Registration Statement including Shares of such holder, and such Other Person's
directors and officers, and each Person, if any, who controls such Other Person
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from FCEI to such
holder, but only with respect to information relating to such holder furnished
in writing by such holder expressly for use in any Registration Statement or
Prospectus, or any amendment or supplement thereto, or any preliminary
prospectus. If any action or proceeding shall be brought against FCEI, any Other
Person or their respective directors, officers, employees, agents or any
controlling person, in respect of which indemnity may be sought against a holder
of Registrable Securities, such holder shall have the rights and duties given
FCEI, and FCEI, the Other Person and their respective directors, officers, and
controlling persons shall have the rights and duties given to each holder by the
preceding paragraph. FCEI and the Other Persons shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above with respect to information so furnished in writing by
such Persons specifically for inclusion in any Prospectus or Registration
Statement.
9. RULES 144 AND 144A.
After the closing of the initial public offering of securities, FCEI
covenants that it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
SEC thereunder and FCEI will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 or Rule 144A under the Securities Act, aa such Rules
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any holder of Registrable
Securities, FCEI will deliver to such holder a written statement as to whether
it has complied with such information and requirements.
10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
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11. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. FCEI will not after the date of this
Agreement enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the holders of Registrable Securities in
this Agreement or otherwise conflicts with the provisions hereof.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless FCEI has obtained the written consent of holders of greater than
50% of the then-outstanding Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other holders of Registrable
Securities may be given by the holders of greater than 50% of Registrable
Securities being sold.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail telecopier or air courier guaranteeing overnight delivery:
(i) if to a holder of Registrable Securities, at the most
current address given by such holder to FCEI in accordance with the
provisions of this SECTION 11(c), which address initially is, with
respect to AAPH, the address set forth in Article XI of the
Reorganization Agreement; and
(ii) if to FCEI, initially at its address set forth in Article
XI of the Reorganization Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of
this SECTION 11(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed: when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent holders of Registrable Securities.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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(g) GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the internal laws of the state of Ohio without regard to the
conflict of law rules thereof.
(h) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(i) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by FCEI with respect to the
securities exchanged pursuant to the Reorganization Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
FCEI: FORTE COMPUTER EASY, INC.
By:
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Name:
---------------------
Title:
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AAPH: AAP HOLDINGS, INC.
By:
----------------------------
Name:
---------------------
Title:
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12
