EXECUTION
COPY
SECURITIES
PURCHASE
AGREEMENT
BY AND AMONG
TONTINE
CAPITAL
PARTNERS,
L.P.,
TONTINE
CAPITAL
OVERSEAS
MASTER FUND, L.P.
AND
PATRICK
INDUSTRIES,
INC.
APRIL 10 , 2007
TABLE OF
CONTENTS
Page
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ARTICLE 2
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Purchase and Sale of Shares and Issuance of
Note
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4
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|
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2.3
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Purchase Price for Shares and Form
of Payment; Delivery
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4
|
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ARTICLE 3 Buyers’ Representations and
Warranties
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4
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3.1
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Organization and
Qualification
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4
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|
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3.2
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Authorization;
Enforcement
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4
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3.5
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Restrictions on Transfer
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5
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ARTICLE 4 Representations and Warranties of the
Company
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6
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4.1
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Organization and
Qualification
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6
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4.2
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Authorization;
Enforcement
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6
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4.3
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Capitalization; Valid Issuance of
Securities
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6
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4.5
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SEC Documents; Financial
Statements.
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8
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4.6
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Absence of Certain
Changes
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8
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4.7
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Absence of Litigation
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8
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4.8
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Intellectual Property
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9
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4.10
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Permits; Compliance.
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9
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4.11
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Environmental Matters
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10
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4.12
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Title to Property
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11
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4.13
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No Investment Company or Real
Property Holding Company
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11
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4.15
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Registration Rights
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11
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4.16
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Exchange Act Registration
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11
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4.18
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Transactions with Affiliates and
Employees
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11
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4.20
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Approved Acquisitions of Securities;
No Anti-Takeover Provisions
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12
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5.1
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Form D; Blue Sky Laws
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13
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i
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5.6
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Future Acquisitions
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13
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5.7
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Announcement of Rights
Offering
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14
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ARTICLE 6 Conditions To The Company’s
Obligation
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14
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6.1
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Delivery of Transaction
Documents
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14
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6.2
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Payment of Purchase Price
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14
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6.3
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Representations and
Warranties
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14
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ARTICLE 7 Conditions to The Buyers’
Obligation
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14
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7.1
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Delivery of Transaction Documents;
Issuance of Securities
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14
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7.2
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Representations and
Warranties
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14
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7.7
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No Material Adverse
Effect
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15
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7.9
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Amendment of Rights Plan
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15
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7.10
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Control Share Statute
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15
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8.1
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Termination Provisions
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15
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8.2
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Effect of Termination
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16
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ARTICLE 9 Indemnification
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16
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9.1
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Indemnification by the
Company
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16
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ARTICLE 10 Governing Law;
Miscellaneous
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17
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10.2
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Counterparts; Electronic
Signatures
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17
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10.5
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Entire Agreement;
Amendments
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17
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10.7
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Successors and Assigns
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19
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10.8
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Third Party Beneficiaries
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19
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10.10
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Further Assurances
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19
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10.11
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No Strict Construction
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19
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10.12
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Rights Cumulative
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19
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ii
SECURITIES
PURCHASE
AGREEMENT
This SECURITIES PURCHASE AGREEMENT,
dated as of April 10, 2007, is entered into by and among PATRICK
INDUSTRIES, INC., an Indiana corporation (the “
Company ”), and the investors identified on the
signature page hereto (each a “ Buyer ”
and collectively, the “ Buyers
”).
RECITALS:
A. The
Buyers desire to provide financing to the Company, and the Company
desires to obtain financing from the Buyers, upon the terms and
conditions set forth in this Agreement, in connection with the
Company’s proposed acquisition of Adorn Holdings, Inc.
(“ Target ”);
B. The
total financing being provided by the Buyers to the Company
hereunder shall consist of the purchase by the Buyers of 980,000
shares (the “ Shares ”) of common stock,
no par value, of the Company, which constitutes 19.95% of the
common stock currently outstanding, at $11.25 per share, for a
total purchase price of $11,025,000.00, and the provision by the
Buyers of interim debt financing of up to $16,500,000.00, but not
less than $13,975,000.00 (the “ Debt Financing
”), in exchange for Senior Subordinated Promissory Notes from
the Company in like principal amount, substantially in the form
attached hereto as Exhibit A (individually, a “
Note ” and collectively, the “
Notes ”);
C. The
Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemptions from securities registration
afforded by Section 4(2) of the 1933 Act and Rule 506;
and
D. At
the Closing (as defined below), the parties hereto will execute and
deliver an Amended and Restated Registration Rights Agreement, in
the form attached hereto as Exhibit B , pursuant to which
the Company has agreed under certain circumstances to register the
resale of the Shares under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities
laws.
AGREEMENT
NOW THEREFORE, the Company and the
Buyers hereby agree as follows:
ARTICLE 1
DEFINITIONS
“ 1933 Act
” means the Securities Act of 1933, as amended.
“ 1934 Act
” means the Securities Exchange Act of 1934, as
amended.
“ Acquisition
” means the proposed acquisition by the Company of the Target
pursuant to that certain Securities Purchase Agreement dated April
10, 2007 among the Company, Target and the additional parties
thereto (the “ Target SPA ”).
“ Action ”
means any action, suit claim, inquiry, notice of violation,
proceeding (including any partial proceeding such as a deposition)
or investigation against or affecting the Company, any of its
Subsidiaries or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency,
regulatory authority (federal, state, county, local or foreign),
public board, stock market, stock exchange or trading
facility.
1
“ Agreement
” means this Securities Purchase Agreement.
“ Amended and Restated
Registration Rights Agreement ” means the Amended and
Restated Registration Rights Agreement, in the form attached hereto
as Exhibit B , to be executed and delivered at the Closing
pursuant to which the Company has agreed under certain
circumstances to register the resale of the Shares under the 1933
Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.
“ Buyer ”
and “ Buyers ” have the meaning set forth
in the preamble.
“ Claim ”
has the meaning set forth in Section 8.2 .
“ Closing
” has the meaning set forth in Section 2.4
.
“ Closing Date
” has the meaning set forth in Section 2.4
.
“ Code ”
has the meaning set forth in Section 4.13 .
“ Common Stock
” means the Company’s common stock, no par
value.
“ Company
” has the meaning set forth in the preamble.
“ Debt Financing
” has the meaning set forth in the Recitals.
“ Environmental
Laws ” has the meaning set forth in Section
4.11 .
“ ERISA ”
has the meaning set forth in Section 4.21 .
“ Reimbursement
Agreement ” has the meaning set forth in Section
5.3 .
“ GAAP ”
has the meaning set forth in Section 4.5(b) .
“ Hazardous
Materials ” has the meaning set forth in Section
4.11 .
“ IBCL ”
has the meaning set forth in Section 4.20 .
“ Indemnified
Party ” has the meaning set forth in Section
8.2 .
“ Intellectual
Property ” has the meaning set forth in Section
4.8 .
“ Investment
Company ” has the meaning set forth in Section
4.13 .
“ Legal
Requirement ” means any federal, state, local,
municipal, foreign, international, multinational or other law,
rule, regulation, order, judgment, decree, ordinance, policy or
directive, including those entered, issued, made, rendered or
required by any court, administrative or other governmental body,
agency or authority, or any arbitrator.
“ Material Adverse
Change ” means a material adverse change on the
business, condition, financial or otherwise, assets, liabilities,
or results of operations of the Company and each of its
Subsidiaries, taken as a whole; provided, however, “Material
Adverse Change” shall not include (a) changes in business or
economic conditions affecting the economy or the Company’s
and each of its Subsidiaries’ industries generally, provided
that the Company and each of its Subsidiaries are not
2
disproportionately affected thereby;
(b) changes in stock markets or credit markets; (c) any event as to
which the Buyers have provided written consent hereunder; or (d)
except for purposes of Section 4.4 , the execution, delivery
or performance of this Agreement (including any announcement
relating to this Agreement or the fact that the Company is
acquiring the Target and each of its subsidiaries).
“ Material Adverse
Effect ” means any material adverse effect on the
business, operations, assets, financial condition or prospects of
the Company.
“ Note ”
and “ Notes ” have the meaning set forth
in the Recitals.
“ Per Share
Price ” means $11.25 per Share, which is the lesser
of (a) the closing price of the Common Stock as reported on the
Nasdaq Global Market on the trading day immediately prior to the
public announcement of the Company’s entry into the Target
SPA and (b) the arithmetic average of the closing price of the
Common Stock as reported on the Nasdaq Global Market during the
twenty (20) consecutive trading day period ending five (5) trading
days prior to such public announcement. The Per Share Price shall
be rounded down to the closest $0.25 increment.
“ Permits
” has the meaning set forth in Section 4.10
.
“ Purchase Price
” has the meaning set forth in Section 2.3
.
“ Registration Rights
Agreement ” means the Registration Rights Agreement,
dated September 13, 2005, by and between Tontine Capital and the
Company pursuant to which the Company has agreed under certain
circumstances to register the resale of shares of Common Stock held
by Tontine Capital under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities
laws.
“ Rights
Agreement ” has the meaning set forth in Section
4.20 .
“ Rule 506
” means Rule 506 of Regulation D promulgated under the 1933
Act.
“ SEC ”
means the United States Securities and Exchange
Commission.
“ SEC Documents
” has the meaning set forth in Section 4.5
.
“ Securities
” means, collectively, the Shares and the Note.
“ Shares ”
has the meaning set forth in the Recitals.
“ Subsidiaries
” means with respect to the Company, Machinery Inc. and
Harlan Machinery Inc.
“ Target ”
has the meaning set forth in the Recitals.
“ Target SPA
” has the meaning set forth in the definition of
Acquisition.
“ Tontine
Capital ” means Tontine Capital Partners,
L.P.
“ Transaction
Documents ” means this Agreement, the Amended and
Restated Registration Rights Agreement, the Note, and any other
documents contemplated by this Agreement.
“ Transfer
Instructions ” has the meaning set forth in
Section 2.3 .
3
ARTICLE 2
PURCHASE AND SALE OF SHARES AND ISSUANCE OF NOTE
2.1
Purchase of Shares . Subject to the terms and conditions of
this Agreement, on the Closing Date, the Company shall issue and
sell the Shares to each Buyer and each Buyer shall purchase from
the Company the number of Shares as is set forth below such
Buyer’s name on the signature page hereto.
2.2
Issuance of Note . Subject to the terms and conditions of
this Agreement, on the Closing Date, each Buyer shall provide a
portion of the Debt Financing to the Company in the amount as is
set forth below such Buyer’s name on the signature page
hereto and the Company shall issue a Note in like principal amount
to each Buyer.
2.3
Purchase Price for Shares and Notes and Form of Payment;
Delivery . On the Closing Date each Buyer shall pay the Per
Share Price for the Shares and the amount of the Note to be issued
and sold to it at the Closing, for a total price of $11,025,000.00
for the Shares and up to $16,500,000.00, but not less than
$13,975,000.00 for the Notes (the “ Purchase
Price ”). The Purchase Price shall be paid by wire
transfer of immediately available funds in accordance with the
Company’s written instructions. At the Closing, upon payment
by the Buyers of the Purchase Price, the Company shall issue and
deliver to the Buyers the Notes in the principal amount of the
total Debt Financing, and the Company will deliver irrevocable
written instructions (“ Transfer Instructions
”) to the transfer agent for the Company’s Common Stock
to issue certificates representing the Shares registered in the
name of each Buyer and to deliver such certificates to or at the
direction of each Buyer. The Company shall not have the power to
revoke or amend the Transfer Instructions without the written
consent of the Buyers.
2.4
Closing Date . Subject to the terms of this Agreement, the
closing of the transactions contemplated by this Agreement shall
occur on or before the date that is five (5) days after the date
that the last of the conditions set forth in Article 6 and
Article 7 have been satisfied, or at such other time as may
be mutually agreed upon by the parties to this Agreement (the
“ Closing Date ”), at the offices of
McDermott Will & Emery LLP, 227 West Monroe Street, Chicago,
Illinois 60606 or at such other location or by such other method
(including exchange of signed documents) as may be mutually agreed
upon by the parties to this Agreement (“
Closing ”).
ARTICLE 3
BUYERS' REPRESENTATIONS AND WARRANTIES
Each Buyer represents and warrants
to the Company that:
3.1
Organization and Qualification . Each of the Buyers is an
entity of the type identified on the signature page hereto duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, with full power and authority
to purchase the Shares and provide the Debt Financing and otherwise
perform its obligations under this Agreement and the other
Transaction Documents.
3.2
Authorization; Enforcement . This Agreement and each of the
other Transaction Documents to be executed by the Buyers and the
consummation of the transactions contemplated hereby and thereby
have been duly and validly authorized by, and duly executed and
delivered on behalf of, such Buyer. This Agreement and each of the
other Transaction Documents to be executed by the Buyers
constitutes the valid and binding agreement of such Buyer
enforceable in accordance with its terms, except as such
enforceability may be limited by: (i) applicable bankruptcy,
insolvency, reorganization,
4
moratorium or other similar laws in
effect that limit creditors’ rights generally; (ii) equitable
limitations on the availability of specific remedies; and (iii)
principles of equity.
3.3
Securities Matters . In connection with the Company’s
compliance with applicable securities laws:
a. Such
Buyer understands that the Securities are being offered and sold to
it in reliance upon specific exemptions from the registration
requirements of United States and state securities laws and that
the Company is relying upon the truth and accuracy of, and such
Buyer’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set
forth herein in order to determine the availability of such
exemption and the eligibility of such Buyer to acquire the
Securities.
b. Such
Buyer is purchasing the Securities for its own account, not as a
nominee or agent, for investment purposes and not with a present
view towards resale, except pursuant to sales exempted from
registration under the 1933 Act, or registered under the 1933 Act
as contemplated by the Amended and Restated Registration Rights
Agreement.
c. Such
Buyer is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D under the 1933 Act, and has
such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment
in the Securities. Such Buyer understands that its investment in
the Securities involves a significant degree of risk. Such Buyer
understands that no United States federal or state agency or any
other government or governmental agency has passed upon or made any
recommendation or endorsement of the Securities.
3.4
Information . Such Buyer has conducted its own due diligence
examination of the Company’s business, financial condition,
results of operations, and prospects. In connection with such
investigation, such Buyer and its representatives (i) have reviewed
the Company’s Form 10-K for the fiscal years ended December
31, 2005 and December 31, 2006, the Company’s quarterly
reports on Form 10-Q for the three most recently concluded interim
periods and the Company’s Current Reports on Form 8-K or Form
8-K/A filed in 2006 and 2007, and (ii) have been given an
opportunity to ask questions, to the extent such Buyer considered
necessary, and have received answers from, officers of the Company
concerning the business, finances and operations of the Company and
information relating to the offer and sale of the Securities, and
(iii) have received or had an opportunity to obtain such additional
information as it deemed necessary to make an informed investment
decision with respect to the purchase of the Securities.
3.5
Restrictions on Transfer . Such Buyer understands
that except as provided in the Amended and Restated
Registration Rights Agreement, the issuance of the Securities has
not been and is not being registered under the 1933 Act or any
applicable state securities laws. Such Buyer may be required to
hold the Securities indefinitely and the Securities may not be
transferred unless (i) the Securities are sold pursuant to an
effective registration statement under the 1933 Act, or (ii) the
Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration. Such Buyer
understands that until such time as the resale of the Shares has
been registered under the 1933 Act as contemplated by the Amended
and Restated Registration Rights Agreement or otherwise may be sold
pursuant to an exemption from registration, certificates evidencing
the Shares may bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against
transfer of the certificates evidencing such Shares):
5
“THE SHARES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE “ACT”). THE SHARES MAY NOT BE OFFERED FOR
SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF
WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE CORPORATION.
”
3.6
Stock Ownership . The Buyers, in the aggregate, beneficially
owned as of the date of this Agreement, 1,313,089 shares of the
Company’s Common Stock. Except for such shares and the Shares
and the Notes to be issued pursuant to this Agreement, neither the
Buyers nor any of their respective affiliates, has or has a right
to acquire any beneficial ownership interest in any capital stock
or any other securities of the Company, and no such person has a
right to vote any common stock of the Company.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the
Company’s Disclosure Schedule attached hereto, the Company
represents and warrants to Buyers that:
4.1
Organization and Qualification . The Company has no
subsidiaries other than the Subsidiaries. The Company and each of
its Subsidiaries is a corporation, duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it
is incorporated, with corporate power and authority to own, lease,
use and operate its properties and to carry on its business as now
operated and conducted. The Company and each of its Subsidiaries is
duly qualified as a foreign corporation to do business and is in
good standing in each jurisdiction in which its ownership or use of
property or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing would not have a Material Adverse
Effect. Neither the Company nor any Subsidiary is in violation of
any provision of its respective certificate or articles of
incorporation, partnership agreement, bylaws or other
organizational or charter documents, as the same may have been
amended.
4.2
Authorization; Enforcement . The Company has all requisite
corporate power and authority to enter into and perform this
Agreement and each of the other Transaction Documents and to
consummate the transactions contemplated hereby and thereby and to
issue the Securities, in accordance with the terms hereof and
thereof. The execution and delivery of this Agreement and each of
the other Transaction Documents by the Company and the consummation
by it of the transactions contemplated hereby and thereby
(including without limitation, the issuance of the Securities) have
been duly authorized by the Company’s Board of Directors and
no further consent or authorization of the Company, its Board of
Directors, or its shareholders is required. This Agreement and each
of the other Transaction Documents have been duly executed and
delivered by the Company. This Agreement and each of the other
Transaction Documents will constitute upon execution and delivery
by the Company, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by: (i)
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws in effect that limit creditors’ rights
generally; (ii) equitable limitations on the availability of
specific remedies; (iii) principles of equity (regardless of
whether such enforcement is considered in a proceeding in law or in
equity); and (iv) to the extent rights to indemnification and
contribution may be limited by federal securities laws or the
public policy underlying such laws.
4.3
Capitalization; Valid Issuance of Securities . As of the
date hereof, the authorized capital stock of the Company consists
of 12,000,000 shares of Common Stock, of which 4,912,427 shares
are
6
issued and outstanding, and no
shares are held by the Company as treasury shares, and 1,000,000
shares of preferred stock, of which no shares are issued and
outstanding. All of such outstanding shares of Common Stock are
duly authorized, validly issued, fully paid and nonassessable. The
Securities have been duly authorized and when issued pursuant to
the terms hereof will be validly issued, fully paid and
nonassessable and will not be subject to any encumbrances,
preemptive rights or any other similar contractual rights of the
shareholders of the Company or any other person. No shares of
capital stock of the Company are subject to preemptive rights or
any other similar rights of the shareholders of the Company or any
liens or encumbrances imposed through the actions or failure to act
of the Company. As of the date of this Agreement, except as set
forth on Schedule 4.3 or disclosed in the Company’s
Proxy Statement for 2006, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of
first refusal, agreements, understandings, claims or other
commitments or rights of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for any
shares of capital stock of the Company or any of its Subsidiaries,
or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock,
(ii) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the
sale of any of its or their securities under the 1933 Act (except
the Registration Rights Agreement) and (iii) there are no
anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing
rights to security holders) that will be triggered by the issuance
of the Shares or the Notes. Except as may be described in any
documents which have been publicly filed by any of the Company's
shareholders, to the Company’s knowledge, there are no
agreements between the Company’s shareholders with respect to
the voting or transfer of the Company’s capital stock or with
respect to any other aspect of the Company’s
affairs.
4.4
No Conflicts . The execution, delivery and performance of
this Agreement and each of the other Transaction Documents by the
Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance of Securities) will not (i) conflict with or result in a
violation of any provision of the Articles of Incorporation, as
amended, of the Company or the Bylaws, as amended, of the Company,
(ii) violate or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation of, any material agreement, indenture, patent,
patent license or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in a violation of any
Legal Requirement (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to
which the Company or its securities are subject) applicable to the
Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or
affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect). Neither the Company nor any of its Subsidiaries is in
violation of its Certificate or Articles of Incorporation, bylaws
or other organizational documents and neither the Company nor any
of its Subsidiaries is in default (and no event has occurred which
with notice or lapse of time would result in a default) under, and
neither the Company nor any of its Subsidiaries has taken any
action or failed to take any action that would give to others any
rights of termination, amendment, acceleration or cancellation of,
any agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for
possible defaults as would not, individually or in the aggregate,
have a Material Adverse Effect. Except with respect to any filings
or notices related to the issuance of the Shares to be filed with
Nasdaq, if any, and as required under the 1933 Act and any
applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing
or registration with, any court, governmental agency, regulatory
agency, self regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its
obligations under the Transaction Documents. All
7
consents, authorizations, orders,
filings and registrations that the Company is required to effect or
obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof.
|
|
4.5
|
SEC Documents; Financial
Statements .
|
a. Since
December 31, 2005, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of
the 1933 Act and the 1934 Act (all of the foregoing filed prior to
the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits
to such documents) incorporated by reference therein, being
hereinafter referred to herein as the “ SEC
Documents ”), or has timely filed for a valid
extension of such time of filing and has filed any such SEC
Documents prior to the expiration of any such extension. As of
their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1933 Act and the 1934 Act and
the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
b. As
of their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with United
States generally accepted accounting principles (“
GAAP ”), consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may not include
footnotes, year end adjustments or may be condensed or summary
statements) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end
audit adjustments). Except as set forth in the financial statements
of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to December
31, 2006, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such
financial statements, which, individually or taken in the aggregate
would not reasonably be expected to have a Material Adverse
Effect.
c. Except as set
forth on Schedule 4.5 , the Company has established and
maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) under the 1934 Act).
4.6
Absence of Certain Changes . Since December 31, 2006, other
than circumstances affecting the recreational vehicle and
manufactured housing industries generally, there has not occurred
any event or circumstance that has had, resulted in, or would
reasonably be expected to have, a Material Adverse Change. Except
with respect to the transactions contemplated hereby and by each of
the other Transaction Documents and except as set forth on
Schedule 4.6 , since December 31, 2006, the Company has not
incurred any liabilities (contingent or otherwise) other than (A)
trade payables, accrued expenses and other liabilities incurred in
the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected on the Company’s
financial statements pursuant to GAAP or required to be disclosed
in filings made with the SEC.
4.7
Absence of Litigation . There is no Action pending or, to
the knowledge of the Company or any of its Subsidiaries, threatened
against or affecting the Company or any of its Subsidiaries that
(i) adversely affects or challenges the legality, validity or
enforceability of this Agreement, or (ii) would, if
8
there were an unfavorable decision,
have or reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries, nor any director
or officer thereof (in his or her capacity as such), is or has been
the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been, and to the knowledge
of the Company, there is not pending any investigation by the SEC
involving the Company or any current or former director or officer
of the Company (in his or her capacity as such). The SEC has not
issued any stop order or other order suspending the effectiveness
of any registration statement filed by the Company under the 1934
Act or the 1933 Act.
4.8
Intellectual Property . The Company and each of its
Subsidiaries owns or possesses the requisite licenses or rights to
use all patents, patent applications, patent rights, inventions,
know-how, trade secrets, copyrights, trademarks, trademark
applications, service marks, service names, trade names and
copyrights (“ Intellectual Property ”)
necessary to enable it to conduct its business as now operated
(and, to the Company’s knowledge, as presently contemplated
to be operated in the future); except as set forth on Schedule
4.8 , there is no claim or Action by any person pertaining to,
or proceeding pending, or to the Company’s knowledge
threatened, which challenges the right of the Company or of a
Subsidiary with respect to any Intellectual Property necessary to
enable it to conduct its business as now operated and to the
Company’s knowledge, the Company’s or its
Subsidiaries’ current products and processes do not infringe
on any Intellectual Property or other rights held by any person,
except where any such infringement would not reasonably be expected
to have a Material Adverse Effect.
4.9
Tax Status . The Company and each of its Subsidiaries has
made or filed all federal, state and foreign income and all other
material tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent
that the Company and each of its Subsidiaries has set aside on its
books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its
books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for
any such claim. The Company has not executed a waiver with respect
to the statute of limitations relating to the assessment or
collection of any foreign, federal, state or local tax.
|
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4.10
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Permits; Compliance
.
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a. The
Company and each of its Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted (collectively, “
Permits ”), and there is no Action pending or,
to the knowledge of the Company, threatened regarding suspension or
cancellation of any of the Permits. Neither the Company nor any of
its Subsidiaries is in conflict with, or in default or violation
of, any of the Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse
Effect.
b. Except
as set forth on Schedule 4.10(b) , since December 31, 2006,
no event has occurred or, to the knowledge of the Company,
circumstance exists that (with or without notice or lapse of time):
(a) would reasonably be expected to constitute or result in a
violation by the Company or any of its Subsidiaries, or a failure
on the part of the Company or its Subsidiaries to comply with, any
Legal Requirement; or (b) would reasonably be expected to give rise
to any obligation on the part of the Company or any of its
Subsidiaries to undertake, or to bear all or any portion of the
cost of, any remedial
9
action of any nature in connection
with a failure to comply with any Legal Requirement, except in
either case that would not reasonably be expected to have a
Material Adverse Effect. Except as set forth on Schedule
4.10(b) , neither the Company nor any of its Subsidiaries has
received any notice or other communication from any regulatory
authority or any other person, nor does the Company have any
knowledge regarding: (x) any actual, alleged, possible or potential
violation of, or failure to comply with, any Legal Requirement, or
(y) any actual, alleged, possible or potential obligation on the
part of the Company or any of its Subsidiaries to undertake, or to
bear all or any portion of the cost of, any remedial action of any
nature in connection with a failure to comply with any Legal
Requirement, except in either case that would not reasonably be
expected to have a Material Adverse Effect.
c. The
Company is in compliance in all material respects with the
provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder that are applicable to it and
has taken reasonable steps such that the Company expects to be in a
position to comply with the requirements of Section 404 of the
Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated thereunder at such time as Section 404 becomes
applicable to the Company.
d. The
Company is, and has reason to believe that for the foreseeable
future it will continue to be, in compliance with all applicable
rules of the Nasdaq Global Market. The Company has not received
notice from Nasdaq that the Company is not in compliance with the
rules or requirements thereof. The issuance and sale of the
Securities under this Agreement does not contravene the rules and
regulations of the Nasdaq Global Market, and no approval of the
shareholders of the Company is required for the Company to issue
the Shares as contemplated by this Agreement.
4.11
Environmental Matters . “ Environmental
Laws ” shall mean, collectively, all Legal
Requirements, including any federal, state, local or foreign
statute, laws, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent,
decree or judgment issued against the Company or its Subsidiaries,
relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, “
Hazardous Materials ”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials. Except for such
matters as could not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect: (i) the Company
and its Subsidiaries have complied and are in compliance with all
applicable Environmental Laws; (ii) without limiting the generality
of the foregoing, the Company and its Subsidiaries have obtained,
have complied, and are in compliance with all Permits that are
required pursuant to Environmental Laws for the occupation of their
respective facilities and the operation of their respective
businesses; (iii) none of the Company or its Subsidiaries has
received any written notice, report or other information regarding
any actual or alleged violation of Environmental Laws, or any
liabilities or potential liabilities (including fines, penalties,
costs and expenses), including any investigatory, remedial or
corrective obligations, relating to any of them or their respective
facilities arising under Environmental Laws, nor, to the knowledge
of the Company is there any factual basis therefore; (iv) there are
no underground storage tanks, polychlorinated biphenyls, urea
formaldehyde or other hazardous substances (other than small
quantities of hazardous substances for use in the ordinary course
of the operation of the Company’s and its Subsidiaries’
respective businesses, which are stored and maintained in
accordance and in compliance with all applicable Environmental
Laws), in, on, over, under or at any real property owned or
operated by the Company and/or its Subsidiaries; (v) there are no
conditions existing at any real property or with respect to the
Company or any of its Subsidiaries that require remedial or
corrective action, removal, monitoring or closure pursuant to the
Environmental Laws and (vi) to the knowledge of the Company,
neither the Company nor any of its Subsidiaries has contractually,
by operation of law, or
10
otherwise amended or succeeded to
any liabilities arising under any Environmental Laws of any
predecessors or any other Person.
4.12
Title to Property . Except for any lien for current taxes
not yet delinquent or which are being contested in good faith and
by appropriate proceedings and except as set forth on Schedule
4.12 , the Company and its Subsidiaries have good and
marketable title to all real property and all personal property
owned by them which is material to the business of the Company and
its Subsidiaries. Any leases of real property and facilities of the
Company and its Subsidiaries are valid and effective in accordance
with their respective terms, except as would not have a Material
Adverse Effect.
4.13
No Investment Company or Real Property Holding Company . The
Company is not, and upon the issuance and sale of the Securities as
contemplated by this Agreement will not be, an “investment
company” as defined under the Investment Company Act of 1940
(“ Investment Company ”). The Company is
not controlled by an Investment Company. The Company is not a
United States real property holding company, as defined under the
Internal Revenue Code of 1986, as amended (the “
Code ”).
4.14
No Brokers . The Company has taken no action which would
give rise to any claim by any person for brokerage commissions,
transaction fees or similar payments relating to this Agreement or
the transactions contemplated hereby.
4.15
Registration Rights . Except pursuant to the Amended and
Restated Registration Rights Agreement and this Agreement, neither
the Company nor any Subsidiary is currently subject to any
agreement providing any person or entity any rights (including
piggyback registration rights) to have any securities of the
Company or any Subsidiary registered with the SEC or registered or
qualified with any other governmental authority.
4.16
Exchange Act Registration . The Common Stock is registered
pursuant to the 1934 Act, and the Company has taken no action
designed to, or which, to the knowledge of the Company, is likely
to have the effect of, terminating the registration of the Common
Stock.
4.17
Labor Relations . No labor or employment dispute exists or,
to the knowledge of the Company, is imminent or threatened, with
respect to any of the employees of the Company that has, or could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
4.18
Transactions with Affiliates and Employees . Except as set
forth in the SEC Documents, none of the officers or directors of
the Company, and to the knowledge of the Company, none of the
employees of the Company, is presently a party to any transaction
or agreement with the Company (other than for services as
employees, officers and directors) exceeding $60,000, including any
contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of
the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director,
trustee or partner.
4.19
Insurance . The Company and its Subsidiaries have insurance
policies in full force and effect of a type, covering such risks
and in such amounts, and having such deductibles and exclusions as
are customary for conducting businesses and owning assets similar
in nature and scope to those of the Company and its Subsidiaries.
The amounts of all such insurance policies and the risks covered
thereby are in accordance in all material respects with all
material contracts and agreements to which the Company and/or its
Subsidiaries is a party and with all applicable Legal Requirements.
With respect to each such insurance policy: (i) the policy is
valid, outstanding and enforceable in accordance with
its
11
terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws in effect that
limit creditors’ rights generally, equitable limitations on
the availability of specific remedies and principles of equity
(regardless of whether such enforcement is considered in a
proceeding in law or in equity); (ii) neither the Company nor any
of its Subsidiaries is in breach or default with respect to its
obligations thereunder in any material respect; and (iii) no party
to the policy has repudiated, or given notice of an intent to
repudiate, any provision thereof.
4.20
Approved Acquisitions of Securities; No Anti-Takeover
Provisions . Prior to Closing, the Company will have taken all
necessary action, if any, required under the laws of the State of
Indiana or otherwise to allow the Buyers to acquire the Securities
pursuant to this Agreement and further to allow the Buyers to,
without further approval of the Company’s Board of Directors,
acquire in the future additional shares of Common Stock, until such
time as the Buyers collectively own 40% of the then-outstanding
Common Stock, including the adoption of irrevocable resolutions
approving and exempting from the restrictions in Section 18 and
Section 19 of Chapter 43 of the ICBL the transactions contemplated
by this Agreement. Without limitation of the foregoing, the Company
will have amended its Bylaws to opt out of the provisions of the
Indiana Business Corporation Law (“ IBCL
”) pertaining to the acquisition of a controlling interest
(IBCL 23-1-42-1 through 23-1-42-11) with respect to the acquisition
by the Buyers of the Shares. Except for the Rights Agreement, the
Company has no control share acquisition, business combination,
poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s
Articles of Incorporation or Bylaws, each as amended (or similar
charter documents), that is or could become applicable to the
Buyers as a result of the Buyers and the Company fulfilling their
obligations or exercising their rights under this Agreement,
including without limitation the Company’s issuance of the
Securities and the Buyers’ ownership of the Securities and
Buyers’ acquisition in the future of additional shares of
Common Stock until such time as the Buyers collectively own 40% of
the then-outstanding Common Stock. Prior to Closing, the Company
will have amended the Rights Agreement, dated March 21, 2006, as
amended, by and between the Company and National City Bank, as
Rights Agent (the “ Rights Agreement ”),
to accommodate the issuance and sale of the Shares to the Buyers,
in a form reasonably acceptable to the Buyers.
4.21
ERISA . Based upon the Employee Retirement Income Security
Act of 1974, as amended (“ ERISA ”), and
the regulations and published interpretations thereunder: (i)
neither the Company nor any of its Subsidiaries has engaged in any
Prohibited Transactions (as defined in Section 406 of ERISA and
Section 4975 of the Code); (ii) the Company and each of its
Subsidiaries has met all applicable minimum funding requirements
under Section 302 of ERISA in respect to its plans; (iii) neither
the Company nor any of its Subsidiaries has any knowledge of any
event or occurrence which would cause the Pension Benefit Guaranty
Corporation to institute proceedings under Title IV of ERISA to
terminate any employee benefit plan(s); neither the Company nor any
of its Subsidiaries has any fiduciary responsibility for
investments with respect to any plan existing for the benefit of
persons other than its or such Subsidiary’s employees; and
(v) neither the Company nor any of its Subsidiaries has withdrawn,
completely or partially, from any multi-employer pension plan so as
to incur liability under the Multiemployer Pension Plan Amendments
Act of 1980.
4.22
Disclosure . The Company understands and confirms that the
Buyers will rely on the representations and covenants contained
herein in effecting the transactions contemplated by this Agreement
and the other Transaction Documents. All representations and
warranties provided to the Buyers including the disclosures in the
Company’s disclosure schedules attached hereto furnished by
or on behalf of the Company, taken as a whole are true and correct
and do not contain any untrue statement of material fact or omit to
state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or its Subsidiaries
or its or their businesses, properties, prospects, operations or
financial conditions, which, under applicable law, rule
or
12
regulation, requires public
disclosure or announcement by the Company but which has not been so
publicly announced or disclosed.
ARTICLE 5
COVENANTS
5.1
Form D; Blue Sky Laws . Upon completion of the Closing, the
Company shall file with the SEC a Form D with respect to the
Securities as required under Regulation D and each applicable state
securities commission and will provide a copy thereof to the Buyers
promptly after such filing.
5.2
Use of Proceeds . The Company shall use the proceeds from
the sale of the Securities to complete the Acquisition.
5.3
Expenses . The Company shall pay the fees and expenses
incurred by the Buyers in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement
and the other Transaction Documents and the transactions hereunder
and thereunder, including, without limitation, reasonable
attorneys’ fees and expenses, as set forth in the Expense
Reimbursement Agreement dated as of February 1, 2007 (the “
Reimbursement Agreement ”) between the Company
and Tontine Capital.
5.4
No Integration . The Company shall not make any offers or
sales of any security (other than the Securities) under
circumstances that would require registration of the Securities
being offered or sold hereunder under the 1933 Act or cause the
offering of the Securities to be integrated with any other offering
of securities by the Company in such a manner as would require the
Company to seek the approval of its shareholders for the issuance
of the Securities under any shareholder approval provision
applicable to the Company or its securities.
5.5
Board Designee(s) . Following the Closing and for as long as
the Buyers and/or their affiliates hold (i) between 7.5% and 14.9%
of the then outstanding Common Stock, the Buyers shall have the
right to appoint one (1) nominee to become a member of the
Company’s Board of Directors reasonably acceptable to the
Nominating and Corporate Governance Committee of the
Company’s Board of Directors (the “ Governance
Committee ”) or (ii) hold at least 15.0% of the then
outstanding Common Stock, the Buyers shall have the right to
appoint two (2) nominees to become members of the Company’s
Board of Directors reasonably acceptable to the Governance
Committee. Notwithstanding anything to the contrary contained in
this Agreement, the Articles of Incorporation, as amended, of the
Company, or the Bylaws of the Company, as amended, following the
Closing and thereafter for as long as the Buyers have the right to
appoint directors pursuant to this Section 5.5, the
Company’s Board of Directors shall be comprised of no more
than nine (9) directors, including any representatives appointed by
Buyers pursuant hereto. Such reduction in the number of the
directors from eleven (11) to nine (9) shall be effected by the
Company prior to or at the Company’s annual shareholder
meeting to be held in 2008.
5.6
Future Acquisitions . The Company shall not revoke its
approval of the acquisition of up to 40% of the Common Stock on a
fully diluted basis collectively by the Buyers. The Company shall
use its best efforts to ensure that any future acquisitions of the
Common Stock by the Buyers (up to 40% of the of the outstanding
Common Stock on a fully diluted basis) shall not be made subject to
the provisions of any anti-takeover laws and regulations of any
governmental authority, including without limitation, the
applicable provisions of the ICBL, and any provisions of an
anti-takeover nature adopted by the Company or any of its
Subsidiaries, including the Rights Agreement, or contained in the
Company’s Articles of Incorporation, Bylaws, or the
organizational documents of any of its Subsidiaries, each as
amended.
13
5.7
Announcement of Rights Offering . The Company shall publicly
announce, concurrent with the announcement of the execution of this
Agreement and the Target SPA, that the Company intends to conduct a
registered rights offering to its shareholders at the Per Share
Price following the consummation of the transactions contemplated
under the Target SPA.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATION
The obligation of the Company
hereunder to issue and sell the Securities to the Buyers at the
Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions thereto, provided that
these conditions are for the Company’s sole benefit and may
be waived by the Company at any time in its sole
discretion:
6.1
Delivery of Transaction Documents . The Buyers shall have
executed and delivered the Transaction Documents to which it is a
party to the Company.
6.2
Payment of Purchase Price . The Buyers shall have delivered
the Purchase Price and the Debt Financing in accordance with
Section 2.3 above.
6.3
Representations and Warranties . The representations and
warranties of the Buyers shall be true and correct in all material
respects (provided, however, that such qualification shall only
apply to representations or warranties not otherwise qualified by
materiality) as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties
that speak as of a specific date), and the applicable Buyer shall
have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
applicable Buyer at or prior to the Closing Date.
6.4
Litigation . No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by or in any court or
governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
ARTICLE 7
CONDITIONS TO THE BUYERS' OBLIGATION
The obligation of the Buyers
hereunder to purchase the Securities at the Closing is subject to
the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the
Buyers’ sole benefit and may be waived by the Buyers at any
time in their sole discretion:
7.1
Delivery of Transaction Documents; Issuance of Securities .
The Company shall have executed and delivered the Transaction
Documents to the Buyers, including the Notes and the Amended and
Restated Registration Rights Agreement, and shall deliver the
Transfer Instructions to the transfer agent for the Company’s
Common Stock to issue certificates in the name of each Buyer
representing the Shares being purchased by such Buyer. The Company
shall deliver a copy of the Transfer Instructions to the Buyers at
the Closing.
7.2
Representations and Warranties . The representations and
warranties of the Company shall be true and correct in all material
respects (provided, however, that such qualification shall
only
14
apply to representations
o
