Page 1 of 71 pages
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Initial Filing)
National Gypsum Company
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
636317109
(CUSIP Number)
Marion A. Cowell, Jr., First Union Corporation,
One First Union Center, Charlotte, NC 28288 (704) 374-6828
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
November 15, 1994
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule
13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4),
check the following box [ ] .
Check the following box if a fee is being paid with the
statement [X].
(A fee is not required only if the reporting person: (1) has a
previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto reporting
beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
This document contains 71 pages.
The exhibit index begins on page 9.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 13D
CUSIP NO. 636317109 PAGE 2 OF 71 PAGES
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FIRST UNION CORPORATION
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NC
</TABLE>
7 SOLE VOTING POWER
820,735
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 813,735
WITH
10 SHARED DISPOSITIVE POWER
5,500
<TABLE>
<CAPTION>
<S> <C> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
820,735
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.0%
14 TYPE OF REPORTING PERSON
CO</TABLE>
<PAGE>
Page 3 of 71 pages
Item 1. Security and Issuer.
This Statement on Schedule 13D (this "Statement") relates to the
Common Stock, $.01 par value per share ("Common Stock"), of National
Gypsum Company, a Delaware corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 2001 Rexford Road,
Charlotte, North Carolina 28211.
Item 2. Identity and Background.
This Statement is filed by First Union Corporation, a North
Carolina corporation (the "Reporting Person"). The Reporting Person is
a registered bank holding company, and the address of its principal
business and principal office is One First Union Center, Charlotte,
North Carolina 28288.
Certain information regarding the Reporting Person's directors and
executive officers is set forth in Exhibit 1 hereto, which is
incorporated by reference herein. All of the individuals listed in
Exhibit 1 are citizens of the United States.
During the last five years, neither the Reporting Person nor any of
the individuals listed in Exhibit 1 has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), or
has been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which any of them was or
is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect
to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The Common Stock beneficially owned by the Reporting Person
represents prior acquisitions which are not the basis for the filing of
this Statement. Of the 820,735 shares of Common Stock reported as
beneficially owned by the Reporting Person, 8,000 shares are held in
fiduciary capacities by banking affiliates of the Reporting Person and
19,000 shares are held by clients of an investment advisory affiliate of
the Reporting Person. The Reporting Person expressly disclaims
beneficial ownership of such 27,000 shares of Common Stock. Of the
remaining 793,735 shares of Common Stock reported as being beneficially
owned by the Reporting Person, 7,883 shares of Common Stock are
represented by warrants to purchase Common Stock exercisable at a price
per share equal to $14.50. The Reporting Person acquired such warrants
and 383,040 shares of the remaining 785,852 shares of Common Stock in
connection with the reorganization of Asbestos Claims Management
Corporation (formerly named National Gypsum Company), a Delaware
corporation ("Old NGC"), under Chapter 11 of the United States
Bankruptcy Code. In the reorganization, such warrants and shares of
Common Stock were distributed to the Reporting Person in connection with
the extinguishment of the Reporting Person's claims against Old NGC
arising from its ownership of $13,720,000 face amount of subordinated
debt of Old NGC. In addition, a total of 401,959
<PAGE>
Page 4 of 71 pages
shares were purchased by the Reporting Person in the open market in June
1993 and May 1994 at an average cost of $19.02 per share. Working
capital was used to fund such open market purchases. An additional 853
shares were acquired by a subsidiary of the Reporting Person from a
subsidiary ofthe Issuer in December 1993 in partial satisfaction of a
debt relating to the sublease of an aircraft hangar by the Issuer's
subsidiary from the Reporting Person's subsidiary.
The information set forth in Item 4 hereof is incorporated by
reference herein.
Item 4. Purpose of Transaction.
On November 15,1994, the Reporting Person and its banking
affiliate, First Union National Bank of North Carolina, issued a
commitment letter to Delcor, Inc., a Delaware corporation ("Delcor"), to
provide equity and debt financing to partially fund Delcor's proposal to
acquire all of the outstanding shares of Common Stock and warrants to
purchase shares of Common Stock held by other security holders in a
negotiated merger transaction at a price per share of $43.50. A copy of
such commitment letter (the "Financing Commitment") is filed as Exhibit
2 hereto.
The terms of Delcor's proposal are set forth in a letter from
Delcor addressed to the Board of Directors of the Issuer, a copy of
which is attached hereto as Exhibit 3 (the "Proposal"). The Proposal
provides that such acquisition (the "Acquisition") would be effected by
means of a merger of the Issuer with a corporation formed by Delcor for
that purpose ("Newco") or with a wholly owned subsidiary of Newco. In
addition, the Proposal provides that the Acquisition would be effected
pursuant to a definitive merger agreement to be negotiated with the
Issuer. The Proposal provides that the merger agreement will contain
what Delcor regards as customary or expected conditions, such as the
obtaining of necessary regulatory approvals and third-party consents, if
any; absence of certain changes; and approval by the Issuer's board of
directors and adoption by the Issuer's stockholders of the merger
agreement pursuant to Sections 203(a) and 251 of the Delaware General
Corporation Law. The Proposal also provides that the merger agreement
will contain a condition that matters relating to the possible financial
impact, if any, of the motions of the NGC Settlement Trust dated October
5, 1994 in In re National Gypsum Company pending in United States
Bankruptcy Court for the Northern District of Texas (Dallas Division) be
resolved to Delcor's satisfaction and that certain other environmental
and bankruptcy matters be resolved to Delcor's satisfaction.
Under the Financing Commitment, the Reporting Person has committed
to purchase $100 million of non-voting preferred stock (with detachable
warrants) of Newco. In addition, the Reporting Person has committed to
contribute the 784,999 shares of Common Stock held by it (which will be
cancelled in the Acquisition) to Newco in exchange (on a share-for-share
basis) for non-voting common stock. Under the Financing Commitment,
First Union National Bank of North Carolina has committed to provide to
Newco up to $187.5 million of a $375 million senior term loan and
revolving credit financing. The Financing Commitment is subject to
certain conditions, including satisfaction of the Reporting Person as to
the financial impact on the Issuer of certain asbestos, bankruptcy and
environmental matters. The terms of the
<PAGE>
Page 5 of 71 pages
Financing Commitments are incorporated by reference herein. The Reporting
Person intends to use working capital to provide funds under the
Financing Commitment.
The Reporting Person may make additional purchases of Common Stock
either in the open market or in private transactions.
On November 15, 1994, NationsBank Corporation and NationsBank of
North Carolina, N.A. also issued a commitment letter (the "NationsBank
Commitment") to Delcor to provide an equal amount of equity and debt
financing to fund the Proposal. A copy of the NationsBank Commitment is
filed as Exhibit 4 hereto. Under the NationsBank Commitment,
NationsBank Corporation has committed to purchase $100 million of non-
voting preferred stock (with detachable warrants) of Newco. In
addition, under the NationsBank Commitment, NationsBank Corporation has
committed to purchase shares of non-voting common stock of Newco at a
total price of approximately $34.1 million. Under the NationsBank
Commitment, NationsBank of North Carolina, N.A. has committed to provide
to Newco up to $187.5 million of a $375 million senior term debt and
revolving credit financing. The NationsBank Commitment indicates that
it is subject to certain conditions, including satisfaction as to the
financial impact on the Issuer of certain asbestos, bankruptcy and
environmental matters. The information set forth in the NationsBank
Commitment is incorporated by reference herein.
On November 15, 1994, Delcor accepted the Financing Commitment and
the NationsBank Commitment.
Item 5. Interest in Securities of the Issuer.
(a) The Reporting Person may be deemed to beneficially own 820,735
shares of Common Stock, or approximately 4.0 percent of the outstanding
shares of Common Stock of the Issuer on the basis of 20,362,413 shares
outstanding as reported in the Issuer's Quarterly Report on Form 10-Q
for the period ended September 30, 1994. Of such shares, 8,000 shares
are held in fiduciary capacities by banking affiliates of the Reporting
Person and 19,000 shares are held by clients of an investment advisory
affiliate of the Reporting Person. The Reporting Person expressly
disclaims beneficial ownership of such 27,000 shares of Common Stock.
To the best of the Reporting Person's knowledge, none of the individuals
listed in Exhibit 1 beneficially owns any shares of Common stock.
As a result of the Financing Commitment and the NationsBank
Commitment, the Reporting Person, Delcor and NationsBank Corporation may
be deemed members of a group (within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) that beneficially owns
all of the shares of Common Stock beneficially owned by each member of
such group. The Reporting Person expressly disclaims beneficial
ownership of any shares of Common Stock beneficially owned by Delcor
(including those shares beneficially owned by Lafarge Coppee S.A. and
its affiliates, as described in Exhibit 5 hereto) and NationsBank
Corporation. Delcor may be deemed to beneficially own 5,960,193 shares
of Common
<PAGE>
Page 6 of 71 pages
Stock (or 29.3 percent of the outstanding shares of Common
Stock on the basis of 20,362,413 shares outstanding). Nationsbank
Corporation may be deemed to beneficially own 8,799 shares of Common
Stock (or less than 0.1 percent of the outstanding shares of Common
Stock on the basis of 20,362,413 shares outstanding). The information
contained herein with respect to the beneficial ownership of Common
Stock by NationsBank Corporation and Delcor was obtained from public
filings under the Securities Exchange Act of 1934, as amended, or was
provided to the Reporting Person by the relevant party. The Reporting
Person has not independently verified and assumes no responsibility for
the accuracy or completeness of such information.
(b) The following table sets forth, with respect to each of the
Reporting Person, Delcor and NationsBank Corporation the number of
shares of Common Stock as to which such person has sole power to vote or
to direct the vote, shared power to vote or to direct the vote, sole
power to dispose or direct the disposition, or shared power to dispose
or direct the disposition.
<TABLE>
<CAPTION>
Sole Shared Sole Power Shared Power
Person Voting Power Voting Power to Dispose to Dispose
<S> <C> <C> <C> <C>
Reporting Person 820,735 0 813,735 5,500
Delcor 0 5,960,193 0 3,872,235
NationsBank Corporation 8,799 0 6,646 0
</TABLE>
The information contained herein with respect to the beneficial
ownership of Common Stock by NationsBank Corporation and Delcor and the
information set forth in Exhibits 5 and 6 were obtained from public
filings under the Securities Exchange Act of 1934, as amended, or were
provided to the Reporting Person by the relevant party. The Reporting
Person has not independently verified and assumes no responsibility for
the accuracy or completeness of such information. The information set
forth in Exhibits 5 and 6 hereto is incorporated herein by reference.
(c) The following table sets forth, to the best of the Reporting
Person's knowledge, the date, number of shares and price per share of
all transactions effected by the Reporting Person and its affiliates
within the past 60 days:
Date of Transaction Number of Shares Price per Share
November 1, 1994 4,000 $34.625
November 3, 1994 1,000 $33.50
November 4, 1994 700 $34.25
November 4, 1994 300 $34.25
November 4, 1994 200 $34.75
<PAGE>
Page 7 of 71 pages
Each of the foregoing transactions were purchases effected in the open
market by a banking affiliate of the Reporting Person acting in a
fiduciary capacity on behalf of five separate trust accounts.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
The information set forth in Item 4 of this Amendment is
incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
Information regarding the directors and executive officers of the
Reporting Person is filed as Exhibit 1 hereto. The Financing Commitment
is filed as Exhibit 2 hereto. The Proposal is filed as Exhibit 3
hereto. The NationsBank Commitment is filed as Exhibit 4 hereto.
Certain information regarding Delcor is filed as Exhibit 5 hereto.
Certain information regarding NationsBank Corporation is filed as
Exhibit 6 hereto.
<PAGE>
Page 8 of 71 pages
Signatures.
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Amendment is
true, complete and correct.
Dated: November 23, 1994
FIRST UNION CORPORATION
By: /s/ W. Barnes Hauptfuhrer
W. Barnes Hauptfuhrer
Senior Vice President
<PAGE>
Page 9 of 71 pages
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT TITLE NUMBERED
PAGE
1 Certain information regarding the directors
and executive officers of First Union
Corporation
2 Commitment letter of First Union Corporation and
First Union National Bank of North Carolina
dated November 15, 1994 addressed to Delcor, Inc.
3 Letter dated November 15, 1994 from Delcor, Inc.
to the Board of Directors of National Gypsum Company
setting forth the terms of a proposed merger
between a company to be formed by Delcor, Inc.
and National Gypsum Company
4 Commitment letter of NationsBank Corporation and
NationsBank of North Carolina, N.A. dated
November 15, 1994 addressed to Delcor, Inc.
5 Certain information regarding Delcor, Inc.
6 Certain information regarding NationsBank
Corporation
***************************************************************************
APPENDIX
On page 1 of Exhibit 2 the First Union logo appears where noted.
On Page 1 of Exhibit 4 the NationsBank logo appears where noted.
EXHIBIT 1
CERTAIN INFORMATION REGARDING THE DIRECTORS
AND EXECUTIVE OFFICERS OF FIRST UNION CORPORATION
First Union Corporation is registered a bank holding company,
incorporated under the laws of the State of North Carolina. The address of
its principal executive office is One First Union Center, Charlotte, North
Carolina 28288. The following table (which is based solely upon
information provided to the Reporting Persons by First Union Corporation)
sets forth the name, residence or business address, present occupation or
employment of each director and executive officer of First Union
Corporation, along with the name, principal business and address of any
corporation or other organization in which such employment is conducted:
<TABLE>
<CAPTION>
OCCUPATION OR EMPLOYMENT
BUSINESS (B) OR NAME OF EMPLOYER, BUSINESS
RESIDENCE (R) OF EMPLOYER, ADDRESS OF
NAME ADDRESS EMPLOYER
DIRECTORS
<S> <C> <C>
Robert D. Davis (R) 1041 Ponte Vedra Blvd. Chairman, D.D.I., Inc., investments
Ponte Vedra Beach, FL 32082 P.O. Box 2088
Jacksonville, FL 32203-2088
Roddey Dowd, Sr. (R) 1242 Queens Road West Chairman, Charlotte Pipe and Foundry
Charlotte, NC 28207 Company, a manufacturer of pipe and
fittings
P.O. Box 35430
Charlotte, NC 28235
William H. Goodwin, Jr. (R) 6701 River Road Chairman, AMF Companies, a
Richmond, VA 23229 manufacturer of sports and other
equipment
901 East Cary Street, Suite 1400
Richmond, VA 23219
Torrence E. Hemby, Jr. (R) 2633 Richardson Drive President, Beverly Crest Corporation,
Charlotte, NC 28211 real estate development
2809 Cavan Court
Charlotte, NC 28270
Jack A. Laughery (B) 800 Tiffany Blvd., Suite 305 Investor
Rocky Mount, NC 27804
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OCCUPATION OR EMPLOYMENT
BUSINESS (B) OR NAME OF EMPLOYER, BUSINESS
RESIDENCE (R) OF EMPLOYER, ADDRESS OF
NAME ADDRESS EMPLOYER
<S> <C> <C>
Radford D. Lovett (R) 129 Ponte Vedra Blvd. Chairman, Commodores Point Terminal
Ponte Vedra Beach, FL 32082 Corp., an operator of a marine terminal
and real estate
P.O. Box 4069
Jacksonville, FL 32201
Randolph N. Reynolds (R) 8605 River Road President & CEO, Reynolds
Richmond, VA 23261 International, Inc., an aluminum
manufacturer
P.O. Box 27002
Richmond, VA 23261
John D. Uible (B) 225 Water Street Investor
Suite 840
Jacksonville, FL 32202
Kenneth G. Younger (R) 3639 Country Club Dr. Consultant
Gastonia, NC 28054
G. Alex Bernhardt (R) 7120 Green Hill Circle President and Chief Executive Officer,
Blowing Rock, NC 28605 Bernhardt Furniture Company, furniture
manufacturing
P.O. Box 740
Lenoir, NC 28645
W. Waldo Bradley (R) Sylvan Island Chairman, Bradley Plywood
Savannah, GA 31404 Corporation, building materials
P.O. Box 1408
Savannah, GA 31402-1408
Brenton S. Halsey (R) 213 Ampthill Road Chairman Emeritus, James River
Richmond, VA 23226 Corporation, marketer & manufacturer of
consumer products
P.O. Box 2218
Richmond, VA 23217
Howard H. Haworth (R) 217 Riverside Drive President, The Haworth Group and The
Morganton, NC 28655 Haworth Foundation, Inc., investments
First Union National Bank Bldg.
300 N. Green St., Suite 201
Morganton, NC 28655
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
OCCUPATION OR EMPLOYMENT
BUSINESS (B) OR NAME OF EMPLOYER, BUSINESS
RESIDENCE (R) OF EMPLOYER, ADDRESS OF
NAME ADDRESS EMPLOYER
<S> <C> <C>
Leonard G. Herring (R) 310 Coffey Street President and Chief Executive Officer,
North Wilkesboro, NC 28659 Lowe's Companies, Inc., a retailer of
building materials and related products
for home improvements
P.O. Box 1111
North Wilkesboro, NC 28656
Henry D. Perry, Jr., M.D. (R) 12240 N.W. 8th Street Physician, retired
Plantation, FL 33325
Lanty L. Smith (R) 1401 Westridge Road Chairman and Chief Executive Officer,
Greensboro, NC 27401 Precision Fabrics Group, Inc., a
manufacturer of technical, high-
performance textile products
North Carolina Trust Bldg., Suite 600
Greensboro, NC 27401
Dewey L. Trogdon (R) P.O. Box 1477 Chairman, Cone Mills Corporation, a
Banner Elk, NC 28604 textile manufacturer
1201 Maple Street
Greensboro, NC 27405
Robert J. Brown (R) 1129 Pennywood Drive Chairman, President and Chief Executive
High Point, NC 27265 Officer, B&C Associates, Inc., a public
relations and marketing research firm
P.O. Box 2636
High Point, NC 27261
Edward E. Crutchfield, Jr. * Chairman and Chief Executive Officer,
First Union Corporation*
R. Stuart Dickson (R) 2235 Pinewood Circle Chairman of the Executive Committee,
Charlotte, NC 28211 Ruddick Corporation, a diversified
holding company
2000 Two First Union Center
Charlotte, NC 28282
B. F. Dolan (B) 1990 Two First Union Center Investor
Charlotte, NC 28282
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
OCCUPATION OR EMPLOYMENT
BUSINESS (B) OR NAME OF EMPLOYER, BUSINESS
RESIDENCE (R) OF EMPLOYER, ADDRESS OF
NAME ADDRESS EMPLOYER
<S> <C> <C>
John R. Georgius * President, First Union Corporation *
Max Lennon (B) 1000 Naturally Fresh Blvd. President & CEO, Eastern Foods, Inc., a
Atlanta, GA 30348 food manufacturer & distributor
1000 Naturally Fresh Blvd.
Atlanta, GA 30348
Ruth G. Shaw (C) 2834 Oldenway Drive Senior Vice President for Corporate
Charlotte, NC 28269 Resources, Duke Power Company, an
investor-owned electric utility
P.O. Box 1009
Charlotte, NC 28201-1009
B. J. Walker * Vice Chairman, First Union Corporation *
EXECUTIVE OFFICERS
(NOT OTHERWISE
LISTED ABOVE)
Robert T. Atwood * Executive Vice President and Chief
Financial Officer, First Union
Corporation *
Marion A. Cowell, Jr. * Executive Vice President, Secretary and
General Counsel, First Union
Corporation *
</TABLE>
* First Union Corporation is registered a bank holding company, and the
address of its principal executive office is One First Union Center,
Charlotte, North Carolina 28288 (which is the business address of such
director or executive officer).
Each of the directors and executive officers of First Union Corporation
is a U.S. citizen. Neither First Union Corporation nor any of its
directors and executive officers has been, during the last five years,
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or a party to a civil proceeding of a judicial or
-4-
<PAGE>
administrative body of competent jurisdiction, as a result of which any of
them was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to
such laws.
-5-
FIRST UNION CORPORATION
Charlotte, North Carolina 28288
704 374-6565
Exhibit 2
[First Union Logo appears here] CONFIDENTIAL
November 15, 1994
Delcor, Inc.
1110 East Morehead Street
Charlotte, NC 28204
Attention: Mr. W. D. Cornwell, Jr.
President
Gentlemen:
First Union National Bank of North Carolina and First Union
Corporation or an affiliate thereof (collectively, "First Union")
are pleased to confirm to Delcor, Inc. ("Delcor"), their
commitment to provide to Newco or its successor pursuant to the
Merger described herein (the "Company"), a company to be formed
by Delcor, on the terms, for the purposes and subject to the
conditions set forth below and in the summary of certain terms
attached hereto (the "Term Sheets") the following: (i) senior
debt facilities (the "Senior Debt Facilities") in an aggregate
amount of up to $187,500,000, (ii) a subscription to purchase
Cumulative Redeemable Payment-In-Kind Preferred Stock (the
"Preferred Stock") in an aggregate amount of $100,000,000 and
related detachable warrants (the "Warrants") and (iii) in
exchange for 784,999 shares of Non-Voting Common Stock of the
Company, 784,999 shares of Common Stock (the "Rollover Equity")
of a company which has been described to us under a code name
"Canoe" in connection with the Company's acquisition of Canoe.
As First Union understands the proposed transaction (the
"Transaction"), Delcor will organize the Company, a single
purpose, wholly owned subsidiary that will enter into a merger
agreement (the "Merger Agreement") with Canoe, pursuant to which
the Company will merge with Canoe (the "Merger"), with Canoe
being the surviving corporation. In the Merger, each of the
issued and outstanding shares of Canoe's common stock, par value
$.01 per share, excluding any treasury shares, Rollover Equity
shares or other contributed shares, will be converted into the
right to receive an aggregate amount in cash consideration per
share not to exceed the amount discussed between First Union and
the Company (the "Merger Price"). The Senior Debt Facilities,
the Preferred Stock and the Rollover Equity (collectively, the
"First Union Financing") are being provided to enable the Company
to (i) complete the Merger, (ii) provide for the ongoing working
capital and capital spending needs of the Company, and (iii) pay
certain fees and expenses related to the Merger. If the
Transaction is structured as a merger of a wholly owned
subsidiary of the Company into Canoe, this commitment letter and
the Term Sheets shall be modified to reflect the revised structure.
<PAGE>
Delcor, Inc.
November 15, 1994
Page 2
_________________________
First Union's commitment is to provide 50% of $375,000,000 of
Senior Debt Facilities that will be co-agented by First Union and
NationsBank of North Carolina, N.A., or an affiliate thereof
(collectively, "NationsBank") . NationsBank will also purchase
(i) $100,000,000 of Preferred Stock and Warrants and (ii) 784,999
shares of Non-Voting Common Stock of the Company for an amount of
cash equal to the Merger Price multiplied by 784,999 shares.
Our commitment to provide the First Union Financing will be
funded upon the effectiveness of the Merger and is subject to the
conditions set forth herein and in the attached Term Sheets,
including the right to assign or transfer all or part of this
commitment for the First Union Financing to any of our affiliated
corporations or banks and to any third parties.
Our commitment to provide the First Union Financing will
terminate (i) on July 31, 1995 if the Merger shall not have
closed on or prior to such date, or (ii) at any time prior to the
Merger and the funding of the First Union Financing if (a) there
shall have been any material adverse change in the business,
assets, financial condition or results of operations of Canoe and
its subsidiaries, taken as a whole, or (b) there shall exist any
condition, event or occurrence which, individually or in the
aggregate, could reasonably be expected to have a material
adverse effect on the business, assets, financial condition or
results of operations of Canoe and its subsidiaries, taken as a
whole, in either case, since September 30, 1994, except as
disclosed in documents filed prior to the date hereof with the
Securities and Exchange Commission.
The business and financial terms set forth in the attached Term
Sheets have been established as a result of a review of Canoe's
publicly available information (including public filings with the
Securities and Exchange Commission). First Union believes that
the closing conditions and other terms contained in the attached
Term Sheets are customary for comparable financings.
You agree that this Commitment Letter is for your confidential
use only and will not be disclosed by you to any person other
than your accountants, attorneys and other advisors and the
Company and Canoe and such of their respective officers,
directors, agents, accountants, attorneys and other advisors as
need to be provided therewith, and only then in connection with
the Transaction and on a confidential basis, except that you may
make public disclosure of the existence and amount of First
Union's commitment and undertaking hereunder, you may file a copy
of the Commitment Letter in any public record in which it is
required by law to be filed, and you may make such other public
disclosure of the terms and conditions hereof as you are required
by law, in the reasonable opinion of your counsel, to make.
Delcor agrees to indemnify each of First Union and its affiliates
and their respective directors, officers, employees, agents and
controlling persons (each, an "Indemnified Party") from and
against any and all losses, claims (whether valid or not),
damages and liabilities, joint or several, to which such
Indemnified Party may become subject, related to or arising out
of the Transaction and will reimburse each Indemnified Party for
all expenses (including reasonable attorneys' fees and expenses)
as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim or
any action or proceeding arising therefrom.
<PAGE>
Delcor, Inc.
November 15, 1994
Page 3
_________________________
Notwithstanding the foregoing, the obligation to indemnify any
Indemnified Party hereunder shall not apply in respect of any loss,
claim, damage or liability to the extent that a court of competent
jurisdiction shall have determined by final judgment that such loss,
claim, damage or liability resulted from such Indemnified Party's
willful malfeasance, gross negligence or bad faith. In the event
that the foregoing indemnity is unavailable or insufficient to
hold an Indemnified Party harmless, then Delcor will contribute
to amounts paid or payable by such Indemnified Party in respect
of such Indemnified Party's losses, claims, damages or
liabilities in such proportions as appropriately reflect the
relative benefits received by and fault of Delcor and such
Indemnified Party in connection with the matters as to which such
losses, claims, damages or liabilities relate and other equitable
considerations.
If any action, proceeding, or investigation is commenced, as to
which any Indemnified Party proposes to demand such
indemnification, it shall notify Delcor with reasonable
promptness; provided, however, that any failure by such
Indemnified Party to notify Delcor shall not relieve Delcor from
its obligations hereunder except to the extent Delcor is
prejudiced thereby. Delcor shall be entitled to assume the
defense of any such action, proceeding, or investigation,
including the employment of counsel and the payment of all fees
and expenses. The Indemnified Party shall have the right to
employ separate counsel in connection with any such action,
proceeding, or investigation and to participate in the defense
thereof, but the fees and expenses of such counsel shall be paid
by the Indemnified Party, unless (a) Delcor has failed to assume
the defense and employ counsel as provided herein, (b) Delcor has
agreed in writing to pay such fees and expenses of separate
counsel, or (c) an action, proceeding, or investigation has been
commenced against the Indemnified Party and Delcor and
representation of both Delcor and the Indemnified Party by the
same counsel would be inappropriate because of actual or
potential conflicts of interest between the parties (in the case
of First Union, the existence of any such actual or potential
conflict of interest to be determined by First Union, taking into
account, among other things, any relevant regulatory concerns).
In the case of any circumstance described in clauses (a), (b), or
(c) of the immediately preceding sentence, Delcor shall be
responsible for the reasonable fees and expenses of such separate
counsel; provided, however, that Delcor shall not in any event be
required to pay the fees and expenses of more than one separate
counsel for all Indemnified Parties. Delcor shall be liable only
for settlement of any claim against an Indemnified Party made
with Delcor's written consent.
Delcor agrees to pay to us the fees for the Senior Debt
Facilities outlined in the fee letter dated the date hereof (the
"Fee Letter"). Delcor also agrees to reimburse us for all of our
out-of-pocket expenses (including the reasonable fees and
disbursements of our counsel) in connection with the Merger and
the First Union Financing, described herein.
The provisions of the three immediately preceding paragraphs
shall survive any termination of this letter.
Delcor acknowledges that First Union has advised Delcor that the
services to be provided hereunder and the amount of fees and the
obligation to reimburse expenses are in no way
<PAGE>
Delcor, Inc.
November 15, 1994
Page 4
_________________________
conditioned upon Delcor's obtaining from First Union or any
affiliate of First Union any other service or any loan or other
financial product.
If you are in agreement with the foregoing, please sign and
return the enclosed copy of this letter and the Fee Letter to
First Union no later than 5:00 p.m. Eastern Standard Time, on or
before November 15, 1994. This commitment shall terminate at
such time unless a signed copy of this letter and the Fee Letter
have been delivered to us.
Very Truly Yours,
FIRST UNION CORPORATION
By: /s/ Daniel W. Mathis
Daniel W. Mathis
Executive Vice President
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ David M. Roberts
David M. Roberts
Senior Vice President
Agreed to and accepted this
15th day of November, 1994
DELCOR, INC.
By: /s/ W. D. Cornwell, Jr.
W. D. Cornwell, Jr.
President
<PAGE>
Confidential
November 15, 1994
PROJECT CANOE
Summary of Certain Terms
<TABLE>
<CAPTION>
Senior Debt Facilities
<S> <C>
Borrower: Newco and, following the Merger, Canoe (the "Company").
Facilities: Will include a six year Revolving Credit Facility (the "Revolver") and
a six year Term Loan (the "Term Loan") (together, the "Senior Debt
Facilities").
Amount: Revolver: Up to $75,000,000
Term Loan: $300,000,000
The aggregate amount available under the Revolver will be based on the
lesser of $75,000,000 or the aggregate of certain percentages of the
Company's eligible accounts receivable and eligible inventory (as
defined in the Company's existing senior credit agreement), subject to
reasonable reserves.
Maturity Dates: The later of June 30, 2001 or six years from the Closing Date.
Agents: First Union National Bank of North Carolina ("First Union") and
NationsBank of North Carolina, N.A., ("NationsBank") (collectively, the
"Agents").
Administrative Agent: NationsBank
Lenders: First Union and NationsBank, and a group of other financial
institutions reasonably acceptable to the Agents and the Company (the
"Lenders").
Use of Proceeds: To consummate the Merger described in the Commitment Letter, to pay
certain fees and expenses related to the Merger and to provide for the
Company's ongoing working capital and capital spending requirements.
Interest Rates: The interest rates on the Senior Debt Facilities will be a function of
the Company's Total Funded Debt to Operating Cash Flow ("Leverage
Ratio") as determined quarterly on a
<PAGE>
Confidential
November 15, 1994
rolling four quarters basis. Operating Cash Flow will equal the
Company's earnings before interest,
taxes, depreciation and amortization ("EBITDA"). The Company will have
the option of borrowing at a spread over the Base Rate (defined as the
higher of the Administrative Agent's Prime Rate, the Three Month CD
Rate plus .50%, and the Federal Funds Rate plus .50%) or the Adjusted
London Interbank Offered Rate ("LIBOR"). The applicable rates will be
based on the following table
Revolver Term Loan
Spread Over Spread Over Spread Over Spread Over
Leverage Ratio Base LIBOR Base LIBOR
> 2.0x 1.25% 2.75% 1.50% 3.00%
1.50x - 1.99x 0.75% 2.25% 1.00% 2.50%
1.00x - 1.49x 0.25% 1.75% 0.50% 2.00%
0.50x - .99x 0.00% 1.25% 0.00% 1.50%
< .50x 0.00% 1.00% 0.00% 1.00%
The interest rates on the Senior Debt Facilities will increase by two
(2) percentage points per annum upon the occurrence and during the
continuance of any payment default under the Loan Agreement.
The Loan Agreement shall include the Agents' standard protective
provisions for such matters as increased costs, funding losses,
illegality and withholding taxes.
Interest Payments: At the end of each applicable Interest Period or quarterly, if earlier,
calculated on an actual 360 day basis for both Base Rate and LIBOR
Loans.
Interest Periods: LIBOR interest period: 30, 60, or 90 days, subject to availability.
Interest Rate Protection: Within 90 days following the closing, the Company must obtain
reasonably acceptable interest rate protection through interest rate
swaps, caps or other instruments reasonably satisfactory to the Agents,
against increases in interest rates for a minimum of 50% of the Term
Loan or such lesser amount as the Agents may agree, for a period of at
least three years. In the event the Company obtains Interest Rate
Protection from any Lender, then such Lender may secure the Company's
obligations thereunderon apari-passu basiswith theSenior Debt Facilities.
-2-
<PAGE>
Confidential
November 15, 1994
Facility Fees: 1/2 of 1% per annum, on the unutilized portion of the Revolver
commitment, payable quarterly in arrears.
Security: A perfected first priority security interest in all of the post-Merger
Company's assets, including the pledge of the stock of all the
Company's subsidiaries.
Mandatory Payments: Revolver: Payable in full at maturity.
Term Loan: Payable quarterly beginning September 30, 1995 in the
following amounts:
Fiscal year Number
Ended Quarterly of Annual
Dec. 31 Amortization Payments Amortization
1995 $10,000,000 2 $20,000,000
1996 10,000,000 4 40,000,000
1997 10,000,000 4 40,000,000
1998 12,500,000 4 50,000,000
1999 15,000,000 4 60,000,000
2000 15,000,000 4 60,000,000
2001 15,000,000 2 30,000,000
$300,000,000
The principal amount of the Term Loan shall be repaid in quarterly
installments beginning on September 30, 1995 and ending June 30, 2001.
In addition to the required amortization, the Company will be required
to make repayments on the Term Loan on an annual basis in an amount
equal to 75% of the Company's Excess Cash Flow (defined as net income
plus depreciation, amortization and all other non-cash charges,
adjusted for changes in working capital, minus capital expenditures,
principal payments and permitted dividends) for such period, beginning
with the period ending December 31, 1995.
The Company will be required to make prepayments with the net cash
proceeds in excess of $5,000,000 from the sale of any of the Company's
assets outside the normal course of business. In addition, the Company
will be required to prepay the Senior Debt Facilities upon any change
of control which results in Delcor, Inc. or its affiliates owning less
than 51% of the voting Common Stock of the Company. The Company will
also be
-3-
<PAGE>
Confidential
November 15, 1994
required to make prepayments in an amount equal to the net
proceeds of any additional issuance of equity.
Mandatory Prepayments shall be applied in inverse order of maturity.
Voluntary Prepayments: The Company may reduce the amount outstanding under the Revolver at any
time and thereafter reborrow. In addition, the Company may, at its
option, upon five business days' notice to the Agents, permanently
reduce the unutilized portion of the Revolver in part (in principal
amounts of at least $1,000,000 or, if greater, an integral multiple
thereof) or in whole.
The Company may, at its option, upon five business days' notice to the
Agents, prepay the Term Loan in part (in principal amounts of at least
$1,000,000 or, if greater, an integral multiple thereof) or in whole,
without premium or penalty, with interest accrued through the date of
prepayment. Any voluntary prepayments above and beyond those required
under the Excess Cash Flow provision shall be applied in the manner
designated by the Company. All other prepayments shall be applied in
inverse order of maturity.
Conditions Precedent
to Closing: The funding of the Senior Debt Facilities will be subject to
satisfaction of customary conditions precedent for similar financings
and for this transaction in particular, including but not limited to
each of the following:
(i) All documentation relating to the Senior Debt Facilities shall
have been completed and reviewed to the Agents' and their
counsels' satisfaction (including with respect to bankruptcy,
environmental and asbestos matters);
(ii) The Company and Canoe shall have entered into a definitive
merger agreement (the "Merger Agreement"), on terms acceptable
to the Agents in their sole discretion and the Merger
contemplated thereby shall be consummated simultaneously with
the funding of the Senior Debt Facilities;
(iii) The Agents shall have determined to their satisfaction and in
their sole discretion that the possible financial impact on
Canoe of the administration of the NGC
-4-
<PAGE>
Confidential
November 15, 1994
Settlement Trust, and Canoe's actual or potential liabilities
with respect to property damage and bodily injury asbestos
claims, will not have a material adverse effect on the
prospective business, assets, financial condition or results of
operations of Canoe and its subsidiaries, taken as a whole;
(iv) The Agents shall have received an environmental survey (or
audit if so requested) prepared by the Company (or an
environmental assessment firm acceptable to the Agents)
addressing the Company's compliance with, and liability under,
all related environmental laws, rules and regulations, and the
Agents shall have determined to their satisfaction and in
their sole discretion that the possible financial impact on
Canoe of environmental matters will not have a material
adverse effect on the prospective business, assets, financial
condition or results of operations of Canoe and its
subsidiaries, taken as a whole;
(v) The Company shall have received commitments for $187,500,000
of Senior Debt Facilities from NationsBank on the same terms
and conditions as outlined herein;
(vi) The Company shall have received a minimum of $300,000,000 in
cash proceeds from the issuance of Cumulative Redeemable
Payment-In-Kind Preferred Stock and Warrants on terms and
conditions reasonably acceptable to the Agents;
(vii) The Company shall have received $50,000,000 in cash proceeds
from the issuance of voting Common Stock to Delcor, Inc. on
terms and conditions reasonably acceptable to the Agents;
(viii) The Company shall have received cash proceeds from the
issuance of Non-Voting Common Stock to NationsBank in an
amount equal to the Merger Price multiplied by 784,999 shares
on terms and conditions reasonably acceptable to the Agents;
(ix) The Company shall have received a minimum of 3,872,235 shares
of Canoe Common Stock from
-5-
<PAGE>
Confidential
November 15, 1994
Delcor, Inc. and 784,999 shares of Canoe Common Stock from First
Union as "contributed" equity to Newco;
(x) All governmental, regulatory, shareholder and third party
consents and approvals, if any, necessary to effect the Merger
and related financing shall have been obtained and remain in
effect;
(xi) No material adverse change shall have occurred in the
business, assets, financial condition or results of operations
of Canoe and its subsidiaries, taken as a whole, and there
shall exist no condition, event or occurrence which,
individually or in the aggregate, could reasonably be expected
to have a material adverse effect on the business, assets,
financial condition or results of operations of Canoe and its
subsidiaries, taken as a whole, since September 30, 1994,
except as disclosed in documents filed prior to the date
hereof with the Securities and Exchange Commission;
(xii) All of the Company's existing senior indebtedness shall be
repaid in full at closing;
(xiii) There shall not be any material pending litigation,
injunction, order or claim with respect to the Merger or the
First Union Financing;
(xiv) The final order of the bankruptcy court entered in March 1993
in connection with Canoe's emergence from its Chapter 11
reorganization shall remain in full force and effect; Canoe
shall be in compliance with each of its continuing obligations
specified therein; and no proceedings shall be pending or
threatened that in any manner challenges such final bankruptcy
court order;
(xv) If requested, the Agents shall have received appraisals in
satisfactory form on certain of the Company's fixed assets
prepared by an independent valuation firm acceptable to the
Agents; and
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<PAGE>
Confidential
November 15, 1994
(xvi) The Agents shall have received such other documents, opinions,
certificates and agreements in connection with the Merger and
the Senior Debt Facilities, all in form and substance
satisfactory to the Agents as they shall reasonably request.
Representations
and Warranties: The Loan Agreement will include representations and warranties
customarily found in the Agents' loan agreements for similar financings
and any additional representations and warranties appropriate in the
context of the proposed Merger (including with respect to bankruptcy,
environmental and asbestos matters).
Covenants: The Loan Agreement will include covenants customarily found in the
Agents' loan agreements for similar financings and any additional
covenants appropriate in the context of the proposed Merger. Such
covenants shall in any event include:
(1) Limitations on Liens;
(2) Limitations on Cash Dividends, Distributions and Stock
Repurchases;
(3) Limitations on Additional Indebtedness;
(4) Limitations on Transactions with Shareholders and Affiliates;
(5) Limitations on Capital Expenditures and Cash Acquisitions; and
(6) Certain other covenants, including financial covenants (such
as fixed charge and interest coverage ratio tests, leverage
tests, and minimum current ratio tests) acceptable to the
Agents.
Permitted Dividends: So long as no Event of Default has occurred and is continuing, the
Company will be permitted to pay cash dividends on the Preferred Stock
and Common Stock in amounts of up to 75% of the Company's net income
calculated prior to giving effect to the dividend for such period (the
"Permitted Dividends") after such time as (i) the Senior Debt
Facilities have been paid down below $200,000,000 and (ii) the
Company's ratio of
-7-
<PAGE>
Confidential
November 15, 1994
Total Funded Debt to Operating Cash Flow on a
trailing four quarters basis is less than 1.0x. Permitted Dividends
may be paid on a quarterly basis no sooner than 15 days after receipt
by the Lenders of the Company's quarterly financial statements
confirming compliance with the above conditions. Cash dividends shall
not be permitted if after giving effect to such payment, the Company
would be in default of the Senior Debt Facilities or the conditions
outlined above.
Events of Default: Those customarily found in the Agents' loan agreements for similar
financings and any additional events of default appropriate in the
context of the proposed Merger.
Syndication: Following the signing of a definitive Merger Agreement between the
Company and Canoe, the Company shall use its best efforts to assist the
Agents in syndicating the Senior Debt Facilities. The initial
syndication shall be a coordinated process under which both Agents
shall reduce their commitments on a pro-rata basis until such time as
they reach their desired hold level or mutually agree to terminate the
joint syndication process.
Assignments
and Participation: After completion of the initial syndication process, any Lender may
participate or assign its interest in the Senior Debt Facilities in
minimum amounts of at least $5,000,000 subject to the approval of the
Company and the Agents, which shall not be unreasonably withheld. In
addition, at any time, any Lender may transfer all or part of its
commitment under the Senior Debt Facilities to an affiliate.
Miscellaneous: (1) North Carolina state law to govern;
(2) All terms and conditions contained in the Agreements to be
reasonably satisfactory to the Agents and to their counsel.
The Company shall reimburse the Agents for all reasonable out-
of pocket expenses including, but not limited to, the
reasonable fees and disbursements of their counsel in
connection with the preparation and execution of the
Agreements and the reasonable fees and expenses of any third
party consultants retained to assist the Agents in analyzing
any environmental or asbestos related issues, in each case
whether or not the transactions herein contemplated shall be
consummated
-8-
<PAGE>
Confidential
November 15, 1994
or the Senior Debt Facilities shall be executed or
closed;
(3) Usual provisions regarding survival of Agreements, waiver and
delay, extensions of maturity, modifications of agreements,
severability, counterparts and enforcements, headings,
definition of accounting terms in accordance with GAAP, waiver
of jury trial; and
(4) The Loan Agreement shall contain voting requirements that
shall allow 66 2/3% in principal amount to approve certain
waivers, modifications and amendments subject to customary
unanimity requirements.
</TABLE>
-9-
<PAGE>
Confidential
November 15, 1994
Cumulative Pay-In-Kind (PIK) Preferred Stock
<TABLE>
<CAPTION>
<S> <C>
Issuer: Newco and, following the Merger, Canoe (the
"Company").
Facility: Cumulative Redeemable Pay-In-Kind (PIK)
Preferred Stock (the "Preferred Stock").
Amount: $100,000,000 (the "Purchase Price").
Shares Issued: 100,000.
Price Per Share: $1,000 (the "Purchase Price Per Share").
Purchaser: First Union Corporation or an affiliate
thereof ("First Union").
Use of Proceeds: To facilitate the consummation of the
Merger as described in the Commitment
Letter.
Redemption Date: 8 years from closing.
Dividend Rate: 10.0%
Dividend Payments: Semi-annual; to be paid in cash or in-kind
for the first three years at the option of
the Company; thereafter, dividends will be
payable in cash, subject to the terms of the
Senior Debt Facilities.
Call Protection: None.
Warrants: The Preferred Stock will carry detachable
warrants exercisable into Non-Voting Common
Stock of the Company, which represents
5.1337% of all Common Stock on a fully-
diluted basis.
Conditions
Precedent: The purchase of the Preferred Stock will
be subject to the execution of a
satisfactory Preferred Stock and Warrant
Purchase Agreement, and any necessary
related documents; as well as the
satisfaction of conditions precedent as
outlined in the Senior Debt Facilities,
which are hereby incorporated by
reference, and any other conditions
deemed appropriate by the Purchaser for
similar financings and for this
transaction in particular.
-10-
<PAGE>
Confidential
November 15, 1994
Protective
Provisions: The Company shall not, without first
obtaining consent or approval of the
holders of at least two-thirds of the
Preferred Stock, do any of the
following:
(i) Create any senior stock having
preference or priority over the
Preferred Stock as to dividends or upon
redemption, liquidation, winding up or
dissolution;
(ii) Adversely amend or alter any
preferences, rights or powers of the
Preferred Stock;
(iii) Pay other than Permitted Dividends,
provided, however, that once all
dividends have been paid on the
Preferred Stock in cash and the
Company has redeemed all prior in-
kind dividends, the Company may pay
cash dividends on the Common Stock
in an annual amount not to exceed
(i) 2.5% multiplied by (ii) an
amount equal to (x) the Merger
Price Per Share multiplied by (y)
the total Shares of voting and Non-
Voting Common Stock outstanding;
and
(iv) Except as contemplated by the Merger
Agreement, redeem or repurchase any
junior stock, warrants or other parity
stock.
Certain Events: The following shall constitute an Event:
(i) Failure to declare and pay semi-annual
dividends on the Preferred Stock in
full;
(ii) Failure to redeem or pay the Redemption
Price in full when required;
(iii) Certain events of bankruptcy,
receivership or similar
proceedings; and
(iv) Failure to observe any Protective
Provisions.
Rights Upon
an Event: Upon and during the continuance of an Event,
the Purchaser may elect one representative to
the Board of Directors of the Company.
-11-
<PAGE>
Confidential
November 15, 1994
Change in Control/
Sale of Assets: In the event there occurs a Change of
Control (an event which results in
Delcor, Inc. or its affiliates owning
less than 51% of the voting Common Stock
of the Company) or sale of substantially
all of the Company's assets, any holder
of Preferred Stock may require the
Company to redeem all of the shares of
Preferred Stock held by such holder at a
price equal to the Purchase Price per
share plus all Accrued Dividends thereon
to the date of redemption.
Transfer Rights: Beginning eighteen months after the
consummation of the Merger, any holder
of the Preferred Stock may sell or
transfer in whole or in part, any shares
of Preferred Stock held by such holder
subject to (i) the Company's consent,
which shall not be unreasonably withheld
and (ii) the Company's first right of
refusal.
Attendance Rights: Following the Merger, the Company will
permit a representative of the Purchaser
to attend all meetings of the Company's
Board of Directors or committees.
Reimbursement
of Expenses: The Purchaser shall be reimbursed for
reasonable out-of-pocket expenses
(including fees and disbursements for
counsel) incurred in connection with the
issuance of the Preferred Stock and the
Warrants.
Information
Requirements: The Company will provide the Purchaser with:
(i) annual financial statements audited by a
nationally recognized "Big Six" independent
accounting firm, (ii) monthly internal
financial statements, (iii) an annual budget
for the next fiscal year prior to the end of
the previous fiscal year, and (iv) any other
information as reasonably requested by such
Purchaser.
Representations
and
Warranties: Those customarily found in purchase
agreements for similar financings and
any additional representations and
warranties appropriate in the context of
the proposed financing.
-12-
<PAGE>
Confidential
November 15, 1994
Warrants
Issuer: Newco and, following the Merger, Canoe (the
"Company").
Facility: Warrants.
Purchaser: First Union Corporation or an affiliate
thereof ("First Union").
Amount: In conjunction with the Cumulative Redeemable
Payment-In-Kind (PIK) Preferred Stock (the
"Preferred Stock"), detachable Warrants will
be issued sufficient to provide the Purchaser
with 5.1337% of the Common Stock of the
Company on a fully-diluted basis (subject
only to dilution by management options in an
amount to be mutually agreed upon).
Exercise Price: Nominal.
Exercise Period: At any time.
Maturity: Ten years from the date of issuance.
Put Provisions: Subject to the terms of the Senior Debt
Facilities and the Preferred Stock, the
Purchaser shall have the right to sell
all or part of the Warrants to the
Company at a cash price (the "Put
Price") as described below at any time
after the earliest to occur of the
following:
(i) Six years after the closing date;
(ii) An event which results in Delcor, Inc.
or its affiliates owning less than 51%
of the voting Common Stock of the
Company;
(iii) Any merger in which the Company is
not the surviving corporation, or
sale or other transfer of
substantially all of the Company's
assets;
(iv) Acceleration of any outstanding credit
facility of the Company; and
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<PAGE>
Confidential
November 15, 1994
(v) A qualified public equity offering by
the Company;
provided, however, that if not exercised upon
the occurrence of the event described in
Section (v), the put right of the Purchaser
shall terminate.
The Put Price shall be the fair market value
as mutually agreed upon by the Company and
the Purchaser. For the purposes of this
paragraph, fair market value will not include
any discount for minority interest or lack of
liquidity. If the parties are not able to
agree on a fair market value, they will agree
to engage a mutually acceptable investment
banker to determine the fair market value of
the Warrants.
Transfer Rights: Beginning eighteen months after
consummation of the Merger, any holder
of the Warrants may sell or transfer in
whole or in part, any Warrant shares
held by such holder subject to (i) the
Company's consent, which shall not be
unreasonably withheld and (ii) the
Company's first right of refusal. If
necessary to facilitate the sale of the
Warrants, the Company will amend its
charter provisions to make the Warrants
exchangeable into voting Common Stock of
the Company. Any change in the Warrant
shares from non-voting to voting will be
subject to Federal Reserve guidelines.
Call Provisions: Subject to the terms of the Senior Debt
Facilities and the Preferred Stock and
beginning seven years after the closing
date, the Company shall have the right
to purchase for cash all or part of the
Warrants, on a pro-rata basis with all
other Warrant holders, at a price equal
to 100% of the Put Price determined at
that time.
Other Rights: In addition to the above rights, the Warrants
will provide for:
(i) Customary anti-dilution provisions;
(ii) Piggyback rights for the Warrant shares
on any public or private sale of the
Company's equity securities;
(iii) Two demand registration rights for
the Warrant shares (taken together
with Purchaser's demand
registration rights for Non-Voting
Common Stock) beginning January 1,
1999 or at any earlier time that
the Put Provision is exercisable;
and
(iv) 30 days' prior notice of the record date
of any cash dividendon the Common Stock.
</TABLE>
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<PAGE>
Confidential
November 15, 1994
Non-Voting Common Stock
<TABLE>
<CAPTION>
<S> <C>
Issuer: Newco and, following the Merger, Canoe (the
"Company").
Facility: Non-Voting Common Stock (the "Non-Voting
Common Stock").
Rollover Value: $34,147,456.50 assuming the Merger Price
Per Share shown below.
Shares Contributed: 784,999 existing shares of Canoe.
Merger Price Per Share: $43.50 (the "Merger Price Per Share").
Purchaser: First Union Corporation or an affiliate
thereof ("First Union").
Use of Proceeds: To facilitate the consummation of the
Merger as described in the Commitment
Letter.
Dividend Rights: To the extent cash dividends on Common
Stock are permitted by the Senior Debt
Facilities and the Preferred Stock, each
holder of voting Common Stock and Non-
Voting Common Stock shall share ratably
in any such dividends.
Put Provisions: Subject to the terms of the Senior Debt
Facilities and the Preferred Stock, the
Purchaser shall have the right to sell
all or part of the Non-Voting Common
Stock to the Company at a cash price
(the "Put Price") as described below at
any time after the earliest to occur of
the following:
(i) Six years after the closing date;
(ii) An event which results in Delcor, Inc.
or its affiliates ("Delcor") owning less
than 51% of the voting Common Stock of
the Company;
(iii) Any merger in which the Company is
not the surviving corporation, or
any sale or other transfer of
substantially all of the Company's
assets;
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<PAGE>
Confidential
November 15, 1994
(iv) Acceleration of any outstanding credit
facility of the Company; and
(v) A qualified public equity offering by
the Company;
provided, however, that if not exercised upon
the occurrence of the event described in
Section (v), the put right of the Purchaser
shall terminate.
The Put Price shall be the fair market value
as mutually agreed upon by the Company and
the Purchaser. For the purposes of this
paragraph, fair market value will not include
any discount for minority interest, lack of
liquidity or lack of voting rights. If the
parties are not able to agree on a fair
market value, they will agree to engage a
mutually acceptable investment banker to
determine the fair market value of the Non-
Voting Common Stock.
Transfer Rights: Beginning eighteen months after
consummation of the Merger, any holder
of the Non-Voting Common Stock may sell
or transfer, in whole or in part, any
Non-Voting Common Stock held by such
holder subject to (i) the Company's
consent, which shall not be unreasonably
withheld and (ii) the Company's first
right of refusal. If necessary to
facilitate the sale of the Non-Voting
Common Stock, the Company will amend its
charter provisions to make the Non-
Voting Common Stock exchangeable into
voting Common Stock of the Company. Any
such right to have the Company's charter
amended shall be subject to Federal
Reserve guidelines.
Call Provisions: Subject to the terms of the Senior Debt
Facilities and the Preferred Stock and
beginning seven years after the closing
date, the Company shall have the right
to purchase for cash all or part of the
Non-Voting Common Stock, on a pro-rata
basis with all other Non-Voting Common
Stock holders, at a price equal to 100%
of the Put Price determined at that
time.
Conditions Precedent: The purchase of the Non-Voting Common
Stock will be subject to the execution
of a satisfactory Non-Voting Common
Stock Purchase Agreement, and any
necessary related documents; as well as
the satisfaction of conditions precedent
as outlined in the Senior Debt
Facilities, which are hereby
incorporated by reference, and any other
conditions deemed appropriate by the
Purchaser for similar financings and for
this transaction in particular.
-16-
<PAGE>
Confidential
November 15, 1994
Attendance Rights: Following the Merger, and provided that
the Preferred Stock has been redeemed in
full, the Company will permit a
representative of the Purchaser to
attend all meetings of the Company's
Board of Directors or committees.
Other Rights: In addition to the above rights, the Non-
Voting Common Stock will provide for:
(i) Customary anti-dilution provisions;
(ii) Piggyback rights on any public or
private sale of the Company's equity
securities; and
(iii) Two demand registration rights
(taken together with Purchaser's
demand registration rights for
Warrant shares) beginning January
1, 1999 or at any earlier time that
the Put Provision is exercisable.
Reimbursement
of Expenses: The Purchaser shall be reimbursed for
reasonable out-of-pocket expenses
(including fees and disbursements for
counsel) incurred in connection with the
issuance of the Non-Voting Common Stock.
Information
Requirements: The Company will provide the Purchaser with:
(i) annual financial statements audited by a
nationally recognized "Big Six" independent
accounting firm, (ii) monthly internal
financial statements, (iii) an annual budget
for the next fiscal year prior to the end of
the previous fiscal year, and (iv) any other
information as reasonably requested by such
Purchaser.
Representations
and Warranties: Those customarily found in purchase
agreements for similar financings and
any additional representations and
warranties appropriate in the context of
the proposed financing.
</TABLE>
-17-
<PAGE>
Exhibit 3
DELCOR, INC.
Wilmington, Delware
November 15, 1994
Board of Directors
National Gypsum Company
2001 Rexford Road
Charlotte, North Carolina 28211
Dear Directors:
We are writing to propose an acquisition transaction that we
believe will provide excellent value for your stockholders.
Delcor, Inc. ("Delcor") is a subsidiary of Golden Eagle
Industries, Inc. ("Golden Eagle"), and, as you know, C.D.
Spangler, Jr. serves as Chairman of Golden Eagle. Delcor holds
3,872,235 shares (approximately 19.0 percent) of the outstanding
common stock of National Gypsum Company (the "Company"), which it
acquired in three block purchases beginning in October 1993.
Delcor acquired those shares because we believed, and we continue
to believe, that the Company represents an attractive long-term
investment opportunity that meets our objectives of investing in
and supporting North Carolina-based businesses.
The Company's earnings have continued to increase throughout
this year, confirming our strong belief in and support for the
Company and its management team. In spite of this earnings
performance, however, the price of the Company's stock has
declined significantly during the past eight months. We have
become convinced that it is in the best interests of the Company
for its ownership to be in the hands of a supportive, long-term
investor group and for its stockholders, many of whom we believe
have shorter range horizons, to be provided an opportunity to
receive premium value for their shares. Accordingly, we propose
to acquire all outstanding shares of common stock and common
stock equivalents held by other securityholders of the Company in
a negotiated cash merger at a price per share of $43.50.
The proposed price represents an approximate 32.8 percent
premium over the Company's closing stock price of $32.75 on
Tuesday, November 15. The proposed price also represents a 166.6
percent premium over the book value per share of the common stock
based on the financial statements included in the Company's most
recent quarterly report.
The acquisition would be effected by means of a merger of
the Company with a corporation formed by us for that purpose
("Newco") or with a wholly owned subsidiary of Newco. In either
case the Company would be the surviving corporation.
<PAGE>
Board of Directors
National Gypsum Company
November 15, 1994
Page 2
We are confident that our proposal is not only in the best
interests of the Company's stockholders, but also in the best
long-term interests of the Company, its management and employees.
Our proposal does not depend on sales of any Company assets,
plant closings, employee layoffs or any termination of or change
in retirement benefits. Moreover, we hope the Company's
management team will continue with us, and we are prepared to
discuss incentive compensation plans with them at the appropriate
time.
We think it is important for you to know that our proposal
has been intentionally structured with a substantial equity base
to support the continued stability and growth of the Company.
Pursuant to the proposal, we will be contributing our 3,872,235
National Gypsum shares (with a merger value of $168.4 million) to
Newco and investing an additional $150 million. In addition, we
have received commitment letters from two major North Carolina-
based financial institutions, First Union Corporation and
NationsBank Corporation, for each to subscribe for an additional
$134.1 million of non-voting preferred and common stock of Newco.
Together, our proposal envisions a total economic equity base of
more than $585 million and an equity-to-capitalization ratio of
approximately 65 percent. Under those commitment letters, bank
affiliates of First Union Corporation and NationsBank Corporation
also have committed to provide a total of up to $375 million in
senior term debt and revolving credit financing to support our
proposal. The commitment letters are subject to certain
conditions, including satisfaction as to the financial impact on
the Company of certain asbestos, bankruptcy and environmental
matters.
Details of our proposal will be contained in a definitive
merger agreement, and we will deliver a draft of that agreement
to you promptly. The proposed merger agreement will contain what
we regard as customary or expected conditions, such as the
obtaining of necessary regulatory approvals and third-party
consents, if any; absence of certain changes; and approval by the
Board of Directors and adoption by the Company's stockholders of
the merger agreement pursuant to Sections 203(a) and 251 of the
Delaware General Corporation Law. In addition, in the light of
recent developments regarding the NGC Settlement Trust (the
"Settlement Trust"), the merger agreement will contain a
condition that matters relating to the possible financial impact,
if any, of the Settlement Trust's recent motions in the
bankruptcy court be resolved to our satisfaction. The merger
agreement will also contain a condition that certain other
environmental and bankruptcy matters be resolved to our
satisfaction.
As a matter of corporate governance, we recognize that you
must consider what alternatives, if any, may be available for the
<PAGE>
Board of Directors
National Gypsum Company
November 15, 1994
Page 3
Company and its stockholders and understand that you may seek to
solicit other acquisition proposals or to discuss with other
potential bidders a possible acquisition of the Company. We
support this process as a way to ensure the best value for the
Company's stockholders; however, we believe our proposal will
prove to be the most advantageous to the Company, its
stockholders, management, employees, and others interested in its
success. For these reasons, we believe it would be mutually
desirable for all interested parties if you would afford us the
opportunity to review all information available to management and
negotiate with you a definitive merger agreement that embodies
the terms of our proposal. We are prepared to enter into a
definitive merger agreement promptly.
As you know, Golden Eagle is a party to a Memorandum of
Understanding dated October 6, 1993, with Lafarge Coppee S.A.
("Lafarge") pursuant to which Golden Eagle and Lafarge have
agreed to cooperate with each other in satisfying any desire by
either party to acquire more shares of the Company and, for that
purpose, to advise each other (to the extent reasonably permitted
by the then existing circumstances) with respect to any plan to
acquire any more shares of the Company's common stock.
Accordingly, Lafarge is being offered the opportunity to
participate with us in the acquisition.
As required by law, we will file tomorrow with the
Securities and Exchange Commission an amendment to our current
Schedule 13D to report our proposal made in this letter. A copy
of this letter will be attached as an exhibit to that amendment.
We look forward to meeting with you or your representatives
to discuss this proposal at the earliest practicable time.
Very truly yours,
DELCOR, INC.
/s/ W.D. Cornwell, Jr.
W.D. Cornwell, Jr.
President
<PAGE>
NationsBank Corporation Exhibit 4
NationsBank Corporation Center
Charlotte, NC 28255
(NationsBank logo appears here)
CONFIDENTIAL
November 15, 1994
Delcor, Inc.
1110 East Morehead Street
Charlotte, NC 28204
Attention: Mr. W. D. Cornwell, Jr.
President
Gentlemen:
NationsBank of North Carolina, N.A., and NationsBank Corporation
or an affiliate thereof (collectively, "NationsBank") are pleased
to confirm to Delcor, Inc. ("Delcor"), their commitment to
provide to Newco or its successor pursuant to the Merger
described herein (the "Company"), a company to be formed by
Delcor, on the terms, for the purposes and subject to the
conditions set forth below and in the summary of certain terms
attached hereto (the "Term Sheets") the following: (i) senior
debt facilities (the "Senior Debt Facilities") in an aggregate
amount of up to $187,500,000, (ii) a subscription to purchase
Cumulative Redeemable Payment-In-Kind Preferred Stock (the
"Preferred Stock") in an aggregate amount of $100,000,000 and
related detachable warrants (the "Warrants") and (iii) the
purchase of 784,999 shares of Non-Voting Common Stock of the
Company for a cash purchase price per share equal to the Merger
Price (as defined below), (the "Common Equity") of a company
which has been described to us under a code name "Canoe" in
connection with the Company's acquisition of Canoe. As
NationsBank understands the proposed transaction (the
"Transaction"), Delcor will organize the Company, a single
purpose, wholly owned subsidiary that will enter into a merger
agreement (the "Merger Agreement") with Canoe, pursuant to which
the Company will merge with Canoe (the "Merger"), with Canoe
being the surviving corporation. In the Merger, each of the
issued and outstanding shares of Canoe's common stock, par value
$.01 per share, excluding any treasury shares, Common Equity
shares or other contributed shares, will be converted into the
right to receive an aggregate amount in cash consideration per
share not to exceed the amount discussed between NationsBank and
the Company (the "Merger Price"). The Senior Debt Facilities,
the Preferred Stock and the Common Equity (collectively, the
"NationsBank Financing") are being provided to enable the Company
to (i) complete the Merger, (ii) provide for the ongoing working
capital and capital spending needs of the Company, and (iii) pay
certain fees and expenses related to the Merger. If the
Transaction is structured as a merger of a wholly owned
subsidiary of the Company into Canoe, this commitment letter and
the Term Sheets shall be modified to reflect the revised
structure.
<PAGE>
Delcor, Inc.
November 15, 1994
Page 2
_________________________
NationsBank's commitment is to provide 50% of $375,000,000 of
Senior Debt Facilities that will be co-agented by NationsBank and
First Union National Bank of North Carolina, or an affiliate
thereof (collectively, "First Union") . First Union will also
(i) purchase $100,000,000 of Preferred Stock and Warrants and
(ii) contribute 784,999 shares of common stock of Canoe in
exchange for 784,999 shares of Non-Voting Common Stock of the
Company.
Our commitment to provide the NationsBank Financing will be
funded upon the effectiveness of the Merger and is subject to the
conditions set forth herein and in the attached Term Sheets,
including the right to assign or transfer all or part of this
commitment for the NationsBank Financing to any of our affiliated
corporations or banks and to any third parties.
Our commitment to provide the NationsBank Financing will
terminate (i) on July 31, 1995 if the Merger shall not have
closed on or prior to such date, or (ii) at any time prior to the
Merger and the funding of the NationsBank Financing if (a) there
shall have been any material adverse change in the business,
assets, financial condition or results of operations of Canoe and
its subsidiaries, taken as a whole, or (b) there shall exist any
condition, event or occurrence which, individually or in the
aggregate, could reasonably be expected to have a material
adverse effect on the business, assets, financial condition or
results of operations of Canoe and its subsidiaries, taken as a
whole, in either case, since September 30, 1994, except as
disclosed in documents filed prior to the date hereof with the
Securities and Exchange Commission.
The business and financial terms set forth in the attached Term
Sheets have been established as a result of a review of Canoe's
publicly available information (including public filings with the
Securities and Exchange Commission). NationsBank believes that
the closing conditions and other terms contained in the attached
Term Sheets are customary for comparable financings.
You agree that this Commitment Letter is for your confidential
use only and will not be disclosed by you to any person other
than your accountants, attorneys and other advisors and the
Company and Canoe and such of their respective officers,
directors, agents, accountants, attorneys and other advisors as
need to be provided therewith, and only then in connection with
the Transaction and on a confidential basis, except that you may
make public disclosure of the existence and amount of
NationsBank's commitment and undertaking hereunder, you may file
a copy of the Commitment Letter in any public record in which it
is required by law to be filed, and you may make such other
public disclosure of the terms and conditions hereof as you are
required by law, in the reasonable opinion of your counsel, to
make.
Delcor agrees to indemnify each of NationsBank and its affiliates
and their respective directors, officers, employees, agents and
controlling persons (each, an "Indemnified Party") from and
against any and all losses, claims (whether valid or not),
damages and liabilities, joint or several, to which such
Indemnified Party may become subject related to or arising out of
the Transaction and will reimburse each Indemnified Party for all
expenses (including reasonable attorneys' fees and expenses) as
they are incurred in connection with the investigation of,
preparation for or
<PAGE>
Delcor, Inc.
November 15, 1994
Page 3
_________________________
defense of any pending or threatened claim or any action or
proceeding arising therefrom. Notwithstanding the
foregoing, the obligation to indemnify any Indemnified Party
hereunder shall not apply in respect of any loss, claim, damage
or liability to the extent that a court of competent jurisdiction
shall have determined by final judgment that such loss, claim,
damage or liability resulted from such Indemnified Party's
willful malfeasance, gross negligence or bad faith. In the event
that the foregoing indemnity is unavailable or insufficient to
hold an Indemnified Party harmless, then Delcor will contribute
to amounts paid or payable by such Indemnified Party in respect
of such Indemnified Party's losses, claims, damages or
liabilities in such proportions as appropriately reflect the
relative benefits received by and fault of Delcor and such
Indemnified Party in connection with the matters as to which such
losses, claims, damages or liabilities relate and other equitable
considerations.
If any action, proceeding, or investigation is commenced, as to
which any Indemnified Party proposes to demand such
indemnification, it shall notify Delcor with reasonable
promptness; provided, however, that any failure by such
Indemnified Party to notify Delcor shall not relieve Delcor from
its obligations hereunder except to the extent Delcor is
prejudiced thereby. Delcor shall be entitled to assume the
defense of any such action, proceeding, or investigation,
including the employment of counsel and the payment of all fees
and expenses. The Indemnified Party shall have the right to
employ separate counsel in connection with any such action,
proceeding, or investigation and to participate in the defense
thereof, but the fees and expenses of such counsel shall be paid
by the Indemnified Party, unless (a) Delcor has failed to assume
the defense and employ counsel as provided herein, (b) Delcor has
agreed in writing to pay such fees and expenses of separate
counsel, or (c) an action, proceeding, or investigation has been
commenced against the Indemnified Party and Delcor and
representation of both Delcor and the Indemnified Party by the
same counsel would be inappropriate because of actual or
potential conflicts of interest between the parties (in the case
of NationsBank, the existence of any such actual or potential
conflict of interest to be determined by NationsBank, taking into
account, among other things, any relevant regulatory concerns).
In the case of any circumstance described in clauses (a), (b), or
(c) of the immediately preceding sentence, Delcor shall be
responsible for the reasonable fees and expenses of such separate
counsel; provided, however, that Delcor shall not in any event be
required to pay the fees and expenses of more than one separate
counsel for all Indemnified Parties. Delcor shall be liable only
for settlement of any claim against an Indemnified Party made
with Delcor's written consent.
Delcor agrees to pay to us the fees for the Senior Debt
Facilities outlined in the fee letter and supplemental fee
letter, each dated the date hereof (the "Fee Letters"). Delcor
also agrees to reimburse us for all of our out-of-pocket expenses
(including the reasonable fees and disbursements of our counsel)
in connection with the Merger and the NationsBank Financing,
described herein.
The provisions of the three immediately preceding paragraphs
shall survive any termination of this letter.
<PAGE>
Delcor, Inc.
November 15, 1994
Page 4
_________________________
Delcor acknowledges that NationsBank has advised Delcor that the
services to be provided hereunder and the amount of fees and the
obligation to reimburse expenses are in no way conditioned upon
Delcor's obtaining from NationsBank or any affiliate of
NationsBank any other service or any loan or other financial
product.
If you are in agreement with the foregoing, please sign and
return the enclosed copy of this letter and the Fee Letters to
NationsBank no later than 5:00 p.m. Eastern Standard Time, on or
before November 15, 1994. This commitment shall terminate at
such time unless a signed copy of this letter and the Fee Letters
have been delivered to us.
Very Truly Yours,
NATIONSBANK CORPORATION
By: /s/ Edward J. Brown, III
Edward J. Brown, III
President, Corporate Bank
NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ Edward J. Brown, III
Edward J. Brown, III
President, Corporate Bank
Agreed to and accepted this
15th day of November, 1994
DELCOR, INC.
By: /s/ W. D. Cornwell, Jr.
W. D. Cornwell, Jr.
President
<PAGE>
Confidential
November 15, 1994
PROJECT CANOE
Summary of Certain Terms
Senior Debt Facilities
<TABLE>
<S> <C>
Borrower: Newco and, following the Merger, Canoe (the "Company").
Facilities: Will include a six year Revolving Credit Facility (the
"Revolver") and a six year Term Loan (the "Term Loan")
(together, the "Senior Debt Facilities").
Amount: Revolver: Up to $75,000,000
Term Loan: $300,000,000
The aggregate amount available under the Revolver will be
based on the lesser of $75,000,000 or the aggregate of certain
percentages of the Company's eligible accounts receivable and
eligible inventory (as defined in the Company's existing senior
credit agreement), subject to reasonable reserves.
Maturity Dates: The later of June 30, 2001 or six years from the Closing Date.
Agents: NationsBank of North Carolina, N.A. ("NationsBank") and
First Union National Bank of North Carolina ("First Union")
(collectively, the "Agents").
Administrative Agent: NationsBank
Lenders: NationsBank and First Union, and a group of other financial
institutions reasonably acceptable to the Agents and the
Company (the "Lenders").
Use of Proceeds: To consummate the Merger described in the Commitment
Letter, to pay certain fees and expenses related to the Merger
and to provide for the Company's ongoing working capital and
capital spending requirements.
Interest Rates: The interest rates on the Senior Debt Facilities will be a
function of the Company's Total Funded Debt to Operating
Cash Flow ("Leverage Ratio") as determined quarterly on a
<PAGE>
Confidential
November 15, 1994
rolling four quarters basis. Operating Cash Flow will equal
the Company's earnings before interest, taxes, depreciation and
amortization ("EBITDA"). The Company will have the option
of borrowing at a spread over the Base Rate (defined as the
higher of the Administrative Agent's Prime Rate, the Three
Month CD Rate plus .50%, and the Federal Funds Rate plus
.50%) or the Adjusted London Interbank Offered Rate
("LIBOR"). The applicable rates will be based on
the following table
</TABLE>
<TABLE>
<CAPTION>
Revolver Term Loan
Spread Over Spread Over Spread Over Spread Over
Leverage Ratio Base LIBOR Base LIBOR
<S> <C> <C> <C> <C>
> 2.0x 1.25% 2.75% 1.50% 3.00%
1.50x - 1.99x 0.75% 2.25% 1.00% 2.50%
1.00x - 1.49x 0.25% 1.75% 0.50% 2.00%
0.50x - .99x 0.00% 1.25% 0.00% 1.50%
< .50x 0.00% 1.00% 0.00% 1.00%
</TABLE>
<TABLE>
<S> <C>
The interest rates on the Senior Debt Facilities will increase by
two (2) percentage points per annum upon the occurrence and
during the continuance of any payment default under the Loan
Agreement.
The Loan Agreement shall include the Agents' standard
protective provisions for such matters as increased costs,
funding losses, illegality and withholding taxes.
Interest Payments: At the end of each applicable Interest Period or quarterly, if
earlier, calculated on an actual 360 day basis for both Base
Rate and LIBOR Loans.
Interest Periods: LIBOR interest period: 30, 60, or 90 days, subject to
availability.
Interest Rate Protection: Within 90 days following the closing, the Company must
obtain reasonably acceptable interest rate protection through
interest rate swaps, caps or other instruments reasonably
satisfactory to the Agents, against increases in interest rates for
a minimum of 50% of the Term Loan or such lesser amount as
the Agents may agree, for a period of at least three years. In
the event the Company obtains Interest Rate Protection from
any Lender, then such Lender may secure the Company's
obligations thereunderon apari-passu basiswith the Senior
Debt Facilities.
</TABLE>
-2-
Confidential
November 15, 1994
<TABLE>
<S> <C>
Facility Fees: 1/2 of 1% per annum, on the unutilized portion of the
Revolver commitment, payable quarterly in arrears.
Security: A perfected first priority security interest in all of the post-
Merger Company's assets, including the pledge of the stock of
all the Company's subsidiaries.
Mandatory Payments: Revolver: Payable in full at maturity.
Term Loan: Payable quarterly beginning September 30,
1995 in the following amounts:
</TABLE>
<TABLE>
<CAPTION>
Fiscal year Number
Ended Quarterly of Annual
Dec. 31 Amortization Payments Amortization
<S> <C> <C> <C>
1995 $10,000,000 2 $20,000,000
1996 10,000,000 4 40,000,000
1997 10,000,000 4 40,000,000
1998 12,500,000 4 50,000,000
1999 15,000,000 4 60,000,000
2000 15,000,000 4 60,000,000
2001 15,000,000 2 30,000,000
$300,000,000
</TABLE>
<TABLE>
<S> <C>
The principal amount of the Term Loan shall be repaid in
quarterly installments beginning on September 30, 1995 and
ending June 30, 2001.
In addition to the required amortization, the Company will be
required to make repayments on the Term Loan on an annual
basis in an amount equal to 75% of the Company's Excess
Cash Flow (defined as net income plus depreciation,
amortization and all other non-cash charges, adjusted for
changes in working capital, minus capital expenditures,
principal payments and permitted dividends) for such period,
beginning with the period ending December 31, 1995.
The Company will be required to make prepayments with the
net cash proceeds in excess of $5,000,000 from the sale of any
of the Company's assets outside the normal course of business.
In addition, the Company will be required to prepay the Senior
Debt Facilities upon any change of control which results in
Delcor, Inc. or its affiliates owning less than 51% of the voting
</TABLE>
-3-
<PAGE>
Confidential
November 15, 1994
<TABLE>
<S> <C>
Common Stock of the Company. The Company will also be
required to make prepayments in an amount equal to the net
proceeds of any additional issuance of equity.
Mandatory Prepayments shall be applied in inverse order of
maturity.
Voluntary Prepayments: The Company may reduce the amount outstanding under the
Revolver at any time and thereafter reborrow. In addition, the
Company may, at its option, upon five business days' notice to
the Agents, permanently reduce the unutilized portion of the
Revolver in part (in principal amounts of at least $1,000,000
or, if greater, an integral multiple thereof) or in whole.
The Company may, at its option, upon five business days'
notice to the Agents, prepay the Term Loan in part (in
principal amounts of at least $1,000,000 or, if greater, an
integral multiple thereof) or in whole, without premium or
penalty, with interest accrued through the date of prepayment.
Any voluntary prepayments above and beyond those required
under the Excess Cash Flow provision shall be applied in the
manner designated by the Company. All other prepayments
shall be applied in inverse order of maturity.
Conditions Precedent
to Closing: The funding of the Senior Debt Facilities will be subject to
satisfaction of customary conditions precedent for similar
financings and for this transaction in particular, including but
not limited to each of the following:
(i) All documentation relating to the Senior Debt
Facilities shall have been completed and reviewed to
the Agents' and their counsels' satisfaction (including
with respect to bankruptcy, environmental and
asbestos matters);
(ii) The Company and Canoe shall have entered into a
definitive merger agreement (the "Merger
Agreement"), on terms acceptable to the Agents in
their sole discretion and the Merger contemplated
thereby shall be consummated simultaneously with the
funding of the Senior Debt Facilities;
</TABLE>
-4-
<PAGE>
Confidential
November 15, 1994
<TABLE>
<S> <C>
(iii) The Agents shall have determined to their satisfaction
and in their sole discretion that the possible financial
impact on Canoe of the administration of the NGC
Settlement Trust, and Canoe's actual or potential
liabilities with respect to property damage and bodily
injury asbestos claims, will not have a material
adverse effect on the prospective business, assets,
financial condition or results of operations of Canoe
and its subsidiaries, taken as a whole;
(iv) The Agents shall have received an environmental
survey (or audit if so requested) prepared by the
Company (or an environmental assessment firm
acceptable to the Agents) addressing the Company's
compliance with, and liability under, all related
environmental laws, rules and regulations, and the
Agents shall have determined to their satisfaction and
in their sole discretion that the possible financial
impact on Canoe of environmental matters will not
have a material adverse effect on the prospective
business, assets, financial condition or results of
operations of Canoe and its subsidiaries, taken as a
whole;
(v) The Company shall have received commitments for
$187,500,000 of Senior Debt Facilities from First
Union on the same terms and conditions as outlined
herein;
(vi) The Company shall have received a minimum of
$300,000,000 in cash proceeds from the issuance of
Cumulative Redeemable Payment-In-Kind Preferred
Stock and Warrants on terms and conditions
reasonably acceptable to the Agents;
(vii) The Company shall have received $50,000,000 in
cash proceeds from the issuance of voting Common
Stock to Delcor, Inc. on terms and conditions
reasonably acceptable to the Agents;
(viii) The Company shall have received cash proceeds from
the issuance of Non-Voting Common Stock to
NationsBank in an amount equal to the Merger Price
</TABLE>
-5-
<PAGE>
Confidential
November 15, 1994
<TABLE>
<S> <C>
multiplied by 784,999 shares on terms and conditions
reasonably acceptable to the Agents;
(ix) The Company shall have received a minimum of
3,872,235 shares of Canoe Common Stock from
Delcor, Inc. and 784,999 shares of Canoe Common
Stock from First Union as "contributed" equity to
Newco;
(x) All governmental, regulatory, shareholder and third
party consents and approvals, if any, necessary to
effect the Merger and related financing shall have
been obtained and remain in effect;
(xi) No material adverse change shall have occurred in the
business, assets, financial condition or results of
operations of Canoe and its subsidiaries, taken as a
whole, and there shall exkuser3 condition, event or
occurrence which, individually or in the aggregate,
could reasonably be expected to have a material
adverse effect on the business, assets, financial
condition or results of operations of Canoe and its
subsidiaries, taken as a whole, since September 30,
1994, except as disclosed in documents filed prior to
the date hereof with the Securities and Exchange
Commission;
(xii) All of the Company's existing senior indebtedness
shall be repaid in full at closing;
(xiii) There shall not be any material pending litigation,
injunction, order or claim with respect to the Merger
or the NationsBank Financing;
(xiv) The final order of the bankruptcy court entered in
March 1993 in connection with Canoe's emergence
from its Chapter 11 reorganization shall remain in full
force and effect; Canoe shall be in compliance with
each of its continuing obligations specified therein;
and no proceedings shall be pending or threatened
that in any manner challenges such final bankruptcy
court order;
</TABLE>
-6-
<PAGE>
Confidential
November 15, 1994
<TABLE>
<S> <C>
(xv) If requested, the Agents shall have received appraisals
in satisfactory form on certain of the Company's
fixed assets prepared by an independent valuation
firm acceptable to the Agents; and
(xvi) The Agents shall have received such other documents,
opinions, certificates and agreements in connection
with the Merger and the Senior Debt Facilities, all in
form and substance satisfactory to the Agents as they
shall reasonably request.
Representations
and Warranties: The Loan Agreement will include representations and
warranties customarily found in the Agents' loan agreements
for similar financings and any additional representations and
warranties appropriate in the context of the proposed Merger
(including with respect to bankruptcy, environmental and
asbestos matters).
Covenants: The Loan Agreement will include covenants customarily found
in the Agents' loan agreements for similar financings and any
additional covenants appropriate in the context of the proposed
Merger. Such covenants shall in any event include:
(1) Limitations on Liens;
(2) Limitations on Cash Dividends, Distributions and
Stock Repurchases;
(3) Limitations on Additional Indebtedness;
(4) Limitations on Transactions with Shareholders and
Affiliates;
(5) Limitations on Capital Expenditures and Cash
Acquisitions; and
(6) Certain other covenants, including financial covenants
(such as fixed charge and interest coverage ratio tests,
leverage tests, and minimum current ratio tests)
acceptable to the Agents.
Permitted Dividends: So long as no Event of Default has occurred and is continuing,
the Company will be permitted to pay cash dividends on the
</TABLE>
-7-
<PAGE>
Confidential
November 15, 1994
<TABLE>
<S> <C>
Preferred Stock and Common Stock in amounts of up to 75%
of the Company's net income calculated prior to giving effect
to the dividend for such period (the "Permitted Dividends")
after such time as (i) the Senior Debt Facilities have been paid
down below $200,000,000 and (ii) the Company's ratio of
Total Funded Debt to Operating Cash Flow on a trailing four
quarters basis is less than 1.0x. Permitted Dividends may be
paid on a quarterly basis no sooner than 15 days after receipt
by the Lenders of the Company's quarterly financial statements
confirming compliance with the above conditions. Cash
dividends shall not be permitted if after giving effect to such
payment, the Company would be in default of the Senior Debt
Facilities or the conditions outlined above.
Events of Default: Those customarily found in the Agents' loan agreements for
similar financings and any additional events of default
appropriate in the context of the proposed Merger.
Syndication: Following the signing of a definitive Merger Agreement
between the Company and Canoe, the Company shall use its
best efforts to assist the Agents in syndicating the Senior Debt
Facilities. The initial syndication shall be a coordinated
process under which both Agents shall reduce their
commitments on a pro-rata basis until such time as they reach
their desired hold level or mutually agree to terminate the joint
syndication process.
Assignments
and Participation: After completion of the initial syndication process, any Lender
may participate or assign its interest in the Senior Debt
Facilities in minimum amounts of at least $5,000,000 subject
to the approval of the Company and the Agents, which shall
not be unreasonably withheld. In addition, at any time, any
Lender may transfer all or part of its commitment under the
Senior Debt Facilities to an affiliate.
Miscellaneous: (1) North Carolina state law to govern;
(2) All terms and conditions contained in the
Agreements to be reasonably satisfactory to the
Agents and to their counsel. The Company shall
reimburse the Agents for all reasonable out-of
pocket expenses including, but not limited to, the
reasonable fees and disbursements of their counsel
</TABLE>
-8-
<PAGE>
Confidential
November 15, 1994
<TABLE>
<S> <C>
in connection with the preparation and execution of
the Agreements and the reasonable fees and
expenses of any third party consultants retained to
assist the Agents in analyzing any environmental or
asbestos related issues, in each case whether or not
the transactions herein contemplated shall be
consummated or the Senior Debt Facilities shall be executed or closed;
(3) Usual provisions regarding survival of Axecuted or closed;
(3) Usual provisions regarding survival of Agreements, waiver
and delay, extensions of maturity, modifications of
agreements, severability, counterparts and enforcements,
headings, definition of accounting terms in accordance with
GAAP, waiver of jury trial; and
(4) The Loan Agreement shall contain voting requirements that
shall allow 66 2/3% in principal amount to approve certain
waivers, modifications and amendments subject to customary
unanimity requirements.
</TABLE>
-9-
<PAGE>
Confidential
November 15, 1994
Cumulative Pay-In-Kind (PIK) Preferred Stock
Issuer: Newco and, following the Merger, Canoe (the
"Company").
Facility: Cumulative Redeemable Pay-In-Kind (PIK)
Preferred Stock (the "Preferred Stock").
Amount: $100,000,000 (the "Purchase Price").
Shares Issued: 100,000.
Price Per Share: $1,000 (the "Purchase Price Per Share").
Purchaser: NationsBank Corporation or an affiliate
thereof ("NationsBank").
Use of Proceeds: To facilitate the consummation of the
Merger as described in the Commitment
Letter.
Redemption Date: 8 years from closing.
Dividend Rate: 10.0%
Dividend Payments: Semi-annual; to be paid in cash or in-kind
for the first three years at the option of
the Company; thereafter, dividends will be
payable in cash, subject to the terms of the
Senior Debt Facilities.
Call Protection: None.
Warrants: The Preferred Stock will carry detachable
warrants exercisable into Non-Voting Common
Stock of the Company, which represents
5.1337% of all Common Stock on a fully-
diluted basis.
Conditions
Precedent: The purchase of the Preferred Stock will
be subject to the execution of a
satisfactory Preferred Stock and Warrant
Purchase Agreement, and any necessary
related documents; as well as the
satisfaction of conditions precedent as
outlined in the Senior Debt Facilities,
which are hereby incorporated by
reference, and any other conditions
deemed appropriate by the Purchaser for
similar financings and for this
transaction in particular.
-10-
<PAGE>
Protective
Provisions: The Company shall not, without first
obtaining consent or approval of the
holders of at least two-thirds of the
Preferred Stock, do any of the
following:
(i) Create any senior stock having
preference or priority over the
Preferred Stock as to dividends or upon
redemption, liquidation, winding up or
dissolution;
(ii) Adversely amend or alter any
preferences, rights or powers of the
Preferred Stock;
(iii) Pay other than Permitted Dividends,
provided, however, that once all
dividends have been paid on the
Preferred Stock in cash and the
Company has redeemed all prior in-
kind dividends, the Company may pay
cash dividends on the Common Stock
in an annual amount not to exceed
(i) 2.5% multiplied by (ii) an
amount equal to (x) the Merger
Price Per Share multiplied by (y)
the total Shares of voting and Non-
Voting Common Stock outstanding;
and
(iv) Except as contemplated by the Merger
Agreement, redeem or repurchase any
junior stock, warrants or other parity
stock.
Certain Events: The following shall constitute an Event:
(i) Failure to declare and pay semi-annual
dividends on the Preferred Stock in
full;
(ii) Failure to redeem or pay the Redemption
Price in full when required;
(iii) Certain events of bankruptcy,
receivership or similar
proceedings; and
(iv) Failure to observe any Protective
Provisions.
Rights Upon
an Event: Upon and during the continuance of an Event,
the Purchaser may elect one representative to
the Board of Directors of the Company.
-11-
<PAGE>
Confidential
November 15, 1994
Change in Control/
Sale of Assets: In the event there occurs a Change of
Control (an event which results in
Delcor, Inc. or its affiliates owning
less than 51% of the voting Common Stock
of the Company) or sale of substantially
all of the Company's assets, any holder
of Preferred Stock may require the
Company to redeem all of the shares of
Preferred Stock held by such holder at a
price equal to the Purchase Price per
share plus all Accrued Dividends thereon
to the date of redemption.
Transfer Rights: Beginning eighteen months after the
consummation of the Merger, any holder
of the Preferred Stock may sell or
transfer in whole or in part, any shares
of Preferred Stock held by such holder
subject to (i) the Company's consent,
which shall not be unreasonably withheld
and (ii) the Company's first right of
refusal.
Attendance Rights: Following the Merger, the Company will
permit a representative of the Purchaser
to attend all meetings of the Company's
Board of Directors or committees.
Reimbursement
of Expenses: The Purchaser shall be reimbursed for
reasonable out-of-pocket expenses
(including fees and disbursements for
counsel) incurred in connection with the
issuance of the Preferred Stock and the
Warrants.
Information
Requirements: The Company will provide the Purchaser with:
(i) annual financial statements audited by a
nationally recognized "Big Six" independent
accounting firm, (ii) monthly internal
financial statements, (iii) an annual budget
for the next fiscal year prior to the end of
the previous fiscal year, and (iv) any other
information as reasonably requested by such
Purchaser.
Representations
and
Warranties: Those customarily found in purchase
agreements for similar financings and
any additional representations and
warranties appropriate in the context of
the proposed financing.
-12-
<PAGE>
Confidential
November 15, 1994
Warrants
Issuer: Newco and, following the Merger, Canoe (the
"Company").
Facility: Warrants.
Purchaser: NationsBank Corporation or an affiliate
thereof ("NationsBank").
Amount: In conjunction with the Cumulative Redeemable
Payment-In-Kind (PIK) Preferred Stock (the
"Preferred Stock"), detachable Warrants will
be issued sufficient to provide the Purchaser
with 5.1337% of the Common Stock of the
Company on a fully-diluted basis (subject
only to dilution by management options in an
amount to be mutually agreed upon).
Exercise Price: Nominal.
Exercise Period: At any time.
Maturity: Ten years from the date of issuance.
Put Provisions: Subject to the terms of the Senior Debt
Facilities and the Preferred Stock, the
Purchaser shall have the right to sell
all or part of the Warrants to the
Company at a cash price (the "Put
Price") as described below at any time
after the earliest to occur of the
following:
(i) Six years after the closing date;
(ii) An event which results in Delcor, Inc.
or its affiliates owning less than 51%
of the voting Common Stock of the
Company;
(iii) Any merger in which the Company is
not the surviving corporation, or
sale or other transfer of
substantially all of the Company's
assets;
(iv) Acceleration of any outstanding credit
facility of the Company; and
(v) A qualified public equity offering by
the Company;
-13-
<PAGE>
Confidential
November 15, 1994
provided, however, that if not exercised upon
the occurrence of the event described in
Section (v), the put right of the Purchaser
shall terminate.
The Put Price shall be the fair market value
as mutually agreed upon by the Company and
the Purchaser. For the purposes of this
paragraph, fair market value will not include
any discount for minority interest or lack of
liquidity. If the parties are not able to
agree on a fair market value, they will agree
to engage a mutually acceptable investment
banker to determine the fair market value of
the Warrants.
Transfer Rights: Beginning eighteen months after
consummation of the Merger, any holder
of the Warrants may sell or transfer in
whole or in part, any Warrant shares
held by such holder subject to (i) the
Company's consent, which shall not be
unreasonably withheld and (ii) the
Company's first right of refusal. If
necessary to facilitate the sale of the
Warrants, the Company will amend its
charter provisions to make the Warrants
exercisable into voting Common Stock of
the Company. Any change in the Warrant
shares from non-voting to voting will be
subject to Federal Reserve guidelines.
Call Provisions: Subject to the terms of the Senior Debt
Facilities and the Preferred Stock and
beginning seven years after the closing
date, the Company shall have the right
to purchase for cash all or part of the
Warrants, on a pro-rata basis with all
other Warrant holders, at a price equal
to 100% of the Put Price determined at
that time.
Other Rights: In addition to the above rights, the Warrants
will provide for:
(i) Customary anti-dilution provisions;
(ii) Piggyback rights for the Warrant shares
on any public or private sale of the
Company's equity securities;
(iii) Two demand registration rights for
the Warrant shares (taken together
with Purchaser's demand
registration rights for Non-Voting
Common Stock) beginning January 1,
1999 or at any earlier time that
the Put Provision is exercisable;
and
(iv) 30 days' prior notice of the record date
of any cash dividend on the Common
Stock.
-14-
<PAGE>
Confidential
November 15, 1994
Non-Voting Common Stock
Issuer: Newco and, following the Merger, Canoe (the
"Company").
Facility: Non-Voting Common Stock (the "Non-Voting
Common Stock").
Purchase Price: $34,147,456.50, assuming the Merger
Price Per Share shown below.
Shares Issued: 784,999
Merger Price
Per Share: $43.50 (the "Merger Price Per Share").
Purchaser: NationsBank Corporation or an affiliate
thereof ("NationsBank").
Use of Proceeds: To facilitate the consummation of the
Merger as described in the Commitment
Letter.
Dividend Rights: To the extent cash dividends on Common
Stock are permitted by the Senior Debt
Facilities and the Preferred Stock, each
holder of voting Common Stock and Non-
Voting Common Stock shall share ratably
in any such dividends.
Put Provisions: Subject to the terms of the Senior Debt
Facilities and the Preferred Stock, the
Purchaser shall have the right to sell
all or part of the Non-Voting Common
Stock to the Company at a cash price
(the "Put Price") as described below at
any time after the earliest to occur of
the following:
(i) Six years after the closing date;
(ii) An event which results in Delcor, Inc.
or its affiliates ("Delcor") owning less
than 51% of the voting Common Stock of
the Company;
(iii) Any merger in which the Company is
not the surviving corporation, or
any sale or other transfer of
substantially all of the Company's
assets;
(iv) Acceleration of any outstanding credit
facility of the Company; and
-15-
<PAGE>
Confidential
November 15, 1994
(v) A qualified public equity offering by
the Company;
provided, however, that if not exercised upon
the occurrence of the event described in
Section (v), the put right of the Purchaser
shall terminate.
The Put Price shall be the fair market value
as mutually agreed upon by the Company and
the Purchaser. For the purposes of this
paragraph, fair market value will not include
any discount for minority interest, lack of
liquidity or lack of voting rights. If the
parties are not able to agree on a fair
market value, they will agree to engage a
mutually acceptable investment banker to
determine the fair market value of the Non-
Voting Common Stock.
Transfer Rights: Beginning eighteen months after
consummation of the Merger, any holder
of the Non-Voting Common Stock may sell
or transfer, in whole or in part, any
Non-Voting Common Stock held by such
holder subject to (i) the Company's
consent, which shall not be unreasonably
withheld and (ii) the Company's first
right of refusal. If necessary to
facilitate the sale of the Non-Voting
Common Stock, the Company will amend its
charter provisions to make the Non-
Voting Common Stock exchangeable into
voting Common Stock of the Company. Any
such right to have the Company's charter
amended shall be subject to Federal
Reserve guidelines.
Call Provisions: Subject to the terms of the Senior Debt
Facilities and the Preferred Stock and
beginning seven years after the closing
date, the Company shall have the right
to purchase for cash all or part of the
Non-Voting Common Stock, on a pro-rata
basis with all other Non-Voting Common
Stock holders, at a price equal to 100%
of the Put Price determined at that
time.
Conditions Precedent: The purchase of the Non-Voting Common
Stock will be subject to the execution
of a satisfactory Non-Voting Common
Stock Purchase Agreement, and any
necessary related documents; as well as
the satisfaction of conditions precedent
as outlined in the Senior Debt
Facilities, which are hereby
incorporated by reference, and any other
conditions deemed appropriate by the
Purchaser for similar financings and for
this transaction in particular.
Attendance Rights: Following the Merger, and provided that
the Preferred Stock has been redeemed in
full, the Company will permit a
representative
-16-
<PAGE>
Confidential
November 15, 1994
of the Purchaser to
attend all meetings of the Company's
Board of Directors or committees.
Other Rights: In addition to the above rights, the Non-
Voting Common Stock will provide for:
(i) Customary anti-dilution provisions;
(ii) Piggyback rights on any public or
private sale of the Company's equity
securities; and
(iii) Two demand registration rights
(taken together with Purchaser's
demand registration rights for
Warrant shares) beginning January
1, 1999 or at any earlier time that
the Put Provision is exercisable.
Reimbursement
of Expenses: The Purchaser shall be reimbursed for
reasonable out-of-pocket expenses
(including fees and disbursements for
counsel) incurred in connection with the
issuance of the Non-Voting Common Stock.
Information
Requirements: The Company will provide the Purchaser with:
(i) annual financial statements audited by a
nationally recognized "Big Six" independent
accounting firm, (ii) monthly internal
financial statements, (iii) an annual budget
for the next fiscal year prior to the end of
the previous fiscal year, and (iv) any other
information as reasonably requested by such
Purchaser.
Representations
and Warranties: Those customarily found in purchase
agreements for similar financings and
any additional representations and
warranties appropriate in the context of
the proposed financing.
-17-
<PAGE>
EXHIBIT 5
CERTAIN INFORMATION REGARDING DELCOR, INC.
Delcor, Inc., a Delaware corporation ("Delcor"), is a wholly
owned subsidiary of Golden Eable Industries, Inc., a North
carolina corporation ("Golden Eagle"). The address of Delcor's
principal office and principal place of business is 1105 North
Market Street, Suite 1010, Wilmington, Delaware 19899. The
address of Golden Eagle's principal office and principal place of
business is 1110 East Morehead Street, Charlotte, North Carolina
28204. Delcor and Golden eagle are engaged in the business of
investment.
The officers and directors of Golden Eagle are as follows:
Officers Title
W.D. Cornwell, Jr. President and Treasurer
W.D. Cornwell Executive Vice President
Stephen L. Cornwell Vice President
Stephen W. Dixon Vice President and Secretary
Duane G. Coggin Vice President
Denise E. Gardner Assistant Vice President
Margaret J. Beam Assistant Secretary
Directors
W.D. Cornwell
W.D. Cornwell, Jr.
C.D. Spangler, Jr.
Meredith R. Spangler
The officers and directors of Delcor are as follows:
Officers Title
W.D. Cornwell, Jr. President and Treasurer
W.D. Cornwell Executive Vice President
Stephen L. Cornwell Vice President
Stephen W. Dixon Vice President and Secretary
Charles B. Campbell, Jr. Vice President and Assistant
Secretary
Denise E. Gardner Assistant Vice President
Margaret J. Beam Assistant Secretary
Directors
Charles B. Campbell, Jr.
W.D. Cornwell
W.D. Cornwell, Jr.
<PAGE>
The following information is set forth with respect to the
officers and directors of Golden Eagle and Delcor:
<TABLE>
<CAPTION>
Principal Occupation, Name
of Employer, Principal
Name of Officer Residence (R) or Business of Employer and
or Director Business (B) Address Address of Principal Office
<S> <C> <C>
Margaret J. Beam (B) 1110 East Morehead Street Administrative Assistant
Charlotte, NC 28204 C.D. Spangler Construction Company
Investment
1100 East Morehead Street
Charlotte, NC 28204
Charles B. Campbell, Jr. (B) 1105 North Market Street Associate
Suite 1010 Delaware Corporate Management, Inc.
Wilmington, DE 19899 Investment holding company representative
1105 North Market Street, Suite 1010
Wilmington, DE 19899
Duane G. Coggin (B) 1110 East Morehead Street Vice President
Charlotte, NC 28204 C.D. Spangler Construction Company
Investment
1100 East Morehead Street
Charlotte, NC 28204
Stephen L. Cornwell (B) 1110 East Morehead Street Vice President
Charlotte, NC 28204 C.D. Spangler Construction Company
Investment
1110 East Morehead Street
Charlotte, NC 28204
W.D. Cornwell (B) 1110 East Morehead Street President
Charlotte, NC 28204 C.D. Spangler Construction Company
Investment
1110 East Morehead Street
Charlotte, NC 28204
W.D. Cornwell, Jr. (B) 1110 East Morehead Street Executive Vice President
Charlotte, NC 28204 C.D. Spangler Construction Company
Investment
1110 East Morehead Street
Charlotte, NC 28204
Stephen W. Dixon (B) 1110 East Morehead Street Vice President
Charlotte, NC 28204 C.D. Spangler Construction Company
Investment
1110 East Morehead Street
Charlotte, NC 28204
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation, Name
of Employer, Principal
Name of Officer Residence (R) or Business of Employer and
or Director Business (B) Address Address of Principal Office
<S> <C> <C>
Denise E. Gardner (B) 1110 East Morehead Street Assistant Vice President
Charlotte, NC 28204 C.D. Spangler Construction Company
Investment
1110 East Morehead Street
Charlotte, NC 28204
C.D. Spangler, Jr. (B) 910 Raleigh Road President
Chapel Hill, NC 27515 The University of North Carolina
Public university system
910 Raleigh Road
Chapel Hill, NC 27515
Meredith R. Spangler (R) 400 East Franklin Street Trustee and volunteer
Chapel Hill, NC 27514 N/A
</TABLE>
All of the above-listed individuals are citizens of the
United States.
During the last five years, neither Delcor, Golden Eagle nor
any of the above-listed individuals has been convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors), and none of the above-listed individuals has been
a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which any of them
was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
Delcor has reported that it may be deemed to beneficially
own certain shares of Common Stock held by Lafarge Coppee S.A.
("Lafarge") through its indirect wholly owned subsidiary, SOCIETE
FINANCIERE IMMOBILIERE ET MOBILIERE "SOFIMO". The following
information is based upon information provided to Delcor by
Lafarge.
Lafarge is one of the world's largest producers of building
materials, with major market positions in four business areas:
cement, concrete and aggregates, gypsum and specialty products
for construction. In addition, Lafarge has diversified into
bioactivities, essentially food products, animal feeds and seeds.
Lafarge owns and operates approximately 500 production and sales
units in approximately 40 countries. Lafarge is a public company
whose voting securities are traded on various European stock
exchanges. Coppee Industries, Inc., a Delaware corporation
("Coppee") holds all shares of Common Stock reported as held by
Lafarge and is a wholly owned subsidiary of Compagnie Coppee de
Development Industriel-CDI, a societe anonyme organized under the
laws of Belgium ("CDI"), which is a majority owned subsidiary of
SOCIETE FINANCIERE IMMOBILIERE ET MOBILIERE "SOFIMO", a societe
anonyme organized under the laws of France ("Sofimo"), which is a
wholly owned subsidiary of Lafarge.
<PAGE>
The address of the principal business and principal office of
Lafarge and Sofimo is 61, rue des Belles Feuilles, Paris Cedex
16, France. The address of the prncipal business and principal
office of CDI is 251, avenue Louise, Baite 13,1050 Bruxelles,
Belgium. The address of the principal business and principal
office of Coppee is c/o Shearman & Sterling, 599 Lexington
Avenue, New York, New York 10022, Attention: Alfred J. Ross, Esq.
Sofimo, CDI and Coppee are holding companies.
The directors and executive officers of Lafarge are listed in the
following table, which sets forth the individual's business
address (or residence address where indicated), present principal
occupation or employment and the name, principal business and
address of any corporation or other organization in which such
employment is conducted, and citizenship (unless otherwise noted
each of these persons is a French citizen, the business address
of such person is 93, rue Nationale, 92100 Boulogne, France, and
such person's principal occupation is the position with Lafarge
listed in the table).
Principal
Name Position with Lafarge Occupation
Jean Francois Honorary Chairman
and Director
Olivier Lecerf Honorary Chairman
and Director
Bertrand Collomb Chairman of the Board
and Chief Executive Officer
Bernard Isautier Director Director,
26 Avenue Foch Ranger Oil Ltd.
75016 Paris, France
Raphael Pavin de Director Chief Financial
Lafarge Officer,
28 Quai Claude Etablissement
Bernard BAUMANN
69007 Lyon, France
Patrice le Hodey Director Chairman,
(Belgian citizen) Groupe
3 rue da la Sapiniere la Libre
1050 Bruxelles, Belgium Belgique
Ernest-Antoine Director Chairman, CGIP
Seilliere
6 rue Elzevir
Paris, France
Bernard Kasriel Director
Managing Director and
Executive Vice President
<PAGE>
<TABLE>
<CAPTION>
Principal
Name Position with Lafarge Occupation
<S> <C> <C>
Jacques Lefevre Director,
Managing Director and
Executive Vice President
Serge Feneuille Senior Executive
Vice President
Robert W. Murdoch Director
(Canadian citizen)
11130 Sunrise Valley
Drive, Suite 300
Reston, VA 22091
Michel Rose Senior Executive Vice President and
President Chief Executive
Officer, Lafarge
Corporation
Pierre Suard Director Chairman,
18 rue du Pavillion Alcatel Alsthom
92100 Boulogne Billancourt
France
Michel Pebereau Director Chairman,
14 bis rue Mouton- Banque
Duvernet Nationale de
75014 Paris, France Paris
Antoine Joly Director Managing
47 Boulevard Lannes Director, L'Air
75016 Paris, France Liquide S.A.
Michel Bon Director Managing
4, Avenue de Camoens Director,
75016 Paris, France Agence Nationale
Pour L'Emploi
Lindsay Owen-Jones Director Chairman and
(British citizen) Chief Executive
31 Bd du Commandant Charcot Officer, L'Oreal
92200 Neuilly sur Seine,
France
Francois Jaclot Executive Vice President
Patrick Node-Langlois Executive Vice President
Philippe Agid Executive Vice President
Jean-Marie Schmitz Executive Vice President
</TABLE>
<PAGE>
The name and present principal occupation of each of the
directors and executive officers of Sofimo are set forth below.
These persons all have as their business address Lafarge Coppee
61, rue des Belles Feuilles, BP40 75782, Paris Cedex 16 France.
All of these persons are citizens of France.
<TABLE>
<CAPTION>
Principal
Name Position with Sofimo Occupation
<S> <C> <C>
Jacques Lefevre President and Director Managing Director
Pierre de Saint Rapt Director Senior Legal
Counsel
Patrick Node-Langlois Director Executive Vice
President
</TABLE>
The name and present principal occupation of each of the
directors and executive officers of CDI are set forth below.
These persons all have as their business address Lafarge Coppee
61, rue des Belles Feuilles, BP40 75782, Paris Cedex 16 France.
All of these persons are citizens of France.
<TABLE>
<CAPTION>
Principal
Name Position with CDI Occupation
<S> <C> <C>
Jacques Lefevre President and Director Managing Director
Philippe Agin Director Executive Vice
President
Bertrand Collomb Director Chairman and Chief
Executive Officer
Serge Feneuille Director Senior Executive
Vice President
Bernard Kasriel Director Managing Director
Patrick Node-Langlois Director Executive Vice
President
Michel Rose Director Senior Executive
Vice President
Jean-Marie Schmitz Director Executive Vice
President
</TABLE>
The name, present principal occupation and business address
of each of the directors and executive officers of Coppee are set
forth below. All of these persons are U. S. citizens.
<PAGE>
<TABLE>
<CAPTION>
Principal
Name Position with Coppee Occupation Business Address
<S> <C> <C> <C>
Edward H. Tuck President and Attorney The French American Foundation
Director 41 E. 72nd St.
New York, NY 10021
Louis G. Munin Director -- 5410 Pebblebroke Drive
Dallas, TX 75229
H. Richard Whittall Director Investment Banker Richardson Greenshields of
Canada Ltd., Suite 500
1066 W. Hastings St.
Vancouver, BC
Canada V6E 3XI
Patrick Baviere Treasurer Vice President, Lafarge Coppee,
Finance 61 rue des Belles Feuilles
BP 40-75782
Paris Cedex 16, France
</TABLE>
During the last five years, neither Lafarge, Sofimo, CDI nor
Coppee nor any executive officer or director thereof has been (a)
convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (b) a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such
laws.
<PAGE>
EXHIBIT 6
CERTAIN INFORMATION REGARDING NATIONSBANK CORPORATION
NationsBank Corporation is a registered bank holding company
incorporated under the laws of the State of North Carolina. The address of
its principal executive office is NationsBank Corporation Center,
Charlotte, North Carolina 28255. The following table sets forth the name,
residence or business address, present occupation or employment of each
director and executive officer of NationsBank Corporation, along with the
name, principal business and address of any corporation or other
organization in which such employment is conducted:
OCCUPATION OR EMPLOYMENT
BUSINESS (B) OR NAME OF EMPLOYER, BUSINESS
NAME RESIDENCE (R) OF EMPLOYER, ADDRESS OF
ADDRESS EMPLOYER
DIRECTORS
Ronald W. Allen (B) Hartsfield Atlanta Chairman of the Board,
Int. Airport, President and Chief
Atlanta, GA 30320 Executive Officer, Delta
Air Lines, Inc., an air
transportation company,
Hartsfield Atlanta Int.
Airport,
Atlanta, GA 30320
William M. (B) 6100 Fairview Road Chairman of the Board,
Barnhardt Suite 970 Southern Webbing Mills,
Charlotte, NC 28210 Inc., a textile
manufacturing firm, 6100
Fairview Road,
Suite 970, Charlotte, NC
28210
Thomas M. Belk (B) 2801 West Tyvola President, Belk Stores
Road Services, Inc., a service
Charlotte, NC 28217- company for Belk Department
4500 Stores, 2801 West Tyvola
Road,
Charlotte, NC 28217-4500
Thomas E. Capps (B) Post Office Box Chairman of the Board and
26532 Chief Executive Officer,
Richmond, VA 23261 Dominion Resources, Inc.,
an electric utility holding
company, Post Office
Box 26532, Richmond, VA
23261
R. Eugene (B) 6 Skidway Village Retired Chairman of the
Cartledge Walk Board and Chief Executive
Suite 203B Officer, Union Camp
Savannah, GA 31411 Corporation, a manufacturer
of paper products, 6
Skidway Village Walk,
Suite 203B, Savannah, GA
31411
<PAGE>
OCCUPATION OR EMPLOYMENT
BUSINESS (B) OR NAME OF EMPLOYER, BUSINESS
NAME RESIDENCE (R) OF EMPLOYER, ADDRESS OF
ADDRESS EMPLOYER
Charles W. Coker (B) Post Office Box Chairman and Chief
160 Executive Officer, Sonoco
Hartsville, SC 29550 Products Company, a
manufacturer of paper and
plastic products, Post
Office Box 160,
Hartsville, SC 29550
Thomas G. Cousins (B) 2500 Windy Ridge Chairman and President,
Parkway Cousins Properties, Inc., a
Suite 1600 real estate development
Marietta, GA 30067 company, 2500 Windy Ridge
Parkway, Suite 1600,
Marietta, GA 30067
Alan T. Dickson (B) Suite 2000 Chairman, Ruddick
Two First Union Corporation, a diversified
Center holding company,
Charlotte, NC 28282 Suite 2000, Two First Union
Center,
Charlotte, NC 28282
W. Frank Dowd, Jr. (B) Post Office Box Chairman of the Executive
35430 Committee, Charlotte Pipe &
Charlotte, NC 28235 Foundry Company, a
manufacturer of cast iron
and plastic pipe and
fittings, Post Office Box
35430,
Charlotte, NC 28235
A. L. Ellis (B) Post Office Box Senior Chairman,
1225 NationsBank of Florida,
Tarpon Springs, FL N.A., a national bank,
33589 Post Office Box 1225,
Tarpon Springs, FL 33589
Paul Fulton (B) Campus Box 3490 Dean, Kenan-Flagler
Carroll Hall Business School, University
Chapel Hill, NC of North Carolina,
27599-3490 Campus Box 3490, Carroll
Hall,
Chapel Hill, NC 27599-3490
L. L. Gellerstedt, (B) Post Office Box Chairman, Executive
Jr. 1375 Committee, Beers
Atlanta, GA 30301 Construction Company, a
general contractor, Post
Office Box 1375,
Atlanta, GA 30301
-2-
OCCUPATION OR EMPLOYMENT
BUSINESS (B) OR NAME OF EMPLOYER, BUSINESS
NAME RESIDENCE (R) OF EMPLOYER, ADDRESS OF
ADDRESS EMPLOYER
Timothy L. Guzzle (B) Post Office Box Chairman of the Board and
111 Chief Executive Officer,
Tampa, FL 33601 TECO Energy, Inc., an
electric utility holding
company,
Post Office Box 111, Tampa,
FL 33601
E. Bronson Ingram (B) Post Office Box Chairman and Chief
23049 Executive Officer, Ingram
Nashville, TN 37202 Industries Inc., a
diversified holding
company, Post Office Box
23049,
Nashville, TN 37202
W. W. Johnson * Chairman of the Executive
Committee, NationsBank
Corporation *
Hugh L. McColl, * Chairman of the Board and
Jr. Chief Executive Officer,
NationsBank Corporation *
Buck Mickel (B) 301 North Main Chairman of the Board and
Street Chief Executive Officer,
Greenville, SC 29601 R.S.I. Holdings Inc., a
holding company of
corporations involved in
distribution and textiles,
301 North Main Street,
Greenville, SC 29601
John J. Murphy (B) Post Office Box Chairman of the Board and
718 Chief Executive Officer,
Dallas, TX 75221 Dresser Industries, Inc., a
supplier of engineered
products and services
utilized by energy-related
activities, Post Office Box
718,
Dallas, TX 75221
John C. Slane (B) Post Office Box President, Slane Hosiery
2486 Mills, Inc., a manufacturer
High Point, NC 27261 of textile products,
Post Office Box 2486,
High Point, NC 27261
John W. Snow (B) Post Office Box Chairman of the Board,
85629 President and Chief
Richmond, VA 23285 Executive Officer, CSX
Corporation, a
transportation company,
Post Office Box 85629,
Richmond, VA 23285
-3-
<PAGE>
OCCUPATION OR EMPLOYMENT
BUSINESS (B) OR NAME OF EMPLOYER, BUSINESS
NAME RESIDENCE (R) OF EMPLOYER, ADDRESS OF
ADDRESS EMPLOYER
Meredith R. (R) 400 E. Franklin Trustee and board member
Spangler Street 400 E. Franklin Street
Chapel Hill, NC Chapel Hill, NC 27514
27514
Robert H. Spilman (B) Post Office Box Chairman of the Board and
626 Chief Executive Officer,
Bassett, VA 24055 Bassett Furniture
Industries, Inc., a
furniture manufacturer,
Post Office Box 626,
Bassett, VA 24055
William W. (B) Post Office Box Chairman and Chief
Sprague, Jr. 339 Executive Officer, Savannah
Savannah, GA 31402 Foods & Industries, Inc., a
food products business,
Post Office Box 339,
Savannah, GA 31402
Ronald Townsend (B) 1100 Wilson President/Gannett
Boulevard Television, Gannett
Arlington, VA 22234 Company, Inc., a
communications company,
1100 Wilson Boulevard,
Arlington, VA 22234
Jackie M. Ward (B) Building G President and Chief
Fourth Floor Executive Officer, Computer
5775 Peachtree- Generation Incorporated, a
Dunwoody Rd. computer software company,
Atlanta, GA 30342 Building G,
Fourth Floor, 5775
Peachtree-Dunwoody Rd.,
Atlanta, GA 30342
Michael Weintraub (B) 200 Southeast Private investor
First Street
Miami, FL 33131
-4-
<PAGE>
OCCUPATION OR EMPLOYMENT
BUSINESS (B) OR NAME OF EMPLOYER, BUSINESS
NAME RESIDENCE (R) OF EMPLOYER, ADDRESS OF
ADDRESS EMPLOYER
EXECUTIVE OFFICERS
(NOT OTHERWISE
LISTED ABOVE)
Fredric J. Figge, * Chairman, Corporate Risk
II Policy, NationsBank
Corporation *
James H. Hance, * Vice Chairman and Chief
Jr. Financial Officer,
NationsBank Corporation*
Kenneth D. Lewis * President, NationsBank
Corporation*
Marc D. Oken * Executive Vice President
and Principal Accounting
Officer, NationsBank
Corporation*
James W. Thompson * Vice Chairman, NationsBank
Corporation*
* NationsBank Corporation is a registered bank holding company, and the
address of its principal executive office is NationsBank Corporate
Center, Charlotte, North Carolina 28255 (which is the business address
of such director or executive officer).
Each of the directors and executive officers of NationsBank Corporation
is a U.S. citizen. Neither NationsBank Corporation nor any of its
directors and executive officers has been, during the last five years,
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction, as a result of which any of
them was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to
such laws.
-5-
<PAGE>
