<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)*
American Filtrona Corporation
- --------------------------------------------------------------------------------
(NAME OF ISSUER)
Common Stock
- --------------------------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
026042101
---------
(CUSIP NUMBER)
Bennett L. Kight, Esq., 999 Peachtree Street, Alanta, GA 30309 (404) 853-8000
- --------------------------------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
December 12, 1996
-------------------------------------------------------
(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 [ ].
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(continued on following pages)
(Page 1 of 4 Pages)
<PAGE> 2
CUSIP No. 026042101 SCHEDULE 13D Page 2 of 4 Pages
--------------------- -------- --------
(1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Bennett L. Kight
---------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group* (a) [ X ]
(b) [ X ]
(3) SEC Use Only
---------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
Not Applicable
---------------------------------------------------------------------
(6) Citizenship or Place of Organization
United States of America
---------------------------------------------------------------------
(7) Sole Voting Power
Number of -0-
Shares --------------------------------------------------------
Beneficially (8) Shared Voting Power
Owned by See response to item 5 of attached Schedule 13D
Each --------------------------------------------------------
Reporting (9) Sole Dispositive Power
Person With -0-
--------------------------------------------------------
(10) Shared Dispositive Power
See response to item 5 of attached Schedule 13D
--------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
996,164 shares
---------------------------------------------------------------------
(12) Check Box if Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
Not Applicable
---------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
26.6%
---------------------------------------------------------------------
(14) Type of Reporting Person*
IN
---------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 3
CUSIP No. 02604201 SCHEDULE 13D Page 2 of 4 Pages
--------------------- -------- --------
(1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Frances B. Bunzl
---------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group* (a) [ X ]
(b) [ X ]
(3) SEC Use Only
---------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
Not Applicable
---------------------------------------------------------------------
(6) Citizenship or Place of Organization
United States of America
---------------------------------------------------------------------
(7) Sole Voting Power
Number of -0-
Shares --------------------------------------------------------
Beneficially (8) Shared Voting Power
Owned by See response to item 5 on attached Schedule 13D
Each --------------------------------------------------------
Reporting (9) Sole Dispositive Power
Person With -0-
--------------------------------------------------------
(10) Shared Dispositive Power
See response to item 5 on attached Schedule 13D
--------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
996,164 shares
---------------------------------------------------------------------
(12) Check Box if Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
Not Applicable
---------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
26.6%
---------------------------------------------------------------------
(14) Type of Reporting Person*
IN
---------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 4
CUSIP No. 026042101 SCHEDULE 13D Page 2 of 4 Pages
--------------------- -------- --------
(1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
WBT Holdings LLC
I.R.S. Identification No. Applied For
---------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group* (a) [ X ]
(b) [ ]
(3) SEC Use Only
---------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
Not Applicable
---------------------------------------------------------------------
(6) Citizenship or Place of Organization
Georgia
---------------------------------------------------------------------
(7) Sole Voting Power
Number of -0-
Shares --------------------------------------------------------
Beneficially (8) Shared Voting Power
Owned by -0-
Each --------------------------------------------------------
Reporting (9) Sole Dispositive Power
Person With -0-
--------------------------------------------------------
(10) Shared Dispositive Power
-0-
--------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
0
---------------------------------------------------------------------
(12) Check Box if Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
Not Applicable
---------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
0%
---------------------------------------------------------------------
(14) Type of Reporting Person*
00
---------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 5
This Amendment No. 4 to Schedule 13D relates to the Schedule
13D filed on February 22, 1989 on behalf of Mrs. Frances B. Bunzl and Mr.
Bennett L. Kight, as co-executors of the Estate of Walter H. Bunzl (the "Bunzl
Estate"). This Amendment No. 4 to Schedule 13D is now filed on behalf of Mrs.
Bunzl and Mr. Kight in their capacities as general trustees or members of trust
committees of various trusts and as directors of a private charitable
foundation, as well as on behalf of WBT Holdings LLC, with regard to beneficial
ownership of shares of common stock of American Filtrona Corporation ("AFC").
Mr. Kight is a director of AFC.
ITEM 1. SECURITY AND ISSUER.
The information set forth in Amendment No.3 to Schedule 13D in
response to this item has not changed as of the date of this Amendment.
ITEM 2. IDENTITY AND BACKGROUND.
(a), (b) and (c) This Schedule is being filed by and on
behalf of Mrs. Frances B. Bunzl and Mr. Bennett L. Kight, in their capacities as
general trustees or members of trust committees of various trusts and as
directors of a private charitable foundation, and on behalf of WBT Holdings LLC
("WBT Holdings"). Mrs. Bunzl resides at 3649 Peachtree Road, Apt. 105, Atlanta,
Georgia 30319 and is not presently employed. Mr. Kight is a partner in the law
firm of Sutherland, Asbill & Brennan. The principal business address of Mr.
Kight is 999 Peachtree Street, Suite 2300, Atlanta, Georgia 30309. WBT Holdings,
a Georgia limited liability company, is a holding company with a principal place
of business at 999 Peachtree Street, Suite 2300, Atlanta, Georgia 30309.
The following table sets forth the executive officers of WBT
Holdings. There are no other controlling persons of WBT Holdings.
<TABLE>
<CAPTION>
Name Position with WBT Holdings
---- --------------------------
<S> <C>
Frances B. Bunzl Chairman
Bennett L. Kight President
</TABLE>
(d) None of WBT Holdings, Mr. Kight and Mrs. Bunzl has, during
the last five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) None of WBT Holdings, Mr. Kight and Mrs. Bunzl has, during
the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction the result of which was to subject
them 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> 6
(f) Both Mrs. Bunzl and Mr. Kight are citizens of the United
States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The information set forth in Amendment No.3 to Schedule 13D in
response to this item has not changed as of the date of this Amendment.
ITEM 4. PURPOSE OF TRANSACTION
As fiduciary owners of AFC stock in various capacities
(general trustees of each of the Walter Bunzl Family Trusts, trust committee
members of the Marital Trust and the Testamentary Trusts (all such trusts
collectively, the "Walter Bunzl Trusts"), and directors of the Foundation), Mrs.
Bunzl and Mr. Kight believe that the value of the investment in AFC of the
Walter Bunzl Trusts and Foundation can best be preserved and increased by
maintaining ownership of AFC, especially its plastics products business. The
Walter Bunzl Trusts and Foundation have organized WBT Holdings, a limited
liability company wholly-owned by such entities, to hold all of the AFC common
stock owned by them as fiduciaries. Mrs. Bunzl serves as chairman of WBT
Holdings, and Mr. Kight serves as its president.
The purpose of the creation of WBT Holdings is to further the
objective of maintaining the ownership interests of the Walter Bunzl Family in
AFC's plastics products business. This purpose is supported by Walter Bunzl's
children, Richard C. Bunzl and Suzanne B. Wilner, who are the adult
beneficiaries of the Walter Bunzl Trusts, and who own individually 31,778 shares
each of AFC stock. In total, these 63,556 shares represent 1.7% of the
outstanding shares of AFC stock as of November 7, 1996.
On December 12, 1996, a letter of intent was executed between
WBT Holdings and the Special Committee of the board of directors of AFC, under
which a wholly-owned subsidiary of WBT Holdings will merge with and into AFC,
and all shareholders of AFC other than WBT Holdings will receive the merger
consideration of $43 per share in cash. WBT Holdings has also signed a letter of
intent for the simultaneous sale of the bonded fibers business of AFC to Bunzl
plc, a U.K. company traded on the London Stock Exchange. Subject to business and
financial reviews, the letter of intent between WBT Holdings and AFC
contemplates the execution of a definitive merger agreement by January 17, 1997,
and the execution of a definitive agreement between WBT Holdings and Bunzl plc
at the same time. Thereafter, the transactions will be subject to regulatory
approvals and submission to the shareholders of AFC for approval by the vote of
more than two-thirds of all outstanding shares, as required by Virginia law.
WBT Holdings initiated the discussions with Bunzl plc
concerning its acquisition of AFC's fibers business, and is committed to working
in tandem with Bunzl plc to secure definitive agreements for the proposed cash
merger and the simultaneous sale of the fibers business, so that AFC's
stockholders will have the opportunity to vote on the merger transaction.
<PAGE> 7
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b) Mrs. Bunzl and Mr. Kight, as members of the trust
committee of the Marital Trust, and not individually, beneficially own within
the meaning of Rule 13d-3, the 429,298 Marital Trust Shares which represent
11.5% of the 3,743,751 shares of AFC common stock outstanding as of November 7,
1996. As such, their actions with respect to the Marital Trust Shares are
governed by the terms of the trust instrument and the general obligations of
fiduciaries. In particular, Mr. Kight and Mrs. Bunzl may consult with each other
and act in concert with respect to the voting and disposition of these shares.
Mr. Kight expressly disclaims any pecuniary interest in the Marital Trust
Shares.
Mrs. Bunzl and Mr. Kight, as directors, and not individually,
also may be deemed to have beneficial ownership (within the meaning of Rule
13d-3) of the 36,800 Foundation Shares. Mrs. Bunzl and Mr. Kight, as directors,
and not individually, share voting and dispositive power with respect to the
Foundation Shares, along with Mrs. Bunzl's two adult children, who are also
directors. These shares represent 1.0% of the outstanding shares of AFC common
stock as of November 7, 1996. Mrs. Bunzl and Mr. Kight expressly disclaim any
pecuniary interest in the Foundation Shares.
In their capacities as general trustees of each of the Walter
Bunzl Family Trusts, and not individually, Mrs. Bunzl and Mr. Kight may also be
deemed to have beneficial ownership (within the meaning of Rule 13d-3) of
505,892 shares of AFC common stock held by the Walter Bunzl Family Trusts. As
general trustees, Mrs. Bunzl's and Mr. Kight's actions with respect to these
505,892 shares are governed by the terms of the trust instruments and the
general obligations of fiduciaries. In particular, Mrs. Bunzl and Mr. Kight may
consult with each other and act in concert with respect to the voting and
disposition of these shares. These shares represent 13.5% of the outstanding
shares of AFC common stock as of November 7, 1996. Mrs. Bunzl and Mr. Kight
expressly disclaim any pecuniary interest in the shares of AFC common stock held
by the Walter Bunzl Family Trusts.
In their capacities as members of the trust committees of each
of the Testamentary Trusts, and not individually, Mrs. Bunzl and Mr. Kight may
also be deemed to have beneficial ownership (within the meaning of Rule 13d-3)
of the 24,174 shares of AFC common stock held in the Testamentary Trusts. As
members of the trust committees, Mrs. Bunzl's and Mr. Kight's actions with
respect to these 24,174 shares are governed by the terms of the trust
instruments and the general obligations of fiduciaries. In particular, Mrs.
Bunzl and Mr. Kight may consult with each other and act in concert with respect
to the voting and disposition of these shares. These shares represent 0.6% of
the outstanding shares of AFC common stock as of November 7, 1996.
Mr. Kight expressly disclaims any pecuniary interest in these shares.
The Marital Trust Shares, the Foundation Shares, the 505,892
shares of AFC common stock held in the Walter Bunzl Family Trusts and the 24,174
shares of AFC common
<PAGE> 8
stock held in the Testamentary Trusts total 996,164 shares, representing 26.6%
of the 3,743,751 shares of AFC common stock outstanding as of November 7, 1996.
Upon contribution of the shares of AFC common stock held by
the Walter Bunzl Trusts and the Foundation to WBT Holdings, WBT Holdings will
own and hold the sole power to vote and dispose of 996,164 shares, representing
26.6% of the 3,743,751 shares of AFC common stock outstanding as of November 7,
1996.
(c) On November 25, 1996, Mr. Kight resigned as trustee or
member of the trust committee for the R.H. Bunzl Trusts and the Rudolph Bunzl
Family Trusts, which hold an aggregate of 593,540 shares of AFC common stock,
and thus Mr. Kight no longer has beneficial ownership (within the meaning of
Rule 13d-3) of such shares. Mr. Kight's resignation was effected by execution
and delivery by Mr. Kight of an instrument of resignation addressed to the
administrative trustees of such trusts.
(d) Any dividends paid on or proceeds from the sale of (i) the
Marital Trust Shares will be paid to the Marital Trust, (ii) the Foundation
Shares will be paid to the Foundation, (iii) the 505,892 shares held by the
Walter Bunzl Family Trusts will be paid to such trusts, and (iv) the 24,174
shares held by the Testamentary Trusts will be paid to such trusts.
Upon contribution of the shares of AFC common stock held by
the Walter Bunzl Trusts and the Foundation to WBT Holdings, WBT Holdings will
have the right to receive or the power to direct receipt of dividends from or
the proceeds of the sale of its shares of AFC common stock.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
In August 1981, certain lineal descendants of Robert H. Bunzl,
the founder of AFC, and their spouses, including Walter H. Bunzl and Mrs. Bunzl,
entered into a "Memorandum of Understanding and Intent" (the "Memorandum"). The
Memorandum sets forth the understanding of the signatories thereto that they
will consult with each other if possible and act together to achieve their goals
on issues of mutual self-interest with respect to AFC common stock. In addition,
the signatories state their intention that none of them will dispose of any AFC
common stock that may be owned by them without first obtaining and considering
the opinion of the other signatories. The Memorandum expressly provides,
however, that it shall not in any way bind any signatory to take any particular
action with respect to AFC common stock that may be owned by such signatory.
Rudolph Hans Bunzl and other members of his family have
notified the other parties to the Memorandum, including Mrs. Bunzl, that they
have rescinded the Memorandum.
<PAGE> 9
Mrs. Bunzl and Mr. Kight expressly disavow the creation of any
"group" under Rule 13d-5(b) as a result of the execution of the Memorandum. To
the extent such a group may be deemed to exist, Mrs. Bunzl and Mr. Kight as (i)
members of the trust committee of the Marital Trust, (ii) directors of the
Foundation, (iii) general trustees of the Walter Bunzl Family Trust, and (iv)
members of the trust committees of the Testamentary Trusts expressly disclaim
membership in any such group and expressly disclaim any additional beneficial
ownership of AFC common stock they may be deemed to have as a result of the
existence of such a group.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
The following exhibits were filed on February 22, 1989 as
part of the original Schedule 13D filed by Mrs. Bunzl and Mr. Kight:
Exhibit A: Agreement regarding the joint
filing of this Schedule 13D.
Exhibit B: Power of attorney authorizing
Bennett L. Kight to sign this
Schedule 13D and any amendments
thereto on behalf of Frances B. Bunzl.
Exhibit C: Evidence of the qualification of
Frances B. Bunzl and Bennett L. Kight
as Co-Executors of the Estate of
Walter H. Bunzl
Exhibit D: Memorandum of Understanding, dated August
26, 1981, by and among certain members of
the Bunzl family.
The following are filed as exhibits to this Schedule 13D:
Exhibit 1: Agreement of WBT Holdings LLC regarding
the joint filing of this Schedule 13D
Exhibit 2: Letter, dated December 12, 1996, from WBT
Holdings LLC to Gilbert M. Rosenthal, Chairman
of the Special Committee of the Board of
Directors of American Filtrona Corporation
<PAGE> 10
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information in this statement is true, complete and
correct.
December 17, 1996 /s/ Frances B. Bunzl
---------------------
Frances B. Bunzl, as trust committee
member and as trustee, and not
individually
December 17, 1996 /s/ Bennett L. Kight
---------------------
Bennett L. Kight, as trust committee
member and as trustee, and not
individually
December 17, 1996 /s/ Frances B. Bunzl
---------------------
WBT Holdings LLC
Frances B. Bunzl,
Chairman
<PAGE> 11
EXHIBIT 1
SCHEDULE 13D
AGREEMENT
The undersigned hereby agrees that the Amendment No. 4 to
Schedule 13D, or any amendment thereto, which is filed on behalf of the group
consisting of Frances B. Bunzl and Bennett L. Kight, each as trust committee
member and as trustee and not individually, and the undersigned (and such other
appropriate persons as may hereafter execute an agreement substantially to the
effect hereof) pursuant to section 13(d) of the Securities Exchange Act of 1934
and the rules and regulations there under with respect to the formation of a
group owning more than five percent of the common stock of American Filtrona
Corporation, is and will be filed jointly on behalf of each of the undersigned
(and such other persons).
Dated as of December 20, 1996
/s/ Bennett L. Kight
----------------------------
WBT Holdings LLC
Bennett L. Kight,
President
<PAGE> 12
EXHIBIT 2
WBT HOLDINGS LLC
999 PEACHTREE STREET, N.E.
SUITE 2100
ATLANTA, GEORGIA 30309
December 12, 1996
Mr. Gilbert M. Rosenthal, Chairman
Special Committee of the Board of Directors
of American Filtrona Corporation
c/o MedOutcomes, Inc.
3301 Rosedale Avenue
Richmond, VA 23230
Dear Gilbert:
WBT Holdings LLC ("WBT Holdings") is pleased to make the
proposal to acquire American Filtrona Corporation ("AFC") set forth in this
letter of intent. Upon its acceptance by AFC, this letter of intent will signify
the intentions of the parties to negotiate in good faith to attempt to agree
upon and execute a definitive Agreement and Plan of Merger (the "Merger
Agreement") consistent with the terms and conditions contained herein and to
obtain approval of the shareholders of AFC to the Merger Agreement. Except for
the provisions of paragraphs 7 and 12 hereof (which are intended to be binding
and enforceable), this letter is not intended to constitute a contract or an
offer to enter into a contract, nor to be binding upon either of the parties,
nor to create any legal obligations or rights in any party with respect to any
of the matters set forth herein.
1. Form of Transaction. The Walter Bunzl family trusts (the
"WB Trusts") would transfer all of their AFC shares to WBT Holdings,
all of whose stock is owned by the WB Trusts. AFC would enter into an
agreement and plan of merger (the "Merger Agreement") with WBT Holdings
and WB Acquisition Corp., a new wholly-owned subsidiary of WBT Holdings
("Newco"), pursuant to which at the closing Newco would merge with and
into AFC (the "Merger"). In the Merger, the outstanding shares of Newco
capital stock would be canceled or converted into shares of AFC common
stock, and the outstanding shares of AFC capital stock, other than the
shares held by WBT Holdings, would be converted into the right to
receive the consideration described in paragraph 2 below.
<PAGE> 13
Mr. Gilbert M. Rosenthal
December 12, 1996
Page 2
2. Consideration. On the terms and conditions set forth in the
Merger Agreement, each outstanding share of AFC capital stock (other
than AFC shares held by WBT Holdings) automatically would be converted
into a right to receive $43 in cash (the "Merger Consideration"). The
Merger Agreement will specify that (i) each stock option outstanding
immediately before the Merger shall be converted into the right to
receive a cash amount equal to the difference between the Merger
Consideration and the exercise price of such option and (ii) currently
outstanding performance share awards for periods ending Dec. 31, 1996
may be settled in accordance with their terms by issuance of shares of
AFC stock after that date and prior to the closing of the Merger, it
being understood that 25% of the awards will not be earned under the
applicable formula.
3. Payment of Merger Consideration. On or after the effective
date of the Merger, the Merger Consideration and the option payments
would be payable by a bank acting as exchange agent upon surrender to
the exchange agent by each such shareholder of his or her certificates
representing shares of AFC capital stock and by each option holder of
his or her option agreements.
4. Interim Operations . Until the closing of the Merger
Agreement, AFC shall be operated solely in the ordinary course with no
dividends or distributions in respect of AFC's capital stock (other
than regular quarterly dividends payable on or before the closing
date), and, except as contemplated by and scheduled in the Merger
Agreement, no major capital expenditures, bonuses, severance agreements
or other adjustments to compensation, except normally scheduled
changes, and no changes in capital structure, shall be paid or made
without approval of Newco.
5. Due Diligence. From and after the date hereof, Newco and
its lenders or their representatives will be provided with full access
to AFC's books, records and premises upon reasonable notice to AFC and
during regular business hours and also will be provided with copies of
financial statements, tax returns, agreements and other materials as
requested, which shall be kept confidential pursuant to the
confidentiality agreement referred to in paragraph 12 below. Bunzl plc
shall have the opportunity to review the financial condition, results
of operations, business and prospects of the bonded fibers business of
AFC (which will be purchased by Bunzl plc as described in and subject
to paragraph 8) to the extent reasonably necessary in the circumstances
with such limits as appropriate in light of the competitive
relationship between AFC and Bunzl plc. All information received by
Bunzl plc shall be subject to the confidentiality agreement referred to
in paragraph 12 below. The parties' obligation to execute the Merger
Agreement is subject to the satisfactory completion of such due
diligence and to AFC's review of the provisions (including the purchase
price)
<PAGE> 14
Mr. Gilbert M. Rosenthal
December 12, 1996
Page 3
contained in the Fibers Sale Agreement (as defined in paragraph 8). AFC
will be provided a complete final draft of the Fibers Sale Agreement,
including the pricing provisions, at least 48 hours prior to the
scheduled execution of the Merger Agreement, during which period there
will be a scheduled meeting of the AFC Special Committee and Board of
Directors to act upon the Merger Agreement; provided, however, that AFC
will enter into an agreement, as to which Bunzl plc will be a third
party beneficiary, providing that, until the Merger Agreement is
executed, (i) it will hold the terms and provisions of the Fibers Sale
Agreement secret and confidential and neither it nor any of its
representatives or advisors will disclose any of the terms or
provisions of the Fibers Sale Agreement to any party other than AFC and
its representatives and advisors, and (ii) neither it nor any of its
advisors or representatives will use the Fiber Sales Agreement or any
terms or provisions thereof for any purpose except the evaluation of
the Merger Agreement from the standpoint of AFC and its shareholders.
6. Certain Fees. Newco and AFC each shall pay its own fees and
expenses and those of its attorneys, agents and advisers. AFC shall not
be obligated to any investment adviser, investment broker, finder or
broker in connection with the proposed acquisition except for AFC's
obligations to Goldman, Sachs & Co. pursuant to a letter dated June 28,
1996.
7. Exclusivity. From the date of acceptance of this letter of
intent and until either the Merger Agreement is executed or Newco and
Bunzl plc terminate their negotiations with AFC pursuant to this letter
of intent, AFC will not, and will not permit any of its officers,
directors, employees, financial advisors, agents or other
representatives or those of any of its subsidiaries to, solicit or
initiate any acquisition or takeover proposal or offer for AFC or any
significant portion of its business or assets, however structured or to
be effected, except (i) they may solicit proposals from not more than
ten prospective competing bidders, and (ii) they may furnish
information about AFC only in response to unsolicited bona fide
requests therefor, and may enter into negotiations with competing
bidders, provided, however, that Newco and Bunzl plc shall be notified
promptly of the principal terms of all bona fide competing offers
(whether solicited or unsolicited) made to AFC which AFC is pursuing.
8. Merger Agreement. AFC, WBT Holdings and Newco will
negotiate in good faith to agree upon the provisions of the Merger
Agreement on the basis set forth in this proposal. The Merger Agreement
shall contain usual and customary representations and warranties (and
supporting disclosures), agreements and conditions pending closing and
other matters typically found in agreements relating to transactions of
this type, size and complexity and otherwise satisfactory to the
parties in form and substance. The Merger Agreement shall be executed
and delivered as soon as possible,
<PAGE> 15
Mr. Gilbert M. Rosenthal
December 12, 1996
Page 4
and in no event later than January 17, 1997. If the parties have not
executed a Merger Agreement by January 17, 1997, all obligations of the
parties under this letter of intent (except those obligations provided
in paragraph 12) shall terminate automatically. The Merger Agreement
will be conditioned upon execution of a definitive agreement between
Newco and Bunzl plc for sale of the assets of the bonded fibers
business of AFC to Bunzl plc for cash (the "Fibers Sale Agreement"),
which Agreement shall be attached as an Exhibit to the Merger
Agreement. Without limiting the foregoing, the Merger Agreement shall
provide for the following:
(a) Receipt by AFC of an opinion from Goldman, Sachs
& Co. at the time of execution of the Merger Agreement, and
not withdrawn before the closing thereunder, that the Merger
Consideration is fair to AFC shareholders.
(b) Approval by the Board of Directors of AFC of the
Merger and, subject to subparagraph (e) below, recommendation
by the Board that the AFC shareholders approve the Merger.
(c) Approval of the Merger by holders of more than
two-thirds of the outstanding stock of AFC at a shareholders
meeting to be duly called and held.
(d) After execution and prior to termination of the
Merger Agreement, neither AFC nor its officers, directors or
agents shall at any time after execution of the Merger
Agreement solicit or initiate any competing bids for AFC, but
they may furnish information about AFC and enter into
negotiations with competing bidders in each case who either
were solicited in accordance with paragraph 7 above or after
execution of the Merger Agreement make unsolicited bona fide
requests therefor; provided, however, that Newco and Bunzl plc
shall be notified promptly of the principal terms of all bona
fide competing offers (whether solicited or unsolicited) made
to AFC which AFC is pursuing.
(e) The Board of Directors of AFC shall have a
"fiduciary out," permitting it to terminate the Merger
Agreement because of its receipt of a higher competing
proposal at any time that the Board concludes, in good faith,
after receiving the advice of its counsel, that such action is
in the best interests of AFC and its shareholders.
(f) If the Board of Directors exercises its fiduciary
out, AFC shall be obligated as follows:
<PAGE> 16
Mr. Gilbert M. Rosenthal
December 12, 1996
Page 5
(i) if the competing proposal is consummated
on or before December 31, 1997 and the AFC shares held by WBT
Holdings and its affiliates are voted in favor of or tendered
pursuant to the proposal, AFC shall pay to WBT Holdings (x)
the expenses incurred by WBT Holdings and Bunzl plc in
connection with the Merger Agreement and the Fibers Sale
Agreement, up to a maximum of 1% of the product of the Merger
Consideration multiplied by the total number of shares of
outstanding AFC stock and (y) a fee equal to 2% of the product
of the Merger Consideration multiplied by the total number of
shares of outstanding AFC stock;
(ii) if the competing proposal is
consummated or is not consummated and WBT Holdings and its
affiliates do not vote their AFC shares in favor of, or tender
their shares pursuant to the proposal (or if the proposal is
not submitted to AFC's shareholders at a special meeting or
through a tender offer and WBT Holdings and its affiliates do
not provide written confirmation of their agreement to so vote
or tender their shares following a request from AFC for such
confirmation), WBT will not be entitled to any break-up fee or
expense reimbursement;
(iii) in any situation not described in (i)
or (ii) above, AFC shall pay to WBT Holdings the expenses
incurred by WBT Holdings and Bunzl plc in connection with the
Merger Agreement and the Fibers Sale Agreement, up to a
maximum of 1% of the product of the Merger Consideration
multiplied by the total number of shares of outstanding AFC
stock.
(g) The Merger Agreement shall contain customary
conditions to the obligations of Newco to proceed, including
without limitation the following, and the other special
conditions set forth below:
(i) Stay bonuses and severance agreements
for employees will be limited to those approved by
the Compensation Committee and Special Committee, as
reported to WBT Holdings on July 26, 1996.
(ii) The employment termination arrangement
with John Morgan will provide for a severance payment
(in lieu of all salary and bonuses payable after the
closing and all additional accruals or contributions
that would be payable after the closing with respect
to his interests under the Pension Plan, SERP and
401(k) Plan and, except as provided herein, in lieu
of continued participation in welfare plans) of
$800,000, and (y) AFC's continuing until December 31,
1999 to
<PAGE> 17
Mr. Gilbert M. Rosenthal
December 12, 1996
Page 6
provide Mr. Morgan participation, as a retiree, in
AFC's medical insurance plan (if available
thereunder) on the same contributory basis as now in
effect; provided, however, that Mr. Morgan will pay
any premiums in excess of $9,000 for such coverage
during 1997 through 1999. Mr. Morgan will enter into
a non-competition agreement for a period of three (3)
years with respect to the bonded fibers business
providing for a payment of $400,000 to be made at
closing and a noncancelable agreement to consult with
Bunzl plc with respect to the bonded fiber business
for a period of two (2) years providing for payments
of $200,000 per year, both containing terms
satisfactory to Bunzl plc and Mr. Morgan. AFC will
hold Mr. Morgan harmless from the application of the
golden parachute and excise tax provisions of
Sections 280G and 4999 of the Internal Revenue Code
of 1986, as amended, respectively. This will include
indemnification of Mr. Morgan for any excise tax
obligations and any federal, state or local income,
employment-related and excise tax obligations related
to indemnification payments.
(iii) The accuracy of warranties and
representations of AFC regarding AFC, its financial
condition, operations, business, assets, liabilities
and prospects.
(iv) The absence of any material adverse
change in the financial condition, results of
operations, business or prospects of AFC from that
reflected in its June 30, 1996 financial statements.
(v) The receipt of any necessary
governmental or contractual consents to the
consummation of the Merger and the Fibers Sale
Agreement so that the surviving corporation in the
Merger or Bunzl plc, as applicable, can continue to
use all of AFC's significant assets, including
software and other contract rights, following the
Merger.
(vi) Satisfaction of all conditions in
Newco's financing commitments (which conditions shall
be satisfactory to AFC) in the form attached as an
Exhibit to the Merger Agreement that are not within
the control of Newco and affiliates, all of which
Newco agrees to use its best commercial efforts to
have satisfied.
(vii) Satisfaction of all conditions in the
Fibers Sale Agreement (which conditions shall be
satisfactory to AFC) in the form attached as
<PAGE> 18
Mr. Gilbert M. Rosenthal
December 12, 1996
Page 7
an Exhibit to the Merger Agreement that are not
within the control of Newco and its affiliates, all
of which Newco agrees to use its best commercial
efforts to have satisfied.
(viii) Relevant filings being made and
waiting periods expiring under the Hart-Scott-Rodino
Act (as defined below).
9. Shareholder Approval. Following execution of the Merger
Agreement, subject to paragraph 8(e), the Board of Directors of AFC
shall:
(a) proceed promptly to call a special meeting of its
shareholders, to be held as soon as practicable, for the
purpose of voting on the transactions contemplated herein;
(b) recommend approval by AFC's shareholders of the
transactions contemplated herein; and
(c) use its best commercial efforts to solicit
sufficient proxies to obtain such approval.
In connection therewith, AFC shall prepare a proxy statement and other
related proxy materials containing all information required by Rule
13e-3 under the Securities Exchange Act of 1934, all of which will be
distributed to AFC's shareholders, and Newco and WBT Holdings shall
prepare and file with the SEC all required documents, including
documents complying with rules applicable to "going private
transactions" as defined in Rule 13e-3.
10. Hart-Scott Filings. Promptly after the execution of the
Merger Agreement, AFC, Newco and Bunzl plc will cooperate with each
other in the preparation of all filings with respect to the
transactions contemplated herein required to be made with the Federal
Trade Commission (the "FTC") and the Department of Justice under the
Antitrust Improvements Act of 1976 (the "Hart-Scott-Rodino Act"). In
the event that the FTC or the Department of Justice requires any
additional information with respect to the transactions, AFC, Newco and
Bunzl plc will cooperate with each other in promptly obtaining and
preparing such information and delivering it to the FTC and the
Department of Justice.
11. Closing Date. The closing of the transactions contemplated
hereby will take place at the offices of Hunton & Williams, Riverfront
Plaza, Richmond, VA at 10:00 a.m. (local time) on the next business day
following approval of the Merger
<PAGE> 19
Mr. Gilbert M. Rosenthal
December 12, 1996
Page 8
Agreement by AFC's shareholders and satisfaction of all other
conditions to the Merger, or at such other place, on such other date
and at such other time as the parties may mutually agree.
12. Confidentiality. The WB Trusts, their affiliates, agents
and advisors have entered into a Confidentiality Agreement agreeing
that all of the information that AFC or its agents and advisors shall
provide to the WB Trusts, their affiliates, agents and advisors
concerning AFC or that is obtained by Newco or its agents or advisors
from its examination of the facilities, records and personnel of AFC
will be used solely for the purpose of the evaluation of the proposed
acquisition of AFC. WBT Holdings and Newco will be bound by that
Confidentiality Agreement. Also, Bunzl plc will execute a
confidentiality agreement containing terms and provisions satisfactory
to AFC and Bunzl plc. AFC, WBT Holdings and Bunzl plc agree that there
be no public statement about this proposal or disclosure of it to
customers of AFC or Bunzl plc save as mutually agreed or as required by
applicable law or by any governmental or regulatory authority or
securities exchange.
13. Approval of Merger Agreement. The Merger Agreement
effectuating this letter of intent is subject to approval by the Board
of Directors of AFC.
Yours truly,
WBT Holdings LLC
by: /s/ Bennett L. Kight
----------------------------------
Bennett L. Kight, President
Accepted, this December 12, 1996.
Special Committee
by: /s/ Gilbert M. Rosenthal
----------------------------------
Gilbert M. Rosenthal, Chairman
BLK/ph
Enclosure
<PAGE> 20
Mr. Gilbert M. Rosenthal
December 12, 1996
Page 9
cc: Mr. Raymond C. Groth
C. Porter Vaughan, III, Esquire
Mr. David H. Coyle
