<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
FORM 10-Q
---------------------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________________TO___________________
COMMISSION FILE NO. 0-23442
CAMERON ASHLEY BUILDING PRODUCTS, INC.
--------------------------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-1984957
------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11651 PLANO ROAD, DALLAS TX 75243
---------------------------------
(Address of principal executive offices)
(Zip Code)
214-860-5100
------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
---------------------- --------------------
The number of shares of Registrant's Common Stock outstanding at June 3, 1996
was 8,996,949.
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Exhibit Index on page 14.
<PAGE>
CAMERON ASHLEY BUILDING PRODUCTS, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
--------
<S> <C>
Item 1. Consolidated Condensed Financial Statements
Consolidated Condensed Balance Sheets as of April 30, 1996 and
October 31, 1995 3
Consolidated Condensed Statements of Income for the three months
and the six months ended April 30, 1996 and 1995 4
Consolidated Condensed Statements of Stockholders' Equity for the
six months ended April 30, 1996 5
Consolidated Condensed Statements of Cash Flows for the six months
ended April 30, 1996 and 1995 6
Notes to Consolidated Condensed Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
CAMERON ASHLEY BUILDING PRODUCTS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
April 30 October 31,
1996 1995
ASSETS ------------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 9,232 $ 3,494
Accounts receivable, net 69,991 75,502
Inventories 63,674 51,780
Prepaid expenses and other assets 1,766 1,738
Deferred income taxes 1,100 843
-------- --------
Total current assets 145,763 133,357
PROPERTY, PLANT AND EQUIPMENT, NET 26,241 23,591
INTANGIBLES, NET 17,650 17,530
OTHER ASSETS 753 589
-------- --------
TOTAL $190,407 $175,067
-------- --------
-------- --------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 41,993 $ 40,410
Accrued expenses 8,469 11,269
Current maturities of debt 691 1,099
-------- --------
Total current liabilities 51,153 52,778
LONG-TERM DEBT, LESS CURRENT MATURITIES 51,834 38,264
DEFERRED INCOME TAXES 1,328 1,039
-------- --------
Total liabilities 104,315 92,081
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock; authorized 100,000 shares,
no shares issued and outstanding
Common stock; no par value; authorized 20,000,000 shares;
9,269,635 shares issued at April 30, 1996,
9,021,175 shares issued at October 31, 1995 59,572 58,550
Retained earnings 30,695 27,319
Treasury stock, at cost, 431,974 shares at April 30, 1996,
297,200 shares at October 31, 1995 (4,175) (2,883)
-------- --------
Total stockholders' equity 86,092 82,986
-------- --------
TOTAL $190,407 $175,067
-------- --------
-------- --------
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE>
CAMERON ASHLEY BUILDING PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------- -----------------------------
April 30, April 30, April 30, April 30,
1996 1995 1996 1995
---------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C>
NET SALES $135,085 $117,290 $255,127 $217,834
COST OF SALES 108,495 95,691 205,390 175,229
---------------- ---------------- -------------- -------------
GROSS PROFIT 26,590 21,599 49,737 42,605
OPERATING EXPENSES 21,685 17,613 42,522 35,069
---------------- ---------------- -------------- -------------
INCOME FROM OPERATIONS 4,905 3,986 7,215 7,536
OTHER (INCOME) EXPENSE (32) (33) (41) (61)
INTEREST EXPENSE 818 882 1,566 1,831
---------------- ---------------- -------------- -------------
INCOME BEFORE INCOME TAXES 4,119 3,137 5,690 5,766
PROVISION FOR INCOME TAXES 1,484 1,167 2,069 2,185
---------------- ---------------- -------------- -------------
INCOME BEFORE EXTRAORDINARY CHARGE $ 2,635 $ 1,970 $ 3,621 $ 3,581
EXTRAORDINARY CHARGE - EARLY
EXTINGUISHMENT OF DEBT, NET OF
INCOME TAX
245 0 245 0
---------------- ---------------- -------------- -------------
NET INCOME $ 2,390 $ 1,970 $ 3,376 $ 3,581
---------------- ---------------- -------------- -------------
---------------- ---------------- -------------- -------------
INCOME PER SHARE BEFORE
EXTRAORDINARY CHARGE $ 0.29 $ 0.23 $ 0.40 $ 0.46
---------------- ---------------- -------------- -------------
---------------- ---------------- -------------- -------------
NET INCOME PER SHARE AFTER
EXTRAORDINARY CHARGE $ 0.26 $ .23 $ 0.37 $ 0.46
---------------- ---------------- -------------- -------------
---------------- ---------------- -------------- -------------
WEIGHTED AVERAGE SHARES
OUTSTANDING 9,117 8,492 9,117 7,778
---------------- ---------------- -------------- -------------
---------------- ---------------- -------------- -------------
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE>
CAMERON ASHLEY BUILDING PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
----------------- RETAINED -----------------
SHARES VALUE EARNINGS SHARES VALUE TOTAL
------ ----- -------- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE AS OF NOVEMBER, 1, 1995 9,021 $58,550 $27,319 297 $(2,883) $82,986
Proceeds from exercise of stock options,
including tax benefits of $734,000 242 965 -- -- -- 965
Proceeds from employee stock purchase plan 7 57 -- -- -- 57
Purchase of treasury stock -- -- -- 135 (1,292) (1,292)
Net income -- -- 3,376 -- -- 3,376
------ ------- ------- ----- ------- -------
BALANCE AS OF APRIL 30, 1996 9,270 $59,572 $30,695 432 $(4,175) $86,092
------ ------- ------- ----- ------- -------
------ ------- ------- ----- ------- -------
</TABLE>
See notes to consolidated condensed financial statements
5
<PAGE>
CAMERON ASHLEY BUILDING PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six months ended
April 30, April 30,
1996 1995
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,376 $ 3,581
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 2,915 2,318
Loss on sale of property, plant and equipment (13) -
Changes in operating assets and liabilities,
net of acquisitions:
Accounts Receivable 7,083 3,200
Inventories (11,050) (11,177)
Prepaid and deferred expenses 18 (1,436)
Accounts payable and accrued expenses (60) (4,088)
Other assets/liabilities (1,386) (536)
-------- --------
Net cash provided by (used in) operating activities 883 (8,138)
INVESTING ACTIVITIES:
Acquisitions (2,870) (16,438)
Seller financing of acquired businesses - 1,663
-------- --------
Cash paid at closing for acquisitions (2,870) (14,775)
Purchases of property, plant and equipment, net (3,906) (2,217)
Other (13) (30)
-------- --------
Net cash used in investing activities (6,789) (17,022)
FINANCING ACTIVITIES:
Borrowings under Senior Debt 50,000 -
Issuance costs paid on Senior Debt (582) -
Repayment of term loans (10,069) -
Net repayments under revolving lines of credit (25,000) (6,280)
Repayments of seller financing of acquired businesses (2,350) (283)
Issuance of common stock, net of offering costs - 32,090
Proceeds from employee stock purchase plan 57 -
Exercise of stock options, including tax benefits 965 310
Purchase of treasury stock (1,292) -
Debt reduction - -
Other (85) (94)
-------- --------
Net cash provided by financing activities 11,644 25,743
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,738 583
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 3,494 357
-------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 9,232 $ 940
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid for interest $ 1,602 $ 1,420
-------- --------
-------- --------
Cash paid for income taxes $ 2,809 $ 2,459
-------- --------
-------- --------
</TABLE>
See notes to consolidated condensed financial statements.
6
<PAGE>
CAMERON ASHLEY BUILDING PRODUCTS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
APRIL 30, 1996
1. INTERIM FINANCIAL STATEMENTS
The accompanying consolidated condensed financial statements of Cameron Ashley
Building Products, Inc. and its subsidiaries (the "Company") have not been
audited, however, the balance sheet at October 31, 1995 has been derived from
the Company's audited financial statements. In the opinion of the Company's
management, the financial statements reflect all adjustments necessary to
present fairly the results of operations for the six-month periods ended April
30, 1996 and 1995, the Company's financial position at April 30, 1996 and
October 31, 1995, and the cash flows for the six-month periods ended April 30,
1996 and 1995. These adjustments are of a normal recurring nature.
Certain notes and other information have been condensed in or omitted from the
interim financial statements presented in the Quarterly Report on Form 10-Q.
Therefore, these financial statements should be read in conjunction with the
Company's 1995 Annual Report on Form 10-K.
The operating results for the second quarter and for the six-month period ended
April 30, 1996 are not necessarily indicative of the results that may be
expected for the entire year.
2. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Net income per share is computed by dividing net income by the weighted average
shares outstanding. Weighted average shares include the actual shares
outstanding and the net additional shares which would be issuable upon the
exercise of stock options, assuming that the Company used the proceeds
(including related income tax benefits) to purchase additional shares at the
average market price during the interim periods of 1996 and 1995. Only the
primary method has been presented, since the number of shares derived under this
method is not significantly different from the fully-diluted method.
3. LONG-TERM DEBT
In April 1996, the Company completed a $50 million private-issue of Senior
Notes. The notes bear an average interest rate of 7.12% and have a final
maturity of April 15, 2006. The notes have four tranches with various
amortization schedules resulting in an average maturity of approximately seven
years. The proceeds from the debt offering, net of $582,000 in issuance costs,
were used to retire $43.6 million of bank borrowings and to increase the
Company's working capital. In addition, the Company entered into a new $75
million Revolving Credit Facility due January 15, 2001, replacing the $50
million facility due to expire in July, 1997. The Senior Notes and the
Revolving Credit Facility are unsecured.
Long-term debt consists of the following at April 30, 1996: (In thousands)
Bank Debt
Revolving credit note due January 15, 2001; interest is
due quarterly at LIBOR rate plus 0.50% to 1.00%, or at a
base rate (defined in the agreement). $ -0-
7 1/8% Senior Notes 50,000
Seller Financing of Acquired Businesses - Various terms, interest
rates ranging from 8% to 9% 1,842
Other, including capital leases 683
-------
52,525
Less Current Maturities (691)
-------
Long-term Debt $51,834
-------
-------
7
<PAGE>
NOTE 4. ACQUISITIONS - COMPLETED AND PENDING
In April 1996, the Company entered into an agreement to purchase the net assets
of the distribution center of Jett Supply Co., Inc. headquartered in Pueblo,
Colorado with branches in Pueblo, Chicago, Illinois and Houston, Texas. The
acquisition was completed on May 6, 1996 for a purchase price of $4.2 million.
The purchase price is subject to certain post closing adjustments and was paid
with cash.
In April 1996, the Company signed a letter of intent to acquire the Colorado
businesses of Mile High Roofing & Exterior Supply Co., Inc. with three branches
in Colorado. The acquisition was completed on May 31, 1996 for a purchase price
of $3.4 million. The purchase price is subject to certain post closing
adjustments and was paid with cash.
In April 1996, the Company signed a letter of intent to acquire California
Roofers Supply, a division of Star, Inc., which is headquartered in Hayward,
California. The operations to be acquired include eight branches located in
both Northern and Southern California. The estimated purchase price is $11.6
million subject to completion of due diligence.
8
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth items from Cameron Ashley Building Products,
Inc.'s Consolidated Condensed Statements of Income as percentages of net sales.
All percentages are before the one-time extraordinary charge.
<TABLE>
<CAPTION>
(In thousands except per share amounts)
Three Months Ended Six Months Ended
----------------------- ---------------------
April 30, April 30, April 30, April 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 80.3 81.6 80.5 80.4
----- ----- ----- -----
Gross Profit 19.7 18.4 19.5 19.6
Operating Expenses 16.1 15.0 16.7 16.1
----- ----- ----- -----
Income from Operations 3.6 3.4 2.8 3.5
Other (Income) Expense 0.0 0.0 0.0 0.0
Interest Expense 0.6 0.8 0.6 0.8
----- ----- ----- -----
Income Before Income Taxes 3.0 2.7 2.2 2.6
Provision for Income Taxes 1.1 1.0 0.8 1.0
----- ----- ----- -----
Income before extraordinary charge 2.0% 1.7% 1.4% 1.6%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
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RESULTS OF OPERATIONS
SECOND QUARTER ENDED APRIL 30, 1996 COMPARED TO SECOND QUARTER ENDED
APRIL 30, 1995
Net sales increased 15.2% from $117.3 million in the three months ended April
30, 1995 to $135.1 million in the three months ended April 30, 1996, an increase
of $17.8 million. Same branch sales for the second quarter increased 4.1% or
$4.8 million, the remaining $13.0 million in additional sales was contributed
from acquisitions and new branch openings.
Gross profit for the second quarter increased $5.0 million or 23.1% on higher
sales, and as a percentage of net sales increased 1.3% to 19.7% compared to the
same period in 1995. Gross profit percentage was affected favorably during the
quarter as a result of an improved selling margin and increased purchasing power
resulting from the Company's larger operating base.
Operating expenses increased 23.1% from $17.6 million in the 1995 period to
$21.7 million in the 1996 period and increased as a percentage of net sales from
15.0% to 16.1%. Operating expenses include both branch operations expenses as
well as corporate overhead costs and increased primarily as a result of
acquisitions and new branch openings. As a percentage of sales, the increase is
due to higher costs associated with increased millwork and tile sales in the
West and higher outbound truck and freight expenses due to rising delivery
costs.
9
<PAGE>
Income from operations increased 23.1% from $4.0 million in the 1995 period to
$4.9 million in the 1996 period, and increased as a percentage of net sales from
3.4% to 3.6%. The increase in income from operations as a percentage of net
sales was due principally to the increase in gross profit percentage in excess
of increases in operating expenses as a percentage of net sales.
As a result of the above factors, and a decrease in interest expense, income
before income taxes increased 31.3% from $3.1 million in the 1995 period to $4.1
million in the 1996 period. Income before the extraordinary charge increased
33.8% from $2.0 million in the 1995 period to $2.6 million in the 1996 period.
Income before the extraordinary charge as a percentage of net sales increased
from 1.7% in the 1995 period to 2.0% in the 1996 period. Earnings per share
before the extraordinary charge increased $.06 per share to $.29 per share on
7.4% more shares outstanding.
In the second quarter, the Company recorded an extraordinary charge of $245,000,
or $0.03 per share, net of tax benefit, in connection with the early retirement
of a total of $43.6 million principal amount of debt. Net income per share
after the one-time extraordinary charge was $0.26.
SIX MONTHS ENDED APRIL 30, 1996 COMPARED TO SIX MONTHS ENDED APRIL 30, 1995
Net sales increased 17.1% from $217.8 million in the six months ended April 30,
1995, to $255.1 million in the six months ended April 30, 1996, an increase of
$37.3 million. Acquisitions and new branches contributed additional sales for
the six month period ended April 30, 1996 of $31.8; while same branch sales for
the period increased $5.5 million or 2.5%. This sales growth continues to
reflect the benefits of acquisitions, introduction of new product lines to
acquired locations where possible and branches located in areas of the country
with good economic conditions, primarily the Southwest.
Gross profit for the six month period increased 16.7%, and as a percentage of
net sales decreased from 19.6% in the 1995 period to 19.5% in the 1996 period.
The increase in gross profit results from businesses acquired since the same
period in 1995. Gross profit as a percentage of sales decreased modestly.
Operating expenses increased 21.3% from $35.1 million in the 1995 period to
$42.5 million in the 1996 period, and increased as a percentage of net sales
from 16.1% to 16.7%. The dollar increase in operating expenses results
primarily from acquisitions and new branches. As a percentage of sales, the
increase is due to higher operating costs in the second quarter associated with
sales mix and delivery costs.
Income from operations decreased 4.3% from $7.5 million in the 1995 period to
$7.2 million in the 1996 period and decreased as a percentage of net sales from
3.5% to 2.8%. The decrease in income from operations as a percentage of net
sales is caused from the decline in gross profit percentage and higher operating
expenses.
As a result of the above factors and decreased interest expense, income before
income taxes decreased 1.3% from $5.8 million in the 1995 period to $5.7 million
in the 1996 period. Income before the extraordinary charge increased 1.1% from
$3.58 million in the 1995 period to $3.62 million in the 1996 period, and income
before the extraordinary charge as a percentage of net sales decreased from 1.6%
to 1.4% during the six month period. Earnings per share before the
extraordinary charge decreased $.06 per share from $.46 per share in the 1995
period to $.40 per share in the 1996 period on 17.2% more shares outstanding.
EFFECTS OF INFLATION
Management does not believe that inflation has had a material impact on results
of operations for the periods presented. Substantial increases in costs,
however, could have a significant impact on the Company and the industry.
Management believes that, to the extent inflation affects its costs in the
future, the Company can generally offset inflation by increasing prices if
competitive conditions permit.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary needs for capital resources are to finance acquisitions,
inventories, accounts receivable, and capital expenditures. Borrowings for
working capital typically increase during periods of sales expansion when higher
levels of
10
<PAGE>
inventory and receivables are needed and decrease as inventories and
receivables are converted to cash which is then used to pay down debt.
During the second quarter, the Company completed a $50 million private issue
of Senior Notes which is described in the notes to the accompanying interim
financial statements. The Company had $51.8 million of long-term debt, less
current maturities, outstanding as of April 30, 1996, consisting of the
senior notes and other debt facilities.
Net cash generated from operating activities was $.9 million for the six months
ended April 30, 1996 compared to net cash used in operations of $8.1 million for
six months ended April 30, 1995.
Capital expenditures were $3.9 million and $2.2 million for the six months ended
April 30, 1996 and 1995, respectively. The Company has budgeted $5.7 million
for capital expenditures in fiscal 1996 relating to its current operations,
including property, plant and equipment additions and replacements. The
Company's fiscal 1996 budget for capital expenditures does not include any
amounts that may be attributable to acquisitions.
Management believes that funds generated from operations, working capital and
funds available from bank lines of credit will be sufficient to meet the needs
of the Company's current operations for the next 12 months.
SEASONALITY
The Company's first and, to a lesser extent, its second quarter, are typically
adversely affected by winter construction cycles and weather patterns as the
level of activity in both the home improvement and new construction markets
decreases. Management closely monitors operating expenses and inventory levels
during seasonal periods and, to the extent possible, controls variable operating
costs.
11
<PAGE>
CAMERON ASHLEY BUILDING PRODUCTS, INC.
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
(a)-(b) At the Company's Annual Meeting of Shareholders on February 29,
1996, the following directors were elected for a term of three years:
CLASS II
Walter J. Muratori
Charles C. Schoen III
Don A. Rice
The following directors continued their terms of office as directors of
the Company after the Annual Meeting:
CLASS I CLASS III
Ronald R. Ross Richard L. Cravey
William S. Green William A. Davies
Donald S. Huml Stanley C. Weiss
(c) The following matters were voted upon at the Annual Meeting:
For Against Votes Withheld
--- ------- --------------
1. Walter J. Muratori 6,661,228 0 66,618
Don A. Rice 6,658,628 0 69,218
Charles C. Schoen III 6,658,128 0 69,718
2. Ratification of Deloitte & Touche LLP
as independent certified public
accountants for fiscal year ended
10/31/96 6,720,626 4,600 2,620
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibits required to be filed with this Report on Form 10-Q are listed
on the Exhibit Index following the signature page hereof.
(b) Reports on Form 8-K
During the quarter ended April 30, 1996, the Registrant did not file any
Reports on Form 8-K.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAMERON ASHLEY BUILDING PRODUCTS, INC.
(Registrant)
Date: June 7, 1996 /s/ F. Dixon McElwee
--------------- -----------------------------------
F. Dixon McElwee
Vice President/Chief Financial
Officer
13
<PAGE>
CAMERON ASHLEY BUILDING PRODUCTS, INC.
EXHIBIT INDEX
EXHIBITS
- --------
10.18 First Restated Credit Agreement among the Company, NationsBank
of Texas National Association, as Agent, ABN Amro Bank, N.V.
as Co-Agent, and other Lenders, dated as of April 18, 1996
10.19 Note Purchase Agreement between the Company and various
Purchasers dated as of April 1, 1996
10.20 Change in Control Employment Agreement between the Company
and Ronald R. Ross dated as of June 1, 1996
10.21 Change in Control Employment Agreement between the Company and
Walter J. Muratori dated as of June 1, 1996
11 Computation of Earnings per Share
14
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FIRST RESTATED CREDIT AGREEMENT
among
CAMERON ASHLEY BUILDING PRODUCTS, INC.
and
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION,
as Agent,
ABN AMRO BANK, N.V.,
as Co-Agent,
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION,
as Issuing Bank,
and each
LENDER
April 18, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS
1.01. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. ACCOUNTING AND OTHER TERMS . . . . . . . . . . . . . . . . . 23
1.03. COVENANT CALCULATIONS . . . . . . . . . . . . . . . . . . . 23
ARTICLE II. AMOUNTS AND TERMS OF ADVANCES
2.01. THE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . 23
2.02. MAKING ADVANCES . . . . . . . . . . . . . . . . . . . . . . 23
2.03. EVIDENCE OF INDEBTEDNESS . . . . . . . . . . . . . . . . . . 25
2.04. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 25
2.05. REPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.06. INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.07. DEFAULT INTEREST . . . . . . . . . . . . . . . . . . . . . . 27
2.08. CONTINUATION AND CONVERSION ELECTIONS . . . . . . . . . . . 27
2.09. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.10. REDUCTION OF COMMITMENT . . . . . . . . . . . . . . . . . . 29
2.11. FUNDING LOSSES . . . . . . . . . . . . . . . . . . . . . . . 29
2.12. COMPUTATIONS AND MANNER OF PAYMENTS . . . . . . . . . . . . 29
2.13. YIELD PROTECTION; CHANGED CIRCUMSTANCES . . . . . . . . . . 30
2.14. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . 32
2.15. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE III. CONDITIONS PRECEDENT
3.01. CONDITIONS PRECEDENT TO EFFECTIVENESS . . . . . . . . . . . 37
3.02. CONDITIONS PRECEDENT TO ALL ADVANCES AND LETTERS OF CREDIT . 40
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
4.01. ORGANIZATION AND QUALIFICATION . . . . . . . . . . . . . . . 41
4.02. DUE AUTHORIZATION; VALIDITY . . . . . . . . . . . . . . . . 41
4.03. CONFLICTING AGREEMENTS AND OTHER MATTERS . . . . . . . . . . 42
4.04. FINANCIAL STATEMENTS; FISCAL YEAR . . . . . . . . . . . . . 42
4.05. LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.06. COMPLIANCE WITH LAWS REGULATING THE INCURRENCE OF DEBT . . . 42
4.07. LICENSES, TITLE TO PROPERTIES, AND RELATED MATTERS . . . . . 43
4.08. OUTSTANDING DEBT; EXISTING LIENS . . . . . . . . . . . . . . 43
4.09. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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4.10. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.11. ENVIRONMENTAL LAWS . . . . . . . . . . . . . . . . . . . . . 44
4.12. INVESTMENTS; SUBSIDIARIES . . . . . . . . . . . . . . . . . 44
4.13. CERTAIN FEES . . . . . . . . . . . . . . . . . . . . . . . . 44
4.14. CABP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.15. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE V. NEGATIVE COVENANTS
5.01. CURRENT RATIO . . . . . . . . . . . . . . . . . . . . . . . 45
5.02. TANGIBLE NET WORTH . . . . . . . . . . . . . . . . . . . . . 45
5.03. FUNDED DEBT TO EBITDA RATIO . . . . . . . . . . . . . . . . 45
5.04. FIXED CHARGES COVERAGE RATIO . . . . . . . . . . . . . . . . 45
5.05. RESTRICTED PAYMENT . . . . . . . . . . . . . . . . . . . . . 45
5.06. CAPITAL EXPENDITURES . . . . . . . . . . . . . . . . . . . . 46
5.07. DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.08. DISPOSITIONS OF ASSETS . . . . . . . . . . . . . . . . . . . 46
5.09. MERGER; CONSOLIDATION; INVESTMENTS . . . . . . . . . . . . . 46
5.10. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.11. FISCAL YEAR AND ACCOUNTING METHOD . . . . . . . . . . . . . 47
5.12. ISSUANCE OF CAPITAL STOCK; AMENDMENT OF CHARTER . . . . . . 47
5.13. CHANGE OF OWNERSHIP . . . . . . . . . . . . . . . . . . . . 48
5.14. SALE AND LEASEBACK . . . . . . . . . . . . . . . . . . . . . 48
5.15. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.16. TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . 48
5.17. COMPLIANCE WITH ERISA . . . . . . . . . . . . . . . . . . . 48
5.18. NOTE PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . 48
5.19. SWAP EXPOSURE . . . . . . . . . . . . . . . . . . . . . . . 49
5.20. SUBSIDIARIES AND OBLIGORS . . . . . . . . . . . . . . . . . 49
ARTICLE VI. AFFIRMATIVE COVENANTS
6.01. PRESERVATION OF EXISTENCE AND SIMILAR MATTERS . . . . . . . 49
6.02. LICENSES AND MATERIAL AGREEMENTS . . . . . . . . . . . . . . 49
6.03. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . 49
6.04. MAINTENANCE OF PROPERTIES . . . . . . . . . . . . . . . . . 49
6.05. PAYMENT OF TAXES AND OTHER INDEBTEDNESS . . . . . . . . . . 50
6.06. ERISA COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . 50
6.07. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.08. INSPECTION RIGHTS . . . . . . . . . . . . . . . . . . . . . 52
6.09. RECORDS AND BOOKS OF ACCOUNT; CHANGES IN GAAP . . . . . . . 52
6.10. REPORTING REQUIREMENTS . . . . . . . . . . . . . . . . . . . 52
6.11. SOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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6.12. SUBSIDIARIES AND OBLIGOR . . . . . . . . . . . . . . . . . . 54
6.13. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VII. EVENTS OF DEFAULT
7.01. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 55
7.02. REMEDIES UPON DEFAULT . . . . . . . . . . . . . . . . . . . 57
7.03. CUMULATIVE RIGHTS . . . . . . . . . . . . . . . . . . . . . 57
7.04. WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.05. PERFORMANCE BY AGENT OR ANY LENDER . . . . . . . . . . . . . 58
7.06. EXPENDITURES . . . . . . . . . . . . . . . . . . . . . . . . 58
7.07. CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VIII. THE AGENT
8.01. AUTHORIZATION AND ACTION . . . . . . . . . . . . . . . . . . 58
8.02. AGENT'S RELIANCE, ETC . . . . . . . . . . . . . . . . . . . 59
8.03. NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION AND AFFILIATES . 59
8.04. LENDER CREDIT DECISION . . . . . . . . . . . . . . . . . . . 59
8.05. INDEMNIFICATION BY LENDERS . . . . . . . . . . . . . . . . . 60
8.06. SUCCESSOR AGENT . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE IX. MISCELLANEOUS
9.01. AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . 61
9.02. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.03. PARTIES IN INTEREST . . . . . . . . . . . . . . . . . . . . 63
9.04. ASSIGNMENTS AND PARTICIPATIONS . . . . . . . . . . . . . . . 63
9.05. SHARING OF PAYMENTS . . . . . . . . . . . . . . . . . . . . 64
9.06. RIGHT OF SET-OFF . . . . . . . . . . . . . . . . . . . . . . 64
9.07. COSTS, EXPENSES, AND TAXES . . . . . . . . . . . . . . . . . 64
9.08. INDEMNIFICATION BY BORROWER . . . . . . . . . . . . . . . . 65
9.09. RATE PROVISION . . . . . . . . . . . . . . . . . . . . . . . 66
9.10. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . 66
9.11. EXCEPTIONS TO COVENANTS . . . . . . . . . . . . . . . . . . 66
9.12. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . 66
9.13. GOVERNING LAW; WAIVER OF JURY TRIAL . . . . . . . . . . . . 67
9.14. RESTATEMENT . . . . . . . . . . . . . . . . . . . . . . . . 67
9.15. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 67
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SCHEDULES AND EXHIBITS:
Schedule 3.01(f) - Guarantors
Schedule 4.01-a - Jurisdictions of Qualification, Ownership and
Capital Structure - Borrower
Schedule 4.01-b - Jurisdictions of Qualification, Ownership and
Capital Structure - Subsidiaries
Schedule 4.05 - Existing Litigation
Schedule 4.08-a - Existing Debt and Liabilities
Schedule 4.08-b - Existing Liens
Schedule 4.09 - Taxes
Schedule 4.12 - Existing Investments
Schedule 9.02 - Lender Addresses
Exhibit A - Note
Exhibit B - Guaranty
Exhibit C - Compliance Certificate
Exhibit D - Borrowing Notice
Exhibit E - Conversion or Continuation Notice
Exhibit F - Borrowing Base Certificate
Exhibit G - Opinions of Borrower's and Obligors' Counsel
Exhibit H - Instruction Letter
Exhibit I - Solvency Certificates
Exhibit J - Assignment and Acceptance Agreement
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FIRST RESTATED CREDIT AGREEMENT
THIS FIRST RESTATED CREDIT AGREEMENT is dated as of April 18, 1996, among
Cameron Ashley Building Products, Inc., a Georgia corporation ("BORROWER"), the
Lenders from time to time party hereto or to an Assignment and Acceptance,
NationsBank of Texas, National Association, as Issuing Bank and Agent, and ABN
AMRO Bank, N.V., as Co-Agent.
BACKGROUND.
Borrower, NationsBank of Texas, National Association, as administrative
lender, and each lender a party thereto have entered into the Credit Agreement
dated as of June 30, 1994 (such agreement, together with all amendments, the
"EXISTING AGREEMENT"). Borrower has requested that the Existing Agreement be
restated to provide a line of credit in the maximum aggregate amount of
$75,000,000 and a letter of credit subfacility (being a portion of the line of
credit) in the maximum aggregate amount of $5,000,000 from Lenders and Issuing
Bank, and Lenders and Issuing Bank have agreed to restate the Existing Agreement
and make such loans and issue letters of credit, respectively, pursuant to the
terms and conditions of this Agreement.
AGREEMENT.
NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I. DEFINITIONS
1.01. DEFINITIONS. As used in this Agreement, the following terms have
the respective meanings indicated below (such meanings to be applicable equally
to both the singular and plural forms of such terms):
"ACCEPTABLE BANK" means any bank or trust company (a) which is organized
under the laws of the United States of America or any State thereof, (b) which
has capital, surplus and undivided profits aggregating at least $100,000,000,
and (c) whose long-term unsecured debt obligations (or the long-term unsecured
debt obligations of the bank holding company owning all of the capital stock of
such bank or trust company) shall have been given a rating of "AA" or better by
S&P or "Aa" or better by Moody's.
"ACCEPTABLE BROKER-DEALER" means any Person other than a natural person (a)
which is registered as a broker or dealer pursuant to the Securities Exchange
Act of 1934, as amended, and (b) whose long-term unsecured debt obligations
shall have been given a rating of "AA" or better by S&P or "Aa" or better by
Moody's.
"ACCOUNTS" means, with respect to any Person, all present and future
rights, howsoever evidenced, of such Person to payment for goods sold or leased
or for services rendered, and
<PAGE>
whether or not they have been earned by performance, including, without
limitation, all "accounts" as such term is defined in the UCC.
"ADDITIONAL LETTER OF CREDIT COSTS" has the meaning specified in
SECTION 2.15(d).
"ADVANCE" means an advance made by a Lender to Borrower pursuant to
SECTION 2.01.
"AFFILIATE" means a Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled By or is Under Common Control with
another Person.
"AGENT" means NationsBank of Texas, National Association, in its capacity
as Agent hereunder, or any successor Agent appointed pursuant to SECTION 8.06.
"AGREEMENT" means this First Restated Credit Agreement, together with all
amendments and restatements in accordance with its terms.
"APPLICABLE LAW" means (a) in respect of any Person, all provisions of Laws
of Tribunals applicable to such Person, and all orders and decrees of all courts
and arbitrators in proceedings or actions to which the Person in question is a
party and (b) in respect of contracts made or performed in the State of Texas,
"Applicable Law" also means the laws of the United States of America, including,
without limiting the foregoing, 12 USC Sections 85 and 86, as amended to the
date hereof and as the same may be amended at any time and from time to time
hereafter, and any other statute of the United States of America now or at any
time hereafter prescribing the maximum rates of interest on loans and extensions
of credit, and the laws of the State of Texas, including, without limitations,
Articles 5069-1.04 and 5069-1.07(a), Title 79, Revised Civil Statutes of Texas,
1925, as amended ("ART. 1.04"), and any other statute of the State of Texas now
or at any time hereafter prescribing maximum rates of interest on loans and
extensions of credit; PROVIDED HOWEVER, that pursuant to Article 5069-15.10(b),
Title 79, Revised Civil Statutes of Texas, 1925, as amended, Borrower agrees
that the provisions of Chapter 15, Title 79, Revised Civil Statutes of Texas,
1925, as amended, shall not apply to the Advances hereunder.
"APPLICABLE MARGIN" means (a) with respect to LIBOR Advances, 0.625% per
annum and (b) with respect to the Commitment Fee, 0.20% per annum.
Notwithstanding the foregoing, after completion of the first full fiscal quarter
after the Effective Date and at the end of each successive fiscal quarter,
effective on the first Business Day following receipt by Agent from Borrower of
a Compliance Certificate delivered to Agent for such fiscal quarter
demonstrating a change in the Funded Debt to EBITDA Ratio to an amount so that
another Applicable Margin should be applied pursuant to the table set forth
below, the Applicable Margin for each LIBOR Advance made on such day or
thereafter shall thereafter mean the respective percentage calculated on a per
annum basis set forth in Column A below opposite such relevant Funded Debt to
EBITDA Ratio, and the Applicable Margin for the Commitment Fee shall mean the
percentage calculated on a per annum basis in Column B below opposite such
relevant Funded Debt to EBITDA Ratio, until such time
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as the Applicable Margin shall be redetermined as provided above; PROVIDED
that the Applicable Margin shall never be a negative number.
COLUMN A COLUMN B
FUNDED DEBT TO EBITDA RATIO LIBOR RATE COMMITMENT FEE
- --------------------------- ---------- --------------
Greater than or equal to 1.000% 0.30%
3.00 to 1
Greater than or equal to 0.750% 0.25%
2.00 to 1 but less than 3.00
to 1
Greater than or equal to 0.625% 0.20%
1.00 to 1 but less than 2.00
to 1
Less than 1.00 to 1 0.500% 0.20%
"ART. 1.04" has the meaning specified in the definition of "Applicable
Law".
"ASHLEY" means Ashley Aluminum, Inc., a Georgia corporation.
"ASHLEY MANAGEMENT AGREEMENT" means the Agreement for Consulting Services
dated as of October 18, 1991 (as amended through the Effective Date) between
Ashley and CGW.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into
by a Lender and an Eligible Assignee, and accepted by Agent, in the form of
EXHIBIT J.
"ATTRIBUTABLE DEBT" means, as to any particular lease relating to a Sale-
and-Leaseback, the present value of all Lease Rentals required to be paid by
Borrower or any Subsidiary of Borrower under such lease during the remaining
term thereof, including any period for which such lease has been extended (such
present value to be determined in accordance with generally accepted financial
practice, compounded semiannually using a discount factor equal to the implicit
rate of such lease, if known, of, if not, the current LIBOR Rate).
"AUDITOR" means Deloitte & Touche, or other independent certified public
accountants selected by Borrower and acceptable to Agent.
"BASE ADVANCE" means an Advance bearing interest at the Base Rate.
"BASE RATE" means a fluctuating rate per annum as shall be in effect from
time to time announced or published by NationsBank of Texas, National
Association as its prime rate, and which may not necessarily be the lowest
interest rate charged by NationsBank of Texas, National Association.
"BORROWING" means a borrowing of the same Type made on the same day.
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"BORROWING BASE" means, as of any given date, an amount equal to the sum of
(a) 85% of the aggregate amount of Eligible Accounts of each of Borrower, Ashley
and Cameron, plus (b) 50% of the value of Eligible Inventory of each of
Borrower, Ashley and Cameron; PROVIDED, in determining the "Borrowing Base", at
no time shall the amount specified in CLAUSE (b) exceed the amount specified in
CLAUSE (a).
"BORROWING BASE CERTIFICATE" means a written report in the form of
EXHIBIT F, delivered by Borrower to Agent and each Lender and certified as
true and correct by an authorized officer of Borrower, Ashley and Cameron.
"BORROWING NOTICE" has the meaning set forth in SECTION 2.02(a).
"BUSINESS DAY" means a day of the year on which banks are not required or
authorized to close in Dallas, Texas or, if with respect to any notice,
payment or calculation related to a LIBOR Advance, London, England.
"CABP" means CABP, Inc., an Arizona corporation.
"CGW" means CGW Southeast Management Company, a Georgia corporation.
"CAMERON" means Wm. Cameron & Co., a Georgia corporation.
"CAMERON MANAGEMENT AGREEMENT" means the Agreement for Consulting Services
dated as of December 20, 1991 (as amended through the Effective Date),
between Cameron and CGW.
"CAPITAL EXPENDITURES" means capital expenditures, as defined in
accordance with GAAP.
"CAPITAL LEASES" means capital leases and subleases, as defined in
accordance with GAAP.
"CO-AGENT" means ABN AMRO Bank, N.V.
"COMMITMENT" means $75,000,000, as reduced from time to time pursuant to
SECTION 2.10 or 7.02.
"COMMITMENT FEE" means the fee described in SECTION 2.09(a).
"COMPLIANCE CERTIFICATE" means a certificate of an officer of Borrower
acceptable to Agent, in the form of EXHIBIT C, (a) certifying that such
individual has no knowledge that a Default or Event of Default has occurred and
is continuing, or if a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action being taken or
proposed to be taken with respect thereto, (b) setting forth detailed
calculations with respect to the covenants described in SECTIONS 5.01 through
5.07 and 5.19 and (c) setting forth detailed calculations of the Applicable
Margin.
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"CONSEQUENTIAL LOSS," with respect to (a) Borrower's payment of all or any
portion of the then-outstanding principal amount of a LIBOR Advance on a day
other than the last day of the related Interest Period, including, without
limitation, payments made as a result of the acceleration of the maturity of a
Note, (b) subject to Agent's prior consent, a LIBOR Advance made on a date other
than the date on which the Advance is to be made according to SECTION 2.02(a) or
2.08, or (c) any of the circumstances specified in SECTION 2.04 on which a
Consequential Loss may be incurred, means any loss, cost or expense incurred by
any Lender as a result of the timing of the payment or Advance or in
liquidating, redepositing, redeploying or reinvesting the principal amount so
paid or affected by the timing of the Advance or the circumstances described in
SECTION 2.04, which amount shall be the sum of (i) the interest that, but for
the payment or timing of Advance, such Lender would have earned in respect of
that principal amount, reduced, if such Lender is able to redeposit, redeploy,
or reinvest the principal amount, by the interest earned by such Lender as a
result of redepositing, redeploying or reinvesting the principal amount plus
(ii) any expense or penalty incurred by such Lender by reason of liquidating,
redepositing, redeploying or reinvesting the principal amount. Each
determination by each Lender of any Consequential Loss is, in the absence of
manifest error, conclusive and binding.
"CONSOLIDATED ASSETS" means, as of any date of determination, the total
amount of all assets of Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP.
"CONTINGENT LIABILITY" means, as to any Person, any obligation, contingent
or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Debt or obligation of any other Person in any manner, whether
directly or indirectly, including without limitation any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(b) to purchase Property or services for the purpose of assuring the owner of
such Debt of its payment, or (c) to maintain the solvency, working capital,
equity, cash flow, fixed charge or other coverage ratio, or any other financial
condition of the primary obligor so as to enable the primary obligor to pay any
Debt or to comply with any agreement relating to any Debt or obligation.
"CONTINUE," "CONTINUATION" and "CONTINUED" each refer to the continuation
pursuant to SECTION 2.08 of a LIBOR Advance from one Interest Period to the next
Interest Period.
"CONTROL" or "CONTROLLED BY" or "UNDER COMMON CONTROL" mean possession,
direct or indirect, of power to direct or cause the direction of management or
policies (whether through ownership of voting securities, by contract or
otherwise); PROVIDED that, in any event (a) any Person which beneficially owns
(i) 10% or more (in number of votes) of the securities having ordinary voting
power for the election of directors of a corporation shall be conclusively
presumed to control such corporation and (ii) 10% or more of the interest in
capital or profits of a partnership shall be conclusively presumed to control
such partnership, and (b) no Person shall be deemed to be an Affiliate of a
corporation solely by reason of his being an officer or director of such
corporation.
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<PAGE>
"CONTROLLED GROUP" means, as to any Person, all members of a controlled
group of corporations and all trades or businesses (whether or not
incorporated) which are under common control with such Person and which,
together with such Person, are treated as a single employer under Section
414(b), (c), (m) or (o) of the Code.
"CONVERSION OR CONTINUANCE NOTICE" has the meaning set forth in SECTION
2.08(b).
"CONVERTIBLE SUBORDINATED DEBT" means all unsecured Debt of Borrower which
shall (a) contain or have applicable thereto terms and provisions in form and
substance satisfactory to Determining Lenders, including, without limitation,
(i) subordination thereof to other Debt of Borrower, including, without
limitation, the Obligations, and (ii) covenants, events of default and other
provisions, (b) have no principal payment prior to April 18, 2001, and (c)
contain a right for the holder thereof to convert such Debt to an equity
interest in Borrower under certain circumstances.
"CURRENT ASSETS" means the current assets of Borrower and its Subsidiaries
on a consolidated basis determined in accordance with GAAP.
"CURRENT LIABILITIES" means the sum of (a) current liabilities of Borrower
and its Subsidiaries on a consolidated basis determined in accordance with GAAP,
plus (b) to the extent not included in CLAUSE (a), the unpaid principal amount
of all outstanding Advances, all accrued unpaid interest on Advances and all
Reimbursement Obligations.
"DEBT" means all obligations, contingent or otherwise, which in accordance
with GAAP are required to be classified on the balance sheet as liabilities, and
in any event including Capital Leases, Contingent Liabilities that are required
to be disclosed and quantified in notes to consolidated financial statements in
accordance with GAAP, and liabilities secured by any Lien on any Property,
regardless of whether such secured liability is with or without recourse.
"DEBTOR RELIEF LAWS" means applicable bankruptcy, reorganization,
moratorium, or similar Laws, or principles of equity affecting the enforcement
of creditors' rights generally.
"DEFAULT" means any event specified in SECTION 7.01, whether or not any
requirement in connection with such event for the giving of notice, lapse of
time, or happening of any further condition has been satisfied.
"DETERMINING LENDERS" means any combination of Lenders having at least
66.67% of the aggregate amount of outstanding Advances hereunder, PROVIDED,
HOWEVER, that if no Advances are outstanding, such term means any combination of
Lenders having Specified Percentages equal to at least 66.67%.
"DISPOSITION VALUE" means, at any time, with respect to any Property, the
book value thereof, valued at the time of such disposition in good faith by the
owner of such Property.
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"DISTRIBUTION" means, as to any Person, (a) any declaration or payment of
any distribution or dividend (other than a stock dividend) on, or the making of
any pro rata distribution, loan, advance, or investment to or in any holder (in
its capacity as a partner, shareholder or other equity holder) of, any
partnership interest or shares of capital stock or other equity interest of such
Person, or (b) any purchase, redemption, or other acquisition or retirement for
value of any shares of partnership interest or capital stock or other equity
interest of such Person.
"EBITDA" means, as of any date of determination, (a) the sum of Borrower's
and its Subsidiaries' (i) pre-tax income or deficit, as the case may be
(excluding extraordinary items and income from the sale of assets other than in
the ordinary course of business), plus (ii) cash interest expense paid;
amortization of Debt discounts; any payments or fees with respect to letters of
credit, bankers' acceptances or similar facilities; fees and expenses with
respect to interest rate swap or similar agreements or foreign currency hedge,
exchange or similar agreements, plus (iii) depreciation and amortization
expense, plus (iv) cash interest paid with respect to Capital Leases, plus (v)
other non-cash charges of Borrower and its Subsidiaries for such period deducted
from consolidated revenues in determining net income for such period; and minus
(b) non-cash items of Borrower and its Subsidiaries for such period increasing
consolidated revenues in determining net income for such period, all calculated
on a consolidated basis in accordance with GAAP.
"EBITDAR" means, as of any date of determination, (a) the sum of Borrower's
and its Subsidiaries' (i) pre-tax income or deficit, as the case may be
(excluding extraordinary items and income from the sale of assets other than in
the ordinary course of business), plus (ii) cash interest expense paid;
amortization of Debt discounts; any payments or fees with respect to letters of
credit, bankers' acceptances or similar facilities; fees and expenses with
respect to interest rate swap or similar agreements or foreign currency hedge,
exchange or similar agreements, plus (iii) depreciation and amortization
expense, plus (iv) lease payments paid pursuant to Operating Leases, plus (v)
cash interest paid with respect to Capital Leases, plus (vi) other non-cash
charges of Borrower and its Subsidiaries for such period deducted from
consolidated revenues in determining net income for such period; and minus (b)
non-cash items of Borrower and its Subsidiaries for such period increasing
consolidated revenues in determining net income for such period, all calculated
on a consolidated basis in accordance with GAAP.
"EFFECTIVE DATE" means April 18, 1996.
"EIGHTY PERCENT-OWNED SUBSIDIARY" means, at any time, any Subsidiary at
least 80% of all the equity interest (except directors' qualifying shares) and
voting interests of which are owned by any one or more of Borrower and its
Wholly-Owned Subsidiaries at such time.
"ELIGIBLE ACCOUNTS" means at the time of any determination thereof each
Account as to which the following requirements have been fulfilled to the
satisfaction of Agent:
(a) Borrower, Ashley or Cameron, as appropriate, has lawful and
absolute title to such Account;
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(b) Such Account is a valid, legally enforceable obligation of the
Person who is obligated under such Account (the "ACCOUNT DEBTOR") for goods
or services delivered or rendered to such Person, subject to Debtor Relief
Laws which may be applicable to the account debtor, provided that the
account debtor is not subject to any proceeding involving Debtor Relief
Laws other than as a creditor;
(c) There has been excluded from such Account any portion that is
subject to any dispute, offset, counterclaim, rebate or other claim or
defense on the part of the account debtor or to any claim on the part of
the account debtor denying liability under such Account known to Borrower,
Ashley or Cameron, as appropriate;
(d) Such Account is evidenced by an invoice rendered to the account
debtor and such Account is not evidenced by any chattel paper, promissory
note or other instrument;
(e) Such Account is not subject to any security interest or other
Lien, except landlord and similar Liens and Liens incurred in the ordinary
course of business in connection with worker's compensation, unemployment
insurance or similar legislation; PROVIDED such Liens only relate to
amounts not yet due and payable;
(f) Fewer than ninety days have elapsed since the date specified in
any invoice with respect to such Account as the due date for any amount
stated on such invoice; and
(g) No account debtor in respect of such Account is (i) primarily
conducting business in any jurisdiction located outside the United States
of America unless otherwise acceptable to Agent, (ii) any Tribunal,
domestic or foreign unless otherwise acceptable to Agent (as evidenced by
Agent's specific written acceptance), or (iii) the subject of a proceeding
under any Debtor Relief Laws, PROVIDED, HOWEVER, notwithstanding this
CLAUSE (iii), PROVIDED that all the other requirements of Eligible Accounts
are fulfilled to the satisfaction of Agent, accounts of other Persons
acceptable to Agent (which acceptance shall be evidenced solely by Agent's
specific written consent) which are the subject of a proceeding under
Debtor Relief Laws shall be Eligible Accounts; PROVIDED, that, no accounts
payable by an account debtor shall constitute Eligible Accounts if 10% or
more of the aggregate dollar amount of all Accounts owed to Borrower,
Ashley or Cameron, as appropriate, by such account debtor have been due and
payable for 120 days or more from the date specified in any invoice with
respect to such Account as the due date for any amount stated in such
invoice; PROVIDED, FURTHER, if the accounts payable by an account debtor
and all Affiliates of such account debtor shall constitute 15% or more of
the aggregate dollar amount of all Accounts owed to Borrower, Ashley or
Cameron, as appropriate, the dollar amount of such accounts payable of such
account debtor and its Affiliates in excess of 15% of the aggregate amount
of all Accounts owed to Borrower, Ashley or Cameron, as appropriate, shall
be excluded in each determination of Eligible Accounts.
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"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under the laws of
the United States, or any state thereof, and having total assets in excess of
$500,000,000; (b) a savings and loan association or savings bank organized under
the laws of the United States, or any state thereof, having total assets in
excess of $500,000,000, and not in receivership or conservatorship; (c) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development, or a political
subdivision of any such country, and having total assets in excess of
$500,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is
described in this clause; and (d) the central bank of any country which is a
member of the Organization for Economic Cooperation and Development.
"ELIGIBLE INVENTORY" means at any date the lesser of the actual cost or the
current fair market value of Inventory (excluding goods in transit and work in
progress) of Borrower, Ashley or Cameron, as appropriate, determined in
accordance with GAAP, provided that such Inventory shall constitute Eligible
Inventory only if on the date as of which the determination is being made (a) it
shall have been either (i) paid for or (ii) purchased on open account from a
vendor who does not have a purchase money security interest or other Lien on
either the acquired Inventory or any other Property of Borrower, Cameron or
Ashley, as appropriate, to secure the purchase price, (b) it shall not be
damaged or obsolete, (c) it shall not have exceeded its normal shelf life, (d)
it shall not be subject to any Lien or security interest, except landlord and
similar Liens and Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or similar
legislation; PROVIDED such Liens only relate to amounts not yet due and payable,
(e) Borrower, Ashley or Cameron, as appropriate, shall have lawful and absolute
title to it, (f) it is located in the United States of America, and (g)
Borrower, Cameron and Ashley, as appropriate, is neither consignor nor consignee
with respect to such Inventory.
"ENVIRONMENTAL CLAIM" means any written notice by any Tribunal alleging
potential liability for damage to the environment, or by any Person alleging
potential liability for personal injury (including sickness, disease or death),
resulting from or based upon (a) the presence or release (including sudden or
non-sudden, accidental or non-accidental, leaks or spills) of any Hazardous
Material at, in or from property, whether or not owned by Borrower or any of its
Subsidiaries, or (b) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 ET SEQ.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 ET SEQ.), the
Resource Conservation and Recovery Act (42 U.S.C Section 6901 ET SEQ.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.), the Clean
Air Act (42 U.S.C. Section 7401 ET SEQ.), the Toxic Substances Control Act (15
U.S.C. Section 2601 ET SEQ.), and the Occupational Safety and Health Act (29
U.S.C. Section 651 ET SEQ.) ("OSHA"), as such laws have been or hereafter may be
amended or supplemented, and any and all analogous future federal, or present or
future state or local, Laws.
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<PAGE>
"EQUITY PROCEEDS" means the gross amount payable to Borrower with respect
to each issuance of any equity interest of Borrower on or after the Effective
Date, net only of actual costs and expenses payable by Borrower to Persons not
Affiliates of Borrower who provided underwriting, accounting, legal, or similar
services with respect to such issuance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.
"ERISA AFFILIATE" means any Person that for purposes of Title IV of ERISA
is a member of the controlled group of Borrower or any Obligor, or is under
common control with Borrower or any Obligor, within the meaning of Section
414(c) of the Internal Revenue Code of 1986, as amended, and the regulations and
rulings issued thereunder.
"ERISA EVENT" means (a) a reportable event, within the meaning of Section
4043 of ERISA, unless the 30-day notice requirement with respect thereto has
been waived by the PBGC, (b) the issuance by the administrator of any Plan of a
notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA), (c) the cessation of operations at a facility in the
circumstances described in Section 4068(f) of ERISA, (d) the withdrawal by
Borrower, any Subsidiary of Borrower, or an ERISA Affiliate from a Multiple
Employer Plan during a Plan year for which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA, (e) the failure by Borrower, any
Subsidiary of Borrower, or any ERISA Affiliate to make a payment to a Plan
required under Section 302 of ERISA, (f) the adoption of an amendment to a Plan
requiring the provision of security to such Plan, pursuant to Section 307 of
ERISA, or (g) the institution by the PBGC of proceedings to terminate a Plan,
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
that constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, a Plan.
"EVENT OF DEFAULT" means any of the events specified in SECTION 7.01 of
this Agreement, provided there has been satisfied any requirement in connection
therewith for the giving of notice, lapse of time, or happening of any further
condition.
"EXISTING AGREEMENT" has the meaning specified in the BACKGROUND section.
"FACILITY" means each piece of improved real property (whether owned or
leased) at which an Obligor conducts business operations.
"FAIR MARKET VALUE" means, at any time and with respect to any Property,
the sale value of such Property that would be realized in an arm's-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
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<PAGE>
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of Dallas, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such date on such
transactions received by Agent from three federal funds brokers of recognized
standing selected by it.
"FIXED CHARGES COVERAGE RATIO" means, for Borrower calculated for the 365-
day period ended on the date of calculation, the ratio of (a) EBITDAR, to
(b) lease payments paid pursuant to Operating Leases, plus all cash interest
paid with respect to Funded Debt and Capital Leases, plus all scheduled
principal payments with respect to Funded Debt.
"FUNDED DEBT" means, as to any Person, at any date, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments
and (c) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business.
"FUNDED DEBT TO EBITDA RATIO" means, for any date of determination, the
ratio of (a) the amount of Funded Debt of Borrower and its Subsidiaries as at
the date of determination, to (b) EBITDA for the 365-day period ended on the
date of determination.
"GAAP" means generally accepted accounting principles applied on a
consistent basis. Application on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period, except for new
developments or statements promulgated by the Financial Accounting Standards
Board.
"GUARANTORS" means each Person listed on SCHEDULE 3.01(F).
"GUARANTY" means a Guaranty executed by each Guarantor in substantially the
form of EXHIBIT B.
"HAZARDOUS MATERIALS" means all materials subject to any Environmental Law,
including without limitation materials listed in 49 C.F.R. Section 172.101,
Hazardous Substances, explosive or radioactive materials, hazardous or toxic
wastes or substances, petroleum or petroleum distillates, asbestos, or material
containing asbestos.
"HAZARDOUS SUBSTANCES" means hazardous waste as defined in the Clean Water
Act, 33 U.S.C. Section 1251 ET SEQ., the Comprehensive Environmental Response
Compensation and Liability Act as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Section 9601 ET SEQ., the Resource Conservation
Recovery Act, 42 U.S.C. Section 6901 ET SEQ., and the Toxic Substances Control
Act, 15 U.S.C. Section 2601 ET SEQ.
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<PAGE>
"HIGHEST LAWFUL RATE" means at the particular time in question the maximum
rate of interest which, under Applicable Law, any Lender is then permitted to
charge on the Obligations. If the maximum rate of interest which, under
Applicable Law, any Lender is permitted to charge on the Obligations shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to
Borrower. For purposes of determining the Highest Lawful Rate under Applicable
Law, the applicable rate ceiling shall be (a) the indicated rate ceiling
described in and computed in accordance with the provisions of Section (a)(l) of
Art. l.04; or (b) provided notice is given as required in Section (h)(l) of Art.
1.04, either the annualized ceiling or quarterly ceiling computed pursuant to
Section (d) of Art. 1.04; PROVIDED, HOWEVER, that at any time the indicated rate
ceiling, the annualized ceiling or the quarterly ceiling, as applicable, shall
be less than 18% per annum or more than 24% per annum, the provisions of
Sections (b)(1) and (2) of said Art. l.04 shall control for purposes of such
determination, as applicable.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities within the meaning of Section 4001(a)(18) of ERISA.
"INTEREST HEDGE AGREEMENTS" means any interest rate swap agreements,
interest cap agreements, interest rate collar agreements, or any similar
agreements or arrangements designed to hedge the risk of variable interest rate
volatility, or foreign currency hedge, exchange or similar agreements, on terms
and conditions reasonably acceptable to Agent (evidenced by Agent's consent in
writing), as such agreements or arrangements may be modified, supplemented, and
in effect from time to time.
"INTEREST PERIOD" means the period beginning on the date the Advance is
made or continued as a LIBOR Advance and ending one, two, three, or six months
thereafter (as Borrower shall select); PROVIDED, HOWEVER, that whenever the
first day of any Interest Period occurs on a day of an initial calendar month
for which there is no numerically corresponding day in the calendar month that
succeeds such initial calendar month by the number of months equal to the number
of months in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"INVENTORY" means, with respect to any Person, any and all goods,
wheresoever located, including, without limitation, goods in transit, whether
now owned or hereafter acquired by such Person, which are held for sale or
lease, furnished under any contract of service or held as raw materials, work in
process or supplies, and all materials used or consumed in such Person's
business, including, without limitation, all such property the sale or other
disposition of which has given rise to Accounts of such Person and which has
been returned to or repossessed or stopped in transit by such Persons and all
"inventory" as such term is defined in the UCC.
"INVESTMENT" means any acquisition of all or substantially all assets of
any Person, or any direct or indirect purchase or other acquisition of, or a
beneficial interest in, capital stock or other
12
<PAGE>
securities of any other Person, or any direct or indirect loan, advance
(other than advances to employees for moving and travel expenses, drawing
accounts, and similar expenditures in the ordinary course of business), or
capital contribution to or investment in any other Person, including
without limitation the incurrence or sufferance of Debt or accounts
receivable of any other Person that are not current assets or do not arise
from sales to that other Person in the ordinary course of business.
"ISSUING BANK" means NationsBank of Texas, N.A., in its capacity as issuer
of a Letter of Credit pursuant to SECTION 2.15.
"LAW" means any constitution, statute, law, ordinance, regulation, rule,
order, writ, injunction, or decree of any Tribunal.
"L/C CASH COLLATERAL ACCOUNT" has the meaning specified in SECTION 2.15(f).
"L/C RELATED DOCUMENTS" has the meaning specified in SECTION 2.15(e).
"LEASE RENTALS" means, with respect to any period, the sum of the minimum
amount of rental and other obligations required to be paid during such period by
Borrower or any Subsidiary of Borrower as lessee under all leases of real or
personal property (other than Capital Leases), EXCLUDING any amounts required to
be paid by the lessee (whether or not therein designated as rental or additional
rental) (a) which are on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges, or (b) which are based on profits,
revenues or sales realized by the lessee from the leased property or otherwise
based on the performance of the lessee.
"LENDER AFFILIATE" means the holding company of any Lender, or any wholly-
owned direct or indirect subsidiary of such holding company or of such Lender.
"LENDERS" means the lenders listed on the signature pages of this
Agreement, and each Eligible Assignee which hereafter becomes a party to this
Agreement pursuant to SECTION 9.04.
"LENDING OFFICE" means, with respect to each Lender, its branch or
affiliate, (a) initially, the office of each Lender, branch or affiliate
identified as such on SCHEDULE 9.02, and (b) subsequently, such other office of
each Lender, branch or affiliate as each Lender may designate to Borrower and
Agent as the office from which the Advances of each Lender will be made and
maintained and for the account of which all payments of principal and interest
on the Advances and the Commitment Fee will thereafter be made. Lenders may
have more than one Lending Office for the purpose of making Base Advances and
LIBOR Advances.
"LETTER OF CREDIT" has the meaning specified in SECTION 2.15(a).
"LETTER OF CREDIT AGREEMENT" has the meaning specified in SECTION 2.15(b).
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<PAGE>
"LETTER OF CREDIT FACILITY" has the meaning specified in SECTION 2.15(a).
"LIBOR ADVANCE" means an Advance bearing interest at the LIBOR Rate.
"LIBOR LENDING OFFICE" means, with respect to each Lender, the office
designated as its "LIBOR Lending Office" below its name on SCHEDULE 9.02, or
such other office of Lender or any of its affiliates hereafter designated by
notice to Borrower and Agent.
"LIBOR RATE" means a simple per annum interest rate equal to the lesser of
(a) the Highest Lawful Rate, and (b) the sum of the LIBOR Rate Basis plus the
Applicable Margin. The LIBOR Rate shall, with respect to LIBOR Advances subject
to reserve or deposit requirements, be subject to premiums assessed therefor by
each Lender, which are payable directly to each Lender. Once determined, the
LIBOR Rate shall remain unchanged during the applicable Interest Period.
"LIBOR RATE BASIS" means, for any Interest Period, the interest rate per
annum (rounded upward to the nearest 1/16th of one percent) determined by Agent
at approximately 9:00 a.m., on the date which is two Business Days before the
first day of such Interest Period to be the offered quotations that appear on
the Reuter's Screen LIBO page for dollar deposits in the London interbank market
for a length of time approximately equal to the Interest Period for the LIBOR
Advance sought by Borrower. If at least two such offered quotations appear on
the Reuter's Screen LIBO page, the LIBOR Rate shall be the arithmetic mean
(rounded upward to the nearest 1/16th of one percent) of such offered
quotations, as determined by Agent. If the Reuter's Screen LIBO page is not
available or has been discontinued, the LIBOR Rate Basis shall be the rate per
annum that Agent determines to be the arithmetic mean (rounded as aforesaid) of
the per annum rates of interest at which deposits in dollars in an amount
approximately equal to the principal amount of, and for a length of time
approximately equal to the Interest Period for, the LIBOR Advance sought by
Borrower are offered to Agent in immediately available funds in the London
interbank market at 11:00 a.m., London time, on the date which is two Business
Days prior to the first day of an Interest Period.
"LICENSE" means, as to any Person, any license, permit, certificate of
need, authorization, certification, accreditation, franchise, approval, or grant
of rights by, or any filing or registration with, any Tribunal or third person
necessary or appropriate for such Person to own, maintain, or operate its
business or Property, including, but not limited to, the sale of Inventory.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien, or
charge of any kind, including without limitation any agreement to give or not to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement or other similar form of public notice under the
Laws of any jurisdiction (except for the filing of a financing statement or
notice in connection with an (a) Operating Lease or (b) the true consignment of
goods to Borrower or any Subsidiary of Borrower as consignee).
14
<PAGE>
"LITIGATION" means any proceeding, claim, lawsuit, arbitration, and/or
investigation conducted or threatened by or before any Tribunal or arbitrator,
including without limitation proceedings, claims, lawsuits, and/or
investigations under or pursuant to any environmental, occupational, safety and
health, antitrust, unfair competition, securities, Tax, or other Law, or under
or pursuant to any contract, agreement, or other instrument.
"LOAN PAPERS" means this Agreement; the Notes; all Interest Rate Hedge
Agreements; each Guaranty and all other guaranties executed by any Person
guaranteeing payment of any portion of the obligations of any Person under this
Agreement, the Notes or any related agreement; all L/C Related Documents; all
letters of credit issued by any Lender for the account of any Obligor, and the
application and all documentation related to any such letter of credit; each
Assignment and Acceptance; all promissory notes evidencing any portion of the
obligations under this Agreement; assignments, security agreements, pledge
agreements, mortgages, deeds of trust, financing statements, collateral
assignments, and other documents and instruments granting an interest in any
collateral, or related to the perfection and/or the transfer thereof; and all
other documents, instruments, agreements or certificates executed or delivered
by Borrower or any other Person, as security for any Obligor's obligations
hereunder, in connection with the loans and other extensions of credit to or for
the benefit of Borrower or otherwise; as each such document shall, with the
consent of Agent, Issuing Bank (if required by the terms hereof) and Lenders
pursuant to the terms hereof, be amended, extended, or restated.
"MATERIAL ADVERSE CHANGE" means any circumstance or event that is or would
reasonably be expected to (a) be material and adverse to the financial
condition, business operations, prospects, or Properties of any Obligor or (b)
materially affect the validity or enforceability of any Loan Paper.
"MATURITY DATE" means January 15, 2001, or the earlier date of termination
in whole of the Commitment pursuant to SECTION 2.10 or 7.02.
"MAXIMUM AMOUNT" means the maximum amount of interest which, under
Applicable Law, a Lender is permitted to charge on the Obligations.
"MONEY MARKET INSTRUMENTS" means United States Governmental Securities
described in CLAUSE (e) of the definition of "RESTRICTED INVESTMENTS" and
commercial paper described in CLAUSE (g) of the definition of "RESTRICTED
INVESTMENTS".
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which Borrower, any Subsidiary, or any ERISA Affiliate
is making or accruing an obligation to make contributions, or has within any of
the preceding five plan years made or accrued an obligation to make
contributions, such plan being maintained pursuant to one or more collective
bargaining agreements.
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<PAGE>
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of Borrower,
any Subsidiary of Borrower, or any ERISA Affiliate and at least one Person other
than Borrower, any Subsidiary of Borrower, and any ERISA Affiliate, or (b) was
so maintained and in respect of which Borrower, any Subsidiary of Borrower, or
any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in
the event such plan has been or were to be terminated.
"NET INCOME" means with reference to any period, for Borrower, determined
in accordance with GAAP, net profit or loss for such period.
"NOTE" means each and "NOTES" means all Notes of Borrower evidencing the
Advances and obligations owing hereunder to each Lender, in substantially the
form of EXHIBIT A, payable to the order of each Lender, together with each
renewal, amendment, and restatement thereof.
"NOTE PURCHASE AGREEMENT" means each Note Purchase Agreement dated as of
April 1, 1996 between Borrower and each Senior Holder.
"NOTICE OF ISSUANCE" has the meaning specified in SECTION 2.15(b).
"OBLIGATIONS" means all present and future obligations, indebtedness and
liabilities, and all renewals and extensions of all or any part thereof, of
Borrower and other Person (other than Lenders, Issuing Bank and Agent) to
Lenders, Issuing Bank and Agent arising from, by virtue of, or pursuant to this
Agreement, any of the other Loan Papers and any and all renewals and extensions
thereof or any part thereof, or future amendments thereto, all interest accruing
on all or any part thereof and reasonable attorneys' fees incurred by Lenders,
Issuing Bank and Agent for the administration, execution of waivers, amendments
and consents, and in connection with any restructuring, workouts or in the
enforcement or the collection of all or any part thereof, whether such
obligations, indebtedness and liabilities are direct, indirect, fixed,
contingent, joint, several or joint and several. Without limiting the
generality of the foregoing, "Obligations" includes all amounts that would be
owed by Borrower and any other Person (other than Agent, Issuing Bank or
Lenders) to Agent, Issuing Bank or Lenders under any Loan Paper, but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving Borrower or any other
Person (including all such amounts which would become due or would be secured
but for the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding of Borrower or any other Person
under any Debtor Relief Law).
"OBLIGOR" means (a) Borrower, (b) each other Person liable for performance
of any of the Obligations, and (c) each other Person the Property of which
secures the performance of any of the Obligations.
"OPERATING LEASES" mean operating leases, as defined in accordance with
GAAP.
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<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
agency or entity performing substantially the same functions.
"PERMITTED ACQUISITION" means (a) the acquisition of the capital stock or
other equity interest of any Person which will be, immediately after such
acquisition, an Eighty-Percent Owned Subsidiary or (b) the acquisition of assets
of any Person constituting or related to a particular line of business of any
Person; PROVIDED, (i) in the case of a proposed acquisition described in CLAUSE
(a), substantially all business operations of such Person to be acquired are in
business lines related to the business lines of Borrower and Guarantors, (ii) in
the case of a proposed acquisition described in CLAUSE (b), the assets or line
of business of such Person to be acquired are in business lines related to the
business lines of Borrower and Guarantors, (iii) the Board of Directors, general
partners or other governing body of such Person has approved such transaction
and such approval has not been revoked, and (iv) such transaction is not the
subject of pending Litigation.
"PERMITTED AMOUNT" means the difference between (a) the sum of (i)
$10,000,000 plus (ii) 60% of cumulative Net Income reported for each fiscal year
of Borrower in which Net Income is a positive number, commencing with the fiscal
year of Borrower ending on October 31, 1996, plus (iii) 100% of cumulative Net
Income reported for each fiscal year of Borrower in which Net Income is a
negative number (expressed as a negative number), commencing with the fiscal
year of Borrower ending on October 31, 1996, minus (b) the aggregate amount of
all cash Distributions made by Borrower on and after the Effective Date.
"PERMITTED DISPOSITIONS" means (a) sales or dispositions of assets in the
ordinary course of business for full and fair consideration, (b) sales or
dispositions of tangible assets determined in good faith by such Person to be
obsolete or no longer useful in such Person's operations and (c) other Transfer
if (i) such Transfer is, in the good faith opinion of Borrower, in exchange for
consideration having a Fair Market Value at least equal to that of the property
exchanged and is in the best interest of Borrower or the Subsidiary of Borrower
which owns such Property; (ii) immediately after giving effect to the Transfer,
no Default or Event of Default would exist; and (iii) if immediately after
giving effect to the Transfer, (A) the Disposition Value of all the property of
Borrower and its Subsidiaries that was the subject of any Transfer occurring in
the period of four fiscal quarters of Borrower then next ending would not exceed
15% of Consolidated Assets as of the end of the then most recently ended fiscal
quarter of Borrower, and (B) the Disposition Value of all property that was the
subject of all Transfers occurring on or after the Effective Date would not
exceed 30% of Consolidated Assets as of the end of the then most recently ended
fiscal quarter of Borrower.
"PERSON" means an individual, partnership, joint venture, corporation,
trust, Tribunal, unincorporated organization, and government, or any department,
agency, or political subdivision thereof.
"PROHIBITED TRANSACTION" has the meaning specified in Section 4975 of the
Internal Revenue Code of 1986, as amended, or Section 406 of Title I of ERISA.
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<PAGE>
"PROPERTY" means all types of real, personal, tangible, intangible, or
mixed property, whether owned or hereafter acquired in fee simple or leased by
each Obligor.
"PRO RATA" means, as to any Lender, in accordance with its percentage of
the aggregate amount of outstanding Advances; PROVIDED, HOWEVER, that if no
Advances are outstanding, such term means in accordance with such Lender's
Specified Percentage.
"QUARTERLY DATE" means the last day of each January, April, July and
October during the term of this Agreement.
"RATABLE" means, as to any Lender, in accordance with its Specified
Percentage.
"REFINANCING ADVANCE" means any Advance which is used to pay the principal
amount (or any portion thereof) of an Advance at the end of its Interest Period
and which, after giving effect to such application, does not result in an
increase in the aggregate amount of outstanding Advances.
"REIMBURSEMENT OBLIGATIONS" means, in respect of any Letter of Credit as at
any date of determination, the sum of (a) the maximum aggregate amount which is
then available to be drawn under such Letter of Credit, plus (b) the aggregate
amount of all drawings under such Letter of Credit not theretofore reimbursed by
Borrower.
"REPURCHASE AGREEMENT" means any written agreement
(a) that provides for (i) the transfer of one or more Money Market
Instruments in an aggregate principal amount at least equal to the amount
of the Transfer Price (defined below) to Borrower or any of its
Subsidiaries from an Acceptable Bank or an Acceptable Broker-Dealer against
a transfer of funds (the "TRANSFER PRICE") by Borrower or such Subsidiary
to such Acceptable Bank or Acceptable Broker-Dealer, and (ii) a
simultaneous agreement by Borrower or such Subsidiary, in connection with
such transfer of funds, to transfer to such Acceptable Bank or Acceptable
Broker-Dealer the same or substantially similar Money Market Instruments
for a price not less than the Transfer Price plus a reasonable return
thereon at a date certain not later than 365 days after such transfer of
funds,
(b) in respect of which Borrower or such Subsidiary shall have the
right, whether by contract or pursuant to applicable law, to liquidate such
agreement upon the occurrence of any default thereunder; and
(c) in connection with which Borrower or such Subsidiary, or an agent
thereof, shall have taken all action required by applicable law or
regulations to perfect a Lien in such Money Market Instruments.
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"RESTRICTED INVESTMENTS" means the following:
(a) property to be used in the ordinary course of business of
Borrower and its Subsidiaries;
(b) current assets arising from the sale of goods and services in the
ordinary course of business of Borrower and its Subsidiaries;
(c) Permitted Acquisitions,
(d) Investments existing on the Effective Date and disclosed in
SCHEDULE 4.12;
(e) Investments in United States Governmental Securities, PROVIDED
that such obligations mature within thirty-six months from the date of
acquisition thereof;
(f) Investments in certificates of deposit, time deposits or banker's
acceptances maturing within 365 days from the date of acquisition thereof
either (i) issued by an Acceptable Bank, or (ii) issued by any other bank
with which Borrower has a banking relationship and which is organized under
the laws of the United States of America or any State thereof, PROVIDED
that the aggregate amount of the Investments of Borrower permitted by this
CLAUSE (ii) shall not exceed $10,000,000;
(g) Investments in commercial paper given the highest rating by a
credit rating agency of recognized national standing and maturing not more
than 270 days from the date of creation thereof;
(h) Investments in Repurchase Agreements;
(i) Investments in tax-exempt obligations of any state of the United
States of America, or any municipality of any such state, in each case
rated "AA" or better by S&P, "Aa2" or better by Moody's or an equivalent
rating by any other credit rating agency of recognized national standing,
PROVIDED that such obligations mature within 365 days from the date of
acquisition thereof;
(j) loans or advances in the usual and ordinary course of business to
officers, directors and employees for expenses (including moving expenses
related to a transfer) incidental to carrying on the business of Borrower
or any Subsidiary of Borrower; and
(k) Investments in the shares of registered investment companies
commonly known as "money market funds", PROVIDED that the aggregate net
asset value of any such investment company shall be $1,000,000,000 or more
and the investment policies of such investment companies shall limit them
to Money Market Instruments.
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As of any date of determination, each Restricted Investment shall be valued
at the greater of:
(x) the amount at which such Restricted Investment is shown on the
books of Borrower or any of its Subsidiaries (or zero if such Restricted
Investment is not shown on any such books); and
(y) either
(i) in the case of any guaranty of the obligation of any Person,
the amount which Borrower or any of its Subsidiaries has paid on
account of such obligation less any recoupment by Borrower or such
Subsidiary of any such payments, or
(ii) in the case of any other Restricted Investment, the excess
of:
(x) the greater of (A) the amount originally entered on the
books of Borrower or any of its Subsidiaries with respect thereto
and (B) the cost thereof to Borrower or its Subsidiary over
(y) any return of capital (after income taxes applicable
thereto) upon such Restricted Investment through the sale or
other liquidation thereof or part thereof or otherwise.
"RESTRICTED PAYMENTS" means (a) any direct or indirect Distribution,
dividend or other payment on account of any equity interest in, or shares of
capital stock or other securities of, Borrower or any of its Subsidiaries; and
(b) any management, consulting or other similar fees, or any interest thereon,
payable by Borrower or any of its Subsidiaries to any Affiliate of Borrower, or
to any other Person other than an unrelated third party.
"RIGHTS" means rights, remedies, powers, and privileges.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"SALE-AND-LEASEBACK" means a transaction or series of transactions pursuant
to which Borrower or any Subsidiary of Borrower shall sell or transfer to any
Person (other than Borrower or a Wholly-Owned Subsidiary) any Property, whether
now owned or hereafter acquired, which, at the time of such transaction has been
owned for more than 180 days by Borrower or such Subsidiary of Borrower, and, as
part of the same transaction or series of transactions, Borrower or such
Subsidiary of Borrower shall rent or lease as lessee, or similarly acquire the
right to possession or use of, such Property or one or more properties which it
intends to use for the same purpose or purposes as such Property for a term of
thirty-six months or longer.
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"SENIOR HOLDER" means each Person named on SCHEDULE 4.08-a, and each
permitted successor and assign.
"SENIOR NOTE PAPERS" means each Note Purchase Agreement, each Senior Note,
all guaranties executed by any Person guaranteeing payment of any portion of the
obligations of any Person under any Note Purchase Agreement or Senior Note; all
promissory notes evidencing any portion of the obligations under any Note
Purchase Agreement or Senior Note; assignments, security agreements, pledge
agreements, mortgages, deeds of trust, financing statements, collateral
assignments, and other documents and instruments granting an interest in any
collateral, or related to the perfection and/or the transfer thereof; and all
other documents, instruments, agreements or certificates executed or delivered
by Borrower or any other Person, as security for any Person's obligations
thereunder; as each such document shall be amended, extended, or restated.
"SENIOR NOTES" means each note issued pursuant to each Note Purchase
Agreement.
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined in Section
4001(a)(15) of ERISA, other than a Multiple Employer Plan of Borrower.
"SOLVENT" means, with respect to any Person, that on such date (a) the fair
value of the Property of such Person is greater than the total amount of
liabilities, including without limitation Contingent Liabilities of such Person,
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's Property would constitute
an unreasonably small capital.
"SPECIAL COUNSEL" means the law firm of Donohoe, Jameson & Carroll, P.C.,
Dallas, Texas, or such other individual or firm acting as special counsel to
Agent.
"SPECIFIED PERCENTAGE" means, as to any Lender, the percentage indicated
beside its name on the signature pages hereof, or as adjusted or specified in
any Assignment and Acceptance.
"SUBSIDIARY" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) 50% or more of:
(a) the outstanding capital stock having voting power to elect a
majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency),
(b) the interest in the capital or profits of such partnership or
joint venture, or
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(c) the beneficial interest of such trust or estate,
is at the time directly or indirectly owned by such Person, by such Person
and one or more of its Subsidiaries or by one or more of such Person's
Subsidiaries.
"SWAP EXPOSURE" means the maximum amount of credit exposure under an
Interest Hedge Agreement, as determined by Agent as at the date of
determination.
"TANGIBLE NET WORTH" means, as of any date, the total shareholder's equity
(including capital stock, additional paid-in capital and retained earnings after
deducting treasury stock) which would appear on a balance sheet of Borrower
prepared as of such date in accordance with GAAP, less the aggregate book value
of intangible assets shown on such balance sheet (PROVIDED, goodwill shall not
be used in any determination of Tangible Net Worth if goodwill is shown on the
balance sheet as a negative number, PROVIDED FURTHER that goodwill shown on the
balance sheet as a positive number shall be deducted in determining Tangible Net
Worth).
"TAXES" means all taxes, assessments, imposts, fees, or other charges at
any time imposed by any Laws or Tribunal.
"TOTAL LIABILITIES" means the amount of total liabilities of Borrower which
would be shown in accordance with GAAP on a balance sheet.
"TRANSFER" means, with respect to any Person, any transaction in which such
Person sells, conveys, transfers or leases (as lessor) any of its Property.
"TRIBUNAL" means any state, commonwealth, federal, foreign, territorial, or
other court or government body, subdivision, agency, department, commission,
board, bureau, or instrumentality of a governmental body.
"TYPE" refers to the distinction between Advances bearing interest at the
Base Rate and LIBOR Rate.
"UCC" means the Uniform Commercial Code as adopted in the State of Texas on
the Effective Date.
"UNITED STATES GOVERNMENTAL SECURITY" means any direct obligation of, or
obligation guaranteed by, the United States of America, or any agency controlled
or supervised by or acting as an instrumentality of the United States of America
pursuant to authority granted by the Congress of the United States of America,
so long as such obligation or guarantee shall have the benefit of the full faith
and credit of the United States of America which shall have been pledged
pursuant to authority granted by the Congress of the United States of America.
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"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Person 100% of all of the
equity interests (except directors' qualifying shares) and voting interests of
which are owned by (a) Borrower, (b) any Person 100% of all of the equity
interests (except directors' qualifying shares) and voting interests of which
are owned by Borrower, or (c) Borrower and any one or more Persons described in
CLAUSE (b).
"WITHDRAWAL LIABILITY" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
1.02. ACCOUNTING AND OTHER TERMS. All accounting terms used in this
Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP consistently applied on a consolidated basis for Borrower
and its Subsidiaries, unless otherwise expressly stated herein. References
herein to one gender shall be deemed to include all other genders. Except where
the context otherwise requires, (a) definitions imparting the singular shall
include the plural and vice versa and (b) all references to time are deemed to
refer to Dallas time.
1.03. COVENANT CALCULATIONS. For purposes of any calculations under
SECTIONS 5.01 through 5.09 and 5.14 which would include a period of
determination during which a Permitted Acquisition occurred, all amounts or
charges attributable to such Permitted Acquisition shall be included in such
calculations as if such Permitted Acquisition occurred on the first day of such
period.
ARTICLE II. AMOUNTS AND TERMS OF ADVANCES
2.01. THE ADVANCES. Each Lender severally agrees, on the terms and
subject to the conditions hereinafter set forth, to make Advances to Borrower on
any Business Day during the period from the Effective Date to the Maturity Date,
in an aggregate principal amount not to exceed at any time outstanding such
Lender's Specified Percentage of the Commitment. Subject to the terms and
conditions of this Agreement, Borrower may borrow, repay, and reborrow the
Advances; PROVIDED, HOWEVER, that immediately after giving effect to each
Advance pursuant to this SECTION 2.01, the sum of the aggregate principal amount
of the outstanding Advances and Reimbursement Obligations shall at no time
exceed the lesser of (a) the Commitment and (b) the Borrowing Base.
2.02. MAKING ADVANCES.
(a) Each Borrowing of Advances shall be made upon the written notice of
Borrower, received by Agent not later than (i) 10:00 a.m. two Business Days
prior to the date of the proposed Borrowing, in the case of LIBOR Advances; and
(ii) not later than 10:00 a.m. on the date of such Borrowing, in the case of
Base Advances. Each such notice of a Borrowing (a "BORROWING NOTICE") shall be
by telecopy or telephone, promptly confirmed by letter, in substantially the
form of EXHIBIT D specifying therein:
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(i) the date of such proposed Borrowing, which shall be a
Business Day;
(ii) the Type of Advances of which the Borrowing is to be
comprised;
(iii) the amount of such proposed Borrowing which shall (A) not
exceed the unused portion of the Commitment, (B) shall not, when added to
the sum of the aggregate principal amount of all outstanding Advances and
Reimbursement Obligations, exceed the Borrowing Base, (C) in the case of a
Borrowing of Base Advances, be in an amount of not less than $500,000 or an
integral multiple of $100,000 in excess thereof, and (D) in the case of a
Borrowing of LIBOR Advances, be in an amount of not less than $1,000,000 or
an integral multiple of $100,000 in excess thereof; and
(iv) if the Borrowing is to be comprised of LIBOR Advances, the
duration of the initial Interest Period applicable to such Advances.
If the Borrowing Notice fails to specify the duration of the initial
Interest Period for any Borrowing comprised of LIBOR Advances, such Interest
Period shall be one month. Agent shall promptly notify Lenders of each such
notice. Each Lender shall, before 1:00 p.m. on the date of each Advance
hereunder (other than a Refinancing Advance), make available to Agent, at its
office at NationsBank Plaza, 901 Main Street, Dallas, Texas 75202, such
Lender's Specified Percentage of the aggregate Advances to be made on that day
in immediately available funds.
(b) Unless any applicable condition specified in ARTICLE III has not been
satisfied, Agent will make the funds promptly available to Borrower (other than
with respect to a Refinancing Advance) by crediting the account number
1292833788 of Borrower on the books of Agent or such other account as shall have
been specified by Borrower.
(c) After giving effect to any Borrowing, (i) there shall not be more than
five different Interest Periods in effect, and (ii) the sum of the aggregate
principal amount of all outstanding Advances and Reimbursement Obligations shall
not exceed the lesser of (A) the Commitment and (B) the Borrowing Base.
(d) No Interest Period shall extend beyond the Maturity Date.
(e) Unless a Lender shall have notified Agent prior to the date of any
Advance that it will not make available its Specified Percentage of any Advance,
Agent may assume that such Lender has made the appropriate amount available in
accordance with SECTION 2.02(a), and Agent may, in reliance upon such
assumption, make available to Borrower a corresponding amount. If and to the
extent any Lender shall not have made such amount available to Agent, such
Lender and Borrower severally agree to repay to Agent immediately on demand such
corresponding amount together with interest thereon, from the date such amount
is made available to Borrower until the date such amount is repaid to Agent, at
(i) in the case of Borrower, the Base Rate, and (ii) in the case of such Lender,
the Federal Funds Rate.
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(f) The failure by any Lender to make available its Specified Percentage
of any Advance hereunder shall not relieve any other Lender of its obligation,
if any, to make available its Specified Percentage of any Advance. In no event,
however, shall Agent or any Lender be responsible for the failure of any other
Lender to make available any portion of any Advance.
(g) Borrower shall indemnify each Lender against any Consequential Loss
incurred by each Lender as a result of (i) any failure to fulfill, on or before
the date specified for the Advance, the conditions to the Advance set forth
herein or (ii) Borrower's requesting that an Advance not be made on the date
specified in the Borrowing Notice.
2.03. EVIDENCE OF INDEBTEDNESS.
(a) The Advances made by each Lender shall be evidenced by a Note in the
amount of such Lender's Specified Percentage of the Commitment in effect on the
Effective Date (as the same may be modified pursuant to SECTION 9.04).
(b) Absent manifest error, Agent's and each Lender's records shall be
conclusive as to amounts owed Agent and such Lender under the Notes and this
Agreement.
2.04. PREPAYMENTS.
(a) Borrower may, upon at least three Business Days prior written notice
to Agent stating the proposed date and aggregate principal amount of the
prepayment, prepay the outstanding principal amount of any Advances in whole or
in part, together with accrued interest to the date of such prepayment on the
principal amount prepaid without premium or penalty other than any Consequential
Loss; PROVIDED, HOWEVER, that in the case of a prepayment of a Base Advance, the
notice of prepayment may be given by telephone by 11:00 a.m. on the date of
prepayment. Each partial prepayment shall, in the case of LIBOR Advances, be in
an aggregate principal amount of not less than $1,000,000 or an integral
multiple of $100,000 in excess thereof, and in the case of Base Advances, be in
an aggregate principal amount of not less than $500,000 or an integral multiple
of $100,000 in excess thereof. If any notice of prepayment is given, the
principal amount stated therein, together with accrued interest on the amount
prepaid and the amount, if any, due under SECTION 2.11, shall be due and payable
on the date specified in such notice.
(b) If at any time the sum of the aggregate principal amount of all
outstanding Advances and Reimbursement Obligations exceeds the lesser of (i) the
Commitment and (ii) the Borrowing Base, Borrower shall immediately prepay
Advances then outstanding in the aggregate amount equal to such excess, together
with accrued interest to the date of such prepayment on the principal amount
prepaid without premium or penalty other than any Consequential Loss. Any
prepayment of Advances pursuant to this SECTION 2.04(b) shall be applied FIRST
to Base Advances, if any, then outstanding, and SECOND to LIBOR Advances with
the shortest remaining Interest Periods outstanding.
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(c) No prepayments of Advances made solely pursuant to this SECTION 2.04
shall cause the Commitment to be reduced.
2.05. REPAYMENT. Borrower shall repay to Agent for the Ratable account
of Lenders the outstanding principal amount of the Advances on the Maturity
Date. The principal amount of each LIBOR Advance is due and payable on the last
day of the applicable Interest Period, which principal payment may be made by
means of a Refinancing Advance (subject to the other provisions of this
Agreement). If on the date of a reduction of the Commitment pursuant to SECTION
2.10, the sum of the aggregate principal amount of all Advances and
Reimbursement Obligations outstanding on the date of such reduction exceeds the
Commitment as reduced, the outstanding principal of all Advances equal to such
excess shall be due and payable, which principal payment may not be made by
means of a Refinancing Advance. If pursuant to any Senior Note Paper Borrower
is required to prepay or repay any amount evidenced by a Senior Note (other than
a scheduled, mandatory prepayment or repayment), Borrower shall, on the same
date as the prepayment or repayment with respect to such Senior Note, pay to
Agent for the Ratable account of Lenders an amount equal to such prepayment or
repayment of such Senior Note, which principal payment may not be made by means
of a Refinancing Advance. Any repayment of Advances pursuant to this SECTION
2.05 shall be applied FIRST to Base Advances, if any, then outstanding, and
SECOND to LIBOR Advances with the shortest remaining Interest Periods
outstanding.
2.06. INTEREST. Subject to SECTIONS 2.07 and 9.09, Borrower shall pay
interest on the unpaid principal amount of each Advance from the date of such
Advance until such principal shall be paid in full, at the following rates per
annum:
(a) BASE ADVANCES. Base Advances shall bear interest at a rate per
annum equal to the lesser of (i) the Base Rate as in effect from time to
time and (ii) the Highest Lawful Rate. If the amount of interest payable
in respect of any interest computation period is reduced to the Highest
Lawful Rate pursuant to the immediately preceding sentence and the amount
of interest payable in respect of any subsequent interest computation
period would be less than the Maximum Amount, then the amount of interest
payable in respect of such subsequent interest computation period shall be
automatically increased to the Maximum Amount; PROVIDED that at no time
shall the aggregate amount by which interest paid has been increased
pursuant to this sentence exceed the aggregate amount by which interest has
been reduced pursuant to the immediately preceding sentence.
(b) LIBOR ADVANCES. LIBOR Advances shall bear interest at the rate
per annum equal to the LIBOR Rate applicable to such Advance, which at no
time shall exceed the Highest Lawful Rate.
(c) PAYMENT DATES. Accrued and unpaid interest on Base Advances
shall be paid quarterly in arrears on each Quarterly Date, on the date of
any prepayment or repayment of such Advance, and on the Maturity Date.
Accrued and unpaid interest in
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respect of each LIBOR Advance shall be paid on the last day of the
appropriate Interest Period and on the date of any prepayment or repayment
of such Avdance; PROVIDED, HOWEVER, that if any Interest Period for a
LIBOR Advance exceeds three months, interest shall also be paid on the
date which falls three months after the beginning of such Interest
Period.
2.07. DEFAULT INTEREST. During the continuation of any Event of
Default, Borrower shall pay, on demand, interest (after as well as before
judgment to the extent permitted by Law) on the principal amount of all Advances
outstanding and on all other Obligations due and unpaid hereunder for each
Advance equal to the lesser of the (a) the Highest Lawful Rate and (b) a rate
per annum which is determined by increasing the greatest applicable interest
rate for each Type of Advance (whether or not in effect) 4.00% per annum for the
principal amount of the Advances outstanding and at a rate per annum equal to
the greatest Base Rate (whether or not in effect) plus 4.00% for any other
Obligations due hereunder.
2.08. CONTINUATION AND CONVERSION ELECTIONS.
(a) Borrower may upon irrevocable written notice to Agent and subject to
the terms of this Agreement:
(i) elect to convert, on any Business Day, all or any portion of
outstanding Base Advances (in an aggregate amount not less than $500,000 or
an integral multiple of $100,000 in excess thereof) into LIBOR Advances; or
(ii) elect to convert at the end of any Interest Period therefor,
all or any portion of outstanding LIBOR Advances comprised in the same
Borrowing (in an aggregate amount not less than $500,000 or an integral
multiple of $100,000 in excess thereof) into Base Advances; or
(iii) elect to continue, at the end of any Interest Period
therefor, any LIBOR Advances;
PROVIDED, HOWEVER, that if the aggregate amount of outstanding LIBOR
Advances comprised in the same Borrowing shall have been reduced as a result of
any payment, prepayment or conversion of part thereof to an amount less than
$1,000,000, the LIBOR Advances comprised in such Borrowing shall automatically
convert into Base Advances at the end of each respective Interest Period.
(b) Borrower shall deliver a notice of conversion or continuation (a
"CONVERSION OR CONTINUATION NOTICE"), in substantially the form of EXHIBIT E, to
Agent not later than 10:00 a.m. (i) three Business Days prior to the proposed
date of conversion or continuation, if the Advances or any portion thereof are
to be converted into or continued as LIBOR Advances; and (ii) not later
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than 10:00 a.m. on the Business Day of the proposed conversion, if the
Advances or any portion thereof are to be converted into Base Advances.
Each such Conversion or Continuation Notice shall be by telecopy or
telephone, promptly confirmed by letter, specifying therein:
(i) the proposed date of conversion or continuation;
(ii) the aggregate amount of Advances to be converted or
continued;
(iii) the nature of the proposed conversion or continuation; and
(iv) the duration of the applicable Interest Period.
(c) If, upon the expiration of any Interest Period applicable to LIBOR
Advances, Borrower shall have failed to select a new Interest Period to be
applicable to such LIBOR Advances or if an Event of Default shall then have
occurred and be continuing, Borrower shall be deemed to have elected to convert
such LIBOR Advances into Base Advances effective as of the expiration date of
such current Interest Period.
(d) Notwithstanding any other provision contained in this Agreement, after
giving effect to any conversion or continuation of any Advances, there shall not
be outstanding Advances with more than five different Interest Periods and no
Interest Period shall extend beyond the Maturity Date.
2.09. FEES.
(a) COMMITMENT FEE. Subject to SECTION 9.09, Borrower shall pay to Agent
for the Ratable account of Lenders a commitment fee (determined for the period
ending on a Quarterly Date or the Maturity Date, as appropriate, and beginning
on the Effective Date (with respect to the initial calculation period) or the
preceding Quarterly Date) on the average daily amount of the difference between
(A) the Commitment and (B) the sum of all outstanding Advances and Reimbursement
Obligations, at the applicable rate per annum set forth in the table in the
definition of Applicable Margin, payable in arrears on each Quarterly Date and
on the Maturity Date, commencing with the first Quarterly Date after the
Effective Date.
(b) L/C ISSUANCE FEE. Subject to SECTION 9.09, Borrower shall pay to
Agent for the sole account of Issuing Bank a fee at the rate of .125% of the
undrawn face amount of each Letter of Credit, payable in advance on the date of
issuance of such Letter of Credit.
(c) L/C COMMISSION FEE. Subject to SECTION 9.09, Borrower shall pay to
Agent for the Ratable account of Lenders a fee on the average daily undrawn
amount of all Letters of Credit, at the rate per annum equal to then-current
Applicable Margin for LIBOR Advances, payable in
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arrears on each Quarterly Date and on the Maturity Date, commencing with
the first Quarterly Date after the Effective Date.
(d) L/C ADMINISTRATION FEES. Subject to SECTION 9.09, Borrower shall pay
to Agent for the sole account of Issuing Bank the standard charges assessed by
Issuing Bank in connection with the administration (including any drawings) and
amendment of Letters of Credit.
2.10. REDUCTION OF COMMITMENT.
(a) The Commitment terminates on the Maturity Date.
(b) Borrower may from time to time, upon notice to Agent not later than
1:00 p.m., five Business Days in advance, terminate in whole or reduce in part
the Commitment; PROVIDED, HOWEVER, that Borrower shall pay the accrued interest
and the Commitment Fee on the amount of such reduction and all amounts due under
SECTION 2.11, and any partial reduction shall be in an aggregate amount which is
an integral multiple of $5,000,000.
(c) To the extent the sum of the aggregate principal amount of outstanding
Advances and Reimbursement Obligations exceeds the Commitment after any
reduction thereof, Borrower shall repay, on the date of such reduction, the
amount specified in SECTION 2.04(b). The Commitment shall be reduced by the
amount of any repayment required by the fourth sentence of SECTION 2.05. Once
reduced or terminated, the Commitment may not be increased or reinstated.
2.11. FUNDING LOSSES. Borrower may prepay the outstanding principal
balance of any Advance, in full at any time or in part from time to time,
PROVIDED, that as conditions precedent to Borrower's right to make, and any
Lender's obligation to accept, any such prepayment: (a) Agent shall have
actually received from Borrower at least five Business Days' prior written
notice of Borrower's intent to prepay, of the amount of principal which will be
prepaid and of the date on which the prepayment will be made; (b) each
prepayment of principal shall be in the amount of $5,000,000 or a larger
integral multiple of $100,000 (unless the prepayment retires the outstanding
balance of outstanding Advances in full); and (c) each such prepayment shall be
in the amount of 100% of the principal amount to be prepaid, plus accrued unpaid
interest thereon to the date of prepayment, plus any other sums which have
become due to Agent and Lenders under the Loan Papers on or before the
prepayment date but have not been paid, and (subject to SECTION 9.09) any
Consequential Loss. A certificate of each Lender setting forth the basis for
the determination of the amount of the Consequential Loss shall be delivered to
Borrower and shall be conclusive in the absence of manifest error.
Borrower agrees that each Lender is not obligated to actually reinvest the
amount prepaid in any specific obligation as a condition to receiving any
Consequential Loss, or otherwise.
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2.12. COMPUTATIONS AND MANNER OF PAYMENTS.
(a) Borrower shall make each payment hereunder and under the other Loan
Papers not later than 1:00 p.m. on the day when due in same day funds to Agent,
for the Ratable account of Lenders unless otherwise specifically provided
herein, at Agent's office at NationsBank Plaza, 901 Main Street, Dallas, Texas
75202, for further credit to the account of Cameron Ashley Building Products,
Inc. No later than the end of each day when each payment hereunder is made,
Borrower shall notify Mr. Tom Blake, (214) 508-0941, or such other Person as
Agent may from time to time specify.
(b) Unless Agent shall have received notice from Borrower prior to the
date on which any payment is due hereunder that Borrower will not make payment
in full, Agent may assume that such payment is so made on such date and may, in
reliance upon such assumption, make distributions to Lenders. If and to the
extent Borrower shall not have made such payment in full, each Lender shall
repay to Agent forthwith on demand the applicable amount distributed, together
with interest thereon at the Federal Funds Rate, from the date of distribution
until the date of repayment. Borrower hereby authorizes each Lender, if and to
the extent payment is not made when due hereunder, to charge the amount so due
against any account of Borrower with such Lender.
(c) Subject to SECTION 9.09, interest on LIBOR Advances, Base Advances,
the Commitment Fee, each other fee, and other amounts due under the Loan Papers
shall be calculated on the basis of actual days elapsed but computed as if each
year consisted of 360 days. Such computations shall be made including the first
day but excluding the last day occurring in the period for which such interest,
payment, Commitment Fee, or other fee is payable. Each determination by Agent
or a Lender of an interest rate, fee or commission hereunder shall be conclusive
and binding for all purposes, absent manifest error. All payments under the
Loan Papers shall be made in United States dollars, and without setoff,
counterclaim, or other defense.
(d) Whenever any payment to be made hereunder or under any other Loan
Papers shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall be included in the computation of interest or fees, if applicable;
PROVIDED, HOWEVER, if such extension would cause payment of interest on or
principal of LIBOR Advances to be made in the next following calendar month,
such payment shall be made on the next preceding Business Day.
(e) Reference to any particular index or reference rate for determining
any applicable interest rate under this Agreement is for purposes of calculating
the interest due and is not intended as and shall not be construed as requiring
any Lender to actually obtain funds for any Advance at any particular index or
reference rate.
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2.13. YIELD PROTECTION; CHANGED CIRCUMSTANCES.
(a) If any Lender determines that either (i) the adoption, after the date
hereof, of any Applicable Law, rule, regulation or guideline regarding capital
adequacy and applicable to commercial banks or financial institutions generally
or any change therein, or any change, after the date hereof, in the
interpretation or administration thereof by any Tribunal, central bank or
comparable agency charged with the interpretation or administration thereof, or
(ii) compliance by any Lender (or Lending Office of any Lender) with any request
or directive made after the date hereof applicable to commercial banks or
financial institutions generally regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency has the effect of reducing the rate of return on such Lender's capital as
a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy [but
excluding consequences of such Lender's negligence or intentional disregard of
law or regulation]) by an amount reasonably deemed by such Lender to be
material, then from time to time, within fifteen days after demand by such
Lender, Borrower shall pay to such Lender such additional amount or amounts as
will adequately compensate such Lender for such reduction. Each Lender will
notify Borrower of any event occurring after the date of this Agreement which
will entitle such Lender to compensation pursuant to this SECTION 2.13(a) as
promptly as practicable after such Lender obtains actual knowledge of such
event; PROVIDED, no Lender shall be liable for its failure or the failure of any
other Lender to provide such notification. A certificate of such Lender
claiming compensation under this SECTION 2.13(a), setting forth in reasonable
detail the calculation of the additional amount or amounts to be paid to it
hereunder and certifying that such claim is consistent with such Lender's
treatment of similar customers having similar provisions generally in their
agreements with such Lender shall be conclusive in the absence of manifest
error. Each Lender shall use reasonable efforts to mitigate the effect upon
Borrower of any such increased costs payable to such Lender under this SECTION
2.13(a).
(b) If, after the date hereof, any Tribunal, central bank or other
comparable authority, at any time imposes, modifies or deems applicable any
reserve (including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit or similar requirement against
assets of, deposits with or for the amount of, or credit extended by, any
Lender, or imposes on any Lender any other condition affecting a LIBOR Advance,
the Notes, or its obligation to make a LIBOR Advance; and the result of any of
the foregoing is to increase the cost to such Lender of making or maintaining
its LIBOR Advances, or to reduce the amount of any sum received or receivable by
such Lender under this Agreement or under the Notes by an amount deemed by such
Lender, to be material, THEN, within five days after demand by such Lender,
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduction. Each Lender will
(i) notify Borrower of any event occurring after the date of this Agreement that
entitles such Lender to compensation pursuant to this SECTION 2.13(b), as
promptly as practicable after such Lender obtains actual knowledge of the event;
PROVIDED, no Lender shall be liable for its failure or the failure of any other
Lender to
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provide such notification and (ii) use good faith and reasonable efforts to
designate a different Lending Office for LIBOR Advances of such Lender if the
designation will avoid the need for, or reduce the amount of, the
compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender. A certificate of such Lender claiming
compensation under this SECTION 2.13(b), setting forth in reasonable detail
the computation of the additional amount or amounts to be paid to it
hereunder and certifying that such claim is consistent with such Lender's
treatment of similar customers having similar provisions generally in their
agreements with such Lender shall be conclusive in the absence of manifest
error. If such Lender demands compensation under this SECTION 2.13(b),
Borrower may at any time, on at least five Business Days' prior notice to
such Lender (i) repay in full the then outstanding principal amount of LIBOR
Advances, of such Lender, together with accrued interest thereon, or (ii)
convert the LIBOR Advances to Base Advances in accordance with the provisions
of this Agreement; PROVIDED, HOWEVER, that Borrower shall be liable for the
Consequential Loss arising pursuant to those actions.
(c) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation or administration of
any Law shall make it unlawful, or any central bank or other Tribunal shall
assert that it is unlawful, for a Lender to perform its obligations hereunder to
make LIBOR Advances or to continue to fund or maintain LIBOR Advances hereunder,
then, on notice thereof and demand therefor by such Lender to Borrower, (i) each
LIBOR Advance will automatically, upon such demand, convert into a Base Advance
and (ii) the obligation of such Lender to make, or to convert Advances into,
LIBOR Advances shall be suspended until such Lender notifies Agent and Borrower
that such Lender has determined that the circumstances causing such suspension
no longer exist.
(d) Upon the occurrence and during the continuance of any Default or Event
of Default, (i) each LIBOR Advance will automatically, on the last day of the
then existing Interest Period therefor, convert into a Base Advance and (ii) the
obligation of each Lender to make, or to convert Advances into, LIBOR Advances
shall be suspended.
(e) Failure on the part of any Lender to demand compensation for any
increased costs, increased capital or reduction in amounts received or
receivable or reduction in return on capital pursuant to this SECTION 2.13 with
respect to any period shall not constitute a waiver of any Lender's right to
demand compensation with respect to such period or any other period, subject,
however, to the limitations set forth in this SECTION 2.13.
(f) The obligations of Borrower under this SECTION 2.13 shall survive any
termination of this Agreement.
(g) Determinations by Lenders for purposes of this SECTION 2.13 shall be
conclusive, absent manifest error. Any certificate delivered to Borrower by a
Lender pursuant to this SECTION 2.13 shall include in reasonable detail the
basis for such Lender's demand for additional compensation and a certification
that the claim for compensation is consistent with such Lender's
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treatment of similar customers having similar provisions generally in their
agreements with such Lender.
(h) Notwithstanding any other provision of this Agreement, no Lender not
organized under the Laws of the United States or any State shall be entitled to
compensation pursuant to this SECTION 2.13 with respect to any amount which
would otherwise be due under this SECTION 2.13 but which is the result of an act
of a Tribunal of the county in which such Lender is organized.
2.14. USE OF PROCEEDS. The proceeds of the Advances shall be available
(and Borrower shall use such proceeds) solely to provide working capital to
Borrower, for general corporate purposes and for Permitted Acquisitions.
2.15. LETTERS OF CREDIT.
(a) THE LETTER OF CREDIT FACILITY. Borrower may request Issuing Bank, on
the terms and conditions hereinafter set forth, to issue, and Issuing Bank
shall, if so requested, issue, letters of credit (the "LETTERS OF CREDIT") for
the account of Borrower from time to time on any Business Day from the Effective
Date until the Maturity Date in an aggregate maximum amount (assuming compliance
with all conditions to drawing) not to exceed at any time outstanding the lesser
of (the "LETTER OF CREDIT FACILITY") (i) $5,000,000, and (ii) the Commitment
MINUS the sum of (A) the aggregate principal amount of Advances then outstanding
and (B) all Reimbursement Obligations. The Letter of Credit Facility is a
subfacility of the Commitment and is not an amount in addition to the
Commitment. No Letter of Credit shall have an expiry (including all rights of
renewal) later than the earlier of eighteen months from the date of issuance of
the Letter of Credit and the Maturity Date. Immediately upon the issuance of
each Letter of Credit, Issuing Bank shall be deemed to have sold and transferred
to each Lender, and each Lender shall be deemed to have purchased and received
from Issuing Bank, in each case irrevocably and without any further action by
any party, an undivided interest and participation in such Letter of Credit,
each drawing thereunder and the obligations of Borrower under this Agreement in
respect thereof in an amount equal to the product of such Lender's Specified
Percentage of the Commitment times the maximum amount available to be drawn
under such Letter of Credit (assuming compliance with all conditions to
drawing). Within the limits of the Letter of Credit Facility, and subject to
the limits referred to above, Borrower may request the issuance of Letters of
Credit under this SECTION 2.15(a), repay any Advances resulting from drawings
thereunder pursuant to SECTION 2.15(c), and request the issuance of additional
Letters of Credit under this SECTION 2.15(a).
(b) REQUEST FOR ISSUANCE. Each Letter of Credit shall be issued upon
notice, given not later than 11:00 a.m. on the third Business Day prior to
the date of the proposed issuance of such Letter of Credit, by Borrower to
Issuing Bank, which shall give to Agent and each Lender prompt notice thereof
by telex, telecopier, or cable. Each Letter of Credit shall be issued upon
notice given in accordance with the terms of any separate agreement between
Borrower and Issuing Bank in form and substance reasonably satisfactory to
Borrower and Issuing Bank providing for the issuance of Letters of Credit
pursuant to this Agreement and containing terms and conditions not
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inconsistent with this Agreement (a "LETTER OF CREDIT AGREEMENT"); PROVIDED,
that if any such terms and conditions are inconsistent with this Agreement,
this Agreement shall control. Each such notice of issuance of a Letter of
Credit (a "NOTICE OF ISSUANCE") shall be by telex, telecopier, or cable,
specifying therein (i) the requested date of such issuance (which shall be a
Business Day), (ii) the maximum amount of such Letter of Credit, (iii) the
expiry of such Letter of Credit, (iv) the name and address of the beneficiary
of such Letter of Credit, (v) the form of such Letter of Credit, and (vi)
such other information as shall be required pursuant to the relevant Letter
of Credit Agreement. If the requested terms of such Letter of Credit are
acceptable to Issuing Bank in its reasonable discretion, Issuing Bank will,
upon fulfillment of the applicable conditions set forth in ARTICLE III, make
such Letter of Credit available to Borrower at its office referred to in
SECTION 9.02 or as otherwise agreed with Borrower in connection with such
issuance.
(c) DRAWING AND REIMBURSEMENT. The payment by Issuing Bank of a draft
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by Issuing Bank of an Advance, which shall bear interest at
the applicable Base Rate, in the amount of such draft (but without any
requirement for compliance with the conditions set forth in ARTICLE III). If a
drawing under any Letter of Credit is not reimbursed by Borrower by 11:00 a.m.
on the first Business Day after such drawing, Issuing Bank shall promptly notify
Agent and each other Lender. Each such Lender shall, on the first Business Day
following such notification, make an Advance, which shall bear interest at the
applicable Base Rate, and shall be used to repay the applicable portion of
Issuing Bank's Advance with respect to such Letter of Credit, in an amount equal
to the amount of its participation in such drawing for application to reimburse
Issuing Bank (but without any requirement for compliance with the applicable
conditions set forth in ARTICLE III) and shall make available to Agent for the
account of Issuing Bank, by deposit at Agent's office, in same day funds, the
amount of such Advance. In the event that any Lender fails to make available to
Agent for the account of Issuing Bank the amount of such Advance, Issuing Bank
shall be entitled to recover such amount on demand from such Lender together
with interest thereon at a rate per annum equal to the lesser of (i) the Highest
Lawful Rate and (ii) the Federal Funds Rate plus 0.50%.
(d) INCREASED COSTS. If any change in any Law or in the interpretation
thereof by any Tribunal charged with the administration thereof shall either
(i) impose, modify, or deem applicable any reserve, special deposit or similar
requirement against letters of credit or guarantees issued by, or assets held
by, or deposits in or for the account of, Issuing Bank or any Lender or
(ii) impose on Issuing Bank or any Lender any other condition regarding this
Agreement or such Lender or any Letter of Credit, and the result of any event
referred to in the preceding CLAUSE (i) or (ii) shall be to increase the cost to
Issuing Bank of issuing or maintaining any Letter of Credit or to any Lender of
purchasing any participation therein or making any Advance pursuant to
SECTION 2.15(c), then, upon demand by Issuing Bank or such Lender, Borrower
shall, subject to SECTION 9.09, pay to Issuing Bank or such Lender, from time to
time as specified by Issuing Bank or such Lender, additional amounts that shall
be sufficient to compensate Issuing Bank or such Lender for such increased cost
("ADDITIONAL LETTER OF CREDIT COSTS"). A certificate as to the amount of such
Additional Letter of Credit Costs, submitted to Borrower by Issuing Bank or such
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Lender, shall include in reasonable detail the basis for the demand for
additional compensation and shall be conclusive and binding for all purposes,
absent manifest error. Notwithstanding any other provision of this Agreement,
no Lender not organized under the Laws of the United States or any State shall
be entitled to compensation pursuant to this SECTION 2.15(d) with respect to any
amount which would otherwise be due under this SECTION 2.15(d) but which is the
result of an act of a Tribunal of the country in which such Lender is organized.
(e) OBLIGATIONS ABSOLUTE. The obligations of Borrower under this
Agreement with respect to any Letter of Credit, any Letter of Credit Agreement,
and any other agreement or instrument relating to any Letter of Credit or any
Advance pursuant to SECTION 2.15(c) shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement, such
Letter of Credit Agreement, and such other agreement or instrument under all
circumstances, including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of this Agreement,
any other Loan Paper, any Letter of Credit Agreement, any Letter of Credit,
or any other agreement or instrument relating thereto (collectively, the
"L/C RELATED DOCUMENTS");
(ii) any change in the time, manner, or place of payment of, or
in any other term of, all or any of the Obligations of Borrower in respect
of the Letters of Credit or any Advance pursuant to SECTION 2.15(c) or any
other amendment or waiver of or any consent to departure from all or any of
the L/C Related Documents;
(iii) the existence of any claim, set-off, defense, or other
right that Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), Issuing Bank, any Lender
or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C Related Documents or any
unrelated transaction;
(iv) any statement or any other document presented under a Letter
of Credit proving to be forged, fraudulent, invalid, or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(v) payment by Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not comply with the terms
of the Letter of Credit, except for any payment made upon Issuing Bank's
gross negligence or willful misconduct;
(vi) any exchange, release, or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from any
guarantee, for all or any of the Obligations of Borrower or any other
Obligor in respect of the Letters of Credit or any Advance pursuant to
SECTION 2.15(c); or
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(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including, without limitation, any
other circumstance that might otherwise constitute a defense available to,
or a discharge of, Borrower or any other Obligor, other than Issuing Bank's
gross negligence or willful misconduct.
(f) L/C CASH COLLATERAL ACCOUNT.
(i) Upon the occurrence of an Event of Default and written
demand by Agent or Issuing Bank, Borrower will promptly pay to Agent in
immediately available funds an amount equal to 100% of the maximum amount
then available to be drawn under the Letters of Credit then outstanding.
Any amounts so received by Agent shall be deposited by Agent in a deposit
account maintained by Issuing Bank (the "L/C CASH COLLATERAL ACCOUNT").
(ii) As security for the payment of all Reimbursement Obligations
and for any other Obligations, Borrower hereby grants, conveys, assigns,
pledges, sets over, and transfers to Agent (for the benefit of Issuing Bank
and Lenders), and creates in Agent's favor (for the benefit of Issuing Bank
and Lenders) a security interest and pledge in, all money, instruments, and
securities at any time held in or acquired in connection with the L/C Cash
Collateral Account, together with all proceeds thereof. The L/C Cash
Collateral Account shall be under the sole dominion and control of Agent
and Borrower shall have no right to withdraw or to cause Agent to withdraw
any funds deposited in the L/C Cash Collateral Account. At any time and
from time to time, upon Agent's request, Borrower promptly shall execute
and deliver any and all such further instruments and documents, including
UCC financing statements, as may be necessary, appropriate or desirable in
Agent's judgment to obtain the full benefits (including perfection and
priority) of the security interest created or intended to be created by
this SECTION 2.15(f)(ii) and of the rights and powers herein granted.
Borrower shall not create or suffer to exist any Lien on any amounts or
investments held in the L/C Cash Collateral Account other than the Lien
granted under this SECTION 2.15(f)(ii).
(iii) Agent shall (A) apply any funds in the L/C Cash
Collateral Account on account of Reimbursement Obligations when the same
become due and payable if and to the extent that Borrower shall fail
directly to pay such Reimbursement Obligations and (B) after the Maturity
Date, apply any proceeds remaining in the L/C Cash Collateral Account FIRST
to pay any unpaid Obligations then outstanding hereunder and THEN to refund
any remaining amount to Borrower.
(iv) Borrower, no more than once in any calendar month, may
direct Agent to invest the funds held in the L/C Cash Collateral Account
(so long as the aggregate amount of such funds exceeds any relevant minimum
investment requirement) in (A) direct obligations of the United States or
any agency thereof, or obligations guaranteed by the United States or any
agency thereof and (B) one or more other types of investments
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permitted by Determining Lenders, in each case with such maturities as
Borrower, with the consent of Determining Lenders, may specify, pending
application of such funds on account of Reimbursement Obligations or on
account of other Obligations, as the case may be. In the absence of any
such direction from Borrower, Agent shall invest the funds held in the L/C
Cash Collateral Account (so long as the aggregate amount of such funds
exceeds any relevant minimum investment requirement) in one or more types
of investments with the consent of Determining Lenders with such
maturities as Agent, with the consent of Determining Lenders, may specify,
pending application of such funds on account of Reimbursement Obligations
or on account of other Obligations, as the case may be. All such
investments shall be made in Agent's name for the account of Issuing Bank
and Lenders. BORROWER RECOGNIZES THAT ANY LOSSES OR TAXES WITH RESPECT TO
SUCH INVESTMENTS SHALL BE BORNE SOLELY BY BORROWER, AND BORROWER AGREES TO
HOLD AGENT, ISSUING BANK, AND LENDERS HARMLESS FROM ANY AND ALL SUCH
LOSSES AND TAXES. Agent may liquidate any investment held in the L/C Cash
Collateral Account in order to apply the proceeds of such investment on
account of the Reimbursement Obligations (or on account of any other
Obligations then due and payable, as the case may be) in accordance with
SECTION 2.15(f)(iii) without regard to whether such investment has matured
and without liability for any penalty or other fee incurred (with respect
to which Borrower hereby agrees to reimburse Agent) as a result of such
application.
(v) Borrower shall pay to Agent the fees customarily charged by
Issuing Bank with respect to the maintenance of accounts similar to the L/C
Cash Collateral Account.
(g) NO LIABILITY OF ISSUING BANK. Borrower assumes all risks of the acts
or omissions of any beneficiary or transferee of any Letter of Credit with
respect to its use of such Letter of Credit. None of Agent, Issuing Bank, or
any Lender, or any of their respective officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by Issuing Bank against
presentation of documents that do not comply with the terms of a Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit, except for any payment made upon Issuing
Bank's gross negligence or willful misconduct; or (d) any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit,
except that Borrower shall have a claim against Issuing Bank, and Issuing Bank
shall be liable to Borrower, to the extent of any direct, but not consequential,
damages suffered by Borrower that Borrower proves were caused by (i) Issuing
Bank's willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) Issuing Bank's willful failure to make lawful payment under a
Letter of Credit after the presentation to it of a draft and certificates
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not
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in limitation of the foregoing, Issuing Bank may accept documents that appear
on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
ARTICLE III. CONDITIONS PRECEDENT
3.01. CONDITIONS PRECEDENT TO EFFECTIVENESS. The effectiveness of this
Agreement is subject to fulfillment of the following conditions precedent:
(a) The making of the Commitment and the initial Advance shall not
contravene any Law applicable to Agent, Issuing Bank, or any Lender.
(b) No Material Adverse Change, as determined by Agent, shall have
occurred and be continuing since January 31, 1996.
(c) Borrower shall have delivered to Agent a certificate, dated the
Effective Date, executed by a duly authorized officer, certifying that (i) no
Default or Event of Default has occurred and is continuing, (ii) the
representations and warranties set forth in ARTICLE IV are true and correct, and
(iii) each Obligor has complied with all agreements and conditions to be
complied with by it under the Loan Papers by such date.
(d) Borrower shall have delivered to Agent:
(i) an Officer's Certificate executed by authorized officers of
Borrower, dated the Effective Date, certifying (A) that an original of
Borrower's certificate of incorporation certified by the Secretary of State
of Georgia and a copy of its bylaws attached thereto are true and complete,
and in full force and effect, without amendment except as shown, (B) that a
copy of Borrower's resolutions attached thereto authorizing execution,
delivery, and performance of this Agreement and all other Loan Papers is
true and complete, and that such resolutions are in full force and effect,
were duly adopted, have not been amended, modified, or revoked, and
constitute all resolutions of Borrower adopted with respect to this loan
transaction, and (C) to the incumbency, name, and signature of each officer
authorized to sign this Agreement and all other Loan Papers on Borrower's
behalf.
(ii) an Officer's Certificate executed by authorized officers of
each Obligor (other than Borrower), dated the Effective Date, certifying
(A) that an original of such Obligor's certificate of incorporation
certified by the Secretary of State of the jurisdiction of incorporation
and a copy of its bylaws attached thereto are true and complete, and in
full force and effect, without amendment except as shown, (B) that a copy
of such Obligor's resolutions attached thereto authorizing execution,
delivery, and performance of all Loan Papers is true and complete, and that
such resolutions are in full
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force and effect, were duly adopted, have not been amended, modified,
or revoked, and constitute all resolutions of such Obligor adopted with
respect to this loan transaction, and (C) to the incumbency, name, and
signature of each officer authorized to sign all Loan Papers on such
Obligor's behalf.
Agent, Issuing Bank, and each Lender may conclusively rely on the
certificates delivered pursuant to this SECTION 3.01 until it receives notice
in writing to the contrary.
(e) Agent shall have received, in form and substance satisfactory to it,
(i) certificates from the Secretary of State and other appropriate officials
of the state of organization, all issued within ten days of the Effective
Date, certifying that each Obligor which is a corporation or partnership is
duly organized, validly existing, and in good standing in said state as of
the respective dates thereof, and (ii) with respect to each other
jurisdiction in which the nature of such Obligor's business is such that
qualification to do business in necessary or advisable, certificates of
appropriate authorities in each such jurisdiction, all issued within ten days
of the Effective Date, to the effect that such Obligor is in good standing
and duly qualified to transact business in each such jurisdiction.
(f) Agent shall have received (in sufficient counterparts as determined by
Agent):
(i) opinions of counsel to Borrower and each other Obligor,
dated the Effective Date, in the form of EXHIBIT G, together with duly
executed instruction letters in the form of EXHIBIT H;
(ii) duly executed Solvency Certificates for Borrower and each
other Obligor, in the form of EXHIBIT I;
(iii) the duly executed Guaranty of each Guarantor;
(iv) a Borrowing Notice, a Compliance Certificate (with
calculations for the 365-day period ended on the Effective Date), and a
Borrowing Base Certificate dated as of the Effective Date;
(v) copies of insurance binders or certificates covering the
Inventory;
(vi) copies of each executed Note Purchase Agreement, each Senior
Note and each other Senior Note Paper, each in form and substance
acceptable to Determining Lenders;
(vii) copies of all documentation relating to Debt owed by
Borrower and each other Obligor of Borrower to any Person, including
without limitation, all credit agreements, notes, collateral documents,
bonds, instruments and other documentation;
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(viii) copies of the projected financials of Borrower for the
following year, certified by an authorized officer to be prepared in good
faith and to be an accurate representation of management's projected
financial condition of Borrower;
(ix) copies of this Agreement and all Loan Papers, pursuant to
terms and conditions required by Agent, all in form and substance
satisfactory to Agent and completed and executed by each Obligor and any
other Person, as appropriate;
(x) a description in detail satisfactory to Agent describing all
Litigation (excluding Litigation all expenses and potentially liability
with respect to which is entirely covered by insurance) related to each
Obligor which if adversely determined could reasonably be expected to
result in a Material Adverse Change; and
(xi) financial statements for Borrower, including the most recent
audited financial statements of Borrower and each subsequent unaudited
interim financial statement of each Obligor.
(g) Payment of all fees (including reasonable attorneys' fees incurred by
Agent in the preparation and negotiation of this Agreement, the Loan Papers
and this loan facility).
(h) Borrower shall have paid all outstanding Obligations (as that term is
defined in the Existing Agreement).
(i) Each Obligor shall have performed each of its obligations pursuant to
the Loan Papers.
3.02. CONDITIONS PRECEDENT TO ALL ADVANCES AND LETTERS OF CREDIT. The
obligation of each Lender to make each Advance (including the Initial
Advance) and of Issuing Bank to issue each Letter of Credit shall be subject
to the further conditions precedent that on the date of such Advance or the
issuance of such Letter of Credit (a) the following statements shall be true
(and the delivery of each Borrowing Notice under SECTION 2.02(a) and each
Conversion or Continuation Notice under SECTION 2.08(b), or the failure to
deliver a Conversion or Continuation Notice under SECTION 2.08(b), and each
Notice of Issuance under SECTION 2.15(b) shall constitute a representation
that on the disbursement or issuance date (except as to representations and
warranties which (i) refer to a specific date, (ii) have been modified by
transactions permitted pursuant to this Agreement or any other Loan Paper, or
(iii) have been specifically waived in writing by Agent) they are true):
(i) The representations and warranties contained in ARTICLE IV
are true and correct on such date, as though made on and as of such date,
(ii) No event has occurred and is continuing, or would result
from such Advance or the issuance of such Letter of Credit (including the
intended application of the
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proceeds of such Advance or such Letter of Credit, that does or could
constitute a Default or Event of Default, and
(iii) Each Subsidiary of Borrower shall have executed and
delivered to Agent a Guaranty;
and (b) which respect to any Lender which has not previously made an Advance and
any participant which has not previously advanced funds to a Lender for an
Advance, Agent shall have received, in form and substance acceptable to it, such
other approvals, documents, certificates, opinions, and information as it may
deem necessary or appropriate for such Lender or participant.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent, Issuing Bank, and each Lender
that the following are true and correct:
4.01. ORGANIZATION AND QUALIFICATION. Borrower is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Georgia. Borrower is qualified to do business in all jurisdictions where the
nature of its business or Properties require such qualification, except where
the failure to so qualify would not result in a Material Adverse Change. Set
forth on SCHEDULE 4.01-a is a complete and accurate listing of Borrower, showing
(a) its street and mailing address, which is its principal place of business and
executive office, (b) the classes of equity interests capital stock authorized
and outstanding, and (c) all outstanding options, rights, rights of conversion
or purchase, rights of first refusal, and similar rights relating to the equity
interests of Borrower. Ashley is a corporation duly organized, validly
existing, and in good standing under the Laws of the State of Georgia. Cameron
is a corporation duly organized, validly existing, and in good standing under
the Laws of the State of Georgia. CABP is a corporation duly organized, validly
existing, and in good standing under the Laws of the State of Arizona. Each of
Ashley, Cameron and CABP is qualified to do business in all jurisdictions where
the nature of its business or Properties require such qualification, except
where the failure to so qualify would not result in a Material Adverse Change.
Set forth on SCHEDULE 4.01-b is a complete and accurate listing, with respect to
Ashley, Cameron and CABP, showing (a) its street and mailing address, which is
its principal place of business and executive office, (b) the classes of capital
stock and the numbers of shares authorized and outstanding, (c) each legal and
beneficial owner of outstanding capital stock on the date hereof, indicating the
ownership percentage, and (d) all outstanding options, rights, rights of
conversion or purchase, rights of first refusal, and similar rights relating to
the equity interests of such Obligor. Each of Borrower and each other Obligor
has all requisite corporate power and authority to own, operate and encumber its
Property and assets and to conduct its business as presently conducted and as
proposed to be conducted in connection with and following the consummation of
the transactions contemplated by this Agreement and the other Loan Papers. All
of the outstanding common stock of each Obligor is validly issued, fully paid,
and nonassessable.
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4.02. DUE AUTHORIZATION; VALIDITY. The Board of Directors of each
Obligor have duly authorized the execution, delivery, and performance of the
Loan Papers to be executed by such Obligor. No consent of the stockholders of
any Obligor (except any consent already obtained) is required as a prerequisite
to the validity and enforceability of any Loan Papers or any other document
contemplated hereby. Each Obligor has full legal right, power, and authority to
execute, deliver, and perform under the Loan Papers to be executed and delivered
by it. The Loan Papers constitute the legal, valid, and binding obligations of
each Obligor (as to each Loan Paper to which it is a party) enforceable in
accordance with their terms (subject as to enforcement of remedies to any
applicable Debtor Relief Laws).
4.03. CONFLICTING AGREEMENTS AND OTHER MATTERS. The execution or
delivery of any Loan Paper, and performance thereunder, does not conflict with,
or result in a breach of the terms, conditions, or provisions of, or constitute
a default under, or result in any violation of, or result in the creation of any
Lien upon any Properties of any Obligor under, or require any consent (other
than consents already obtained), approval, or other action by, notice to, or
filing with any Tribunal or Person pursuant to, the corporate governance
documents of such Obligor, any award of any arbitrator, or any agreement,
instrument, or Law to which such Obligor or any of its Properties is subject.
4.04. FINANCIAL STATEMENTS; FISCAL YEAR. The financial statements of
Borrower and its Subsidiaries dated October 31, 1995 delivered to Agent fairly
present its financial condition and the results of operations as of the dates
and for the periods shown, all in accordance with GAAP. Such financial
statements reflect all material liabilities, direct and contingent, of Borrower
and its Subsidiaries that are required to be disclosed in accordance with GAAP.
As of the date of such financial statements, there were no Contingent
Liabilities, liabilities for Taxes, forward or long-term commitments, or
unrealized or anticipated losses from any unfavorable commitments that are not
reflected on such financial statements or otherwise disclosed in writing to
Agent. Since October 31, 1995, there has been no Material Adverse Change.
Borrower and each other Obligor is Solvent. The projected financial statements
of Borrower dated February 7, 1996 delivered to Agent were prepared in good
faith and management believes them to be based on reasonable assumptions (each
of which are stated in such statement) and to provide reasonable estimations of
future performance as of the dates and for the periods shown for Borrower,
subject to the uncertainty and approximation inherent in any projections.
Borrower's fiscal year ends on October 31.
4.05. LITIGATION. Shown on SCHEDULE 4.05 is all Litigation (other than
Litigation involving counterclaims against an Obligor as part of Litigation
initiated by such Obligor for collection of an Account) that is pending and, to
Borrower's best knowledge, threatened against each Obligor on the date hereof
which if adversely determined could reasonably be expected to result in a
Material Adverse Change. There is no pending or, to Borrower's best knowledge,
threatened Litigation against any Obligor that could constitute a Material
Adverse Change.
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4.06. COMPLIANCE WITH LAWS REGULATING THE INCURRENCE OF DEBT. No
proceeds of any Advance or Letter of Credit will be used directly or indirectly
to acquire any security in any transaction which is subject to Sections 13 and
14 of the Securities Exchange Act of 1934, as amended. No Obligor is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of any Advance or
Letter of Credit will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock.
Following Borrower's intended use of the proceeds of each Advance or Letter of
Credit, not more than 25% of the value of the assets of Borrower will be "margin
stock" within the meaning of Regulation U. No Obligor is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940, the Interstate Commerce Act (as any of the
preceding acts have been amended), or any other Law that the incurring of Debt
by such Obligor would violate in any material respect, including without
limitation Laws relating to common or contract carriers or the sale of
electricity, gas, steam, water, or other public utility services.
4.07. LICENSES, TITLE TO PROPERTIES, AND RELATED MATTERS. Each Obligor
possesses all material Licenses and is not in violation thereof in any material
respect. Each Obligor has full power, authority, and legal right to own and
operate its Properties, and to conduct its business. Each Obligor has good and
indefeasible title (fee or leasehold, as applicable) to its Properties, subject
to no Lien of any kind, except as permitted hereunder. No Obligor is in
violation of its corporate governance documents, or any Law, or material
agreement or instrument binding on or affecting it or any of its Properties. No
business or Properties of any Obligor is affected by any strike, lock-out, or
other labor dispute, drought, storm, earthquake, embargo, act of God or public
enemy, or other casualty that could constitute a Material Adverse Change.
4.08. OUTSTANDING DEBT; EXISTING LIENS. No Obligor has any outstanding
Debt or Contingent Liabilities, except as shown on SCHEDULE 4.08-a, and neither
it nor any of its Properties are subject to any Liens, except as shown on
SCHEDULE 4.08-b. SCHEDULE 4.08-a is a complete and correct description of each
Note Purchase Agreement, each Senior Note, each other Senior Note Paper, and
each Senior Holder. No equity interest of any Obligor (other than Borrower) is
subject to any Lien, including any restriction on hypothecation or transfer.
4.09. TAXES. Each Obligor has filed all federal, state, and other Tax
returns (or extensions related thereto) which are required to be filed, and has
paid all Taxes as shown on said returns, as well as all other Taxes, to the
extent due and payable before penalty. All Tax liabilities of each Obligor are
adequately provided for on its books, including interest and penalties, and
adequate reserves have been established therefor in accordance with GAAP.
Except as shown on SCHEDULE 4.09, no income Tax liability of a material nature
has been asserted by taxing authorities for Taxes in excess of those already
paid other than income tax liabilities being contested in good faith and for
which adequate reserves have been established therefor in accordance with GAAP,
and no taxing authority has notified any Obligor of any deficiency in any Tax
return.
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4.10. ERISA. Each Plan has satisfied the minimum funding standards
under all Laws applicable thereto, and no Plan has an accumulated funding
deficiency thereunder. No Obligor has incurred any material liability to the
PBGC with respect to any Plan. No ERISA Event has occurred with respect to any
Plan. No Obligor has participated in any Prohibited Transaction with respect to
any Plan or trust created thereunder, and the consummation of the transactions
contemplated hereby will not involve any Prohibited Transaction. Neither any
Obligor nor any ERISA Affiliate has incurred any Withdrawal Liability to any
Multiemployer Plan. Neither any Obligor nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or has been terminated, within the meaning of Title IV of
ERISA.
4.11. ENVIRONMENTAL LAWS. The real Properties (whether leased or
owned) of each Obligor, and the operations conducted thereon by it or, to
Borrower's best knowledge, any current or prior owner or operator thereof,
(a) do not violate and have not violated any applicable Environmental Law, the
violation of which would constitute a Material Adverse Change or result in
costs, penalties, fines, or damages in an aggregate amount of $1,000,000 or
more, and (b) are not subject to any pending or threatened investigation or
proceeding by any Tribunal or to any remedial obligations under any
Environmental Law. All Licenses have been obtained or filed that are required
under any Environmental Law in connection with the use of such Property and
assets (including without limitation past or present treatment, storage,
disposal, or release of any Hazardous Materials into the environment). No
Hazardous Materials are generated, produced, or stored at or in connection with
the Properties and operations of any Obligor. Each Obligor has taken all
appropriate steps to determine, and has determined, that no Hazardous Materials
have been disposed of or otherwise released on or to any Property on which any
operations of such Obligor are conducted, except in compliance with
Environmental Laws. No Obligor has any material potential liability with
respect to any release of any Hazardous Materials into the environment. The use
which each Obligor makes or intends to make of the real Property (whether leased
or owned) on which any of its operations are conducted will not result in the
unlawful or unauthorized disposal or other release of any Hazardous Materials,
except in compliance with applicable Environmental Laws. Each Obligor has
delivered to Agent copies of all environmental studies and reports conducted or
received by such Obligor in connection with its real Properties. Such studies
cover all real Property in which such Obligor has an interest.
4.12. INVESTMENTS; SUBSIDIARIES. No Obligor has any Investments except
as described on SCHEDULES 4.01-a, 4.01-b and 4.12 and as permitted by SECTION
5.09. SCHEDULES 4.01-a and 4.01-b are a complete and accurate listing of each
Subsidiary of each Obligor, showing (a) its complete name, (b) its jurisdiction
of organization, (c) its capital structure, (d) its street and mailing address,
which is its principal place of business and executive office and (e) all
interest in such Subsidiary owned by such Obligor.
4.13. CERTAIN FEES. No broker's, finder's, management fee or other fee
or commission will be payable by Borrower (other than to Agent and Lenders
hereunder and to NationsBanc Capital Markets, Inc.). Borrower hereby agrees to
indemnify and hold harmless Agent and each
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Lender from and against any claims, demand, liability, proceedings, costs or
expenses asserted with respect to or arising in connection with any such fees
or commissions.
4.14. CABP. CABP owns no Property other than (a) trademarks, patents
and copyrights, and associated goodwill, applications for trademarks, patents
and copyrights, and other property which is intangible intellectual property,
(b) licenses from CABP to Borrower, Ashley and Cameron of Property described in
CLAUSE (a), (c) demand deposit accounts the aggregate balance of which is not in
excess of an amount reasonable and necessary to the business operations of CABP,
and (d) other Property of nominal value reasonable and necessary to the business
operations of CABP.
4.15. DISCLOSURE. Borrower has not made a material misstatement of
fact, or failed to disclose any fact necessary to make the facts disclosed not
misleading, to Agent or any Lender during the course of application for and
negotiation of any Loan Papers or otherwise in connection with any Advance or
any Letter of Credit. There is no fact known to Borrower that materially
adversely affects any Obligor's Properties or business, or that would constitute
a Material Adverse Change, and that has not been set forth in the Loan Papers or
in other documents furnished to Agent or each Lender.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES, DISCLAIMERS, WAIVERS, ETC. All
representations, warranties, disclaimers and waivers made under this Agreement
and each other Loan Paper shall survive the execution and effectiveness of this
Agreement and shall be deemed to be made at and as of the Effective Date and at
and as of the date of each Advance and issuance of each Letter of Credit, and
each shall be true and correct when made, except to the extent (a) previously
fulfilled in accordance with the terms hereof, (b) subsequently inapplicable, or
(c) previously waived in writing by Agent and Lenders with respect to any
particular factual circumstance.
ARTICLE V. NEGATIVE COVENANTS
So long as the Commitment or any Advance or any Reimbursement Obligations
is outstanding, or Borrower or any other Obligor owes any other amount hereunder
or under any other Loan Paper:
5.01. CURRENT RATIO. Borrower shall not permit the ratio of Current
Assets to Current Liabilities as at any date to be less than 1.50 to 1.
5.02. TANGIBLE NET WORTH. Borrower shall not permit Tangible Net Worth
as at any date to be less than the sum of (a) $50,000,000, plus (b) 50% of
cumulative Net Income reported for each fiscal quarter of Borrower in which Net
Income is a positive number commencing with the fiscal quarter of Borrower
ending on January 31, 1996, plus (c) 100% of Equity Proceeds.
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5.03. FUNDED DEBT TO EBITDA RATIO. Borrower shall not permit the
Funded Debt to EBITDA Ratio as at any date to exceed 3.5 to 1.
5.04. FIXED CHARGES COVERAGE RATIO. Borrower shall not permit the
Fixed Charges Coverage Ratio as at any date to be less than 2.00 to 1.
5.05. RESTRICTED PAYMENT. Borrower shall not, and shall not permit any
Subsidiary of Borrower to, make any Restricted Payment; PROVIDED, that if no
Default or Event of Default exists or will result therefrom, (a) Borrower may
make cash Distributions in a fiscal year to holders of Borrower's equity
securities in an aggregate amount not greater than the Permitted Amount, (b)
Ashley and Cameron may make Distributions to Borrower, (c) CABP may make
Distributions to Borrower, Ashley and Cameron, (d) Ashley may make cash
payments to CGW in accordance with the Ashley Management Agreement, and (e)
Cameron may make cash payments to CGW in accordance with the Cameron
Management Agreement; PROVIDED FURTHER, that no Distribution otherwise
permitted by SECTION 5.05(a) shall be made prior to receipt by Agent of the
financial statements of Borrower and its Subsidiaries required by SECTION
6.10(b) for the fiscal year to which such proposed Distribution is
attributable and a Compliance Certificate prepared after giving effect to
such proposed Distribution.
5.06. CAPITAL EXPENDITURES. Borrower shall not, and shall not permit
any Subsidiary of Borrower to, pay or incur Capital Expenditures (in the
aggregate for Borrower and its Subsidiaries) in excess of $9,000,000 during
any fiscal year of Borrower.
5.07. DEBT. Borrower shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume, become, or be liable in any manner in
respect of, or suffer to exist, any Debt, except (a) Debt under the Loan
Papers, (b) Funded Debt under each Note Purchase Agreement and guaranties of
such Debt made by Subsidiaries of Borrower, (c) other Debt in existence on
the date hereof, as shown on SCHEDULE 4.08-a, (d) purchase money Debt
incurred for the acquisition of tangible assets, provided the aggregate
principal amount of such Debt incurred in any fiscal year shall not exceed
$1,000,000, (e) trade payables incurred and paid in the ordinary course of
business, (f) Contingent Liabilities under or relating to the Loan Papers,
(g) Contingent Liabilities in existence on the date hereof, as shown on
SCHEDULE 4.08-a, (h) Debt of each Subsidiary of Borrower to Borrower, (i)
Contingent Liabilities resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business, (j)
Convertible Subordinated Debt in an aggregate principal amount not to exceed
at any time $25,000,000, (k) as to Borrower and its Subsidiaries on a
consolidated basis, other Debt not to exceed at any time, in the aggregate
principal amount, the difference between (i) $10,000,000, minus (ii) the sum
of all Attributable Debt in respect of all Sale and Leasebacks occurring on
and after the Effective Date and (l) renewals and restatements of any Debt
described in SECTIONS 5.07(a) through (k), provided the principal amount of
the Debt renewed or restated does not exceed the principal amount of such
Debt immediately prior to such renewal or restatement.
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5.08. DISPOSITIONS OF ASSETS. Borrower shall not, and shall not permit
any of its Subsidiaries to, sell, lease, assign, or otherwise dispose of any of
its assets, except Permitted Dispositions.
5.09. MERGER; CONSOLIDATION; INVESTMENTS. Borrower shall not, and
shall not permit any of its Subsidiaries to, merge into, consolidate with, or
make any Investment in, any Person, permit any other Person to merge into or
consolidate with it, or form or acquire any Subsidiary, except (a) Investments
existing on the date hereof as shown on SCHEDULE 4.12, (b) Restricted
Investments, (c) Permitted Acquisitions, if not less than ten Business Days
prior to the effective date of the proposed acquisition, Borrower shall have
delivered to Agent (A) a detailed written description of the proposed Permitted
Acquisition, (B) a statement certified by an authorized officer that the
proposed transaction complies with the requirements of a Permitted Acquisition
and stating that no Default or Event of Default exists prior to or will exist
upon consummation of the proposed Permitted Acquisition, (C) a Compliance
Certificate (with calculations for the 365-day period ended on the effective
date of the proposed acquisition) prepared as of the effective date of the
proposed Permitted Acquisition and based on PRO FORMA financial statements for
Borrower giving effect to such transaction (which financial statements shall not
exclude any expenses Borrower projects to be eliminated by such proposed
acquisition), and (D) projected financial statements for Borrower for the three-
year period following the effective date of the proposed transaction giving
effect to such transaction, (d) Borrower may organize new Subsidiaries;
PROVIDED, (i) such Subsidiary executes and delivers to Agent a Guaranty and such
other documents as Agent may reasonably request prior to such Subsidiary's
engaging in any activities other than organizational activities and (ii) no
Default or Event of Default results from the creation of such Subsidiary, (e)
the merger or consolidation of Wholly-Owned Subsidiaries of Borrower between
themselves or into Borrower so long as Borrower is the surviving entity, (f) the
merger or consolidation of any other Person with or into Borrower so long as
Borrower is the surviving entity and no Default or Event of Default exists prior
to or as a result of such merger or consolidation, and (g) Investments in
account receivables arising in the ordinary course of business.
5.10. LIENS. Borrower shall not, and shall not permit any of its
Subsidiaries to, create or suffer to exist any Lien upon any of its
Properties, except (a) Liens created by the Loan Papers, (b) Liens in
existence on the date hereof, as shown on SCHEDULE 4.08-b, (c) Tax,
mechanics', materialmen's, warehousemen's, laborer's and landlord and other
similar Liens relating to amounts that are not yet due and payable, or that
are being contested in good faith by appropriate proceedings, for which
adequate reserves have been established, (d) Liens securing Debt permitted
under SECTION 5.07(d), provided such Lien shall encumber only the specific
property acquired by such Debt, (e) Liens incurred in the ordinary course of
business in connection with worker's compensation, unemployment insurance or
similar legislation; and (f) easements, right-of-way, restrictions and other
similar encumbrances on the use of real property which do not interfere with
the ordinary conduct of the business of such Person. Borrower shall not, and
shall not permit any of its Subsidiaries to, hereafter agree with any Person
(other than Agent) not to grant a Lien on any of its assets or not to permit
the pledge any of its equity interest (except as may be provided in each Note
Purchase Agreement).
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5.11. FISCAL YEAR AND ACCOUNTING METHOD. Without Agent's prior written
approval, Borrower shall not, and shall not permit any of its Subsidiaries to,
change its fiscal year or method of accounting, except as may be required by
GAAP.
5.12. ISSUANCE OF CAPITAL STOCK; AMENDMENT OF CHARTER. Borrower shall
not permit any of its Subsidiaries to, issue, sell or otherwise dispose of any
capital stock in such Person, or any options or rights to acquire such capital
stock. Borrower shall not sell, transfer, encumber or otherwise dispose of any
equity interest or ownership interest in any Subsidiary of Borrower and shall
not permit any Subsidiary of Borrower to sell, transfer, encumber or otherwise
dispose of any equity interest or ownership interest in any Person which is a
Subsidiary of such Subsidiary of Borrower. Borrower shall not amend its
articles of organization or bylaws, and Borrower shall not permit any of its
Subsidiaries to amend its articles of organization or bylaws in any manner which
impairs or revokes any approval related to the Loan Papers.
5.13. CHANGE OF OWNERSHIP. Borrower shall not, and shall not permit
any of its Subsidiaries to, permit any change in the ownership of Ashley,
Cameron and CABP from the ownership thereof as of the date hereof as disclosed
on SCHEDULE 4.01-b.
5.14. SALE AND LEASEBACK. Borrower shall not, and shall not permit any
of its Subsidiaries to, enter into any Sale and Leaseback if the Attributable
Debt of such Sale and Leaseback exceeds the difference between (a)
$10,000,000, minus (b) the sum of (i) the aggregate amount of all
Attributable Debt of all other Sale and Leasebacks occurring on and after the
Effective Date plus (ii) the aggregate outstanding principal amount of other
Debt of Borrower and its Subsidiaries permitted pursuant to SECTION 5.07(k).
5.15. BUSINESS. Borrower shall not, and shall not permit any of its
Subsidiaries to, change the nature of its business as now conducted.
5.16. TRANSACTIONS WITH AFFILIATES. Except as permitted herein,
Borrower shall not, and shall not permit any of its Subsidiaries to, enter
into or be party to a transaction with any Affiliate of such Person, except
on terms no less favorable than could be obtained on an arm's-length basis
with a Person that is not an Affiliate of such Person.
5.17. COMPLIANCE WITH ERISA. Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, or permit any member of such
Person's Controlled Group to directly or indirectly, (a) terminate any Plan so
as to result in any material (in the opinion of Agent) liability to any Obligor
or any member of its Controlled Group, (b) permit to exist any ERISA Event, or
any other event or condition which presents the risk of any material (in the
opinion of Agent) liability of any Obligor or any member of its Controlled
Group, (c) make a complete or partial withdrawal (within the meaning of Section
4201 of ERISA) from any Multiemployer Plan so as to result in any material (in
the opinion of Agent) liability to any Obligor or any member of its Controlled
Group, (d) enter into any new Plan or modify any existing Plan so as to increase
its obligations thereunder (except in the ordinary course of business consistent
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with past practice) which could result in any material (in the opinion of Agent)
liability to any Obligor or any member of its Controlled Group, or (e) permit
the present value of all benefit liabilities, as defined in Title IV of ERISA,
under each Plan of each Obligor or any member of its Controlled Group (using the
actuarial assumptions utilized by the PBGC upon termination of a Plan) to
materially (in the opinion of Agent) exceed the fair market value of Plan assets
allocable to such benefits all determined as of the most recent valuation date
for each such Plan.
5.18. NOTE PURCHASE AGREEMENT. Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into or permit to exist any amendment
or restatement of any Note Purchase Agreement, Senior Note or other Senior Note
Paper which has the effect of (a) increasing the principal amount of all Senior
Notes outstanding on the Effective Date, minus the aggregate amount of all
principal of all Senior Notes repaid on and after the Effective Date, (b)
increasing any applicable interest rate, (c) accelerating any date specified for
a required prepayment or repayment of principal of any Senior Note, (d)
increasing the amount of any required prepayment or repayment of principal of
any Senior Note, or (e) increasing the obligations of any guarantor of any
obligations under any Note Purchase Agreement, any Senior Note or other Senior
Note Paper.
5.19. SWAP EXPOSURE. Borrower shall not, and shall not permit any of
its Subsidiaries to, enter into or become liable in respect of any Interest
Hedge Agreement pursuant to which the aggregate notional amount (together with
the aggregate notional amount of all other Interest Hedge Agreements) exceeds
the aggregate principal amount of all Advances.
5.20. SUBSIDIARIES AND OBLIGORS. Borrower shall not permit any of its
Subsidiaries and Affiliates or any other Obligor to violate any provision of
this ARTICLE V.
ARTICLE VI. AFFIRMATIVE COVENANTS
So long as the Commitment or any Advance or any Reimbursement Obligations
is outstanding, or Borrower or any other Obligor owes any other amount hereunder
or under any other Loan Paper:
6.01. PRESERVATION OF EXISTENCE AND SIMILAR MATTERS. Borrower shall:
(a) preserve and maintain, or timely obtain and thereafter preserve,
maintain and comply with, its existence, Rights, franchises, Licenses,
authorizations, consents, privileges and all other authorizations from any
Tribunal, the loss of which could have a Material Adverse Effect; and
(b) qualify and remain qualified and authorized to do business in each
jurisdiction in which the character of its Properties or the nature of its
business requires such qualification or
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authorization, except where the failure to be so qualified and authorized
would not result in a Material Adverse Change.
6.02. LICENSES AND MATERIAL AGREEMENTS. Borrower shall maintain and
comply in all material respects with all agreements necessary for it to own,
maintain, or operate any of its businesses or Properties.
6.03. COMPLIANCE WITH LAWS. Borrower shall comply in all material
respects with all applicable Laws.
6.04. MAINTENANCE OF PROPERTIES. Borrower shall maintain or cause to
be maintained all its Properties in good repair, working order and condition,
taken as a whole, ordinary wear and tear excepted, and from time to time make or
cause to be made all appropriate repairs, renewals, replacements, additions,
betterments and improvements thereto.
6.05. PAYMENT OF TAXES AND OTHER INDEBTEDNESS. Borrower will pay and
discharge (a) before penalty all Taxes, (b) when due all lawful claims
(including claims for labor, materials and supplies), which, if unpaid, might
give rise to a Lien upon any of its property, except to the extent contested in
good faith and for which adequate reserves have been established therefor in
accordance with GAAP, and (c) when due all of its other Debt, obligations and
liabilities to the extent that the failure to so pay would result in an Event of
Default described in SECTION 7.01(h), except as prohibited hereunder.
6.06. ERISA COMPLIANCE. Borrower will (a) make prompt payment of all
contributions required under all Plans, and (b) notify Agent immediately if (i)
there is a "complete withdrawal" or "partial withdrawal" (as described in ERISA
Sections 4203 and 4205, respectively) by Borrower or any ERISA Affiliate of
Borrower from a Multiemployer Plan, (ii) Borrower or any ERISA Affiliate of
Borrower is in "default" (as defined in ERISA Section 4219 (c) (5)) with respect
to payments to a Multiemployer Plan required by reason of its complete or
partial withdrawal from such Plan, (iii) a Multiemployer Plan of Borrower is in
"reorganization" (as described in Internal Revenue Code Section 418 or in Title
IV of ERISA) or has "terminated" (as described in ERISA Section 4041A), or (iv)
there is an action brought against Borrower or any ERISA Affiliate for failure
to make contributions as required by ERISA Section 515.
6.07. INSURANCE. Borrower shall:
(a) OBTAIN AND MAINTAIN INSURANCE. Maintain and keep in force the
following policies of insurance:
(i) HAZARD INSURANCE. Insurance against loss or damage to each
Facility by fire and any of the risks covered by insurance of the type now
known as "all risk coverage," in an aggregate amount satisfactory to Agent
or the full replacement cost of the Facility, including, without
limitation, the cost of debris removal (exclusive of the cost of
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excavations, foundations, and footings below the lowest basement floor),
whichever is greater; and a deductible from the loss payable for any
casualty not to exceed $25,000 per occurrence, unless a higher amount is
required by applicable Law. The policies of insurance carried in
accordance with this SECTION 6.07 (a) (i) shall contain the "Replacement
Cost Endorsement" and an "Agreed Amount Endorsement";
(ii) BUSINESS INTERRUPTION INSURANCE. Business interruption
insurance in the minimum amount equal to Borrower's Net Income for the
preceding fiscal year divided by four;
(iii) PERSONAL PROPERTY INSURANCE. Insurance against loss or
damage to any personal property of Borrower and its Subsidiaries by fire
and other risks covered by insurance of the type now known as "all risk
coverage";
(iv) PUBLIC LIABILITY INSURANCE. Comprehensive public liability
insurance (including, without limitation, coverage for elevators and
escalators) on an "occurrence basis" against claims for "personal injury",
including, without limitation, bodily injury, death or property damage
occurring on, in or about the Facility and the adjoining streets, sidewalks
and passageways, such insurance to afford immediate minimum protection to a
limit of not less than $10,000,000 for bodily injury and property damage
for any single occurrence;
(v) WORKERS' COMPENSATION INSURANCE. Either or a combination of
workers' compensation insurance (including, without limitation, employer's
liability insurance) or a program of self-insurance (if permitted by
applicable Law) for all employees of Borrower and its Subsidiaries required
to be covered by applicable Law in such amount as is generally carried in
accordance with sound business practice by companies in similar businesses
similarly situated, or, if higher limits are established by applicable Law,
then in such amounts; and
(vi) OTHER INSURANCE. Such other insurance, and in such amounts,
as may be required by any Tribunal having jurisdiction with respect thereto
or as is carried generally in accordance with sound business practice by
companies in businesses similarly situated or as may be reasonably required
from time to time by Agent.
(b) GENERAL INSURANCE PROVISIONS. Cause all policies of insurance
required by the provisions of SECTION 6.07(a) to:
(i) Contain an endorsement or agreement by the insurer that any
loss shall be payable in accordance with the terms of such policy
notwithstanding any act or negligence of the insured which might otherwise
result in forfeiture of said insurance and the further agreement of the
insurer waiving all rights of setoff, counterclaim or deductions against
the insured;
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(ii) Be issued by companies having an A.M. Best Co.
policyholder's rating of "A" or better and a financial size category of "V"
or better. Insurance carriers with lesser ratings are acceptable if they
present a reinsurance agreement containing a direct access clause with a
company or companies that meet such rating requirement. Coverage amounts
shall not exceed 5% of carrier surplus and capital values unless approved
in writing by Agent or reinsurance is carried;
(iii) Be issued by carriers that are fully and properly licensed
in each appropriate State; and
(iv) Otherwise be in form and substance satisfactory to Agent.
(c) EVIDENCE OF INSURANCE. Furnish Agent with an original copy of all
policies of required insurance. The required insurance may be provided through
one or more blanket policies carried by Borrower and covering more than one
location, in which event Borrower shall furnish Agent with a certificate of
insurance for each such policy setting forth the coverage, the limits of
liability, the name of the carrier, the policy number, and the expiration date
and, if requested by Agent, a certified copy of the blanket policy or policies.
Borrower shall also furnish or cause to be furnished to Agent (i) no later than
fifteen Business Days before the applicable renewal date a copy of all binders
of coverage, on which binders are indicated the terms of payment, deductibles,
policy amounts and other relevant information, and (ii) within ten Business Days
after each such renewal date, evidence of the payment of all premiums payable in
connection with such renewal. Within ninety days after the end of each fiscal
year, Borrower shall deliver to Agent a report describing all insurance coverage
of Borrower.
6.08. INSPECTION RIGHTS. Borrower shall permit Agent, upon reasonable
notice and during normal business hours, to examine and make copies of and
abstracts from its records and books of account, to visit and inspect its
Properties and to discuss its affairs, finances, and accounts with any of its
officers or accountants, all as Agent may request.
6.09. RECORDS AND BOOKS OF ACCOUNT; CHANGES IN GAAP. Borrower shall
keep adequate records and books of account in conformity with GAAP.
6.10. REPORTING REQUIREMENTS. Borrower shall furnish to Agent and each
Lender:
(a) As soon as available and in any event within forty-five days after the
end of each fiscal quarter, the consolidated and consolidating balance sheet of
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the
consolidated and consolidating statements of income, changes in shareholders'
equity and changes in cash flow of Borrower and its Subsidiaries for such fiscal
quarter and for the portion of the fiscal year ending with such fiscal quarter,
setting forth, in comparative form, results for the corresponding periods in the
previous fiscal year, all in reasonable detail, and certified by an officer of
Borrower acceptable to Agent as prepared in accordance with GAAP, and fairly
presenting the financial condition and results of operations of
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Borrower and its Subsidiaries (subject to changes resulting from an audit and
normal year-end adjustments);
(b) As soon as available and in any event within ninety days after the end
of each fiscal year of Borrower, a consolidated and consolidating balance sheet
of Borrower and its Subsidiaries as at the end of such fiscal year, and
consolidated and consolidating statements of income, changes in shareholders'
equity, and changes in cash flow of Borrower and its Subsidiaries for such
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an unqualified opinion of Auditor, which opinion shall state that
said financial statements were prepared in accordance with GAAP, that the
examination by Auditor in connection with such financial statements was made in
accordance with generally accepted auditing standards, and that said financial
statements present fairly the financial condition and results of operations of
Borrower and its Subsidiaries;
(c) Promptly upon the first to occur of their becoming available or their
filing with the appropriate Tribunal, a copy of each Form 10-Q for each fiscal
quarter, each Form 10-K for each fiscal year, if required to be prepared under
Regulation 14a-3, promulgated by the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934, as amended, a copy of Borrower's proxy
materials provided to its shareholders, financial statement, report, notice,
proxy statement, regular, periodic or special report, registration statement,
prospectus, and all other information, and all amendments thereto, together with
all exhibits and schedules to each of the foregoing, filed by Borrower or any of
its Subsidiaries with the Securities and Exchange Commission or any similar
Tribunal, or otherwise provided to holders of securities issued by Borrower or
any of its Subsidiaries;
(d) Promptly upon receipt thereof, copies of all material reports or
letters submitted to Borrower by Auditor or any other accountants in connection
with any annual, interim, or special audit, including without limitation the
comment letter submitted to management in connection with any such audit;
(e) Together with each set of financial statements delivered pursuant to
SECTION 6.10(a) and (b), a Compliance Certificate (with calculations for the
365-day period ended on such fiscal quarter end);
(f) As soon as available and in any event within twenty days after the end
of each month, a Borrowing Base Certificate for such month;
(g) As soon as possible and in any event within two Business Days after
knowledge by an officer of Borrower of the occurrence of any Default or Event of
Default, a notice from an officer of Borrower acceptable to Agent, setting forth
the details of such Default or Event of Default, and the action being taken or
proposed to be taken with respect thereto;
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(h) (i) As soon as possible and in any event within two days after
knowledge thereof by an officer of Borrower, notice of any Litigation pending or
threatened against Borrower or any Obligor which, if determined adversely, could
result in judgment, penalties, or damages equal to or in excess of $2,000,000,
together with a statement of an officer of Borrower acceptable to Agent,
describing the allegations of such Litigation, and the action being taken or
proposed to be taken with respect thereto, (ii) within ninety days after the end
of each fiscal year, complete reports by counsel to Borrower and each Obligor,
describing all Litigation of Borrower and each Obligor, and (iii) within forty-
five days after each fiscal quarter in which a material change in reported
Litigation of the nature described above has occurred or additional Litigation
has been threatened or commenced, reports by counsel to Borrower and each
Obligor, describing such material changes in or additions to the last annual
Litigation report;
(i) As soon as possible and in any event within two days after knowledge
thereof by an officer of Borrower, notice of any claimed default, actual default
or the occurrence of any event or existence of any condition the effect of which
is to cause or permit the acceleration of any Debt of or secured by any assets
of any Obligor, with respect to Debt in the aggregate amount equal to or in
excess of $2,000,000;
(j) Promptly after filing or receipt thereof by an officer of Borrower,
copies of all reports and notices that Borrower, any of its Subsidiaries and
Affiliates and each Obligor (i) files or receives in respect of any Plan with or
from the Internal Revenue Service, the PBGC, or the United States Department of
Labor, or (ii) furnishes to or receives from any holders of any Debt or
Contingent Liability that is not duplicative of, or subsumed in, reports or
notices provided to Agent or Lenders hereunder, if in the case of CLAUSES (i)
and (ii), any information or dispute referred to therein could result in a
Default or an Event of Default;
(k) Borrower will notify Lender in writing, promptly upon Borrower
learning, of any of the following which has a reasonable likelihood of resulting
in liability in excess of $500,000:
(i) each Environmental Claim which Borrower receives, including
one to take any remedial, removal or other action with respect to any Hazardous
Materials contained on any property, whether or not owned by Borrower;
(ii) each notice of violation of any Environmental Law; and
(iii) each commencement of any judicial or administrative
proceeding or investigation concerning an Environmental Claim with respect to
Borrower;
(l) As soon as possible and in any event within five days after knowledge
thereof by an officer of Borrower, notice of any act, event or circumstance
which could reasonably be foreseen to cause or result in a Material Adverse
Change, together with a statement of an officer of Borrower acceptable to Agent,
describing the circumstances surrounding the same, and the action being taken or
proposed to be taken with respect thereto;
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(m) As soon as possible and in any event within five days after the
occurrence thereof, notice of any requested amendment or restatement and any
effective amendment or restatement of any Note Purchase Agreement, any Senior
Note or any other Senior Note Paper, and any assignment of any Senior Note or
any other Senior Note Paper, together with copies of each document related
thereto; and
(n) Promptly upon written request, such other information concerning the
condition or operations of Borrower or any other Obligor, financial or
otherwise, as Agent may from time to time request.
6.11. SOLVENCY. Each Obligor shall continue to be Solvent.
6.12. SUBSIDIARIES AND OBLIGOR. Borrower shall cause each of its
Subsidiaries and Affiliates and each Obligor to comply with each provision of
this ARTICLE VI.
6.13. FURTHER ASSURANCES. Borrower will make, execute or endorse, and
acknowledge and deliver or file or cause the same to be done, all such vouchers,
invoices, notices, certifications and additional agreements, undertakings, or
other assurances, and take any and all such other action, as Agent may, from
time to time, deem reasonably necessary or proper in connection with any of the
Loan Papers and the obligations of Borrower thereunder.
ARTICLE VII. EVENTS OF DEFAULT
7.01. EVENTS OF DEFAULT. Any one or more of the following shall be an
"Event of Default" hereunder, if the same shall occur for any reason whatsoever,
whether voluntary or involuntary, by operation of Law, or otherwise:
(a) Borrower shall fail to pay any principal, interest, fees or other
amounts payable under any Loan Paper on the date due;
(b) Any representation or warranty made or deemed made by any Obligor (or
any of its officers or representatives) under or in connection with any Loan
Paper shall prove to have been incorrect or misleading in any material respect
when made or deemed made;
(c) Any Obligor shall fail to perform or observe any term or covenant
contained in ARTICLE V;
(d) Any Obligor shall fail to perform or observe any other term or
covenant contained in any Loan Paper, other than those described in SECTION
7.01(a), (b) and (c), and such failure shall not be remedied within (i) thirty
days following the earlier of knowledge thereof by such Obligor or an officer of
such Obligor, or of written notice by Agent to Borrower, with respect to any
failure to perform or observe the provisions of SECTIONS 6.01, 6.02, 6.03 and
6.04, and (ii) ten
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Business Days following the earlier of knowledge thereof by such Obligor or
an officer of such Obligor, or of written notice by Agent to Borrower, with
respect to any other provision of any Loan Paper;
(e) Any Loan Paper or provision thereof shall, for any reason, not be
valid and binding on the Obligor signatory thereto, or not be in full force and
effect, or shall be declared to be null and void; the validity or enforceability
of any Loan Paper shall be contested by any Obligor; any Obligor shall deny that
it has any or further liability or obligation under its respective Loan Papers;
or any default or breach under any provision of any Loan Papers shall continue
after the applicable grace period, if any, specified in such Loan Paper;
(f) Any of the following shall occur: (i) any Obligor shall make an
assignment for the benefit of creditors or be unable to pay its debts generally
as they become due; (ii) any Obligor shall petition or apply to any Tribunal for
the appointment of a trustee, receiver, or liquidator of it, or of any
substantial part of its assets, or shall commence any proceedings relating to
any Obligor under any Debtor Relief Laws; (iii) any such petition or application
shall be filed, or any such proceedings shall be commenced, against any Obligor,
or an order, judgment or decree shall be entered appointing any such trustee,
receiver, or liquidator, or approving the petition in any such proceedings;
(iv) any final order, judgment, or decree shall be entered in any proceedings
against any Obligor decreeing its dissolution; or (v) any final order, judgment,
or decree shall be entered in any proceedings against any Obligor decreeing its
split-up which requires the divestiture of a substantial part of its assets;
(g) Any Event of Default (as defined in each Note Purchase Agreement)
shall occur;
(h) Borrower or any other Obligor shall fail to pay any (A) Funded Debt
(other than Debt under the Loan Papers or any Note Purchase Agreement) or
obligations in respect of Capital Leases (other than Debt under the Loan Papers
or any Note Purchase Agreement) in an aggregate amount of $5,000,000 or more
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) or (B) other Debt (other than Debt under the Loan Papers
or any Note Purchase Agreement and Debt described in CLAUSE (A) immediately
preceding), except to matters being disputed or contested in good faith, in an
aggregate amount of $5,000,000 or more when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt (being the Debt described in either of
CLAUSES (A) or (B) immediately preceding); Borrower or any other Obligor shall
fail to perform or observe any term or covenant contained in any agreement or
instrument relating to any such Debt, when required to be performed or observed,
and such failure shall continue after the applicable grace period, if any,
specified in such agreement or instrument, and can result in acceleration of the
maturity of such Debt; or any such Debt shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
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(i) Any Obligor shall have any final judgment(s) outstanding against it
for the payment of $5,000,000 or more, and such judgment(s) shall remain
unstayed, in effect, and unpaid for the period of time after which the judgment
holder may and may cause the creation of Liens against or seizure of any of its
Property;
(j) Any ERISA Event shall have occurred with respect to a Plan of
Borrower, and the sum of the Insufficiency of such Plan and liabilities relating
thereto is equal to or greater than $1,000,000; or Borrower or any ERISA
Affiliate of Borrower shall have committed a failure described in Section
302(f)(l) of ERISA, and the amount determined under Section 302(f)(3) of ERISA
is equal to or greater than $5,000,000;
(k) Borrower or any ERISA Affiliate of Borrower shall have been notified
by the sponsor of a Multiemployer Plan that (A) it has incurred Withdrawal
Liability to such Plan in an amount that, exceeds $5,000,000 or requires
payments exceeding $1,000,000 per annum, or (B) such Plan is in reorganization
or is being terminated, within the meaning of Title IV of ERISA, if as a result
thereof the aggregate annual contributions to all Multiemployer Plans in
reorganization or being terminated is increased over the amounts contributed to
such Plans for the preceding Plan year by an amount exceeding $5,000,000;
(l) Any Obligor shall be required under any Environmental Law (i) to
implement any remedial, neutralization, or stabilization process or program, the
cost of which would constitute a Material Adverse Change, or (ii) to pay any
penalty, fine, or damages in an aggregate amount of $5,000,000 or more; or
(m) Any Property (whether leased or owned), or the operations conducted
thereon by any Obligor or any current or prior owner or operator thereof (in the
case of real Property), shall violate or have violated any applicable
Environmental Law, if such violation would constitute a Material Adverse Change;
or such Obligor shall not obtain or maintain any License required to be obtained
or filed under any Environmental Law in connection with the use of such Property
and assets, including without limitation past or present treatment, storage,
disposal, or release of Hazardous Materials into the environment, if the failure
to obtain or maintain the same would constitute a Material Adverse Change.
7.02. REMEDIES UPON DEFAULT. If an Event of Default described in
SECTION 7.01(F) shall occur with respect to any Obligor, the aggregate unpaid
principal balance of and accrued interest on all Advances shall, to the extent
permitted by applicable Law, thereupon become due and payable concurrently
therewith, without any action by Agent, Issuing Bank, or any Lender, and without
diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind, all of which are hereby expressly
waived. Subject to the foregoing sentence, if any Event of Default shall occur
and be continuing, Agent may at its election, do any one or more of the
following:
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(a) Declare the entire unpaid balance of all Advances immediately due and
payable, whereupon it shall be due and payable without diligence, presentment,
demand, protest, notice of protest or intent to accelerate, or notice of any
other kind (except notices specifically provided for under SECTION 7.01), all of
which are hereby expressly waived (except to the extent waiver of the foregoing
is not permitted by applicable Law);
(b) Terminate the Commitment;
(c) Enforce any Rights under SECTION 2.15(F);
(d) Reduce any claim of Agent, Issuing Bank, and Lenders to judgment; and
(e) Exercise any Rights afforded under any Loan Papers, by Law, including
but not limited to the UCC, at equity, or otherwise.
7.03. CUMULATIVE RIGHTS. All Rights available to Agent, Issuing Bank,
and Lenders under the Loan Papers shall be cumulative of and in addition to all
other Rights granted thereto at Law or in equity, whether or not amounts owing
thereunder shall be due and payable, and whether or not Agent, Issuing Bank, or
any Lender shall have instituted any suit for collection or other action in
connection with the Loan Papers.
7.04. WAIVERS. The acceptance by Agent, Issuing Bank, or any Lender at
any time and from time to time of partial payment of any amount owing under any
Loan Papers shall not be deemed to be a waiver of any Default or Event of
Default then existing. No waiver by Agent, Issuing Bank, or any Lender of any
Default or Event of Default shall be deemed to be a waiver of any Default or
Event of Default other than such Default or Event of Default. No delay or
omission by Agent, Issuing Bank, or any Lender in exercising any Right under the
Loan Papers shall impair such Right or be construed as a waiver thereof or an
acquiescence therein, nor shall any single or partial exercise of any such Right
preclude other or further exercise thereof, or the exercise of any other Right
under the Loan Papers or otherwise.
7.05. PERFORMANCE BY AGENT OR ANY LENDER. Should any covenant of any
Obligor fail to be performed in accordance with the terms of the Loan Papers,
Agent may, at its option, perform or attempt to perform such covenant on behalf
of such Obligor. Notwithstanding the foregoing, it is expressly understood that
none of Agent, Issuing Bank, or any Lender assumes, and shall not ever have,
except by express written consent of Agent, Issuing Bank, or such Lender, any
liability or responsibility for the performance of any duties or covenants of
any Obligor.
7.06. EXPENDITURES. Borrower shall reimburse Agent, Issuing Bank, and
each Lender for any reasonable sums spent by it in connection with the exercise
of any Right provided herein. Such sums shall bear interest at the lesser of
(a) the greatest Base Rate (whether or not in effect), plus 4.00% and (b) the
Highest Lawful Rate, from the date spent until the date of repayment by
Borrower.
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7.07. CONTROL. None of the covenants or other provisions contained in
this Agreement shall, or shall be deemed to, give Agent, Issuing Bank, or any
Lender any Rights to exercise control over the affairs and/or management of any
Obligor, the power of Agent, Issuing Bank, and each Lender being limited to the
Rights to exercise the remedies provided in this Article; PROVIDED, HOWEVER,
that if Agent, Issuing Bank, or any Lender becomes the owner of any partnership,
stock or other equity interest in any Person, whether through foreclosure or
otherwise, it shall be entitled to exercise such legal Rights as it may have by
being an owner of such stock or other equity interest in such Person.
ARTICLE VIII. THE AGENT
8.01. AUTHORIZATION AND ACTION. Each Lender and Issuing Bank hereby
appoints and authorizes Agent to take such action as Agent on its behalf and to
exercise such powers under this Agreement and the other Loan Papers as are
delegated to the Agent by the terms of the Loan Papers, together with such
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement and the other Loan Papers (including without
limitation enforcement or collection of the Notes), Agent shall not be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of Determining Lenders (or all Lenders, if
required under SECTION 9.01), and such instructions shall be binding upon all
Lenders and Issuing Bank; PROVIDED, HOWEVER, that Agent shall not be required to
take any action which exposes Agent to personal liability or which is contrary
to any Loan Papers or applicable Law. Agent agrees to give to each Lender and
Issuing Bank notice of each notice given to it by Borrower pursuant to the terms
of this Agreement, and to distribute to each applicable Lender and Issuing Bank
in like funds all amounts delivered to Agent by Borrower for the Ratable or
individual account of any Lender or Issuing Bank, as appropriate.
8.02. AGENT'S RELIANCE, ETC. Neither Agent, nor any of its directors,
officers, agents, employees, or representatives shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement or any other Loan Paper, except for its or their own gross negligence
or willful misconduct. Without limitation of the generality of the foregoing,
Agent (a) may treat the payee of any Note as the holder thereof until Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to Agent; (b) may consult with legal counsel
(including counsel for Borrower or any of its Subsidiaries), independent public
accountants, and other experts selected by it, and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants, or experts; (c) makes no warranty or
representation to any Lender or Issuing Bank and shall not be responsible to any
Lender or Issuing Bank for any statements, warranties, or representations made
in or in connection with this Agreement or any other Loan Papers; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants, or conditions of this Agreement or any other Loan
Papers on the part of any Obligor or its Subsidiaries or to inspect the Property
(including the books and records) of any
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Obligor or its Subsidiaries; (e) shall not be responsible to any Lender or
Issuing Bank for the due execution, legality, validity, enforceability,
genuineness, sufficiency, or value of this Agreement, any other Loan Papers,
or any other instrument or document furnished pursuant hereto; and (f) shall
incur no liability under or in respect of this Agreement or any other Loan
Papers by acting upon any notice, consent, certificate, or other instrument
or writing believed by it to be genuine and signed or sent by the proper
party or parties.
8.03. NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION AND AFFILIATES. With
respect to its Commitment, its Advances, and any Loan Papers, NationsBank of
Texas, National Association has the same Rights under this Agreement as any
other Lender and may exercise the same as though it were not Agent. NationsBank
of Texas, National Association and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in any kind
of business with, any Obligor, any Affiliate thereof, and any Person who may do
business therewith, all as if NationsBank of Texas, National Association were
not Agent and without any duty to account therefor to any Lender.
8.04. LENDER CREDIT DECISION. Each Lender and Issuing Bank
acknowledges that it has, independently and without reliance upon Agent, any
other Lender or Issuing Bank, and based on the financial statements referred to
in SECTION 4.04 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and Issuing Bank also acknowledges that it will,
independently and without reliance upon Agent, any other Lender, or Issuing Bank
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Papers.
8.05. INDEMNIFICATION BY LENDERS. LENDERS SHALL INDEMNIFY AGENT, PRO
RATA, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS OF ANY
KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST AGENT IN ANY WAY RELATING TO OR ARISING OUT OF ANY LOAN PAPERS OR ANY
ACTION TAKEN OR OMITTED BY AGENT THEREUNDER, INCLUDING ANY NEGLIGENCE OF AGENT;
PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES, OR DISBURSEMENTS RESULTING FROM AGENT'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. Without limitation of the foregoing, Lenders shall
reimburse Agent, Pro Rata, promptly upon demand for any out-of-pocket expenses
(including reasonable attorneys' fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiation, legal proceedings or otherwise) of, or
legal and other advice in respect of rights or responsibilities under, the Loan
Papers. Agent may make demand for any amounts claimed to be due under this
SECTION 8.05 on and after the third Business
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Day after Borrower or any other Obligor has failed or refused to pay the full
amount demanded. The indemnity provided in this SECTION 8.05 shall survive
the termination of this Agreement.
8.06. SUCCESSOR AGENT. Agent may resign at any time by giving written
notice thereof to Lenders, Issuing Bank, and Borrower, and may be removed at any
time with or without cause by the action of all Lenders (other than Agent, if it
is a Lender). Upon any such resignation, Determining Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed and shall have accepted such appointment within thirty days after the
retiring Agent's giving of notice of resignation, then the retiring Agent may,
on behalf of Lenders, appoint a successor Agent, which shall be a commercial
bank organized under the Laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $50,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the Rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Papers, provided that if the
retiring or removed Agent is unable to appoint a successor Agent, Agent shall,
after the expiration of a sixty day period from the date of notice, be relieved
of all obligations as Agent hereunder. Notwithstanding any Agent's resignation
or removal hereunder, the provisions of this ARTICLE VIII shall continue to
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
ARTICLE IX. MISCELLANEOUS
9.01. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement or any other Loan Papers, nor consent to any departure by
Borrower or any Obligor therefrom, shall be effective unless the same shall be
in writing and signed by Agent with the consent of the Determining Lenders, and
then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; PROVIDED, HOWEVER, that no
amendment, waiver, or consent shall (and the result of action or failure to take
action shall not) unless in writing and signed by all of Lenders and Agent,
(a) increase the Commitment, (b) reduce any principal, interest, fees, or other
amounts payable hereunder, or waive or result in the waiver of any Event of
Default under SECTION 7.01(A), (c) postpone any date fixed for any payment of
principal, interest, fees, or other amounts payable hereunder, (d) release any
collateral or guaranties securing any Obligor's obligations hereunder, other
than releases contemplated hereby and by the Loan Papers, (e) change the meaning
of Specified Percentage or the number of Lenders required to take any action
hereunder, or (f) amend this SECTION 9.01 or SECTION 9.03. No amendment,
waiver, or consent shall affect the Rights, duties, or obligations of Agent
under any Loan Papers, unless it is in writing and signed by Agent in addition
to the requisite number of Lenders. No amendment, waiver, or consent shall
affect the Rights, duties, or obligations of Issuing Bank under any Loan Papers,
unless it is in writing and signed by Issuing Bank in addition to the requisite
number of Lenders.
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9.02. NOTICES.
(a) MANNER OF DELIVERY. All notices communications and other materials to
be given or delivered under the Loan Papers shall, except in those cases where
giving notice by telephone is expressly permitted, be given or delivered in
writing. All written notices, communications and materials shall be sent by
registered or certified mail, postage prepaid, return receipt requested, by
telecopier, or delivered by hand. In the event of a discrepancy between any
telephonic notice and any written confirmation thereof, such written
confirmation shall be deemed the effective notice except to the extent Agent,
any Lender, Issuing Bank, or Borrower has acted in reliance on such telephonic
notice.
(b) ADDRESSES. All notices, communications and materials to be given or
delivered pursuant to this Agreement shall be given or delivered at the
following respective addresses and telecopier and telephone numbers and to the
attention of the following individuals or departments:
(a) If to Borrower:
Cameron Ashley Building Products, Inc.
11651 Plano Road
Suite 100
Dallas, Texas 75243
Telephone No.: (214) 860-5120
Telecopier No.: (214) 860-5148
Attention: Mr. F. Dixon McElwee, Jr.
with a copy to: Mr. John Davis
(b) If to Agent or Issuing Bank:
NationsBank of Texas, National Association
NationsBank Plaza
901 Main Street, 67th Floor
Dallas, Texas 75202
Telephone No.: (214) 508-0941
Telecopier No.: (214) 508-0980
Attention: Mr. Tom Blake
(c) If to any Lender, to its address shown on SCHEDULE 9.02
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or at such other address or, telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify for the purpose in a notice to the other
specifically captioned "Notice of Change of Address".
(d) EFFECTIVENESS. Each notice, communication and any material to be
given or delivered to any party pursuant to this Agreement shall be effective or
deemed delivered or furnished (i) if sent by mail, on the fifth day after such
notice, communication or material is deposited in the mail, addressed as above
provided, (ii) if sent by telecopier, when such notice, communication or
material is transmitted to the appropriate number determined as above provided
in this SECTION 9.02 and the appropriate receipt is received or otherwise
acknowledged, (iii) if sent by hand delivery or overnight courier, when left at
the address of the addressee addressed as above provided, and (iv) if given by
telephone, when communicated to the individual or any member of the department
specified as the individual or department to whose attention notices,
communications and materials are to be given or delivered except that notices of
a change of address, telecopier or telephone number or individual or department
to whose attention notices, communications and materials are to be given or
delivered shall not be effective until received; PROVIDED, HOWEVER, that notices
to Agent pursuant to ARTICLE II shall be effective when received. Borrower
agrees that Agent shall have no duty or obligation to verify or otherwise
confirm telephonic notices given pursuant to ARTICLE II, and AGREES TO INDEMNIFY
AND HOLD HARMLESS AGENT, ISSUING BANK, AND LENDERS FOR ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS,
COSTS, AND EXPENSES RESULTING, DIRECTLY OR INDIRECTLY, FROM ACTING UPON ANY SUCH
NOTICE.
9.03. PARTIES IN INTEREST. All covenants and agreements contained in
this Agreement and all other Loan Papers shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto. Each Lender may
from time to time assign or transfer its interests hereunder pursuant to SECTION
9.04. No Obligor may assign or transfer any of its Rights or obligations
hereunder without the prior written consent of Lenders and, if such Rights or
obligation relate to any Letter of Credit or the Letter of Credit Facility,
Issuing Bank.
9.04. ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender (an "ASSIGNOR") may assign its Rights and obligations as a
Lender under the Loan Papers to one or more Eligible Assignees pursuant to an
Assignment and Acceptance, so long as (i) each assignment shall be of a
constant, and not a varying percentage of all Rights and obligations thereunder,
(ii) each Assignor shall obtain in each case the prior written consent of Agent
and Borrower, (iii) each Assignee shall in each case pay a $2,500 processing fee
to Agent, and (iv) no such assignment is for an amount less than $5,000,000.
Within five Business Days after Agent receives notice of any such assignment,
Borrower shall execute and deliver to Agent, in exchange for the Notes issued to
Assignor, new Notes to the order of such Assignor and its assignee in amounts
equal to their respective Specified Percentages of the Commitment. Such new
Notes shall be dated the effective date of the assignment. It is
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specifically acknowledged and agreed that on and after the effective date of
each assignment, the assignee shall be a party hereto and shall have the
Rights and obligations of a Lender under the Loan Papers.
(b) Each Lender may sell participations to one or more Persons in all or
any of its Rights and obligations under the Loan Papers; PROVIDED, HOWEVER, that
(i) such Lender's obligations under the Loan Papers shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender shall remain the holder
of its Notes for all purposes of the Loan Papers, (iv) the participant shall be
granted the Right to vote on or consent to only those matters described in
SECTIONS 9.01(A), (B), (C) and (D), (v) each Obligor, Agent, Issuing Bank, and
other Lenders shall continue to deal solely and directly with such Lender in
connection with its Rights and obligations under the Loan Papers, and (vi) no
such participation is for an amount less than $5,000,000.
(c) Any Lender may, in connection with any assignment or participation, or
proposed assignment or participation, disclose to the assignee or participant,
or proposed assignee or participant, any information relating to any Obligor
furnished to such Lender by or on behalf of any Obligor.
(d) Notwithstanding any other provision set forth in this Agreement, (i)
any Lender may at any time create a security interest in all or any portion of
its Rights under this Agreement (including, without limitation, the Advances
owing to it and the Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System, and (ii) no participant of any Lender may further assign or participate
any of its interest in the Loan Papers to any Person (except as may be required
by Law or a Tribunal having authority over such participant).
9.05. SHARING OF PAYMENTS. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any Right of set-off,
or otherwise) on account of its Advances in excess of its Pro Rata share of
payments made by Borrower, such Lender shall forthwith purchase participations
in Advances made by the other Lenders as shall be necessary to share the excess
payment Pro Rata with each of them; PROVIDED, HOWEVER, that if any of such
excess payment is thereafter recovered from the purchasing Lender, its purchase
from each Lender shall be rescinded and each Lender shall repay the purchase
price to the extent of such recovery together with a Pro Rata share of any
interest or other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered. Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this SECTION 9.05 may, to the
fullest extent permitted by Law, exercise all its Rights of payment (including
the Right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.
9.06. RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default, Agent, Issuing Bank, and each Lender is hereby
authorized at any time and from time to
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time, to the fullest extent permitted by Law, to set-off and apply any and
all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by Agent, Issuing
Bank, or such Lender to or for the credit or the account of Borrower against
any and all of the obligations of Borrower now or hereafter existing under
this Agreement and the other Loan Papers, whether or not Agent, Issuing Bank,
or any Lender shall have made any demand under this Agreement or the other
Loan Papers, and even if such obligations are unmatured. Each of Agent,
Issuing Bank, and each Lender shall promptly notify Borrower after any such
set-off and application, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The Rights of
Agent, Issuing Bank, and each Lender under this SECTION 9.06 are in addition
to other Rights (including, without limitation, other Rights of set-off)
which Agent, Issuing Bank, and such Lender may have.
9.07. COSTS, EXPENSES, AND TAXES.
(a) Borrower agrees to pay on demand (i) all costs and expenses (including
reasonable attorneys' fees and expenses) of Agent in connection with the
preparation, negotiation, administration, interpretation, modification,
amendment, waiver, and release of all Loan Papers, and (ii) all costs and
expenses (including reasonable attorneys' fees and expenses) of Agent, Issuing
Bank, and each Lender in connection with any restructuring, work-out, or
collection of any portion of the Obligations or the enforcement of any Loan
Papers.
(b) In addition, Borrower shall pay any and all stamp, debt, and other
Taxes payable or determined to be payable in connection with any payment
hereunder (other than Taxes on the overall net income of Agent, Issuing Bank, or
any Lender or franchise Taxes or Taxes on capital or capital receipts of Agent,
Issuing Bank, or any Lender), or the execution, delivery, or recordation of any
Loan Papers, and agrees to save Agent, Issuing Bank, and each Lender harmless
from and against any and all liabilities with respect to, or resulting from any
delay in paying or omission to pay any Taxes in accordance with this SECTION
9.07, including any penalty, interest, and expenses relating thereto. All
payments by Borrower or any Subsidiary of Borrower under any Loan Papers shall
be made free and clear of and without deduction for any present or future Taxes
(other than Taxes on the overall net income of Agent, Issuing Bank, or any
Lender of any nature now or hereafter existing, levied, or withheld, or
franchise Taxes or Taxes on capital or capital receipts of Agent, Issuing Bank,
or any Lender), including all interest, penalties, or similar liabilities
relating thereto. If Borrower shall be required by Law to deduct or to withhold
any Taxes from or in respect of any amount payable hereunder, (i) the amount so
payable shall be increased to the extent necessary so that, after making all
required deductions and withholdings (including Taxes on amounts payable to
Agent, Issuing Bank, or any Lender pursuant to this sentence), Agent, Issuing
Bank, or any Lender receives an amount equal to the sum it would have received
had no such deductions or withholdings been made, (ii) Borrower shall make such
deductions or withholdings, and (iii) Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority in accordance with
applicable Law. Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
SECTION 9.07 shall survive the execution of this Agreement, termination of the
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Commitment, repayment of the Obligations, satisfaction of each agreement
securing or assuring the Obligations and termination of this Agreement and
each other Loan Paper.
9.08. INDEMNIFICATION BY BORROWER. BORROWER AGREES TO INDEMNIFY,
DEFEND, AND HOLD HARMLESS AGENT, ISSUING BANK, EACH LENDER AND THIS
RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, AGENTS, EMPLOYEES, AND
REPRESENTATIVES, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS,
EXPENSES, AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED BY OR ASSERTED AGAINST ANY OF THEM IN ANY WAY RELATING
TO OR ARISING OUT OF ANY LOAN PAPERS (INCLUDING IN CONNECTION WITH OR AS A
RESULT, IN WHOLE OR IN PART, OF THE NEGLIGENCE OF ANY OF THEM), ANY
TRANSACTION RELATED HERETO OR THERETO, OR ANY ACT, OMISSION, OR TRANSACTION
OF BORROWER AND ITS AFFILIATES WITH RESPECT HERETO AND THERETO, OR ANY OF
THEIR DIRECTORS, PARTNERS, OFFICERS, AGENTS, EMPLOYEES, OR REPRESENTATIVES
WITH RESPECT HERETO AND THERETO; PROVIDED, HOWEVER, THAT NONE OF AGENT,
ISSUING BANK, OR ANY LENDER SHALL BE INDEMNIFIED, DEFENDED, AND HELD HARMLESS
PURSUANT TO THIS SECTION 9.08 TO THE EXTENT OF ANY LOSSES OR DAMAGES WHICH
BORROWER PROVES WERE CAUSED BY THE INDEMNIFIED PARTY'S WILLFUL MISCONDUCT OR
GROSS NEGLIGENCE.
9.09. RATE PROVISION. It is not the intention of any party to any Loan
Papers to make an agreement violative of the Laws of any applicable
jurisdiction relating to usury. In no event shall any Obligor or any other
Person be obligated to pay any amount in excess of the Maximum Amount. If
Agent, Issuing Bank, or any Lender ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest
shall be deemed a partial repayment of principal and treated hereunder as
such; and if principal is paid in full, any remaining excess shall be paid to
Borrower or the other Person entitled thereto. In determining whether or not
the interest paid or payable, under any specific contingency, exceeds the
Maximum Amount, each Obligor, Agent, Issuing Bank, and each Lender shall, to
the maximum extent permitted under Applicable Laws, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligations so that the
interest rate is uniform throughout the entire term of the Obligations;
PROVIDED that if the Obligations are paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received for
the actual period of existence thereof exceeds the Maximum Amount, Agent,
Issuing Bank, or Lenders, as appropriate, shall refund to Borrower the amount
of such excess or credit the amount of such excess against the total
principal amount owing, and, in such event, none or Agent, Issuing Bank, or
any Lender shall be subject to any penalties provided by any Laws for
contracting for, charging or receiving interest in excess of the Maximum
Amount. This SECTION 9.09 shall control every other provision of all
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agreements among the parties to the Loan Papers pertaining to the
transactions contemplated by or contained in the Loan Papers.
9.10. SEVERABILITY. If any provision of any Loan Papers is held to be
illegal, invalid, or unenforceable under present or future Laws during the
term thereof, such provision shall be fully severable, the appropriate Loan
Paper shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance therefrom. Furthermore, IN LIEU of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part of such
Loan Paper a legal, valid, and enforceable provision as similar in terms to
the illegal, invalid, or unenforceable provision as may be possible.
9.11. EXCEPTIONS TO COVENANTS. No Obligor shall be deemed to be
permitted to take any action or to fail to take any action that is permitted
as an exception to any covenant in any Loan Papers, or that is within the
permissible limits of any covenant, if such action or omission would result
in a violation of any other covenant in any Loan Papers.
9.12. COUNTERPARTS. This Agreement and the other Loan Papers may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such
agreement, it shall not be necessary to produce or account for any
counterpart other than one signed by the party against which enforcement is
sought.
9.13. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND ALL OTHER LOAN PAPERS SHALL BE DEEMED TO BE
CONTRACTS MADE IN DALLAS, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO
CONFLICTS OF LAWS) AND THE UNITED STATES OF AMERICA. WITHOUT EXCLUDING ANY
OTHER JURISDICTION, BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF
TEXAS LOCATED IN DALLAS, TEXAS, WILL HAVE JURISDICTION OVER PROCEEDINGS IN
CONNECTION HEREWITH. TO THE MAXIMUM EXTENT PERMITTED BY LAW, BORROWER HEREBY
WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE (WHETHER
A CLAIM IN TORT, CONTRACT, EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO
THIS AGREEMENT, THE OTHER LOAN PAPERS, OR ANY RELATED MATTERS, AND AGREES
THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
(b) BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY LEGAL PROCESS UPON
IT. BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY REGISTERED
MAIL (RETURN RECEIPT REQUESTED)
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DIRECTED TO BORROWER AT ITS ADDRESS DESIGNATED FOR NOTICE UNDER THIS
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER
DEPOSIT IN THE UNITED STATES MAIL. NOTHING IN THIS SECTION 9.13 SHALL AFFECT
THE RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
9.14. RESTATEMENT. This Agreement restates in its entirety the Existing
Agreement and is not intended as and shall not be construed as a release or
novation of the obligations of each Obligor pursuant to the Existing
Agreement.
9.15. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, this First Restated Credit Agreement is executed as
of the date first set forth above.
BORROWER:
CAMERON ASHLEY BUILDING
PRODUCTS, INC.
By:
---------------------------------------
---------------,-----------------------
(Print Name) (Print Title)
AGENT:
NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION
By:
---------------------------------------
Joseph G. Taylor, Senior Vice President
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CO-AGENT:
ABN AMRO BANK, N.V., Atlanta Agency
By:
---------------------------------------
---------------,-----------------------
(Print Name) (Print Title)
By:
---------------------------------------
---------------,-----------------------
(Print Name) (Print Title)
ISSUING BANK:
NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION
By:
---------------------------------------
Joseph G. Taylor, Senior Vice President
LENDERS:
NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION
Specified Percentage: 40.00000%
By:
---------------------------------------
Joseph G. Taylor, Senior Vice President
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ABN AMRO BANK, N.V., Atlanta Agency
Specified Percentage: 33.33330%
By:
---------------------------------------
---------------,-----------------------
(Print Name) (Print Title)
FIRST INTERSTATE BANK OF TEXAS, N.A.
Specified Percentage: 13.33335%
By:
---------------------------------------
Ken Taylor, Assistant Vice President
SUNTRUST BANK, ATLANTA
Specified Percentage: 13.33335%
By:
---------------------------------------
---------------,-----------------------
(Print Name) (Print Title)
By:
---------------------------------------
---------------,-----------------------
(Print Name) (Print Title)
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EXHIBIT 10.19
COMPOSITE CONFORMED COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CAMERON ASHLEY BUILDING PRODUCTS, INC.
$50,000,000 Senior Notes
$10,000,000 6.79% Senior Notes due April 15, 2001
$15,000,000 6.79% Senior Notes due April 15, 2002
$10,000,000 7.21% Senior Notes due April 15, 2003
$15,000,000 7.61% Senior Notes due April 15, 2006
______________
NOTE PURCHASE AGREEMENT
_____________
Dated as of April 1, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CAMERON ASHLEY BUILDING PRODUCTS, INC.
11651 PLANO ROAD
DALLAS, TEXAS 75243
$50,000,000 Senior Notes
$10,000,000 6.79% Senior Notes due April 15, 2001
$15,000,000 6.79% Senior Notes due April 15, 2002
$10,000,000 7.21% Senior Notes due April 15, 2003
$15,000,000 7.61% Senior Notes due April 15, 2006
Dated as of
April 1, 1996
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
CAMERON ASHLEY BUILDING PRODUCTS, INC., a Georgia corporation (the
"COMPANY"), agrees with you as follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $10,000,000 6.79% Senior
Notes due April 15, 2001, $15,000,000 6.79% Senior Notes due April 15, 2002,
$10,000,000 7.21% Senior Notes due April 15, 2003, and $15,000,000 7.61% Senior
Notes due April 15, 2006 (respectively the "2001 NOTES", the "2002 NOTES", the
"2003 NOTES" and the "2006 NOTES", each being a "SERIES" of Notes, and
collectively the "NOTES", such term to include any such notes issued in
substitution therefor pursuant to Section 13 of this Agreement or the Other
Agreements (as hereinafter defined)). The Notes shall be substantially in the
form set out in Exhibit 1.1, with such changes therefrom, if any, as may be
approved by you and the Company. Certain capitalized terms used in this
Agreement are defined in Schedule B; references to a "Schedule" or an "Exhibit"
are, unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement. Payment of the Notes will be guaranteed by the Guarantors under and
pursuant to separate Guaranty Agreements (the "GUARANTY AGREEMENTS") each
substantially in the form set out in Exhibit 1.2.
<PAGE>
Cameron Ashley Building Products, Inc. Note Purchase Agreement
SECTION 2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount and of the Series
specified opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this Agreement,
the Company is entering into separate Note Purchase Agreements (the "OTHER
AGREEMENTS") identical with this Agreement with each of the other purchasers
named in Schedule A (the "OTHER PURCHASERS"), providing for the sale at such
Closing to each of the Other Purchasers of Notes in the principal amount and of
the Series specified opposite its name in Schedule A. Your obligation
hereunder, and the obligations of the Other Purchasers under the Other
Agreements, are several and not joint obligations, and you shall have no
obligation under any Other Agreement and no liability to any Person for the
performance or nonperformance by any Other Purchaser thereunder.
SECTION 3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Chapman and Cutler, 111 West Monroe
Street, Chicago, Illinois 60603, at 10:00 A.M. Chicago time, at a closing (the
"CLOSING") on April 18, 1996 or on such other Business Day thereafter on or
prior to April 30, 1996 as may be agreed upon by the Company and you and the
Other Purchasers. At the Closing the Company will deliver to you the Notes to
be purchased by you in the form of a single Note (or such greater number of
Notes in denominations of at least $1,000,000 as you may request) dated the date
of the Closing and registered in your name (or in the name of your nominee),
against delivery by you to the Company or its order of immediately available
funds in the amount of the purchase price therefor by wire transfer of
immediately available funds to DDA # 1292833788 at NationsBank of Texas, N.A.,
ABA Number 111000025, Beneficiary: Cameron Ashley Building Products. If at the
Closing the Company shall fail to tender such Notes to you as provided above in
this Section 3, or any of the conditions specified in Section 4 shall not have
been fulfilled to your satisfaction, you shall, at your election, be relieved of
all further obligations under this Agreement, without thereby waiving any rights
you may have by reason of such failure or such nonfulfillment.
SECTION 4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions:
-10-
<PAGE>
Cameron Ashley Building Products, Inc. Note Purchase Agreement
SECTION 4.1. GUARANTY AGREEMENTS. The Guaranty Agreements shall have
been executed and delivered by the Guarantors.
SECTION 4.2. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company in this Agreement and of the Guarantors in the
Guaranty Agreements shall be correct when made and at the time of the Closing.
SECTION 4.3. PERFORMANCE; NO DEFAULT. The Company, and each Guarantor,
shall have performed and complied with all agreements and conditions contained
in this Agreement required to be performed or complied with by it prior to or at
the Closing, and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by Section 5.14), no Default
or Event of Default shall have occurred and be continuing. Neither the Company
nor any Subsidiary shall have entered into any transaction since the date of the
Memorandum that would have been prohibited by Section 10 hereof had such Section
applied since such date.
SECTION 4.4. COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company and each Guarantor shall have
delivered to you an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.2, 4.3 and 4.10 have been
fulfilled.
(b) SECRETARY'S CERTIFICATE. The Company and each Guarantor shall have
delivered to you a certificate certifying as to the resolutions attached thereto
and other corporate proceedings relating to the authorization, execution and
delivery of the Notes and the Agreements or, as the case may be, the Guaranty
Agreements.
SECTION 4.5. OPINIONS OF COUNSEL. You shall have received opinions in
form and substance satisfactory to you, dated the date of the Closing (a) from
Stieber Campbell, P.C., special counsel for the Company and the Guarantors,
covering the matters set forth in Exhibit 4.5(a) and covering such other matters
incident to the transactions contemplated hereby as you or your counsel may
reasonably request (and the Company hereby instructs its counsel to deliver such
opinion to you) and (b) from Chapman and Cutler, your special counsel in
connection with such transactions, substantially in the form set forth in
Exhibit 4.5(b) and covering such other matters incident to such transactions as
you may reasonably request.
SECTION 4.6. PURCHASE PERMITTED BY APPLICABLE LAW, ETC. On the date of
the Closing your purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
as to the character of the particular investment, (ii) not violate any
applicable law or regulation (including, without limitation, Regulation G, T or
X of the Board of Governors of the Federal Reserve System) and (iii) not subject
you to any tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer's Certificate certifying as
to such matters of fact as you may reasonably specify to enable you to determine
whether such purchase is so permitted.
SECTION 4.7. SALE OF OTHER NOTES. Contemporaneously with the Closing,
the Company shall sell to the Other Purchasers, and the Other Purchasers shall
purchase, the Notes to be purchased by them at the Closing as specified in
Schedule A.
SECTION 4.8. PAYMENT OF SPECIAL COUNSEL FEES. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the Closing
the fees, charges and disbursements of your special counsel referred to in
Section 4.5 to the extent reflected in a statement of such counsel rendered to
the Company at least one Business Day prior to the Closing.
SECTION 4.9. PRIVATE PLACEMENT NUMBERS. A Private Placement Number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for each Series of the Notes.
SECTION 4.10. CHANGES IN CORPORATE STRUCTURE. The Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
SECTION 4.11. PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or other copies
of such documents as you or they may reasonably request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
SECTION 5.1. ORGANIZATION; POWER AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
incorporation, and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has the corporate power
and authority to own or hold under lease the properties it purports to own or
hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver this Agreement and the Other Agreements and the
Notes and to perform the provisions hereof and thereof.
SECTION 5.2. AUTHORIZATION, ETC. (a) This Agreement, the Other
Agreements and the Notes have been duly authorized by all necessary corporate
action on the part of the Company, and this Agreement constitutes, and upon
execution and delivery thereof each Note will constitute, a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(b) Each of the Guaranty Agreements has been duly authorized by all
necessary corporate action on the part of each Guarantor, and each of the
Guaranty Agreements, upon execution and delivery thereof, will constitute, a
legal, valid and binding joint and several obligation of each Guarantor
enforceable against such Guarantor in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 5.3. DISCLOSURE. The Company, through its agents, Dillon, Read &
Co. Inc. and NationsBanc Capital Markets, Inc., has delivered to you and each
Other Purchaser a copy of a Private Placement Offering Memorandum, dated
February 1996 (the "MEMORANDUM"), relating to the transactions contemplated
hereby. The Memorandum fairly describes, in all material respects, the general
nature of the business and principal properties of the Company and its
Subsidiaries. This Agreement, the Memorandum, the documents, certificates or
other writings delivered to you by or on behalf of the Company in connection
with the transactions contemplated hereby and the financial statements listed in
Schedule 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which they
were made. Since October 31, 1995, there has been no change in the financial
condition, operations, business, properties or prospects of the Company or any
Subsidiary except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
Effect. There is no fact known to the Company that could reasonably be expected
to have a Material Adverse Effect.
SECTION 5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES;
AFFILIATES. (a) Schedule 5.4 contains complete and correct lists (i) of the
Company's Subsidiaries, showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests outstanding owned by
the Company and each other Subsidiary, (ii) of the Company's Affiliates, other
than Subsidiaries, and (iii) of the Company's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its other Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and clear
of any Lien.
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction (other than restrictions imposed by the corporate law of the
jurisdiction under which such Subsidiary exists) or any agreement restricting
the ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Company or any of its Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of such
Subsidiary.
(e) Those Subsidiaries listed in Section IA of said Schedule 5.4
constitute Restricted Subsidiaries.
(f) Each Guarantor is a Wholly-Owned Restricted Subsidiary.
SECTION 5.5. FINANCIAL STATEMENTS. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its Subsidiaries
listed on Schedule 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
of the respective dates specified in such Schedule and the consolidated results
of their operations and cash flows for the respective periods so specified and
have been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).
SECTION 5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The
execution, delivery and performance by the Company of this Agreement and the
Notes and the execution, delivery and performance by each Guarantor of its
Guaranty Agreement will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to the Company or any Subsidiary or (iii) violate any provision of any statute
or other rule or regulation of any Governmental Authority applicable to the
Company or any Subsidiary.
SECTION 5.7. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Notes or the execution, delivery or
performance by any Guarantor of its Guaranty Agreement.
SECTION 5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary or any property of the Company or any
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term of
any agreement or instrument to which it is a party or by which it is bound, or
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
SECTION 5.9. TAXES. The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
payable on such returns and all other taxes and assessments levied upon them or
their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
except for any taxes and assessments (i) the amount of which is not individually
or in the aggregate Material or (ii) the amount, applicability or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which the Company or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. The Company knows of no
basis for any other tax or assessment that could reasonably be expected to have
a Material Adverse Effect. The charges, accruals and reserves on the books of
the Company and its Subsidiaries in respect of Federal, state or other taxes for
all fiscal periods are adequate. Except as set forth on Schedule 5.9, the
Federal income tax liabilities of the Company and its Subsidiaries have been
determined by the Internal Revenue Service and paid for all fiscal years up to
and including the fiscal year ended October 3, 1992.
SECTION 5.10. TITLE TO PROPERTY; LEASES. The Company and its Restricted
Subsidiaries have good and sufficient title to their respective properties that
individually or in the aggregate are Material, including all such properties
reflected in the most recent audited balance sheet referred to in Section 5.5 or
purported to have been acquired by the Company or any Restricted Subsidiary
after said date (except as sold or otherwise disposed of in the ordinary course
of business), in each case free and clear of Liens prohibited by this Agreement.
All leases that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.
SECTION 5.11. LICENSES, PERMITS, ETC.
(a) The Company and its Restricted Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any Material respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or other right owned by
any other Person; and
(c) to the best knowledge of the Company, there is no Material violation
by any Person of any right of the Company or any of its Subsidiaries with
respect to any patent, copyright, service mark, trademark, trade name or other
right owned or used by the Company or any of its Subsidiaries.
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
SECTION 5.12. COMPLIANCE WITH ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of ERISA), and no
event, transaction or condition has occurred or exists that could reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "BENEFIT LIABILITIES" has the
meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE" and
"PRESENT VALUE" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and sale
of the Notes hereunder will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to (i) the accuracy of your representation in Section 6.2 as to
the sources of the funds used to pay the purchase price of the Notes to be
purchased by you and (ii) the assumption, made solely for the purpose of making
such representation, that Department of Labor Interpretive Bulletin 75-2 with
respect to prohibited transactions remains valid in the circumstances of the
transactions contemplated herein.
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
SECTION 5.13. PRIVATE OFFERING BY THE COMPANY. Neither the Company nor
anyone acting on its behalf has offered the Notes or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person other than you, the
Other Purchasers and not more than 100 other Institutional Investors, each of
which has been offered the Notes at a private sale for investment. Neither the
Company nor anyone acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Notes to the registration requirements
of Section 5 of the Securities Act.
SECTION 5.14. USE OF PROCEEDS; MARGIN REGULATIONS. The Company will apply
the proceeds of the sale of the Notes to the repayment of Indebtedness of the
Company to banks and for working capital. No part of the proceeds from the sale
of the Notes hereunder will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System (12 CFR 207), or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). The Company does not presently own any
margin stock and the Company does not have any present intention to acquire any
margin stock in the future. As used in this Section, the term "MARGIN STOCK"
and the phrase "PURPOSE OF BUYING OR CARRYING" shall have the meanings assigned
to them in said Regulation G.
SECTION 5.15. EXISTING INDEBTEDNESS; FUTURE LIENS. (a) Except as
described therein, Schedule 5.15 sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Restricted Subsidiaries as of
March 31, 1996, since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or maturities of
the Indebtedness of the Company or its Restricted Subsidiaries. Neither the
Company nor any Restricted Subsidiary is in default and no waiver of default is
currently in effect, in the payment of any principal or interest on any
Indebtedness of the Company or such Restricted Subsidiary and no event or
condition exists with respect to any Indebtedness of the Company or any
Restricted Subsidiary that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Indebtedness to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment.
(b) Neither the Company nor any Restricted Subsidiary has agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien.
SECTION 5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither the sale
of the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
Enemy Act, as amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or
any enabling legislation or executive order relating thereto.
SECTION 5.17. STATUS UNDER CERTAIN STATUTES. Neither the Company nor any
Subsidiary is subject to regulation under the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 1935, as amended, the
Interstate Commerce Act, as amended, or the Federal Power Act, as amended.
SECTION 5.18. ENVIRONMENTAL MATTERS. Neither the Company nor any
Subsidiary has knowledge of any claim or has received any notice of any claim,
and no proceeding has been instituted raising any claim against the Company or
any of its Subsidiaries or any of their respective real properties now or
formerly owned, leased or operated by any of them or other assets, alleging any
damage to the environment or violation of any Environmental Laws, except, in
each case, such as could not reasonably be expected to result in a Material
Adverse Effect. Except as otherwise disclosed to you in writing:
(a) neither the Company nor any Subsidiary has knowledge of any facts
which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring
on or in any way related to real properties now or formerly owned, leased
or operated by any of them or to other assets or their use, except, in each
case, such as could not reasonably be expected to result in a Material
Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them and or has disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws in each case in any manner that
could reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
Section 6. Representations of the Purchaser.
SECTION 6.1. PURCHASE FOR INVESTMENT. You represent that you are
purchasing the Notes for your own account or for one or more separate accounts
maintained by you or for the account of one or more pension or trust funds and
not with a view to the distribution thereof,
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
PROVIDED that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
SECTION 6.2. SOURCE OF FUNDS. You represent that you are an insurance
company and that at least one of the following statements is an accurate
representation as to each source of funds (a "SOURCE") to be used by you to pay
the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE") 95-
60 (issued July 12, 1995), and there is no employee benefit plan (treating
as a single plan all plans maintained by the same employer or employee
organization) with respect to which the amount of the general account
reserves and liabilities for all contracts held by or on behalf of such
plan exceed 10% of the total reserves and liabilities of such general
account (exclusive of separate account liabilities) plus surplus, as set
forth in your most recent annual statement in the form required by the
National Association of Insurance Commissioners as filed with your state of
domicile; or
(b) the Source is an insurance company pooled separate account,
within the meaning of PTE 90-1 (issued January 29, 1990), and, except as
you have disclosed to the Company in writing pursuant to this paragraph
(b), no employee benefit plan or group of plans maintained by the same
employer or employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective investment
fund; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part l(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of
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such QPAM and (ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company in
writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each
of which has been identified to the Company in writing pursuant to this
paragraph (e); or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN",
"GOVERNMENTAL PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
SECTION 7. INFORMATION AS TO COMPANY.
SECTION 7.1. FINANCIAL AND BUSINESS INFORMATION. The Company shall
deliver to each Holder of Notes that is an Institutional Investor:
(a) QUARTERLY STATEMENTS -- within 45 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies
of:
(i) consolidated and consolidating balance sheets of the Company
and its Restricted Subsidiaries as of the close of such quarterly
fiscal period, setting forth in comparative form the consolidated
figures for the fiscal year then most recently ended,
(ii) consolidated and consolidating statements of income of the
Company and its Restricted Subsidiaries for such quarterly fiscal
period and for the portion of the fiscal year ending with such
quarterly fiscal period, in each case setting forth in comparative
form the consolidated figures for the corresponding periods of the
preceding fiscal year, and
(iii) consolidated and consolidating statements of
stockholders' equity and cash flows of the Company and its Restricted
Subsidiaries for the portion of the fiscal year ending with such
quarterly fiscal period, setting forth
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in comparative form the consolidated figures for the corresponding
period of the preceding fiscal year,
all in reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally, and certified by a Senior
Financial Officer as fairly presenting, in all material respects, the
financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, PROVIDED that delivery within the time period specified above
of copies of the Company's Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this
Section 7.1(a);
(b) ANNUAL STATEMENTS -- within 90 days after the end of each fiscal
year of the Company, duplicate copies of,
(i) consolidated and consolidating balance sheets of the Company
and its Restricted Subsidiaries, as at the end of such year, and
(ii) consolidated and consolidating statements of income, changes
in stockholders' equity and cash flows of the Company and its
Restricted Subsidiaries, for such year,
setting forth in each case in comparative form the consolidated figures for
the previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state
that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon
and their results of operations and cash flows and have been prepared
in conformity with GAAP, and that the examination of such accountants
in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making their
audit, they have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if they are aware
that any such condition or event then exists, specifying the nature
and period of the existence thereof (it being understood that such
accountants shall not be liable, directly or indirectly, for any
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failure to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing standards or did
not make such an audit),
PROVIDED that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with
the Company's annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and Exchange
Commission, together with the accountant's certificate described in clause
(B) above, shall be deemed to satisfy the requirements of this Section
7.1(b);
(c) SEC AND OTHER REPORTS -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement
sent by the Company or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such holder),
and each prospectus and all amendments thereto filed by the Company or any
Subsidiary with the Securities and Exchange Commission and of all press
releases and other statements made available generally by the Company or
any Subsidiary to the public concerning developments that are Material;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in any
event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given
any notice or taken any action with respect to a claimed default hereunder
or that any Person has given any notice or taken any action with respect to
a claimed default of the type referred to in Section 11(f), a written
notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any,
that the Company or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, or in
the imposition of any Lien on any of the rights, properties or assets
of the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or such penalty or excise tax provisions, if such liability or
Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse
Effect;
(f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or
any Subsidiary from any Federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that could reasonably
be expected to have a Material Adverse Effect;
(g) UNRESTRICTED SUBSIDIARIES. Within the respective periods
provided in paragraphs (a) and (b) above, financial statements of the
character and for the dates and periods as in said paragraphs (a) and (b)
provided covering each Unrestricted Subsidiary (or groups of Unrestricted
Subsidiaries on a consolidated basis); and
(h) REQUESTED INFORMATION -- with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such Holder of Notes.
SECTION 7.2. OFFICER'S CERTIFICATE. Each set of financial statements
delivered to a Holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.1 through Section 10.8
hereof, inclusive, during the quarterly
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
or annual period covered by the statements then being furnished (including
with respect to each such Section, where applicable, the calculations of
the maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of the
amount, ratio or percentage then in existence); and
(b) EVENT OF DEFAULT -- a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his or
her supervision, a review of the transactions and conditions of the Company
and its Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes a Default or
an Event of Default or, if any such condition or event existed or exists
(including, without limitation, any such event or condition resulting from
the failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof
and what action the Company shall have taken or proposes to take with
respect thereto.
SECTION 7.3. INSPECTION. The Company shall permit the representatives of
each Holder of Notes that is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then exists, at
the expense of such Holder and upon reasonable prior notice to the Company,
to visit the principal executive office of the Company, to discuss the
affairs, finances and accounts of the Company and its Restricted
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its independent
public accountants, and (with the consent of the Company, which consent
will not be unreasonably withheld) to visit the other offices and
properties of the Company and each Restricted Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing;
and
(b) DEFAULT -- if a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or
properties of the Company or any Restricted Subsidiary, to examine all
their respective books of account, records, reports and other papers, to
make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and
independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts
of the Company and its Restricted Subsidiaries), all at such times and as
often as may be requested.
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
SECTION 8. PREPAYMENT OF THE NOTES.
SECTION 8.1. REQUIRED PREPAYMENTS.
(a) 2002 NOTES. On April 15, 2000 and April 15, 2001 the Company will
prepay $5,000,000 principal amount (or such lesser principal amount as shall
then be outstanding) of the 2002 Notes at par and without payment of the Make-
Whole Amount or any premium, PROVIDED that (i) upon any partial prepayment of
the 2002 Notes pursuant to Section 8.2, such partial prepayment shall be deemed
to be applied first, to the amount of principal scheduled to remain unpaid on
the 2002 Notes on April 15, 2002, and then to the remaining scheduled principal
payments in inverse chronological order and (ii) upon any purchase of the 2002
Notes permitted by Section 8.5 the principal amount of each required prepayment
of the 2002 Notes becoming due under this Section 8.1(a) on and after the date
of such purchase shall be reduced in the same proportion as the aggregate unpaid
principal amount of the 2002 Notes is reduced as a result of such purchase.
(b) NO REQUIRED PREPAYMENT OF OTHER SERIES OF NOTES. No prepayment of the
2001 Notes, the 2003 Notes or the 2006 Notes is required pursuant to this
Section 8.1 prior to the maturity thereof.
SECTION 8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT. The Company
may, at its option, upon notice as provided below, prepay at any time all, or
from time to time any part of, the Notes, in an amount not less than 10% of the
aggregate principal amount of the Notes then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid, plus the Make-
Whole Amount determined for the prepayment date with respect to such principal
amount. The Company will give each Holder of Notes written notice of each
optional prepayment under this Section 8.2 not less than 30 days and not more
than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such Holder to
be prepaid (determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each Holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
SECTION 8.3. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of each
partial prepayment of the Notes, the principal amount of the Notes to be prepaid
shall be allocated among all of the Notes of all Series at the time outstanding
in proportion, as nearly as
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment.
SECTION 8.4. MATURITY; SURRENDER, ETC. In the case of each prepayment of
Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in
full shall be surrendered to the Company and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal amount of
any Note.
SECTION 8.5. PURCHASE OF NOTES. The Company will not and will not permit
any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the Notes. The
Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.
SECTION 8.6. MAKE-WHOLE AMOUNT. The term "MAKE-WHOLE AMOUNT" means, with
respect to any Note, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the Called Principal
of such Note over the amount of such Called Principal, PROVIDED that the Make-
Whole Amount may in no event be less than zero. For the purposes of determining
the Make-Whole Amount, the following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due
dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor
(applied on the same periodic basis as that on which interest on the Notes
is payable) equal to the Reinvestment Yield with respect to such Called
Principal.
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
"REINVESTMENT YIELD" means, with respect to the Called Principal of
any Note, 0.5% plus the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 500" on the Telerate Access Service (or such
other display as may replace Page 500 on Telerate Access Service) for
actively traded on-the-run U.S. Treasury securities having a maturity equal
to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields are not reported as of such time or
the yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H. 15 (519) (or any comparable successor publication)
for actively traded on-the-run U.S. Treasury securities having a constant
maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date. Such implied yield will be determined, if necessary,
by (a) converting U.S. Treasury bill quotations to bond-equivalent yields
in accordance with accepted financial practice and (b) interpolating
linearly between (1) the actively traded on-the-run U.S. Treasury security
with the duration closest to and greater than the Remaining Average Life
and (2) the actively traded on-the-run U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number
of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, PROVIDED that if such Settlement Date is not a date
on which interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 8.2 or
12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or has
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
become or is declared to be immediately due and payable pursuant to Section
12.1, as the context requires.
SECTION 9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
SECTION 9.1. COMPLIANCE WITH LAW. The Company will and will cause each
of its Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 9.2. INSURANCE. The Company will and will cause each of its
Restricted Subsidiaries to maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a similar
business and similarly situated.
SECTION 9.3. MAINTENANCE OF PROPERTIES. The Company will and will cause
each of its Restricted Subsidiaries to maintain and keep, or cause to be
maintained and kept, their respective properties in good repair, working order
and condition (other than ordinary wear and tear), so that the business carried
on in connection therewith may be properly conducted at all times, PROVIDED that
this Section shall not prevent the Company or any Restricted Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 9.4. PAYMENT OF TAXES AND CLAIMS. The Company will and will
cause each of its Restricted Subsidiaries to file all tax returns required to be
filed in any jurisdiction and to pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments, governmental charges,
or levies imposed on them or any of their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and payable
and
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
before they have become delinquent and all claims for which sums have become due
and payable that have or might become a Lien on properties or assets of the
Company or any Restricted Subsidiary, PROVIDED that neither the Company nor any
Restricted Subsidiary need pay any such tax or assessment or claims if (i) the
amount, applicability or validity thereof is contested by the Company or such
Restricted Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Restricted Subsidiary has established adequate
reserves therefor in accordance with GAAP on the books of the Company or such
Restricted Subsidiary or (ii) the nonpayment of all such taxes and assessments
in the aggregate could not reasonably be expected to have a Material Adverse
Effect.
SECTION 9.5. CORPORATE EXISTENCE, ETC. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Sections 10.8 and 10.9, the Company will at all times preserve and keep in full
force and effect the corporate existence of each of its Restricted Subsidiaries
(unless merged into the Company or a Restricted Subsidiary) and all rights and
franchises of the Company and its Restricted Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise could
not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
SECTION 10.1. CONSOLIDATED NET WORTH. The Company will not, in any fiscal
year, permit Consolidated Net Worth to be less than (i) in the case of its
fiscal year ending October 31, 1996, $62,500,000, and (ii) in the case of each
fiscal year thereafter, an amount equal to the sum of the amount required to be
maintained in the immediately previous fiscal year plus 50% of Consolidated Net
Income for such immediately previous fiscal year (but without deduction in the
event of a deficit in Consolidated Net Income).
SECTION 10.2. LIMITATION ON CONSOLIDATED DEBT. The Company will not, and
will not permit any Restricted Subsidiary, directly or indirectly, to create,
incur, assume, guarantee, or otherwise become directly or indirectly liable with
respect to, any Debt, UNLESS on the date the Company or such Restricted
Subsidiary becomes liable with respect to any such Debt and immediately after
giving effect thereto and the concurrent retirement of any other Debt,
(a) no Default or Event of Default exists, and
(b) Consolidated Debt as of such date does not exceed 60% of
Consolidated Total Capitalization as of the end of the then most recent
fiscal quarter of the Company;
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
PROVIDED, HOWEVER, that, if such Debt is incurred by the Company
concurrently with and for the purpose of an acquisition of a Person or the
assets of a Person or a line of business of a Person, then Consolidated
Debt may be as much as 65% of Consolidated Total Capitalization for the
period commencing on the date of the incurrence of such Debt and the
consummation of such acquisition and ending nine months thereafter.
SECTION 10.3. LIMITATION ON DEBT OF RESTRICTED SUBSIDIARIES. The Company
will not permit any Restricted Subsidiary, directly or indirectly, to create,
incur, assume, guarantee, or otherwise become directly or indirectly liable with
respect to, any Debt, except:
(a) Debt of a Restricted Subsidiary to the Company or to a Wholly-
Owned Restricted Subsidiary, and
(b) Debt of a Restricted Subsidiary consisting of:
(i) Debt of a Person existing at the time such Person is merged
into or consolidated with a Restricted Subsidiary or such Restricted
Subsidiary acquires all or substantially all the properties of such
Person,
(ii) Debt of a Person existing at the time such Person becomes a
Restricted Subsidiary,
(iii) Debt of a Restricted Subsidiary outstanding on the date
hereof and reflected in Schedule 5.15,
(iv) Debt of a Restricted Subsidiary incurred in connection with,
or with a view to, compliance by such Restricted Subsidiary with the
requirements of any program adopted by any federal, state or local
governmental authority and applicable to such Restricted Subsidiary
and providing financial or tax benefits to such Restricted Subsidiary
which are not available without the incurrence of such Debt and are
not available directly to the Company,
(v) Debt of a Restricted Subsidiary incurred to pay all or any
part of the purchase price or the cost of construction of property or
equipment acquired by a Restricted Subsidiary, provided such Debt is
incurred within one year after such acquisition or the completion of
such construction, whichever is later,
(vi) Debt of a Restricted Subsidiary incurred to pay all or any
part of the cost to construct additions, substantial repairs or
alterations or substantial improvements to properties of such
Restricted Subsidiary, provided (x) the
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
amount of such Debt does not exceed the expense incurred to construct
such additions, substantial repairs or alterations or substantial
improvements, and (y) such Debt is incurred within one year after
completion of construction and full operation,
(vii) Debt of a Restricted Subsidiary owing to the seller or
sellers of such Restricted Subsidiary or of substantially all the
assets thereof, to the Company or such Restricted Subsidiary and
incurred by such Restricted Subsidiary to finance the acquisition of
either (A) the capital stock of such Restricted Subsidiary by the
Company or another Restricted Subsidiary or (B) such assets by such
Restricted Subsidiary, and
(viii) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any
Debt referred to in the foregoing clauses (i) through (vi), inclusive,
provided the principal amount of the Debt so extended, renewed or
replaced shall not exceed the principal amount thereof immediately
prior to such extension renewal or replacement,
PROVIDED that, after giving effect thereto and to the application of the
proceeds thereof the aggregate amount of Priority Obligations does not
exceed 15% of Consolidated Net Worth as at the end of the Company's fiscal
year then most recently ended.
SECTION 10.4. FIXED CHARGES COVERAGE RATIO. The Company will not, at any
time, permit the Fixed Charges Coverage Ratio to be less than 1.05 to 1.
SECTION 10.5. LIENS. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly create, incur, assume or
permit to exist (upon the happening of a contingency or otherwise) any Lien on
or with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of the
Company or any such Restricted Subsidiary, whether now owned or held or
hereafter acquired, or any income or profits therefrom or assign or otherwise
convey any right to receive income or profits (unless it makes, or causes to be
made, effective provision whereby the Notes will be equally and ratably secured
with any and all other obligations thereby secured, such security to be pursuant
to an agreement reasonably satisfactory to the Required Holders and, in any such
case, the Notes shall have the benefit, to the fullest extent that, and with
such priority as, the Holders of the Notes may be entitled under applicable law,
of an equitable Lien on such property), except:
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
(a) Liens existing on the date of this Agreement and securing the
Debt of the Company and its Restricted Subsidiaries so identified in
Schedule 5.15 (other than Liens designated in Section 5.15 to be discharged
at or before the Closing);
(b) any Lien created to secure all or any part of the purchase price,
or to secure Debt incurred or assumed to pay all or any part of the
purchase price or cost of construction, of property (or any improvement
thereon) acquired, constructed or improved by the Company or a Restricted
Subsidiary after the date of the Closing, PROVIDED that
(i) any such Lien shall extend solely to the item or items of
such property (or improvement thereon) so acquired, constructed or
improved and, if required by the terms of the instrument originally
creating such Lien, other property (or improvement thereon) which is
an improvement to or is acquired for specific use in connection with
such acquired or constructed property (or improvement thereon) or
which is real property being improved by such acquired or constructed
property (or improvement thereon),
(ii) the principal amount of the Debt secured by any such Lien
shall at no time exceed an amount equal to the lesser of (A) the cost
to the Company or such Restricted Subsidiary of the property (or
improvement thereon) so acquired or constructed and (B) the Fair
Market Value (as determined in good faith by the board of directors of
the Company) of such property (or improvement thereon) at the time of
such acquisition or construction,
(iii) any such Lien shall be created contemporaneously with,
or within 180 days after, the acquisition of such property (or in the
case of property constructed or improved, after the later of (y) the
completion of such construction or improvement or (z) the commencement
of commercial operation of such property),
(iv) the property subject to such Lien was not acquired in
connection with a Property Reinvestment Application, and
(v) in the case of any such construction or improvement such
Lien shall not apply to any property theretofore owned by the Company
or any Restricted Subsidiary, other than any theretofore unimproved
real property on which the property so constructed, or the
improvement, is located;
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
(c) any Lien existing on property of a Person immediately prior to
its being consolidated with or merged into the Company or a Restricted
Subsidiary or its becoming a Restricted Subsidiary, or any Lien existing on
any property acquired by the Company or any Restricted Subsidiary at the
time such property is so acquired (whether or not the Debt secured thereby
shall have been assumed), PROVIDED that (i) no such Lien shall have been
created or assumed in contemplation of such consolidation or merger or such
Person's becoming a Restricted Subsidiary or such acquisition of property,
and (ii) each such Lien shall extend solely to the item or items of
property so acquired and, if required by the terms of the instrument
originally creating such Lien, other property which is an improvement to or
is acquired for specific use in connection with such acquired property;
(d) any Lien renewing, extending or refunding any Lien permitted by
paragraphs (a), (b) or (c) of this Section 10.5, PROVIDED that (i) the
principal amount of Debt secured by such Lien immediately prior to such
extension, renewal or refunding is not increased or the maturity thereof
reduced, (ii) such Lien is not extended to any other property, and (iii)
immediately after such extension, renewal or refunding no Default or Event
of Default would exist;
(e) Liens for taxes, assessments or other governmental charges which
are not yet due and payable or the payment of which is not at the time
required by Section 9.4;
(f) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other similar Liens, in each case, incurred in
the ordinary course of business for sums not yet due and payable or which
are being contested in good faith by appropriate actions or proceedings
which will prevent the forfeiture or sale of the property subject to such
Lien or any material interference with the use thereof by the Company or
any Restricted Subsidiary and book reserves have been set aside with
respect thereto in an amount deemed adequate by the Company;
(g) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business (i) in connection with workers'
compensation, unemployment insurance and other types of social security or
retirement benefits, or (ii) to secure (or to obtain letters of credit that
secure) the performance of tenders, statutory obligations, surety bonds,
appeal bonds, bids, leases (other than Capital Leases), performance bonds,
purchase, construction or sales contracts and other similar obligations, in
each case not incurred or made in connection with the borrowing of money,
the obtaining of advances or credit or the payment of the deferred purchase
price of property;
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
(h) any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 60 days after the expiration of any such stay; and
(i) other Liens not otherwise permitted by paragraphs (a) through
(h), provided that, after giving effect thereto and to the Debt secured
thereby and to the application of the proceeds of such Debt, the aggregate
amount of Priority Obligations does not exceed 15% of Consolidated Net
Worth as at the end of the Company's fiscal year then most recently ended.
SECTION 10.6. SALE-AND-LEASEBACKS. The Company will not, and will not
permit any Restricted Subsidiary to, enter into any Sale-and-Leaseback
Transaction UNLESS
(a) immediately after giving effect thereto (i) Consolidated Debt
does not exceed the amount then permitted to be incurred under Section
10.2, and (ii) the aggregate amount of Priority Obligations does not exceed
15% of Consolidated Net Worth as at the end of the Company's fiscal year
then most recently ended; or
(b) the Net Proceeds Amount received by the Company or such
Restricted Subsidiary in respect of such Sale-and-Leaseback Transaction is
applied within 180 days of the consummation thereof to a Debt Prepayment
Application; PROVIDED that, any Debt Prepayment Application with respect to
the Notes shall be made in accordance with the provisions of Section 8.2.
SECTION 10.7. RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.
(a) LIMITATION. The Company will not, and will not permit any of its
Restricted Subsidiaries to, declare, make or incur any liability to make any
Restricted Payment or make or authorize any Restricted Investment UNLESS
immediately after giving effect to such action:
(i) the sum of (x) the aggregate value of all Restricted Investments
of the Company and its Restricted Subsidiaries (valued immediately after
such action), plus (y) the aggregate amount of Restricted Payments of the
Company and its Restricted Subsidiaries declared or made during the period
commencing on November 1, 1995, and ending on the date such Restricted
Payment or Restricted Investment is declared or made, inclusive, would not
exceed the sum of
(A) $10,000,000, plus
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(B) 60% of Consolidated Net Income (or minus 100% of
Consolidated Net Income if Consolidated Net Income for such period is
a loss) for each full fiscal year beginning with the fiscal year
ending October 31, 1996, to and including the date such Restricted
Payment or Restricted Investment is declared or made, plus
(C) the aggregate amount of Net Proceeds of Capital Stock for
such period; and
(ii) no Default or Event of Default would exist.
(b) TIME OF PAYMENT. The Company will not, nor will it permit any of its
Restricted Subsidiaries to, authorize a Restricted Payment that is not payable
within 90 days of authorization.
SECTION 10.8. SALE OF ASSETS, ETC.; CREATION OF MINORITY INTERESTS. (a)
Except as permitted under Section 10.9 the Company will not, and will not permit
any of its Restricted Subsidiaries to, make any Asset Disposition unless:
(i) in the good faith opinion of the Company, the Asset Disposition
is in exchange for consideration having a Fair Market Value at least equal
to that of the property exchanged and is in the best interest of the
Company or such Restricted Subsidiary;
(ii) immediately after giving effect to the Asset Disposition, no
Default or Event of Default would exist; and
(iii) immediately after giving effect to the Asset Disposition,
(A) the Disposition Value of all the property of the Company and its
Restricted Subsidiaries that was the subject of any Asset Disposition
occurring in the period of four fiscal quarters of the Company then next
ending would not exceed 15% of Consolidated Assets as of the end of the
then most recently ended fiscal quarter of the Company, and (B) the
Disposition Value of all property that was the subject of all Asset
Dispositions occurring on or after the Closing Date would not exceed 30% of
Consolidated Assets as of the end of the then most recently ended fiscal
quarter of the Company.
If the Net Proceeds Amount for any Transfer is applied to a Debt Prepayment
Application or a Property Reinvestment Application within 180 days after such
Transfer, then such Transfer, only for the purpose of determining compliance
with subsection (a)(iii) of this Section 10.8 as of any date, shall be deemed
not to be an Asset Disposition; PROVIDED that, any Debt Prepayment
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Application with respect to the Notes shall be made in accordance with the
provisions of Section 8.2.
(b) The Company will not permit any Restricted Subsidiary to issue or sell
any shares of stock of any class (including as "stock" for the purposes of this
Section 10.8, any warrants, rights or options to purchase or otherwise acquire
stock or other Securities exchangeable for or convertible into stock) of such
Restricted Subsidiary to any Person other than the Company or a Wholly-Owned
Restricted Subsidiary, except for the purpose of qualifying directors, or except
in satisfaction of the validly pre-existing preemptive rights of minority
shareholders in connection with the simultaneous issuance of stock to the
Company and/or a Restricted Subsidiary whereby the Company and/or such
Restricted Subsidiary maintain their same proportionate interest in such
Restricted Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any shares
of stock of any Restricted Subsidiary (except to qualify directors) or any
Indebtedness of any Restricted Subsidiary, and will not permit any Restricted
Subsidiary to sell, transfer or otherwise dispose of (except to the Company or a
Wholly-Owned Restricted Subsidiary) any shares of stock or any Indebtedness of
any other Restricted Subsidiary, unless:
(i) simultaneously with such sale, transfer, or disposition, all
shares of stock and all Indebtedness of such Restricted Subsidiary at the
time owned by the Company and by every other Restricted Subsidiary shall be
sold, transferred or disposed of as an entirety;
(ii) the Board of Directors of the Company shall have determined, as
evidenced by a resolution thereof, that the proposed sale, transfer or
disposition of said shares of stock and Indebtedness is in the best
interests of the Company;
(iii) said shares of stock and Indebtedness are sold, transferred
or otherwise disposed of to a Person, for a cash consideration and on terms
reasonably deemed by the Board of Directors to be adequate and
satisfactory; and
(iv) the Restricted Subsidiary being disposed of shall not have any
continuing investment in the Company or any other Restricted Subsidiary not
being simultaneously disposed of.
SECTION 10.9. MERGER, CONSOLIDATION, ETC. The Company will not, and will
not permit any of its Restricted Subsidiaries to, consolidate with or merge with
any other corporation or convey, transfer or lease substantially all of its
assets in a single transaction or series of transactions to any Person (except
that a Restricted Subsidiary of the Company may
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(x) consolidate with or merge with, or convey, transfer or lease substantially
all of its assets in a single transaction or series of transactions to, the
Company or another Wholly-Owned Restricted Subsidiary of the Company and (y)
convey, transfer or lease all of its assets in compliance with the provisions of
Section 10.8), provided that the foregoing restriction does not apply to the
consolidation or merger of the Company with, or the conveyance, transfer or
lease of substantially all of the assets of the Company in a single transaction
or series of transactions to, any Person so long as:
(a) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the case
may be (the "SUCCESSOR CORPORATION"), shall be a solvent corporation
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia;
(b) if the Company is not the Successor Corporation, such corporation
shall have executed and delivered to each Holder of Notes its assumption of
the due and punctual performance and observance of each covenant and
condition of this Agreement, the Other Agreements and the Notes pursuant to
such agreements and instruments as shall be reasonably satisfactory to the
Required Holders, and the Company shall have caused to be delivered to each
Holder of Notes an opinion of nationally recognized independent counsel, or
other independent counsel reasonably satisfactory to the Required Holders,
to the effect that all agreements or instruments effecting such assumption
are enforceable in accordance with their terms and comply with the terms
hereof; and
(c) immediately after giving effect to such transaction:
(i) no Default or Event of Default would exist, and
(ii) the Successor Corporation would be permitted by the
provisions of Section 10.2 hereof to incur at least $1.00 of
additional Debt owing to a Person other than a Restricted Subsidiary
of the Successor Corporation.
No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any Successor
Corporation from its liability under this Agreement or the Notes.
SECTION 10.10. TRANSACTIONS WITH AFFILIATES. The Company will not and will
not permit any Restricted Subsidiary to enter into directly or indirectly any
transaction or Material group of related transactions (including without
limitation the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the
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Company or another Restricted Subsidiary), except in the ordinary course and
pursuant to the reasonable requirements of the Company's or such Restricted
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Restricted Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.
SECTION 10.11. LINE OF BUSINESS. The Company will not, and will not permit
any of its Restricted Subsidiaries to, engage in any business if, as a result,
the general nature of the business in which the Company and its Restricted
Subsidiaries, taken as a whole, would then be engaged would be substantially
changed from the general nature of the business in which the Company and its
Restricted Subsidiaries, taken as a whole, are engaged on the date of this
Agreement as described in the Memorandum.
SECTION 10.12. GUARANTIES. The Company will not, and will not permit any
Restricted Subsidiary to, become or be liable in respect of any Guaranty except
Guaranties by the Company which are limited in amount to a stated maximum dollar
exposure or which constitute Guaranties of obligations incurred by any
Restricted Subsidiary in compliance with the provisions of this Agreement and
Permitted Guaranties.
SECTION 10.13. GUARANTORS TO REMAIN WHOLLY-OWNED RESTRICTED SUBSIDIARIES.
The Company will not permit the Guarantors to cease to be Wholly-Owned
Restricted Subsidiaries.
SECTION 11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-
Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any
term contained in Section 7.1(d) or in Sections 10.1 through 10.9, both
inclusive; or
(d) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a), (b)
and (c) of this Section 11) and such default is not remedied within 30 days
after the earlier of (i) a Responsible Officer obtaining actual knowledge
of such default and (ii) the Company
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receiving written notice of such default from any Holder of a Note (any
such written notice to be identified as a "notice of default" and to refer
specifically to this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or in any
writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on the date
as of which made; or
(f) (i) the Company or any Restricted Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any principal
of or premium or make-whole amount or interest on any Debt that is
outstanding in an aggregate principal amount of at least $5,000,000 beyond
any period of grace provided with respect thereto, or (ii) the Company or
any Restricted Subsidiary is in default in the performance of or compliance
with any term of any evidence of any Debt in an aggregate outstanding
principal amount of at least $5,000,000 or of any mortgage, indenture or
other agreement relating thereto beyond any period of grace provided with
respect thereto, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time or
the right of the holder of Debt to convert such Debt into equity
interests), (x) the Company or any Restricted Subsidiary has become
obligated to purchase or repay Debt before its regular maturity or before
its regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least $5,000,000, or (y) one or more Persons have
the right to require the Company or any Restricted Subsidiary so to
purchase or repay such Debt; or
(g) the Company or any Restricted Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing against
it of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of
any jurisdiction, (iii) makes an assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is adjudicated as
insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of its
Restricted Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up
or liquidation of the Company or any of its Restricted Subsidiaries, or any
such petition shall be filed against the Company or any of its Restricted
Subsidiaries and such petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $3,000,000 (excluding any judgment, or portion
thereof, as to which a solvent insurer shall have accepted responsibility)
are rendered against one or more of the Company and its Restricted
Subsidiaries and which judgments are not, within 30 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not discharged
within 30 days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a Plan
may become a subject of any such proceedings, (iii) the aggregate "amount
of unfunded benefit liabilities" (within the meaning of section 4001(a)(18)
of ERISA) under all Plans, determined in accordance with Title IV of ERISA,
shall exceed $3,000,000, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to Title
I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, (v) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Company or any
Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase
the liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect.
As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
SECTION 12. REMEDIES ON DEFAULT, ETC.
SECTION 12.1. ACCELERATION.
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(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 11 has occurred, all the Notes then
outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
Holder or Holders of more than 25% in principal amount of the Notes at the
time outstanding may at any time at its or their option, by notice or
notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any Holder or Holders of Notes
at the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all
the Notes held by it or them to be immediately due and payable.
Upon any Note's becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each Holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for), and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
SECTION 12.2. OTHER REMEDIES. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the Holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such Holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
SECTION 12.3. RESCISSION. At any time after any Notes have been declared
due and payable pursuant to clause (b) or (c) of Section 12.1, the Holders of
not less than 66-2/3% in principal amount of the Notes then outstanding, by
written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and Make-Whole Amount, if any, on any Notes that are due
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
and payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
SECTION 12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. No
course of dealing and no delay on the part of any Holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such Holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any Holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the Holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such Holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
SECTION 13.1. REGISTRATION OF NOTES. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each Holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or
more Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and Holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any Holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered Holders of Notes.
SECTION 13.2. TRANSFER AND EXCHANGE OF NOTES. Upon surrender of any Note
at the principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered Holder of such Note or its attorney duly authorized in writing and
accompanied by the address for notices of each transferee of such Note or part
thereof), the Company shall execute and deliver, at the Company's expense
(except as provided below), one or more new Notes (as requested by the holder
thereof) of the same Series in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of
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the surrendered Note. Each such new Note shall be payable to such Person as
such Holder may request and shall be substantially in the form of Exhibit 1.1.
Each such new Note shall be dated and bear interest from the date to which
interest shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000, PROVIDED that if necessary
to enable the registration of transfer by a Holder of its entire holding of
Notes, one Note may be in a denomination of less than $100,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2.
SECTION 13.3. REPLACEMENT OF NOTES. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the Holder of such Note is,
or is a nominee for, an original Purchaser or another Holder of a Note with
a minimum net worth or admitted assets of at least $100,000,000, such
Person's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note of the same Series, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.
SECTION 14. PAYMENTS ON NOTES.
SECTION 14.1. PLACE OF PAYMENT. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in New York, New York, at the principal office of
Citibank, N.A., in such jurisdiction.
SECTION 14.2. HOME OFFICE PAYMENT. So long as you or your nominee shall
be the Holder of any Note, and notwithstanding anything contained in Section
14.1 or in such Note to the contrary, the Company will pay all sums becoming due
on such Note for principal, Make-Whole Amount, if any, and interest by the
method and at the address specified for such purpose below your name in Schedule
A, or by such other method or at such other address as you shall
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have from time to time specified to the Company in writing for such purpose,
without the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment or prepayment in full of any Note, you
shall surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of
payment most recently designated by the Company pursuant to Section 14.1. Prior
to any sale or other disposition of any Note held by you or your nominee you
will, at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to Section
13.2. The Company will afford the benefits of this Section 14.2 to any
Institutional Investor that is the direct or indirect transferee of any Note
purchased by you under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 14.2.
SECTION 15. EXPENSES, ETC.
SECTION 15.1. TRANSACTION EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys' fees of a special counsel and, if reasonably
required, local or other counsel) incurred by you and each Other Purchaser or
Holder of a Note in connection with such transactions and in connection with any
amendments, waivers or consents under or in respect of this Agreement or the
Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a Holder of any Note, and (b) the
costs and expenses, including financial advisors' fees, incurred in connection
with the insolvency or bankruptcy of the Company or any Restricted Subsidiary or
in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Company will pay, and will save you
and each other Holder of a Note harmless from, all claims in respect of any
fees, costs or expenses, if any, of brokers and finders (other than those
retained by you).
SECTION 15.2. SURVIVAL. The obligations of the Company under this Section
15 will survive the payment or transfer of any Note, the enforcement, amendment
or waiver of any provision of this Agreement or the Notes, and the termination
of this Agreement.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
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All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent Holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other Holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.
SECTION 17. AMENDMENT AND WAIVER.
SECTION 17.1. REQUIREMENTS. This Agreement and the Notes may be amended,
and the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing, and (b) no such amendment or waiver may, without the written consent
of the Holder of each Note at the time outstanding affected thereby, (i) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or of
the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the Holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.
SECTION 17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each Holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such Holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each Holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite Holders of Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any Holder of Notes as consideration
for or as an inducement to the entering into
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by any Holder of Notes or any waiver or amendment of any of the terms and
provisions hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each Holder of Notes then
outstanding even if such Holder did not consent to such waiver or amendment.
SECTION 17.3. BINDING EFFECT, ETC. Any amendment or waiver consented to
as provided in this Section 17 applies equally to all Holders of Notes and is
binding upon them and upon each future Holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the
Company and the Holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
Holder of such Note. As used herein, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to time be amended or
supplemented.
SECTION 17.4. NOTES HELD BY COMPANY, ETC. Solely for the purpose of
determining whether the Holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the Holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.
SECTION 18. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telefacsimile if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery service (charges
prepaid), or (b) by registered or certified mail with return receipt requested
(postage prepaid), or (c) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified
for such communications in Schedule A, or at such other address as you or
it shall have specified to the Company in writing,
(ii) if to any other Holder of any Note, to such Holder at such
address as such other Holder shall have specified to the Company in
writing, or
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
(iii) if to the Company, to the Company at its address set forth
at the beginning hereof to the attention of Chief Financial Officer, or at
such other address as the Company shall have specified to the Holder of
each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
SECTION 19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other Holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
SECTION 20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Company or any Restricted
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Restricted Subsidiary,
PROVIDED that such term does not include information that (a) was publicly known
or otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Restricted Subsidiary or (d) constitutes financial statements
delivered to you under Section 7.1 that are otherwise publicly available. You
will maintain the confidentiality of such Confidential Information in accordance
with procedures adopted by you in good faith to protect confidential information
of third parties delivered to you, PROVIDED that you may deliver or disclose
Confidential Information to (i) your directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other Holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
Holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any Holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such Holder
(other than a Holder that is a party to this Agreement or its nominee), such
Holder will enter into an agreement with the Company embodying the provisions of
this Section 20.
SECTION 21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original Holder of the
Notes under this Agreement.
SECTION 22. MISCELLANEOUS.
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
SECTION 22.1. SUCCESSORS AND ASSIGNS. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent Holder of a Note) whether so expressed or
not.
SECTION 22.2. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount or interest on any Note that is due on a date other than
a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.
SECTION 22.3. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 22.4. CONSTRUCTION. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
SECTION 22.5. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.
SECTION 22.6. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York excluding choice-of-law principles of the law
of such State that would require the application of the laws of a jurisdiction
other than such State.
* * * * *
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
CAMERON ASHLEY BUILDING PRODUCTS, INC.
By /s/ F. Dixon McElwee
Title: Vice President
The foregoing is hereby agreed
to as of the date thereof.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By /s/ Warren Shank
Its Counsel
By /s/ Fredrick A. Bell
Its Second Vice President-Securities
Investment
THE CANADA LIFE ASSURANCE COMPANY
By /s/ Brian J. Lynch
Its Associate Treasurer
CANADA LIFE INSURANCE COMPANY OF
AMERICA
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
By /s/ Brian J. Lynch
Its Associate Treasurer
NORTHWESTERN NATIONAL LIFE INSURANCE
COMPANY
By /s/ Gregory M. Anderson
Its Authorized Representative
NORTHERN LIFE INSURANCE COMPANY
By /s/ Gregory M. Anderson
Its Assistant Treasurer
UNITED SERVICES LIFE INSURANCE COMPANY
By /s/ Gregory M. Anderson
Its Assistant Treasurer
NATIONWIDE LIFE INSURANCE COMPANY
By /s/ Michael D. Groseclose
Its Associate Vice President
Corporate Fixed-Income Securities
NATIONWIDE LIFE AND ANNUITY
INSURANCE COMPANY
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
By /s/ Michael D. Groseclose
Its Associate Vice President
Corporate Fixed-Income Securities
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
NAMES AND ADDRESSES PRINCIPAL AMOUNT
OF PURCHASERS OF NOTES TO BE PURCHASED
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY 2001 Notes --
711 High Street 2002 Notes $15,000,000
Des Moines, Iowa 50392-0800 2003 Notes --
Attention: Investment Department--
Securities Division 2006 Notes --
Regarding Bond Number 1-B-60706
Telefacsimile: (515) 248-2490
Confirmation: (515) 248-3495
Payments
All payments on or in respect of each Series of Notes to be by separate bank
wire transfers of Federal or other immediately available funds (identifying each
payment as "Cameron Ashley Building Products, Inc., 6.79% Senior Notes due April
1, 2002, PPN 133290 A@ 5, Bond Number 1-B-60706, principal, premium or
interest") to:
Norwest Bank Iowa, N.A. (ABA #0730 0022 8)
7th and Walnut Streets
Des Moines, Iowa 50309
for credit to: Principal Mutual Life Insurance Company
General Account Number 014752
Reference: OBI: PFGSE(s) B 60706
Notices
All notices concerning payment on or in respect of the Notes, to:
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Department--Accounting & Treasury
Telefacsimile: (515) 248-2490
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
SCHEDULE A
(to Note Purchase Agreement)
<PAGE>
Cameron Ashley Building Products, Inc. Note Purchase Agreement
Taxpayer I.D. Number: 42-012-7290
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
NAMES AND ADDRESSES PRINCIPAL AMOUNT
OF PURCHASERS OF NOTES TO BE PURCHASED
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY 2001 Notes --
711 High Street 2002 Notes --
Des Moines, Iowa 50392-0800 2003 Notes --
Attention: Investment Department--
Securities Division 2006 Notes $5,900,000
Regarding Bond Number 1-B-60707
Telefacsimile: (515) 248-2490
Confirmation: (515) 248-3495
Payments
All payments on or in respect of each Series of Notes to be by separate bank
wire transfers of Federal or other immediately available funds (identifying each
payment as "Cameron Ashley Building Products, Inc., 7.61% Senior Notes due April
15, 2006, PPN 133290 B* 6, Bond Number 1-B-60707, principal, premium or
interest") to:
Norwest Bank Iowa, N.A. (ABA #0730 0022 8)
7th and Walnut Streets
Des Moines, Iowa 50309
for credit to: Principal Mutual Life Insurance Company
General Account Number 014752
Reference: OBI: PFGSE(s) B 60707
Notices
All notices concerning payment on or in respect of the Notes, to:
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Department--Accounting & Treasury
Telefacsimile: (515) 248-2490
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 42-012-7290
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
NAMES AND ADDRESSES PRINCIPAL AMOUNT
OF PURCHASERS OF NOTES TO BE PURCHASED
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY 2001 Notes --
711 High Street 2002 Notes --
Des Moines, Iowa 50392-0800 2003 Notes --
Attention: Investment Department--
Securities Division 2006 Notes $4,100,000
Regarding Bond Number 16-B-60707
Telefacsimile: (515) 248-2490
Confirmation: (515) 248-3495
Payments
All payments on or in respect of each Series of Notes to be by separate bank
wire transfers of Federal or other immediately available funds (identifying each
payment as "Cameron Ashley Building Products, Inc., 7.61% Senior Notes due April
15, 2006, PPN 133290 B* 6, Bond Number 16-B-60707, principal, premium or
interest") to:
Norwest Bank Iowa, N.A. (ABA #0730 0022 8)
7th and Walnut Streets
Des Moines, Iowa 50309
for credit to: Principal Mutual Life Insurance Company
Separate Account Number 032395
Reference: OBI: PFGSE(s) B 60707
Notices
All notices concerning payment on or in respect of the Notes, to:
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Department--Accounting & Treasury
Telefacsimile: (515) 248-2490
All notices and communications other than those in respect to payments to be
addressed as first provided above.
A-57
<PAGE>
Cameron Ashley Building Products, Inc. Note Purchase Agreement
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 42-012-7290
A-58
<PAGE>
Cameron Ashley Building Products, Inc. Note Purchase Agreement
NAME AND ADDRESS PRINCIPAL AMOUNT
OF LENDER OF NOTES
THE CANADA LIFE ASSURANCE 2001 Notes $3,000,000
COMPANY 2002 Notes --
330 University Avenue 2003 Notes --
Toronto, Ontario 2006 Notes --
Canada M5G 1R8
Attention: U.S. Private Placements, SP-11
Facsimile: (416) 597-9678
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
immediately available funds in U.S. dollars (identifying each payment as
"Cameron Ashley Building Products, Inc., 6.79% Senior Notes due April 15, 2001,
PPN 133290 A* 7, principal, premium or interest") to:
c/o Morgan Guaranty Trust Company
ABA No. 021-000-238
Account No. 999-99-024
Attention: Custody Collection
for credit to The Canada Life
Assurance Company's Custody Account No. 41233
Notices
All notices and communications, other than notices with respect to payments, to
be addressed as first provided above.
All notices of and confirmations with respect to payments, to:
Morgan Guaranty Trust Company
60 Wall Street
New York, New York 10260-0060
Attention: Bob Rich or Peter Frank, 36th Floor
Facsimile: (212) 648-5111
with copies to:
The Canada Life Assurance Company
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<PAGE>
Cameron Ashley Building Products, Inc. Note Purchase Agreement
330 University Avenue
Toronto, Ontario
Canada M5G 1R8
Attention: Securities Accounting, SP-12
Facsimile: (416) 597-2609
Name of Nominee in which Notes are to be issued: INCE & CO.
Taxpayer I.D. Number: 38-0397420
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
NAME AND ADDRESS PRINCIPAL AMOUNT
OF LENDER OF NOTES
CANADA LIFE INSURANCE COMPANY 2001 Notes $2,000,000
OF AMERICA 2002 Notes --
c/o The Canada Life Assurance Company 2003 Notes --
330 University Avenue 2006 Notes --
Toronto, Ontario
Canada M5G 1R8
Attention: U.S. Private Placements, SP-11
Facsimile: (416) 597-9678
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
immediately available funds in U.S. dollars (identifying each payment as
"Cameron Ashley Building Products, Inc., 6.79%, Senior Notes due April 15, 2001,
PPN 133290 A* 7, principal, premium or interest") to:
c/o Chemical Bank
ABA No. 021 000 128
Account No. 544-755-102
Attention: Custody Collection
for credit to Canada Life Insurance
Company of America's Trust Account
No. AR80-77249
Notices
All notices and communications, other than notices with respect to payments, to
be addressed as first provided above.
All notices of and confirmations with respect to payments, to:
Chemical Bank
4 New York Plaza
New York, New York 10004
Institutional Client Services, 4th Floor
Attention: Rich Boxer
Facsimile: (212) 623-6709
A-61
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
with copies to:
The Canada Life Assurance Company
330 University Avenue
Toronto, Ontario
Canada M5G 1R8
Attention: Securities Accounting, SP-12
Facsimile: (416) 597-2609
Name of Nominee in which Notes are to be issued: Cummings & Co.
Taxpayer I.D. Number: 38-2816473
A-62
<PAGE>
Cameron Ashley Building Products, Inc. Note Purchase Agreement
NAME AND ADDRESS PRINCIPAL AMOUNT
OF LENDER OF NOTES
NORTHWESTERN NATIONAL LIFE INSURANCE 2001 Notes $1,000,000
COMPANY 2002 Notes --
c/o Reliastar Investment Research 2003 Notes --
100 Washington Square, Suite 800 2006 Notes $2,000,000
Minneapolis, Minnesota 55401-2147
Ref: James Tobin, (612) 342-3204
Telecopier Number: (612) 372-5368
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Cameron Ashley Building Products, Inc., 6.79% Senior Notes due April 15, 2001,
PPN 133290 B* 6 or 7.61% Senior Notes due April 15, 2006, PPN 133290 A* 7, as
the case may be, principal, premium or interest") to:
First National Bank N.A./Mpls.
601 2nd Avenue South
Bank ABA #091 000 022
Attention: Securities Accounting
for credit to: Northwestern National Life Insurance Company
Account Number 1102-4001-4461
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-0451140
A-63
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
NAME AND ADDRESS PRINCIPAL AMOUNT
OF LENDER OF NOTES
NORTHERN LIFE INSURANCE COMPANY 2001 Notes --
c/o ReliaStar Investment Research, Inc. 2002 Notes --
100 Washington Square, Suite 800 2003 Notes --
Minneapolis, Minnesota 55401-2121 2006 Notes $3,000,000
Attention: Securities Department
Ref: James Tobin, (612) 342-3204
Telecopier Number: (612) 372-5368
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Cameron Ashley Building Products, Inc., 7.61% Senior Notes due April 15, 2006,
PPN 133290 B* 6, principal, premium or interest") to:
First National Bank N.A./Mpls.
601 2nd Avenue South
(ABA #091000022)
Attention: Securities Accounting
for credit to: Northern Life Insurance Company
Account Number 1602-3237-6105
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-1295933
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<PAGE>
Cameron Ashley Building Products, Inc. Note Purchase Agreement
NAME AND ADDRESS PRINCIPAL AMOUNT
OF LENDER OF NOTES
UNITED SERVICES LIFE INSURANCE COMPANY 2001 Notes $4,000,000
c/o ReliaStar Investment Research, Inc. 2002 Notes --
100 Washington Square, Suite 800 2003 Notes --
Minneapolis, Minnesota 55401-2121 2006 Notes --
Attention: Securities Department
Ref: James Tobin, (612) 342-3204
Telecopier Number: (612) 372-5368
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Cameron Ashley Building Products, Inc., 6.79%, Senior Notes due April 15, 2001,
PPN 133290 A* 7, principal, premium or interest") to:
Chemical NYC/GEOCUST
New York, NY
DDA #544755102
A/C #1960 Dept 571 NonStandard Securities
Bank ABA #021 000 128
for credit to: United Services Life Insurance Company
Account Number N9207267
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: SIGLER & CO.
Taxpayer I.D. Number: 53-0159267
A-65
<PAGE>
Cameron Ashley Building Products, Inc. Note Purchase Agreement
NAME AND ADDRESS PRINCIPAL AMOUNT
OF LENDER OF NOTES
Nationwide Life Insurance Company 2001 Notes --
One Nationwide Plaza (1-33-07) 2002 Notes --
Columbus, Ohio 43215-2220 2003 Notes $8,000,000
2006 Notes --
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Cameron Ashley Building Products, Inc., 7.21% Senior Notes due April 15, 2003,
PPN 133290 A# 3, principal, premium or interest") to:
Morgan Guaranty Trust Company of New York (ABA #021-000-238)
JOURNAL #999-99-024
F/A/O Nationwide Life Insurance Company Custody A/C #71615
Attention: Custody Service Department
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
Nationwide Life Insurance Company
One Nationwide Plaza (1-32-09)
Columbus, Ohio 43215-2220
Attention: Corporate Money Management
All notices and communications other than those in respect to payments to be
addressed:
Nationwide Life Insurance Company
One Nationwide Plaza--1-33-07
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 31-4156830
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
NAME AND ADDRESS PRINCIPAL AMOUNT
OF LENDER OF NOTES
Nationwide Life and Annuity 2001 Notes --
INSURANCE COMPANY 2002 Notes --
One Nationwide Plaza (1-33-07) 2003 Notes $2,000,000
Columbus, Ohio 43215-2220 2006 Notes --
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Cameron Ashley Building Products, Inc., 7.21% Senior Notes due April 15, 2003,
PPN 133290 A# 3, principal, premium or interest") to:
Morgan Guaranty Trust Company of New York (ABA #021-000-238)
JOURNAL #999-99-024
F/A/O Nationwide Life and Annuity Insurance Company Custody A/C #71620
Attention: Custody Service Department
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
Nationwide Life and Annuity Insurance Company
One Nationwide Plaza (1-32-09)
Columbus, Ohio 43215-2220
Attention: Corporate Money Management
All notices and communications other than those in respect to payments to be
addressed:
Nationwide Life and Annuity Insurance Company
One Nationwide Plaza--1-33-07
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 31-1000740
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
"AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests; PROVIDED, HOWEVER, that
a Restricted Subsidiary shall not be an Affiliate of the Company or of another
Restricted Subsidiary. As used in this definition, "CONTROL" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "AFFILIATE" is a reference to an
Affiliate of the Company.
"ASSET DISPOSITION" means any Transfer except:
(a) any
(i) Transfer from a Restricted Subsidiary to the Company or a
Wholly-Owned Restricted Subsidiary; and
(ii) Transfer from the Company to a Wholly-Owned Restricted
Subsidiary,
so long as immediately before and immediately after the consummation of any
such Transfer and after giving effect thereto, no Default or Event of
Default exists; and
(b) any Transfer made in the ordinary course of business and
involving only property that is either (i) inventory held for sale or (ii)
equipment, fixtures, supplies or materials no longer required in the
operation of the business of the Company or any of its Restricted
Subsidiaries or that is obsolete.
"ATTRIBUTABLE DEBT" means, as to any particular lease relating to a Sale-
and-Leaseback Transaction, the present value of all Lease Rentals required to be
paid by the Company or any Restricted Subsidiary under such lease during the
remaining term thereof, including any period for which such lease has been
extended (such present value to be determined in accordance with
SCHEDULE B
(to Note Purchase Agreement)
<PAGE>
Cameron Ashley Building Products, Inc. Note Purchase Agreement
generally accepted financial practice, compounded semiannually using a discount
factor equal to the implicit rate of such lease, if known, of, if not, the
average of the interest rates then borne by the Notes, weighted by the principal
amount of the then outstanding Notes of each Series).
"BUSINESS DAY" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are generally closed, and (b) for the purposes of any other provision of
this Agreement, any day other than a Saturday, a Sunday or a day on which
commercial banks in Dallas, Texas are generally closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"COMPANY" means Cameron Ashley Building Products, Inc., a Georgia
corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED ASSETS" means, as of any date of determination, the total
amount of all assets of the Company and its Restricted Subsidiaries on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED DEBT" means, as of any date of determination, the total of
all Debt of the Company and its Restricted Subsidiaries outstanding on such
date, after eliminating all offsetting debits and credits between the Company
and its Restricted Subsidiaries and all other items required to be eliminated in
the course of the preparation of consolidated financial statements of the
Company and its Restricted Subsidiaries in accordance with GAAP.
"CONSOLIDATED INCOME AVAILABLE FOR FIXED CHARGES" means, with respect to
any period, Consolidated Net Income for such period plus all amounts deducted in
the computation thereof on account of (a) Fixed Charges and (b) taxes imposed on
or measured by income or excess profits.
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"CONSOLIDATED NET INCOME" means, with reference to any period, the net
income (or loss) of the Company and its Restricted Subsidiaries for such period
(taken as a cumulative whole), as determined in accordance with GAAP, after
eliminating all offsetting debits and credits between the Company and its
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of the Company
and its Restricted Subsidiaries in accordance with GAAP.
"CONSOLIDATED NET WORTH" means, at any time,
(a) the sum of (i) the par value (or value stated on the books of the
corporation) of the capital stock (but excluding treasury stock and capital
stock subscribed and unissued) of the Company and its Restricted
Subsidiaries plus (ii) the amount of the paid-in capital and retained
earnings of the Company and its Restricted Subsidiaries, in each case as
such amounts would be shown on a consolidated balance sheet of the Company
and its Restricted Subsidiaries as of such time prepared in accordance with
GAAP, MINUS
(b) to the extent included in clause (a), (i) all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Restricted Subsidiaries and (ii) redeemable preferred stock with an average
life which is less than the life to maturity of the 2006 Notes.
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any time, the sum of
Consolidated Net Worth and Consolidated Debt.
"CONVERTIBLE SUBORDINATED DEBT" shall mean all unsecured Debt of the
Company which shall (i) contain or have applicable thereto subordination
provisions substantially in the form set forth in Exhibit B-1 attached hereto
providing for the subordination thereof to other Debt of the Company, including,
without limitation, the Notes, or such other provisions as may be approved in
writing by the Holders holding not less than 66-2/3% in aggregate principal
amount of the outstanding Notes, (ii) shall mature no earlier than April 15,
2006, (iii) shall have a weighted average life to maturity which is no less than
the life to maturity of the 2006 Notes and (iv) contains a right for the holder
thereof to convert such Debt to an equity interest in the Company under certain
circumstances.
"CREDIT AGREEMENT GUARANTIES" shall mean the Guaranties by the Guarantors
of the obligations of the Company under that certain First Restated Credit
Agreement dated as of April 15, 1996 among the Company, Nationsbank of Texas,
National Association, as Agent, ABN AMRO Bank, N.V., as Co-Agent and Issuing
Bank, and the Lenders (as defined therein).
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
"DEBT" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including, without limitation, all liabilities
created or arising under any conditional sale or other title retention
agreement with respect to any such property);
(c) its Capital Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities);
(e) Attributable Debt of such Person; and
(f) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (e) hereof.
Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (f) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP. In calculating the amount of Debt of the Company,
Convertible Subordinated Debt of the Company shall be excluded insofar as the
aggregate principal amount thereof shall not exceed $25,000,000.
"DEBT PREPAYMENT APPLICATION" means, with respect to any Transfer of
property, the application by the Company or its Restricted Subsidiaries of cash
in an amount equal to the Net Proceeds Amount with respect to such Transfer to
pay Debt of the Company (other than (a) Convertible Subordinated Debt, (b) Debt
owing to the Company, any of its Restricted Subsidiaries or any Affiliate, and
(c) Debt in respect of any revolving credit or similar credit facility providing
the Company or any of its Restricted Subsidiaries with the right to obtain loans
or other extensions of credit from time to time, except to the extent that in
connection with such payment of Debt the availability of credit under such
credit facility is permanently reduced by an amount not less than the amount of
such proceeds applied to the payment of such Debt).
"DEFAULT" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
"DEFAULT RATE" means that rate of interest that is the greater of (i) 2%
per annum above the rate of interest stated in clause (a) of the first paragraph
of any Note or (ii) 2% over the rate of interest publicly announced by Citibank,
N.A., in New York, New York, as its "base" or "prime" rate.
"DISPOSITION VALUE" means, at any time, with respect to any property
(a) in the case of property that does not constitute Restricted
Subsidiary Stock, the book value thereof, valued at the time of such
disposition in good faith by the Company, and
(b) in the case of property that constitutes Restricted Subsidiary
Stock, an amount equal to that percentage of book value of the assets of
the Restricted Subsidiary that issued such stock as is equal to the
percentage that the book value of such Restricted Subsidiary Stock
represents of the book value of all of the outstanding capital stock of
such Restricted Subsidiary (assuming, in making such calculations, that all
Securities convertible into such capital stock are so converted and giving
full effect to all transactions that would occur or be required in
connection with such conversion) determined at the time of the disposition
thereof, in good faith by the Company.
"DISTRIBUTION" means, in respect of any corporation, association or other
business entity:
(a) dividends or other distributions or payments on capital stock or
other equity interest of such corporation, association or other business
entity (except distributions in such stock or other equity interest); and
(b) the redemption or acquisition of such stock or other equity
interests or of warrants, rights or other options to purchase such stock or
other equity interests (except when solely in exchange for such stock or
other equity interests).
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means, at any time and with respect to any property,
the sale value of such property that would be realized in an arm's-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
"FIXED CHARGES" means, with respect to any period, the sum of (a) Interest
Charges for such period and (b) Lease Rentals for such period.
"FIXED CHARGES COVERAGE RATIO" means, at any time, the ratio of (a)
Consolidated Income Available for Fixed Charges for the period of four
consecutive fiscal quarters ending on, or most recently ended prior to, such
time to (b) Fixed Charges for such period.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or other political
subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTY" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
any other Person in any manner, whether directly or indirectly, including
(without limitation) obligations incurred through an agreement, contingent or
otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"GUARANTY AGREEMENTS" are defined in Section 1.
"GUARANTORS" shall mean Ashley Aluminum, Inc., a Georgia corporation, Wm.
Cameron & Co., a Georgia corporation, and CABP, Inc., an Arizona corporation.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
"INDEBTEDNESS" with respect to any Person means, at any time, without
duplication,
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
(a) its liabilities for borrowed money and its redemption obligations
in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under
any conditional sale or other title retention agreement with respect to any
such property);
(c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account
by banks and other financial institutions (whether or not representing
obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note, (b)
any Holder of a Note holding more than 5% of the aggregate principal amount of
the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"INTEREST CHARGES" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between the Company and its Restricted Subsidiaries and all other
items required to be eliminated in the course of the preparation of consolidated
financial statements of the Company and its Restricted Subsidiaries in
accordance with GAAP): (a) all interest in respect of Debt of the Company and
its Restricted Subsidiaries (including imputed interest on Capital Lease
Obligations and Attributable Debt)
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
deducted in determining Consolidated Net Income for such period, together with
all interest capitalized or deferred during such period and not deducted in
determining Consolidated Net Income for such period, and (b) all debt discount
and expense amortized or required to be amortized in the determination of
Consolidated Net Income for such period.
"INVESTMENT" means any investment, made in cash or by delivery of property,
by the Company or any of its Subsidiaries (i) in any Person, whether by
acquisition of stock, Debt or other obligation or Security, or by loan,
Guaranty, advance, capital contribution or otherwise, or (ii) in any property.
"LEASE RENTALS" means, with respect to any period, the sum of the minimum
amount of rental and other obligations required to be paid during such period by
the Company or any Restricted Subsidiary as lessee under all leases of real or
personal property (other than Capital Leases), EXCLUDING any amounts required to
be paid by the lessee (whether or not therein designated as rental or additional
rental) (a) which are on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges, or (b) which are based on
profits, revenues or sales realized by the lessee from the leased property or
otherwise based on the performance of the lessee.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.6.
"MATERIAL" means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Restricted Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Restricted Subsidiaries taken as a whole, or (b) the ability of
the Company to perform its obligations under this Agreement and the Notes, or
(c) the validity or enforceability of this Agreement or the Notes.
"MEMORANDUM" is defined in Section 5.3.
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as such
term is defined in section 4001(a)(3) of ERISA).
"NET PROCEEDS AMOUNT" means, with respect to any Transfer of any Property
by any Person, an amount equal to the DIFFERENCE of
(a) the aggregate amount of the consideration (valued at the Fair
Market Value of such consideration at the time of the consummation of such
Transfer) received by such Person in respect of such Transfer, MINUS
(b) all ordinary and reasonable out-of-pocket costs and expenses
actually incurred by such Person in connection with such Transfer.
"NET PROCEEDS OF CAPITAL STOCK" means, with respect to any period, cash
proceeds (net of all costs and out-of-pocket expenses in connection therewith,
including, without limitation, placement, underwriting and brokerage fees and
expenses), received by the Company and its Restricted Subsidiaries during such
period, from the sale of all capital stock (other than redeemable capital stock)
of the Company, including in such net proceeds:
(a) the net amount paid upon issuance and exercise during such period
of any right to acquire any capital stock, or paid during such period to
convert a convertible debt Security to capital stock (but excluding any
amount paid to the Company upon issuance of such convertible debt
Security); and
(b) any amount paid to the Company upon issuance of any convertible
debt Security issued after April 1, 1996 and thereafter converted to
capital stock during such period.
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
"OTHER AGREEMENTS" is defined in Section 2.
"OTHER PURCHASERS" is defined in Section 2.
"PERMITTED GUARANTIES" shall mean the Guaranties under the Guaranty
Agreements and the Credit Agreement Guaranties.
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PREFERRED STOCK" means any class of capital stock of a corporation that is
preferred over any other class of capital stock of such corporation as to the
payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"PRIORITY OBLIGATIONS" shall mean at any time the aggregate amount at such
time of:
(a) Debt of Restricted Subsidiaries referred to in Section 10.3(b),
(b) Debt secured by Liens permitted by paragraphs (a), (c), (d) or
(i) of Section 10.5 hereof, and
(c) Attributable Debt.
The terms "PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"PROPERTY REINVESTMENT APPLICATION" means, with respect to any Transfer of
property, the satisfaction of each of the following conditions:
(a) an amount equal to the Net Proceeds Amount with respect to such
Transfer shall have been applied to the acquisition by the Company, or any
of its Restricted Subsidiaries making such Transfer, of property that upon
such acquisition is unencumbered by any Lien not permitted by Section 10.5
hereof and that
(i) constitutes property that is (x) property classifiable under
GAAP as non-current to the extent that such proceeds are derived from
the transfer of property that was properly classifiable as non-
current, and otherwise properly
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
classifiable as either current or non-current, and (y) to be used in
the ordinary course of business of the Company and the Subsidiaries,
or
(ii) constitutes equity interests of a Person that shall be, on
or prior to the time of such acquisition, a Wholly-Owned Subsidiary of
the Company, and that shall invest the proceeds of such acquisition in
property of the nature described in the immediately preceding clause
(i); and
(b) the Company shall have delivered a certificate of a Responsible
Officer of the Company to each Holder of a Note referring to Section 10.8
and identifying the property that was the subject of such Transfer, the
Disposition Value of such property, and the nature, terms, amount and
application of the proceeds from the Transfer.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.
"REQUIRED HOLDERS" means, at any time, the Holders of at least 66-23% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"RESTRICTED INVESTMENTS" means all Investments except the following:
(a) property to be used in the ordinary course of business of the
Company and its Restricted Subsidiaries;
(b) current assets arising from the sale of goods and services in the
ordinary course of business of the Company and its Restricted Subsidiaries;
(c) Investments in one or more Restricted Subsidiaries or any Person
that concurrently with such Investment becomes a Restricted Subsidiary;
(d) Investments existing on the date of the Closing and disclosed in
Schedule C;
(e) Investments in United States Governmental Securities, PROVIDED
that such obligations mature within 36 months from the date of acquisition
thereof;
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
(f) Investments in certificates of deposit, time deposits or banker's
acceptances maturing within 365 days from the date of acquisition thereof
either (i) issued by an Acceptable Bank, or (ii) issued by any other bank
with which the Company has a banking relationship and which is organized
under the laws of the United States of America or any State thereof,
PROVIDED that the aggregate amount of the Investments of the Company
permitted by this clause (ii) shall not exceed $10,000,000;
(g) Investments in commercial paper given the highest rating by a
credit rating agency of recognized national standing and maturing not more
than 270 days from the date of creation thereof;
(h) Investments in Repurchase Agreements;
(i) Investments in tax-exempt obligations of any state of the United
States of America, or any municipality of any such state, in each case
rated "AA" or better by S&P, "Aa2" or better by Moody's or an equivalent
rating by any other credit rating agency of recognized national standing,
PROVIDED that such obligations mature within 365 days from the date of
acquisition thereof;
(j) loans or advances in the usual and ordinary course of business to
officers, directors and employees for expenses (including moving expenses
related to a transfer) incidental to carrying on the business of the
Company or any Restricted Subsidiary; and
(k) Investments in the shares of registered investment companies
commonly known as "money market funds", PROVIDED that the aggregate net
asset value of any such investment company shall be $1,000,000,000 or more
and the investment policies of such investment companies shall limit them
to Money Market Instruments.
As of any date of determination, each Restricted Investment shall be valued at
the greater of:
(x) the amount at which such Restricted Investment is shown on the
books of the Company or any of its Restricted Subsidiaries (or zero if such
Restricted Investment is not shown on any such books); and
(y) either
(i) in the case of any Guaranty of the obligation of any Person,
the amount which the Company or any of its Restricted Subsidiaries has
paid on account of such obligation less any recoupment by the Company
or such Restricted Subsidiary of any such payments, or
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
(ii) in the case of any other Restricted Investment, the excess
of:
(x) the greater of (A) the amount originally entered on the
books of the Company or any of its Restricted Subsidiaries with
respect thereto and (B) the cost thereof to the Company or its
Restricted Subsidiary over
(y) any return of capital (after income taxes applicable
thereto) upon such Restricted Investment through the sale or
other liquidation thereof or part thereof or otherwise.
As used in this definition of "Restricted Investments":
"ACCEPTABLE BANK" means any bank or trust company (i) which is
organized under the laws of the United States of America or any State
thereof, (ii) which has capital, surplus and undivided profits aggregating
at least $100,000,000, and (iii) whose long-term unsecured debt obligations
(or the long-term unsecured debt obligations of the bank holding company
owning all of the capital stock of such bank or trust company) shall have
been given a rating of "AA" or better by S&P or "Aa" or better by Moody's.
"ACCEPTABLE BROKER-DEALER" means any Person other than a natural
person (i) which is registered as a broker or dealer pursuant to the
Exchange Act and (ii) whose long-term unsecured debt obligations shall have
been given a rating of "AA" or better by S&P or "Aa" or better by Moody's.
"MONEY MARKET INSTRUMENTS" shall mean United States Governmental
Securities described under paragraph (e) above and commercial paper
qualified for Investments under paragraph (g) above.
"MOODY'S" means Moody's Investors Service, Inc.
"REPURCHASE AGREEMENT" means any written agreement
(a) that provides for (i) the transfer of one or more Money
Market Instruments in an aggregate principal amount at least equal to
the amount of the Transfer Price (defined below) to the Company or any
of its Restricted Subsidiaries from an Acceptable Bank or an
Acceptable Broker-Dealer against a transfer of funds (the "TRANSFER
PRICE") by the Company or such Restricted Subsidiary to such
Acceptable Bank or Acceptable Broker-Dealer, and (ii) a simultaneous
agreement by the Company or such Restricted Subsidiary, in
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connection with such transfer of funds, to transfer to such Acceptable
Bank or Acceptable Broker-Dealer the same or substantially similar
Money Market Instruments for a price not less than the Transfer Price
plus a reasonable return thereon at a date certain not later than 365
days after such transfer of funds,
(b) in respect of which the Company or such Restricted
Subsidiary shall have the right, whether by contract or pursuant to
applicable law, to liquidate such agreement upon the occurrence of any
default thereunder, and
(c) in connection with which the Company or such Restricted
Subsidiary, or an agent thereof, shall have taken all action required
by applicable law or regulations to perfect a Lien in such Money
Market Instruments.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc.
"UNITED STATES GOVERNMENTAL SECURITY" means any direct obligation of,
or obligation guaranteed by, the United States of America, or any agency
controlled or supervised by or acting as an instrumentality of the United
States of America pursuant to authority granted by the Congress of the
United States of America, so long as such obligation or guarantee shall
have the benefit of the full faith and credit of the United States of
America which shall have been pledged pursuant to authority granted by the
Congress of the United States of America.
"RESTRICTED PAYMENT" means
(a) any Distribution in respect of the Company or any Restricted
Subsidiary of the Company (other than on account of capital stock or other
equity interests of a Restricted Subsidiary of the Company owned legally
and beneficially by the Company or another Restricted Subsidiary of the
Company), including, without limitation, any Distribution resulting in the
acquisition by the Company of Securities which would constitute treasury
stock, and
(b) any payment, repayment, redemption, retirement, repurchase or
other acquisition, direct or indirect, by the Company or any Restricted
Subsidiary of, on account of, or in respect of, the principal of any
Convertible Subordinated Debt (or any installment thereof) prior to the
regularly scheduled maturity date thereof (as in effect on the date such
Convertible Subordinated Debt was originally incurred).
For purposes of this Agreement, the amount of any Restricted Payment made in
property shall be the greater of (x) the Fair Market Value of such property (as
determined in good faith by the
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board of directors (or equivalent governing body) of the Person making such
Restricted Payment) and (y) the net book value thereof on the books of such
Person, in each case determined as of the date on which such Restricted Payment
is made.
"RESTRICTED SUBSIDIARY" shall mean any Subsidiary (i) which is designated
as such on Schedule 5.4 or, at the time such Subsidiary becomes a Subsidiary, is
designated as such in a written notice with respect to such Subsidiary given by
the Company to the Holders of the Notes pursuant to Section 18 and (ii) of which
more than 80% (by number of votes) of the Voting Stock is beneficially owned by
the Company or by any Restricted Subsidiary.
"SALE-AND-LEASEBACK TRANSACTION" means a transaction or series of
transactions pursuant to which the Company or any Restricted Subsidiary shall
sell or transfer to any Person (other than the Company or a Wholly-Owned
Restricted Subsidiary) any property, whether now owned or hereafter acquired,
which, at the time of such transaction has been owned for more than 180 days by
the Company or such Restricted Subsidiary or which was acquired in connection
with a Property Reinvestment Application, and, as part of the same transaction
or series of transactions, the Company or any Restricted Subsidiary shall rent
or lease as lessee, or similarly acquire the right to possession or use of, such
property or one or more properties which it intends to use for the same purpose
or purposes as such property for a term of 36 months or longer.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.
"SECURITY" has the meaning set forth in section 2(1) of the Securities Act
of 1933, as amended.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"SUBSIDIARY" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to
a "Subsidiary" is a reference to a Subsidiary of the Company.
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Cameron Ashley Building Products, Inc. Note Purchase Agreement
SUBSIDIARY STOCK" means, with respect to any Person, the stock (or any
options or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Subsidiary of such Person.
"SWAPS" means, with respect to any Person, payment obligations with respect
to interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. For the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof as of the end
of the then most recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such fiscal quarter, and
in making such determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person thereunder or if any
such agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall be the net
amount so determined.
"TRANSFER" means, with respect to any Person, any transaction in which such
Person sells, conveys, transfers or leases (as lessor) any of its property,
including, in the case of the Company: (i) the issuance or sale by any
Restricted Subsidiary of any shares of stock of any class (including as "stock"
for the purpose of this definition, any warrants, rights or options to purchase
or otherwise acquire stock or other Securities exchangeable for or convertible
into stock) of such Restricted Subsidiary to any Person other than the Company
or a Wholly-owned Restricted Subsidiary (except for the purpose of qualifying
directors, or except in satisfaction of the validly pre-existing preemptive
rights of minority shareholders in connection with the simultaneous issuance of
stock to the Company and its Subsidiaries whereby the Company and its
Subsidiaries maintain their same proportionate interest in such Restricted
Subsidiary) and (ii) the sale, transfer or other disposition by the Company of
any shares of stock of any Restricted Subsidiary (except to qualify directors)
and the sale, transfer or other disposition (except to the Company or a Wholly-
Owned Restricted Subsidiary) by any Restricted Subsidiary of any shares of stock
of any other Subsidiary. For purposes of determining the application of the Net
Proceeds Amount in respect of any Transfer, the Company may designate any
Transfer as one or more separate Transfers each yielding a separate Net Proceeds
Amount.
"UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary which is not a
Restricted Subsidiary.
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" means, at any time, any Restricted
Subsidiary one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests and Debt of which are owned
by any one or more of the Company and the Company's other Wholly-Owned
Restricted Subsidiaries at such time.
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EXHIBIT 10.20
CHANGE IN CONTROL EMPLOYMENT AGREEMENT
AGREEMENT by and between Cameron Ashley Building Products, Inc., a
Georgia corporation (the "Company") and RONALD R. ROSS (the "Executive"),
dated as of the 1st day of June 1996.
The Board of Directors of the Company (the "Board"), has determined that
it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change in Control
(as defined below) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or threatened Change in
Control and to encourage the Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending Change in
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change in Control which ensure that the compensation and
benefits expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall mean the first date during the
Change in Control Period (as defined in Section 1(b)) on which a Change in
Control (as defined in Section 2) occurs. Anything in this Agreement to the
contrary notwithstanding, the "Effective Date" shall mean the date
immediately prior to the date of the Executive's termination of employment,
if such termination occurs either (i) within six (6) months prior to a Change
in Control; or (ii) prior to a Change in Control and reasonably demonstrated
by the Executive to be at the request of a third party who has taken steps
reasonably calculated to effect a Change on Control or otherwise arising in
connection with or anticipation of a Change in Control.
(b) The "Change in Control Period" shall mean the period
commencing on the date hereof and ending on the fifth anniversary of the date
hereof; provided, however, that commencing on the date one year after the
date hereof, and on each annual anniversary of such date (such date and each
annual anniversary thereof shall be hereinafter referred to as the "Renewal
Date"), unless previously terminated, the Change in Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give
notice to the Executive that the Change in Control Period shall not be so
extended.
(c) "Subsidiary" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if
each of the
<PAGE>
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
2. CHANGE IN CONTROL. For the purposes of this Agreement, a "Change
in Control" shall mean the first to occur of the following events:
(i) any person (as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and as used in Section
13(d) and 14(d) thereof), excluding the Company, any Subsidiary and any
employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including any trustee of such plan acting as trustee thereof),
but including a 'group' as defined in Section 13(d)(3) of the Exchange Act (a
"Person"), becomes the beneficial owner of shares of the Company having at
least thirty percent (30%) of the total number of votes that may be cast for
the election of directors of the Company (the "Voting Shares"), or, if
greater, that percentage of Voting Shares owned by CGW Southeast Partners I,
L.P. (such 30% or greater percentage hereinafter referred to as the "Voting
Share Percentage"); provided that no Change of Control will occur as a result
of an acquisition of stock by CGW Southeast Partners I, L.P. or the Company
which increases, proportionately, the stock representing the voting power of
the Company owned by such person or group above the Voting Share Percentage,
and provided further that if such person or group acquires stock representing
more than the Voting Share Percentage by reason of share purchases by the
Company, and after such share purchases by the Company acquires any
additional shares representing voting power of the Company, then a Change of
Control shall occur;
(ii) the shareholders of the Company shall approve any merger or
other business combination of the Company, sale of the Company's assets or
combination of the foregoing transactions (a "Transaction") other than a
Transaction involving only the Company, one or more of its Subsidiaries, or
CGW Southeast Partners I, L.P. or any of its affiliates, or a Transaction
immediately following which the shareholders of the Company immediately prior
to the Transaction continue to have a majority of the voting power in the
resulting entity excluding for this purpose any shareholder owning directly
or indirectly more than ten percent (10%) of the shares of the other company
involved in the merger; or
(iii) within any 24-month period beginning on or after the
Effective Date, the persons who were directors of the Company immediately
before the beginning of such period (the "Incumbent Directors") shall cease
(for any reason other than death) to constitute at least a majority of the
Board of Directors or the board of directors of any successor to the Company,
provided that any director who was not a director as of the Effective Date
shall be deemed to be an Incumbent Director if such director was elected to
the Board of Directors by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified as Incumbent
Directors either actually or by prior operation of this clause (iii); and
provided further that any director elected to the
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Board of Directors to avoid or settle a threatened or actual proxy contest
shall in no event be deemed to be an Incumbent Director.
Notwithstanding the foregoing, any distribution or transfer of
shares of the Company by CGW Southeast Partners I, L.P., to its partners or
its affiliates shall in no event be a Change in Control.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending on the third
anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately preceding the
Effective Date and (B) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding the Effective
Date or any office or location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours
to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve on corporate,
civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct
of such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the
Company.
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(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary"), which shall be
paid at a monthly rate, at least equal to twelve times the highest monthly
base salary paid or payable, including any base salary which has been earned
but deferred, to the Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding the month in which
the Effective Date occurs. During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Executive prior to the Effective Date and thereafter
at least annually. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under
common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
Executive's highest bonus under the Company's [Annual Incentive Plan], or any
comparable bonus under any predecessor or successor plan, for the last three
full fiscal years prior to the Effective Date (annualized in the event that
the Executive was not employed by the Company for the whole of such fiscal
year) (the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices, policies
and programs provide the Executive with incentive opportunities (measured
with respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), savings opportunities
and retirement benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices, policies
and programs as in effect at any time during the 120-day period immediately
preceding the Effective Date or if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
(iv) WELFARE BENEFIT PLANS. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies
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and programs provided by the Company and its affiliated companies (including,
without limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with benefits which
are less favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and its affiliated
companies.
(v) EXPENSES. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in
effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without
limitation, tax and financial planning services, payment of club dues, and,
if applicable, use of an automobile and payment of related expenses, in
accordance with the most favorable plans, practices, programs and policies of
the Company and its affiliated companies in effect for the Executive at any
time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its affiliated
companies at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided generally
at any time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its affiliated
companies as in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
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<PAGE>
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the
30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or
the Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct
or gross misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief Executive
Officer or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted
to be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice is
provided
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<PAGE>
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
(c) GOOD REASON. The Executive's employment may be terminated by
the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at
any office or location other than as provided in Section 4(a)(i)(B) hereof or
the Company's requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive. Anything in this
Agreement to the contrary notwithstanding, a termination by the Executive for
any reason during the 30-day period immediately following the first
anniversary of the Effective Date shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party hereto given in accordance with Section
12(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances
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claimed to provide a basis for termination of the Executive's employment
under the provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 30 days after the
giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive any right of the
Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination
or any later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD REASON; OTHER
THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the higher of (I) the Recent Annual Bonus and (II) the Annual
Bonus paid or payable, including any bonus or portion thereof which has been
earned but deferred (and annualized for any fiscal year consisting of less
than twelve full months or during which the Executive was employed for less
than twelve full months), for the most recently completed fiscal year during
the Employment Period, if any (such higher amount being referred to as the
"Highest Annual Bonus") and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of Termination,
and the denominator of which is 365 and (3) any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1), (2), and
(3) shall be hereinafter referred to as the "Accrued Obligations"); and
B. the amount equal to the product of (1) three and (2)
the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual
Bonus; and
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C. the amount equal to the excess of (a) the actuarial
equivalent of the benefit the Executive would have been paid under all
employee retirement plans maintained by the Company in effect as of his date
of termination, including, to the extent such plan is then maintained by the
Company, the [Cameron Ashley 401(k) Plan] and any successor plan or plans, if
he had been fully vested and had continued to be covered for a period of
thirty-six (36) months from the Date of Termination as if the Executive had
earned the compensation described in Section 4(b)(i) and (ii) hereof during
such period and had made contributions sufficient to earn the maximum
matching contribution, if any, under such plan (less any amounts he would
have been required to contribute), over (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any, under such plan(s) as
of the Date of Termination.
(ii) for three years after the Executive's Date of
Termination, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this
Agreement if the Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive
becomes re-employed with another employer and is eligible to receive medical
or other welfare benefits under another employer provided plan, the medical
and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility.
For purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until three years after the Date of Termination and to have
retired on the last day of such period;
(iii) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and provider of
which shall be selected by the Executive in his sole discretion; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible
to receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits").
(b) DEATH. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With
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respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(b) shall include without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the
Company and affiliated companies to the estates and beneficiaries of peer
executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, as in
effect with respect to other peer executives and their beneficiaries at any
time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive's estate and/or the Executive's
beneficiaries, as in effect on the date of the Executive's death with respect
to other peer executives of the Company and its affiliated companies and
their beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized in this
Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and
its affiliated companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer
executives and their families at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any time thereafter
generally with respect to other peer executives of the Company and its
affiliated companies and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive (x) his Annual Base Salary
through the Date of Termination, (y) the amount of any compensation
previously deferred by the Executive, and (z) Other Benefits, in each case to
the extent theretofore unpaid. If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination for Good
Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, all Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company
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or any of its affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any
of its affiliated companies at or subsequent to the Date of Termination shall
be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
8. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
the Executive or others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this
Agreement and, except to the extent provided in Section 6(a)(ii) hereof, such
amounts shall not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus
in each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986,
as amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest
or penalties are incurred by the Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 9(a), if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the Executive, after taking into account the
Payments and the Gross-Up Payment, would not receive a net after-tax benefit
of at least [$50,000] (taking into account both income taxes and any Excise
Tax) as compared to the net after-tax proceeds to the Executive resulting
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from an elimination of the Gross-Up Payment and a reduction of the Payments,
in the aggregate, to an amount (the "Reduced Amount") such that the receipt
of Payments would not give rise to any Excise Tax, then no Gross-Up Payment
shall be made to the Executive and the Payments, in the aggregate, shall be
reduced to the Reduced Amount.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made
by [Deloitte & Touche LLP] or such other certified public accounting firm as
may be designated by the Executive (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change in Control,
the Executive shall appoint another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 9, shall-be paid by the
Company to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to
be paid. The Executive shall not pay such claim prior to the expiration of
the 30-day period following the date on which it gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
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(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation of the foregoing
provisions of this Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 9(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If, after the receipt
by the Executive of an amount advanced by the Company pursuant to Section
9(c), a determination is made that- the Executive shall not be entitled to
any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of 30 days after
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such determination, then such advance shall-be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts otherwise payable
to the Executive under this Agreement.
11. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
12. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, without reference to
principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than-by a written agreement executed
by the parties hereto or their respective successors and legal
representatives.
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(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
IF TO THE EXECUTIVE:
Ronald R. Ross
816 Hills Creek Drive
McKinney, Texas 75070
IF TO THE COMPANY:
Cameron Ashley Building Products, Inc.
Suite 100
11651 Plano Road
Dallas, Texas 75243
Attention: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed
to be a waiver of such provision or right or any other provision or right of
this Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which
case the Executive shall have no further rights under this
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Agreement. From and after the Effective Date this Agreement shall supersede
any other agreement between the parties with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
_____________________________
Ronald R. Ross
CAMERON ASHLEY BUILDING
PRODUCTS, INC.
By: __________________________
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EXHIBIT 10.21
CHANGE IN CONTROL EMPLOYMENT AGREEMENT
AGREEMENT by and between Cameron Ashley Building Products, Inc., a
Georgia corporation (the "Company") and WALTER J. MURATORI (the "Executive"),
dated as of the 1st day of June 1996.
The Board of Directors of the Company (the "Board"), has determined that
it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change in Control
(as defined below) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or threatened Change in
Control and to encourage the Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending Change in
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change in Control which ensure that the compensation and
benefits expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall mean the first date during the
Change in Control Period (as defined in Section l(b)) on which a Change in
Control (as defined in Section 2) occurs. Anything in this Agreement to the
contrary notwithstanding, the "Effective Date" shall mean the date
immediately prior to the date of the Executive's termination of employment,
if such termination occurs either (i) within six (6) months prior to a Change
in Control; or (ii) prior to a Change in Control and reasonably demonstrated
by the Executive to be at the request of a third party who has taken steps
reasonably calculated to effect a Change on Control or otherwise arising in
connection with or anticipation of a Change in Control.
(b) The "Change in Control Period" shall mean the period
commencing on the date hereof and ending on the fifth anniversary of the date
hereof; provided, however, that commencing on the date one year after the
date hereof, and on each annual anniversary of such date (such date and each
annual anniversary thereof shall be hereinafter referred to as the "Renewal
Date"), unless previously terminated, the Change in Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give
notice to the Executive that the Change in Control Period shall not be so
extended.
(c) "Subsidiary" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if
each of the
<PAGE>
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
2. CHANGE IN CONTROL. For the purposes of this Agreement, a "Change
in Control" shall mean the first to occur of the following events:
(i) any person (as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and as used in Section
13(d) and 14(d) thereof), excluding the Company, any Subsidiary and any
employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including any trustee of such plan acting as trustee thereof),
but including a `group' as defined in Section 13(d)(3) of the Exchange Act (a
"Person"), becomes the beneficial owner of shares of the Company having at
least thirty percent (30%) of the total number of votes that may be cast for
the election of directors of the Company (the "Voting Shares"), or, if
greater, that percentage of Voting Shares owned by CGW Southeast Partners I,
L.P. (such 30% or greater percentage hereinafter referred to as the "Voting
Share Percentage"); provided that no Change of Control will occur as a result
of an acquisition of stock by CGW Southeast Partners I, L.P. or the Company
which increases, proportionately, the stock representing the voting power of
the Company owned by such person or group above the Voting Share Percentage,
and provided further that if such person or group acquires stock representing
more than the Voting Share Percentage by reason of share purchases by the
Company, and after such share purchases by the Company acquires any
additional shares representing voting power of the Company, then a Change of
Control shall occur;
(ii) the shareholders of the Company shall approve any merger or
other business combination of the Company, sale of the Company's assets or
combination of the foregoing transactions (a "Transaction") other than a
Transaction involving only the Company, one or more of its Subsidiaries, or
CGW Southeast Partners I, L.P. or any of its affiliates, or a Transaction
immediately following which the shareholders of the Company immediately prior
to the Transaction continue to have a majority of the voting power in the
resulting entity excluding for this purpose any shareholder owning directly
or indirectly more than ten percent (10%) of the shares of the other company
involved in the merger; or
(iii) within any 24-month period beginning on or after the
Effective Date, the persons who were directors of the Company immediately
before the beginning of such period (the "Incumbent Directors") shall cease
(for any reason other than death) to constitute at least a majority of the
Board of Directors or the board of directors of any successor to the Company,
provided that any director who was not a director as of the Effective Date
shall be deemed to be an Incumbent Director if such director was elected to
the Board of Directors by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified as Incumbent
Directors either actually or by prior operation of this clause (iii); and
provided further that any director elected to the
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Board of Directors to avoid or settle a threatened or actual proxy contest
shall in no event be deemed to be an Incumbent Director.
Notwithstanding the foregoing, any distribution or transfer of
shares of the Company by CGW Southeast Partners I, L.P., to its partners or
its affiliates shall in no event be a Change in Control.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending on the third
anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately preceding the
Effective Date and (B) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding the Effective
Date or any office or location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours
to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve on corporate,
civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct
of such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the
Company.
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(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary"), which shall be
paid at a monthly rate, at least equal to twelve times the highest monthly
base salary paid or payable, including any base salary which has been earned
but deferred, to the Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding the month in which
the Effective Date occurs. During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Executive prior to the Effective Date and thereafter
at least annually. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under
common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
Executive's highest bonus under the Company's [Annual Incentive Plan], or any
comparable bonus under any predecessor or successor plan, for the last three
full fiscal years prior to the Effective Date (annualized in the event that
the Executive was not employed by the Company for the whole of such fiscal
year) (the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices, policies
and programs provide the Executive with incentive opportunities (measured
with respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), savings opportunities
and retirement benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices, policies
and programs as in effect at any time during the 120-day period immediately
preceding the Effective Date or if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
(iv) WELFARE BENEFIT PLANS. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies
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and programs provided by the Company and its affiliated companies (including,
without limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with benefits which
are less favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and its affiliated
companies.
(v) EXPENSES. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in
effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without
limitation, tax and financial planning services, payment of club dues, and,
if applicable, use of an automobile and payment of related expenses, in
accordance with the most favorable plans, practices, programs and policies of
the Company and its affiliated companies in effect for the Executive at any
time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its affiliated
companies at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided generally
at any time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its affiliated
companies as in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
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5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" shall mean the absence of the
Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or
the Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct
or gross misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief Executive
Officer or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted
to be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice is
provided
-6-
<PAGE>
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
(c) GOOD REASON. The Executive's employment may be terminated by
the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at
any office or location other than as provided in Section 4(a)(i)(B) hereof or
the Company's requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive. Anything in this
Agreement to the contrary notwithstanding, a termination by the Executive for
any reason during the 30-day period immediately following the first
anniversary of the Effective Date shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party hereto given in accordance with Section
12(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances
-7-
<PAGE>
claimed to provide a basis for termination of the Executive's employment
under the provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 30 days after the
giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive any right of the
Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination
or any later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD REASON; OTHER
THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the higher of (I) the Recent Annual Bonus and (II) the Annual
Bonus paid or payable, including any bonus or portion thereof which has been
earned but deferred (and annualized for any fiscal year consisting of less
than twelve full months or during which the Executive was employed for less
than twelve full months), for the most recently completed fiscal year during
the Employment Period, if any (such higher amount being referred to as the
"Highest Annual Bonus") and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of Termination,
and the denominator of which is 365 and (3) any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1), (2), and
(3) shall be hereinafter referred to as the "Accrued Obligations"); and
B. the amount equal to the product of (1) three and (2)
the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual
Bonus; and
-8-
<PAGE>
C. the amount equal to the excess of (a) the actuarial
equivalent of the benefit the Executive would have been paid under all
employee retirement plans maintained by the Company in effect as of his date
of termination, including, to the extent such plan is then maintained by the
Company, the [Cameron Ashley 401(k) Plan] and any successor plan or plans, if
he had been fully vested and had continued to be covered for a period of
thirty-six (36) months from the Date of Termination as if the Executive had
earned the compensation described in Section 4(b)(i) and (ii) hereof during
such period and had made contributions sufficient to earn the maximum
matching contribution, if any, under such plan (less any amounts he would
have been required to contribute), over (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any, under such plan(s) as
of the Date of Termination.
(ii) for three years after the Executive's Date of
Termination, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this
Agreement if the Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive
becomes re-employed with another employer and is eligible to receive medical
or other welfare benefits under another employer provided plan, the medical
and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility.
For purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until three years after the Date of Termination and to have
retired on the last day of such period;
(iii) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and provider of
which shall be selected by the Executive in his sole discretion; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible
to receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits").
(b) DEATH. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With
-9-
<PAGE>
respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(b) shall include without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the
Company and affiliated companies to the estates and beneficiaries of peer
executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, as in
effect with respect to other peer executives and their beneficiaries at any
time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive's estate and/or the Executive's
beneficiaries, as in effect on the date of the Executive's death with respect
to other peer executives of the Company and its affiliated companies and
their beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized in this
Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and
its affiliated companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer
executives and their families at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any time thereafter
generally with respect to other peer executives of the Company and its
affiliated companies and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive (x) his Annual Base Salary
through the Date of Termination, (y) the amount of any compensation
previously deferred by the Executive, and (z) Other Benefits, in each case to
the extent theretofore unpaid. If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination for Good
Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, all Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company
-10-
<PAGE>
or any of its affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any
of its affiliated companies at or subsequent to the Date of Termination shall
be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
8. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
the Executive or others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this
Agreement and, except to the extent provided in Section 6(a)(ii) hereof, such
amounts shall not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus
in each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986,
as amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest
or penalties are incurred by the Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 9(a), if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the Executive, after taking into account the
Payments and the Gross-Up Payment, would not receive a net after-tax benefit
of at least [$50,000] (taking into account both income taxes and any Excise
Tax) as compared to the net after-tax proceeds to the Executive resulting
-11-
<PAGE>
from an elimination of the Gross-Up Payment and a reduction of the Payments,
in the aggregate, to an amount (the "Reduced Amount") such that the receipt
of Payments would not give rise to any Excise Tax, then no Gross-Up Payment
shall be made to the Executive and the Payments, in the aggregate, shall be
reduced to the Reduced Amount.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made
by [Deloitte & Touche LLP] or such other certified public accounting firm as
may be designated by the Executive (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change in Control,
the Executive shall appoint another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 9, shall-be paid by the
Company to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to
be paid. The Executive shall not pay such claim prior to the expiration of
the 30-day period following the date on which it gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
-12-
<PAGE>
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation of the foregoing
provisions of this Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 9(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If, after the receipt
by the Executive of an amount advanced by the Company pursuant to Section
9(c), a determination is made that- the Executive shall not be entitled to
any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of 30 days after
-13-
<PAGE>
such determination, then such advance shall-be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts otherwise payable
to the Executive under this Agreement.
11. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
12. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, without reference to
principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than-by a written agreement executed
by the parties hereto or their respective successors and legal
representatives.
-14-
<PAGE>
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
IF TO THE EXECUTIVE:
Walter J. Muratori
18913 Crescent Road
Odesa, Florida 33556
IF TO THE COMPANY:
Cameron Ashley Building Products, Inc.
Suite 100
11651 Plano Road
Dallas, Texas 75243
Attention: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed
to be a waiver of such provision or right or any other provision or right of
this Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which
case the Executive shall have no further rights under this
-15-
<PAGE>
Agreement. From and after the Effective Date this Agreement shall supersede
any other agreement between the parties with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
_____________________________
Walter J. Muratori
CAMERON ASHLEY BUILDING
PRODUCTS, INC.
By: __________________________
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<PAGE>
EXHIBIT 11
CAMERON ASHLEY BUILDING PRODUCTS, INC.
COMPUTATION OF EARNINGS PER SHARE
(Thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------ -----------------------
April 30, April 30, April 30, April 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Average common stock
outstanding 8,846 7,909 8,786 7,200
Average options outstanding 989 1,154 1,104 1,149
Effects of treasury stock
method (based on exercise
proceeds and tax benefits) (718) (571) (773) (571)
--------- --------- --------- ---------
Weighted average common
shares outstanding 9,117 8,492 9,117 7,778
--------- --------- --------- ---------
--------- --------- --------- ---------
Income before extraordinary
charge $2,635 $1,970 $3,621 $3,581
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income $2,390 $1,970 $3,376 $3,581
--------- --------- --------- ---------
--------- --------- --------- ---------
Income per share before
extraordinary charge $ .29 $ .23 $ .40 $ .46
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income per share after
extraordinary charge $ .26 $ .23 $ .37 $ .46
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
- -------------------
The fully diluted computation of earnings per share is not presented since
fully diluted earnings per share and primary earnings per share do not differ
by more than 3%.
-15-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED FINANCIAL STATEMENTS FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED
APRIL 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<CASH> 9,232
<SECURITIES> 0
<RECEIVABLES> 72,545
<ALLOWANCES> 2,554
<INVENTORY> 63,674
<CURRENT-ASSETS> 145,763
<PP&E> 36,014
<DEPRECIATION> 9,773
<TOTAL-ASSETS> 190,407
<CURRENT-LIABILITIES> 51,153
<BONDS> 0
0
0
<COMMON> 59,572
<OTHER-SE> 26,250
<TOTAL-LIABILITY-AND-EQUITY> 190,407
<SALES> 135,085
<TOTAL-REVENUES> 135,085
<CGS> 108,495
<TOTAL-COSTS> 21,158
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 527
<INTEREST-EXPENSE> 818
<INCOME-PRETAX> 4,119
<INCOME-TAX> 1,484
<INCOME-CONTINUING> 2,635
<DISCONTINUED> 0
<EXTRAORDINARY> 245
<CHANGES> 0
<NET-INCOME> 2,390
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26
</TABLE>
