<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-Q/A
--------------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1999
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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at September 1, 1999: 8,680,307
================================================================================
<PAGE> 2
CAMERON ASHLEY BUILDING PRODUCTS, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
JULY 31, 1999
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
--------
<S> <C>
Item 1. Consolidated Condensed Financial Statements
Consolidated Balance Sheets as of July 31, 1999 and
October 31, 1998 3
Consolidated Statements of Income for the three months and nine months
ended July 31, 1999 and 1998 4
Consolidated Statement of Stockholders' Equity for the
nine months ended July 31, 1999 5
Consolidated Statements of Cash Flows for the nine months
ended July 31, 1999 and 1998 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
-2-
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
CAMERON ASHLEY BUILDING PRODUCTS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
July 31, October 31,
1999 1998
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,566 $ 3,706
Accounts receivable, net 167,313 148,392
Inventories 135,125 99,810
Prepaid expenses and other assets 2,844 1,999
Deferred income taxes 4,010 3,703
--------- ---------
Total current assets 312,858 257,610
PROPERTY, PLANT AND EQUIPMENT, NET 58,795 50,454
INTANGIBLES, NET 64,821 48,865
OTHER ASSETS 1,662 4,804
--------- ---------
TOTAL $ 438,136 $ 361,733
========= =========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 108,764 $ 80,950
Accrued expenses 21,913 24,052
Line of credit 3,188 0
Current maturities of debt 4,348 2,346
--------- ---------
Total current liabilities 138,213 107,348
LONG-TERM DEBT, LESS CURRENT MATURITIES (Note 3) 169,452 135,051
MINORITY INTEREST 516 0
DEFERRED INCOME TAXES 4,427 4,369
--------- ---------
Total liabilities 312,608 246,768
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; 9,863,000 shares
issued July 31, 1999, and
9,834,000 shares issued at October 31, 1998 64,722 64,329
Retained earnings 75,849 65,756
Treasury stock, at cost, 1,190,000 shares (13,633) (13,633)
Accumulated other comprehensive income (loss), net of tax (1,410) (1,487)
--------- ---------
Total stockholders' equity 125,528 114,965
--------- ---------
TOTAL $ 438,136 $ 361,733
========= =========
</TABLE>
See notes to consolidated condensed financial statements.
-3-
<PAGE> 4
CAMERON ASHLEY BUILDING PRODUCTS, INC.,
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------- ---------------------
July 31, July 31, July 31, July 31,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUE $315,768 $249,322 $807,901 $613,311
COST OF SALES 253,131 200,532 646,544 491,053
-------- -------- -------- --------
GROSS PROFIT 62,637 48,790 161,357 122,258
OPERATING EXPENSES 47,901 37,309 134,392 100,857
RE-ENGINEERING & SYSTEM CONVERSION 500 300 1,562 1,223
-------- -------- -------- --------
INCOME FROM OPERATIONS 14,236 11,181 25,403 20,178
INTEREST EXPENSE 3,175 2,170 8,569 5,587
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 11,061 9,011 16,834 14,591
PROVISION FOR INCOME TAXES 4,399 3,646 6,741 5,835
-------- -------- -------- --------
NET INCOME $ 6,662 $ 5,365 $ 10,093 $ 8,756
======== ======== ======== ========
NET INCOME PER SHARE:
BASIC $ 0.77 $ 0.57 $ 1.17 $ 0.94
======== ======== ======== ========
DILUTED $ 0.76 $ 0.56 $ 1.15 $ 0.91
======== ======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 8,662 9,363 8,652 9,345
======== ======== ======== ========
DILUTED 8,821 9,648 8,807 9,621
======== ======== ======== ========
</TABLE>
See notes to consolidated condensed financial statements.
-4-
<PAGE> 5
CAMERON ASHLEY BUILDING PRODUCTS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK OTHER
--------------------- RETAINED TREASURY COMPREHENSIVE
SHARES VALUE EARNINGS STOCK INCOME (LOSS) TOTAL
-------- -------- -------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AS OF NOVEMBER 1, 1998 9,834 $ 64,329 $ 65,756 $(13,633) $ (1,487) $114,965
Proceeds from exercise of stock options, 2 19 -- -- -- 19
including tax benefits of $1,000
Proceeds from employee stock purchase plan 27 229 -- -- -- 229
Management and director stock plan
compensation expense -- 145 -- -- -- 145
Net income -- -- 10,093 -- -- 10,093
Foreign currency translation adjustment -- -- -- -- 77 77
-------- -------- -------- -------- -------- --------
BALANCE AS OF JULY 31, 1999 9,863 $ 64,722 $ 75,849 $(13,633) $ (1,410) $125,528
======== ======== ======== ======== ======== ========
</TABLE>
See notes to consolidated condensed financial statements
-5-
<PAGE> 6
CAMERON ASHLEY BUILDING PRODUCTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine months ended
----------------------
July 31, July 31,
1999 1998
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 10,093 $ 8,756
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 8,899 7,021
(Gain) loss on sale of property, plant and equipment (35) 47
Deferred income taxes (269) (1,178)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (6,359) (7,615)
Notes receivable held for resale (27) 16,123
Inventories (28,801) (24,298)
Prepaid expenses (293) (2,165)
Accounts payable and accrued expenses 18,633 10,775
Warehouse line of credit 0 (12,189)
Other assets/liabilities (1,240) 1,568
-------- --------
Net cash provided by/(used in) operating activities 601 (3,155)
INVESTING ACTIVITIES:
Payment for acquisitions (19,093) (37,029)
Purchases of property, plant and equipment, net (10,366) (7,053)
Investment in affiliate 0 (293)
Other 18 4
-------- --------
Net cash used in investing activities (29,441) (44,371)
FINANCING ACTIVITIES:
Net borrowings 30,691 58,308
Repayments of seller financing of acquired business (1,583) (1,237)
Proceeds from employee stock purchase plan 229 167
Exercise of stock options 19 721
Other (656) (706)
-------- --------
Net cash provided by financing activities 28,700 57,253
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (140) 9,727
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 3,706 899
-------- --------
END OF PERIOD $ 3,566 $ 10,626
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid for interest $ 6,140 $ 2,947
======== ========
Cash paid for income taxes $ 9,056 $ 3,113
======== ========
</TABLE>
See notes to consolidated condensed financial statements
-6-
<PAGE> 7
CAMERON ASHLEY BUILDING PRODUCTS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JULY 31, 1999
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, 1998 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 three month and nine month
periods ended July 31, 1999 and 1998, financial position at July 31, 1999 and
October 31, 1998, and the cash flows for the nine month periods ended July 31,
1999 and 1998. 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 1998 Annual Report on Form 10-K.
The operating results for the third quarter and for the nine month period ended
July 31, 1999 are not necessarily indicative of the results that may be expected
for the entire year.
Certain prior year amounts have been reclassified to conform to current year
presentation.
2. NEW ACCOUNTING PRONOUNCEMENTS
On November 1, 1998, the Company adopted Statement of Financial Accounting
Standards ("SFAS"). SFAS No. 130, "Reporting Comprehensive Income", which
establishes standards for reporting and display of comprehensive income and its
components in the financial statements. During the nine month periods ended July
31, 1999 and 1998 the Company's total comprehensive earnings (in thousands) were
as follows:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Net income (loss) $10,093 $ 8,756
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 77 (1,471)
------- -------
Comprehensive income $10,170 $ 7,285
</TABLE>
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
131, "Disclosures About Segments of an Enterprise and Related Information" which
establishes standards for the way public companies disclose information about
operating segments, products and services, geographic areas and major customers.
The Company will adopt these standards commencing with the annual report for
fiscal year 1999. The Company does not expect the adoption of these standards to
have any impact on the Company's financial position or results of operations.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities' (SFAS No. 133). SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognizes
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company believes that
SFAS No. 133, which is required to be implemented no later than November 1,
2000, will not have a material impact on the financial statements of the
Company.
-7-
<PAGE> 8
3. LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt consists of the following at July 31, 1999: (In thousands)
<S> <C>
Senior Debt:
Unsecured Senior Notes with maturities and interest rates as follows:
$10,000 due April 15, 2001 bearing interest at 6.79%
$15,000 due April 15, 2002 bearing interest at 6.79%
with scheduled payments of $5.0 million
on April 15, 2000 and April 15, 2001
$10,000 due April 15, 2003 bearing interest at 7.21%
$15,000 due April 15, 2006 bearing interest at 7.61%
$3,000 due April 7, 2004 bearing interest at 6.71%
$63,000 due April 7, 2010 bearing interest at 6.90%
with payments of $12.6 million beginning April 7, 2006
$10,000 (Canadian $) due October 7, 2004 bearing interest at 6.45%
$7,000 due October 7, 2004 bearing interest at 6.71%
Interest is due semi-annually, with an average interest rate of 6.93% $129,368
Bank of America (as agent):
Revolving credit note due January 15, 2002; unsecured; interest is due
quarterly at the LIBOR rate or Banker's acceptance rate plus 0.50%
to 2.0%, or at a base rate
(defined in the agreement as prime). At July 31, 1999, the interest rate was 7.12% 36,100
Revolving credit note due December 31, 1999; secured, interest due monthly at prime
plus 0.05% at July 31, 1999, the interest rate was 8.5% 3,188
Seller financing of acquired businesses:
Various terms, interest at 7%, collateralized by certain land and buildings 239
Other, including capital leases 8,093
--------
176,988
Less current maturities (7,536)
--------
Long-term debt $169,452
========
</TABLE>
The seller notes payable are subordinated to the obligations under the Bank of
America agreements.
At July 31, 1999, the Company had $1,273,500 of letters of credit issued under
the Bank of America revolving credit facility.
NOTE 4. ACQUISITIONS
In May, 1999, the Company increased its ownership of Field Marketing, Inc. from
53.5% to 55.23% by an equity investment of approximately $0.5 million. In
September, 1999, the Company increased its ownership in Field Marketing, Inc.,
to approximately 70% by a $1.1 million equity investment.
In June, 1999, the Company acquired certain assets and assumed certain
liabilities of Fox Valley Building Materials, Inc., an Elgin, Illinois
distributor of building products. The purchase price, subject to post closing
adjustments was approximately $3.6 million.
-8-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
consolidated condensed financial statements and notes thereto, and with the
Company's audited consolidated financial statements and notes thereto for the
fiscal year ended October 31, 1998, included in the Company's Annual Report on
Form 10-K.
GENERAL
The Company is a distributor of a broad line of building products that are used
principally in home improvement, remodeling and repair work, and in new
residential construction. The Company distributes its products to independent
building material dealers, professional builders, large contractors, and mass
merchandisers through a network of over 160 branches located throughout the
United States and Canada. Product lines include roofing, millwork, pool and
patio enclosure materials, insulation, siding, steel products, industrial metals
and a variety of other building materials.
The building products industry is affected by various factors including general
economic conditions, the level of building activity, weather conditions, the
rate of new home construction, interest rates and the availability of credit. A
significant portion of the Company's products are sold for use in the home
improvement, remodeling and repair market, which is relatively less affected by
these factors that the new residential construction market.
The Company's long-term growth strategy focuses on three principles: (i)
establishing economies of scale through strategic acquisitions which build mass
and allow increased purchasing power, (ii) promoting internal sales growth
through a focus on product mix and marketing efforts, and (iii) improving branch
operating performance through cost awareness programs, the consolidation of
overhead expenses and the upgrade of technology.
In an effort to increase efficiency and reduce operating costs, the company has
invested in a new information system. The Company is on schedule for installing
the new system in the U.S. branches, and believes the new system will improve
its operating leverage and enhance its long-term growth strategy.
The following table sets forth items from Cameron Ashley Building Products,
Inc.'s Consolidated Statements of Income as percentages of revenue:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------- ----------------------------------
July 31, 1999 July 31, 1998 July 31, 1999 July 31, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue 100.0% 100.0% 100.0% 100.0%
Cost of Sales 80.2 80.4 80.0 80.1
----- ----- ----- -----
Gross Profit 19.8 19.6 20.0 19.9
Operating Expenses 15.2 15.0 16.7 16.4
Re-engineering and System
Conversion Costs 0.1 0.1 0.2 0.2
----- ----- ----- -----
Income from Operations 4.5 4.5 3.1 3.3
Interest Expense 1.0 0.9 1.1 0.9
----- ----- ----- -----
Income Before Income Taxes 3.5 3.6 2.0 2.4
Provision for Income Taxes 1.4 1.4 0.8 1.0
----- ----- ----- -----
Net Income 2.1% 2.2% 1.2% 1.4%
===== ===== ===== =====
</TABLE>
-9-
<PAGE> 10
RESULTS OF OPERATIONS
The comparability of operating results between the three and nine months ended
July 31, 1999 and the corresponding periods for 1998 is affected by several
events which occurred during those periods (collectively referred to as the "Net
Acquisition Activity"). These events include: 1) the discontinuation of the
Company's financing subsidiary, Cameron Ashley Financial Services (CAFS) in
1998, 2) the acquisition of seven businesses during fiscal 1998 at a total cost
of $8.8 million, 3) the acquisition of four businesses through 7/31/99 at a
total price of approximately $16.6 million, and 4) the increase in ownership of
Field Marketing, Inc. from 33% to 55.23% during 1999.
THIRD QUARTER ENDED JULY 31, 1999 COMPARED TO THIRD QUARTER ENDED JULY 31, 1998
Revenue increased 26.7% from $249.3 million in the three months ended July 31,
1998 to $315.8 million in the three months ended July 31, 1999, an increase of
$66.5 million. Of the increase in revenues, $16.3 million resulted from a 6.8%
increase in same store sales. The remaining increase in revenues is from the Net
Acquisitions Activity, specifically the acquisitions done during 1998 which were
only partially reflected in the 1998 numbers, while revenues for the full period
are shown in 1999.
Gross profit for the third quarter increased from $48.8 million to $62.6
million, an increase of 28.4%. Gross profit as a percentage of net sales
increased to 19.8% as compared to 19.6% for the same quarter 1998, due primarily
to changes in overall product mix.
Operating expense increased from $37.3 million in the third quarter of 1998 to
$47.9 million in the same period in 1999. The increase is primarily a result of
the increased operations as a result from the Net Acquisition Activity mentioned
above. As a percentage of net sales, operating expenses increased from 15.0% for
the third quarter of 1998, to 15.2% for the same period in 1999. A portion of
the increase is a result of increased employee costs to keep up with the peak
seasonal demands. Other Operating expenses incurred for re-engineering and
system conversion costs totaled $0.5 million for the third quarter, compared to
$0.3 million for the same period a year ago. As a percent of revenue these
expenses remained flat at 0.1% for both the 1998 and 1999 third quarters.
Total operating expenses, including those associated with re-engineering and
system conversion, were $48.4 million in the quarter ended July 31, 1999,
compared with $37.6 million in the prior year's quarter. The quarter ended July
31, 1998 included a charge of $1.4 million in operating expenses for costs
associated with the discontinuation of issuing customer loans by CAFS. There
were no charges associated with the discontinuation of business for CAFS for the
third quarter in 1999.
Income from operations increased 27.3% from $11.2 million in the third quarter
of 1998 to $14.2 million in the same period in 1999, due to Net Acquisition
Activity as discussed. The re-engineering and system conversion costs
effectively reduced income from operations by 3.4% for the quarter in 1999 and
2.6% for the same period in 1998. Including all activity, the income from
operations as a percentage of revenues remained flat at 4.5% for the third
quarters of 1998 and 1999.
Interest expense increased 46.3% from $2.2 million in the third quarter of 1998
to $3.2 million in the same period in 1999 due to additional debt of
approximately $54 million incurred for acquisitions during the latter part of
1998 and higher inventory levels to support seasonal needs over a larger branch
base.
As a result of the above factors, income before income taxes increased 22.8%
from $9.0 million in the third quarter of 1998 to $11.1 million in the same
period of 1999. Net income increased from $5.4 million in the 1998 period to
$6.7 million in the 1999 period. Diluted earnings per share increased from $0.56
in the 1998 period to $0.76 in the 1999 period on 8.6% fewer shares outstanding.
NINE MONTHS ENDED JULY 31, 1999 COMPARED TO NINE MONTHS ENDED JULY 31, 1998
Revenues increased 31.7% from $613.3 million in the nine months ended July 31,
1998, to $807.9 million in the same period in 1999, an increase of $194.6
million. Of the increase in revenues, $49.1 million resulted from an 8.3%
increase in same store revenues. The remaining increase in revenues is from the
Net Acquisition Activity, specifically the acquisitions done during 1998, which
were only partially reflected in the 1998 numbers, while revenues for the full
period are shown in the 1999 results.
-10-
<PAGE> 11
Gross profit for the nine-month period ending July 31, 1999 increased from
$122.3 million to $161.4 million, an increase of 32.0%. Gross profit as a
percentage of net sales increased to 20.0% in 1999 as compared to 19.9% for the
same period in 1998, due primarily to changes in overall product mix.
Operating expense increased from $100.9 million in the first nine months of
1998, to $134.4 million in the same period in 1999. Operating expenses include
both expenses directly attributable to branch operations and corporate expenses.
The increase is primarily a result of the increased operations as a result from
the Net Acquisition Activity mentioned above. As a percentage of net sales,
operating expenses increased from 16.4% for the first nine months in 1998, to
16.7% for the same period in 1999. A portion of the increase is a result of
increased employee costs and increased vehicle and transportation costs.
Other operating expenses incurred for re-engineering and system conversion costs
totaled $1.6 million for the nine months ended July 31, 1999, compared to $1.2
million for the same period a year ago. As a percent of revenue these expenses
remained flat at 0.2% for both the nine month period ending July 31, 1998 and
July 31, 1999.
Total operating expenses, including those associated with re-engineering and the
system conversion, increased from $102.1 million in the nine months ended July
31, 1998, to $136.0 million for the nine months ending July 31, 1999. Included
in the operating expenses for the nine months ended July 31, 1998, is a charge
of $1.9 million for costs associated with the discontinuation of issuing
customer loans by CAFS. There were no charges in 1999 for the discontinuation of
this business. This decrease in costs from 1998 to 1999 is offset by the
increases in operating costs as a result of the new acquisitions, which
combined, form the Net Acquisition Activity mentioned above.
Income from operations increased 25.9% from $20.2 million in the nine months
period ended July 31, 1999 to $25.4 million in the 1999 period, due to the
reasons previously discussed. The re-engineering and system conversion costs
effectively reduced income from operations by 5.8% for the nine months ending
July 31, 1999 and 5.7% for the same period in 1998. Including all activity, the
income from operations as a percentage of revenues dropped slightly from 3.3%
for the nine months ending July 31, 1998, to 3.1% for the same period in 1999.
Interest expense increased from $5.6 million in the nine months ending July 31,
1998 to $8.6 million in the nine months ending July 31, 1999. The increase is in
conjunction with the increase in long-term debt, which was the result of the Net
Acquisitions Activity mentioned previously. Total long-term debt, including
current maturities, was $141.3 million on July 31, 1998, and $177.0 million on
July 31, 1999.
As a result of the above factors, income before income taxes increased 15.4%
from $14.6 million in the 1998 period to $16.8 million in the 1999 period. Net
income increased 15.3% from $8.8 million in the nine months period 1998 to
$10.1 million in the same 1999 period, an increase of $1.3 million. Net income
as a percentage of revenue decreased from 1.4% in the 1998 period to 1.2% in the
1999 period. Diluted EPS increased from $0.91 per share in the 1998 period to
$1.15 per share in the 1999 period.
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,
working capital and capital expenditures. Borrowings for working capital
typically increase during periods of sales expansion when higher levels of
inventory and receivables are needed and decrease as inventories and receivables
are converted to cash which is then used to pay down debt. The Company had
$169.5 million of long-term debt (excluding current maturities of $7.5 million)
outstanding as of July 31, 1999, consisting of the facilities described in the
1998 Annual Report, Form 10-K and in the notes to the accompanying interim
financial statements.
-11-
<PAGE> 12
Net cash provided from operating activities was $0.6 million for the nine months
ended July 31, 1999 compared to net cash used in operations of $3.2 million for
nine months ended July 31, 1998. The change in cash used in operating activities
was due to a decrease in payments of accounts payable due primarily to timing
and the 1998 use of funds on the warehouse line of credit used in the operations
of CAFS.
Capital expenditures were $10.4 million up from $7.1 million for the nine months
ended July 31, 1999 and 1998, respectively. The Company has budgeted $13.0
million for capital expenditures in fiscal 1999 relating to its currents
operations, including property, plant and equipment additions and replacements
and the costs of implementation of the Company's new enterprise information
systems. Management estimates the new system will have a total cost of $20 - $23
million of which approximately $17.0 million is of a capital nature. Of the
total cost, approximately $15 million had been incurred as of July 31, 1999, and
the remainder will be incurred by the middle of fiscal Year 2000 when management
expects the system to be fully implemented across the Cameron division. The
Company's fiscal 1999 budget for capital expenditures does not include any
amounts that may be attributable to acquisitions.
Management believes that funds generated from operations, funds available from
bank lines of credit, and other sources 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 to match seasonally adjusted revenues in both the U.S. and Canada.
YEAR 2000 COMPLIANCE
The Company utilizes a significant number of computer software programs and
information systems in its internal operations, including applications used in
financial business systems and various administration functions ("IT systems").
The Company also makes use of a variety of machinery and equipment in its
business which are operated by or reliant upon non-information technology
systems ("non-IT systems"), for example equipment or mechanical systems which
contain embedded technology such as microcontrollers. To the extent that the
source code of the software applications of these IT systems or the embedded
technologies of these non-IT systems are unable to appropriately interpret and
process the upcoming calendar year 2000 ("Year 2000"), some level of
modification or possible replacement of such applications would be necessary for
proper continuous performance. Without such modification or replacement, the
normal course of the Company's business could be disrupted or otherwise
adversely impacted. This potential problem is commonly referred to as the Year
2000 compliance issue.
State of Readiness. Management of the Company has substantially
completed evaluation of the status of the Company's internal IT and non-IT
systems for compliance with the Year 2000 issue. In addition, the Company has
completed verification of the readiness for Year 2000 of third party systems
with whom the Company has a material relationship, such as its largest vendors
and suppliers. On the basis of such evaluation, the Company has developed a
comprehensive Year 2000 readiness project plan.
Non-IT Systems. Management believes that the failure of any internal
non-IT system to become timely compliant for Year 2000 would not have a material
effect on the business, operations or financial condition of the Company as a
whole. Nevertheless, the Company will continue to take steps to modify or
replace all non-IT systems which are not Year 2000 compliant during the 1999
calendar year. The anticipated expenses for such conversions are not expected to
be material.
Major IT Systems. The Company's current primary internal IT system is
supplied and supported by DMSI. DMSI completed a multi-year compliance project
and released its Year 2000 compliant Version 8.1 in October 1998 and has
delivered this release to the Company as part of its annual support agreement.
The Company has completed the upgrade of its system to Version 8.1.
DMSI has released another update known as Version 8.3 to correct minor problems
experienced by some users. The Company will evaluate the issues addressed by
this and any future updates, and, if a material correction is made to a portion
of DMSI used by the Company, the new version will be installed and the system
re-tested for Year 2000 compliance.
-12-
<PAGE> 13
Certain other systems, running independently at a number of recently acquired
operations, could require revision, modification, or replacement to become Year
2000 compliant. The Company initiated a major re-engineering project in late
1997, centered around a new information system for the Cameron division. The new
system is operational and is being implemented on a gradual rollout basis in all
of the Company's branch locations. The implementation is scheduled to be
completed by April 2000 and will replace all existing major systems including
the DMSI system and those in recently acquired operations. Those branches not on
a Year 2000 compliant system will be converted prior to December 1999.
The Company's business process re-engineering project is aimed at improving and
standardizing Company processes, using a "best practices" approach to reduce
operating costs. This project incorporates an IT system using JD Edwards
software and IBM hardware to be implemented in the Cameron division, which
business accounted for approximately 82% of the Company's total revenues in
fiscal 1998. The new IT system and re-engineered processes are expected to
enhance the Company's competitive position by reducing operating and
administrative costs and improving customer service, pricing management and
inventory and logistics management. JD Edwards has represented the new software
to be fully Year 2000 compliant. The Company will test for such compliance by
the end of September 1999.
JD Edwards has announced their intent to release an update to correct minor
problems experienced by some users. The Company will evaluate the issues
addresses by this and any future updates, and, if a material correction is made
to a portion of JD Edwards used by the Company, the new version will be
installed and the system re-tested for Year 2000 compliance.
Development of the new enterprise system is virtually complete, and the Cameron
division began the roll-out of the system implementation to its branches in
November 1998. As of August 1, 1999, all of the Company's Canadian operations
and 17 U.S. branches were operating on the new system. The Company will continue
the system rollout to its Cameron division U.S. operations throughout the
remainder of 1999 and into 2000.
In the Ashley division, the Company operates a Data General Aviion system, which
has been determined to be Year 2000 compliant and has been successfully tested
on a preliminary basis. The Company will test this system again for Year 2000
compliance by the end of 1999.
Other IT Systems. The Company has assessed its telecommunications
systems with its third party providers and has been assured that they are or
will be made Year 2000 compliant without significant expense to the Company. The
Company is also assessing the requirements and expense to make Year 2000
compliant all third party IT-system application software typically used in
desktop formats, such as financial, accounting, spreadsheet, E-mail and word
processing programs. Management believes that these costs will not be material
to the Company.
Third Party Systems. The Company has completed a review of the issues
related to Year 2000 compliance by its largest suppliers and vendors. The
Company has received assurance from its largest suppliers and vendors that they
are, or will be, Year 2000 functional. Due to the nature of the Company's
business, management believes that the loss of any single of its smaller
suppliers or vendors as a result of Year 2000 system problems would not
materially impact the Company's business, operations or financial condition.
Costs to Address Year 2000 Issues. It is important to note that,
although Year 2000 compliance is a necessary byproduct of the Cameron division
system re-engineering project, it is only one portion of the benefit to be
derived by the Company from the new system conversion. While cost of the project
constitutes the vast majority of the Company's IT budget for the relevant
periods, such cost is not confined solely to the Year 2000 issue and is not
displacing other critical IT projects. It is not possible to segregate the total
expense to the Company strictly for Year 2000 compliance from the total system
conversion project budget.
As of August 1, 1999, the costs to date of the system re-engineering project in
the Cameron division were approximately $17.5 million. The Company currently
expects that the final project cost to be $20 - $23 million. The Company's
results of operations reflect the amount of re-engineering and system conversion
costs that have been expensed and not capitalized. The Company's source of funds
for the system re-engineering project is cash generated by operations and
borrowings under existing bank facilities.
The costs of Year 2000 compliance verification and testing in the Company are
expected to be minimal. In addition, as stated above, management believes that
the costs for making other IT systems and non-IT systems Year 2000 compliant are
not material.
-13-
<PAGE> 14
Risks to the Company for Year 2000 Issues. The worst case scenario to
the Company associated with its Year 2000 compliance efforts would be the
failure of the new enterprise system in the Cameron division to be Year 2000
compliant. This would require any operating branches not yet converted to the
new enterprise system to rely on the Company's current DMSI system and may
require already converted branches to revert back to the old system. Should the
Company's enterprise system experience a Year 2000 failure for an significant
period of time prior to implementation of its contingency plan, it would have an
impact on the Company's ability to efficiently process, bill, account for and
report its sales. In addition, in such a worst case scenario, manual processes
would be required to temporarily replace automated processes and could
moderately disrupt the Company's ability to take and fulfill product orders.
Contingency Plans. In anticipation that the Cameron division's new IT
system will not be fully operational in all locations in 1999, the Company
completed installation of the Year 2000 compliant version of its current DMSI
system. Management believes that this has achieved Year 2000 compliance in the
Company's current IT system, and that such system would function as an effective
back-up system. There are minimal costs associated with the DMSI upgrades.
FORWARD-LOOKING INFORMATION
The matters discussed in this Report on Form 10-Q, other than historical
information, and, in particular, information regarding future revenue, earnings
and business plans and goals, consist of forward-looking information under the
Private Securities Litigation Reform Act of 1995, and are subject to and involve
risks and uncertainties which could cause actual results to differ materially
from the forward-looking information. Forward-looking statements may be
indicated by phrases such as "believes", "anticipates", "expects", "intends",
"foresees", "projects", "predicts", "forecasts" or similar words and involve
known and unknown risks and uncertainties which may cause the Company's actual
results in future periods to differ materially from forecasted results. Among
the factors that could cause results to differ materially are the following: (i)
business and economic conditions in North America, (ii) business and economic
conditions in the regional markets in which the Company operates, (iii) adverse
homebuilding conditions including those related to weather and interest rates,
(iv) the ability to make acquisitions at reasonable prices and achieve synergies
upon integration, (v) reliable and cost-effective supply of products from
manufacturers, and (vi) technology risks in integrating information systems.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not have any material exposure to market risk associated with
activities involving derivative financial instruments, other financial
instruments and derivative commodity instruments. The majority of the Company's
debt is at a fixed rate and, thus, is not exposed to interest rate risk.
-14-
<PAGE> 15
CAMERON ASHLEY BUILDING PRODUCTS, INC.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In connection with a pending investigation of possible violation of
federal antitrust laws in the aluminum building products industry in Florida,
first reported in the Company's Annual Report on Form 10-K for the fiscal year
ending October 31, 1998, representatives of the U.S. Department of Justice,
Antitrust Division, in Dallas, Texas, interviewed an executive officer of the
Company in June 1999. After such interview, the Department of Justice requested
additional information from the Company's subsidiary in Florida. No further
developments occurred in the quarter ending July 31, 1999.
ITEM 5. OTHER INFORMATION
On May 21, 1999, the Board of Directors of the Company accepted the
resignation of Allen J. Keesler who served as a Director. Subsequently, the
Board of Directors voted to reduce the number of Board seats from nine to eight.
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
There were no reports on Form 8-K filed by the Registrant during the
quarter ended July 31, 1999.
-15-
<PAGE> 16
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: October 18, 1999 /s/ GAROLD E. SWAN
---------------------------------------
Garold E. Swan
Executive Vice President/Chief
Financial Officer/Treasurer
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--- -----------
<S> <C>
10.7.2 Employment Agreement dated May 25, 1999 between the Company and Ronald R. Ross.
10.8.2 Employment Agreement dated May 25, 1999 between the Company and Walter J. Muratori.
10.20.1 Change in Control Employment Agreement dated June 1, 1999 between the Company and
Ronald R. Ross.
10.20.2 First Amendment to Change in Control Employment Agreement dated October 13, 1999 between the
Company and Ronald R. Ross.
10.21.1 Change in Control Employment Agreement dated June 1, 1999 between the Company and Walter J. Muratori.
10.21.2 First Amendment to Change in Control Employment Agreement dated October 13, 1999 between the Company
and Walter J. Muratori.
10.30 Employment Agreement dated June 1, 1999, between Wm. Cameron & Co. dba Cameron Ashley Building
Products and Kirk Black (previously filed).
11 Computation of Earnings per Share (previously filed)
27 Financial Data Schedule (previously filed)
</TABLE>
<PAGE> 1
EXHIBIT 10.7.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective as of
the 25th day of May, 1999, between CAMERON ASHLEY BUILDING PRODUCTS, INC. (the
"Company") and RONALD R. ROSS, a resident of the State of Texas ("Executive").
BACKGROUND
Executive has been employed by the Company and its subsidiary, Wm
Cameron & Co. ("Cameron"), pursuant to an Employment Agreement dated September
1, 1996 (the "Prior Agreement"), as Chairman and Chief Executive Officer of the
Company and Cameron. The Board of Directors of the Company desires to modify,
renew and extend the terms and conditions of the employment relationship with
Executive, and Executive desires to continue employment on the terms and
conditions set forth below. This Agreement will amend, replace and supersede
the Prior Agreement.
AGREEMENT
In consideration of the continued employment of Executive by the
Company, the premises, and the mutual agreements hereinafter set forth, the
parties agree:
1. Definitions. The following terms used herein shall have the
definitions set forth below:
(a) "Business" or "Business of the Company" means the
business of distribution of building materials.
(b) "Cause" means conduct amounting to fraud or dishonesty
against the Company; Executive's willful violation of Sections 2(a) or (b)
hereof, or any of the Company's work rules or policies or repeated absences
from work without a reasonable excuse, if the Board of Directors of the Parent
notifies Executive of such violation or absence in writing and Executive fails
to cure such violation or absenteeism within five (5) days after written notice
has been given, provided that written notice relating to such violation or
absenteeism shall only be given once as it relates to a particular manner of
conduct; intoxication with alcohol or drugs while on Company business during
regular business hours; a conviction or plea of guilty or nolo contendere to a
felony or a crime involving dishonesty against the Company; or Executive's
failure to observe the requirements of Sections 2(c), 5 or 6 hereof.
(c) "Disability" means (i) the inability of Executive to
perform the duties of Executive's employment due to physical or emotional
incapacity or illness, where such inability is expected to be a long-continued
and indefinite duration or (ii) Executive shall be entitled to (x) disability
retirement benefits under the federal Social Security Act or (y) recover
benefits under any
<PAGE> 2
long-term disability plan or policy maintained by the Company. In the event of
a dispute, the determination of Disability shall be made by the Board of
Directors of the Company and shall be supported by advice of a physician
competent in the area to which such Disability relates.
(d) "Effective Date" means the date set forth above.
2. Terms of Engagement; Duties
(a) The Company hereby employs Executive, commencing on the
Effective Date, and Executive hereby accepts employment by the Company subject
to the terms and conditions hereof. Executive is engaged initially with the
title and functions of Chairman and Chief Executive Officer of the Company.
Executive shall report to and shall perform the duties assigned by the Board of
Directors of the Company from time to time, and as are provided in the Bylaws
of the Company. At all times during the term of this Agreement, the Executive
shall be employed as a senior executive of the Company with appropriate and
commensurate title, rank and status and Executive shall retain the chairman and
chief executive position of any division or unit of the Company in the future
that contains substantially all of the assets of the Company as are held by the
Company on the Effective Date.
(b) Throughout the term of this Agreement, Executive shall:
(i) devote all of Executive's business effort, time,
energy, and skill (reasonable vacations and reasonable absences due
to illness excepted) to the duties assigned by the Board of
Directors of the Company and the Parent;
(ii) faithfully, loyally, and industriously perform
such duties, subject to the control and supervision of the Board of
Directors of the Company; and
(iii) diligently follow and implement all lawful
management policies and decisions of the Company that are
communicated to Executive.
(c) During the term of this Agreement, Executive shall not be
engaged (whether or not during normal business hours) in any other business or
professional activity, whether or not such activity is pursued for gain, profit
or other pecuniary advantage that is contrary to the provisions of Section
2(b)(i) above; provided, however, that this restriction shall not be construed
as preventing Executive from (i) investing his personal assets in businesses
which do not compete with the Company in such form or manner as will not
require any services on the part of Executive in the operation or the affairs
of the companies in which such investments are made and in which his
participation is solely that of an investor or (ii) purchasing securities in
any corporation whose securities are regularly traded provided that such
purchase shall not result in his collectively owning beneficially at any time
five (5%) percent or more of the equity securities of any corporation engaged
in a business competitive to that of the Company.
-2-
<PAGE> 3
3. Compensation. In consideration of the services rendered by
Executive pursuant to this Agreement, the Company shall provide the following:
(a) A base salary of Four Hundred Sixty Thousand Dollars
($460,000) per annum (the "Base Salary") which Base Salary will be reviewed
periodically and may be increased by the Board of Directors of the Company from
time to time. The Base Salary shall be paid in accordance with the Company's
standard payroll practices in effect from time to time, and shall be subject to
such deductions and withholdings as are required by law or by policies of the
Company.
(b) Executive shall be eligible to be considered for an
annual cash performance bonus, which may consist of an amount of up to one
hundred percent (100%) of the Base Salary in the applicable year based on the
attainment of performance objectives established by the Board of Directors of
the Company in good faith and Executive's contributions to the attainment of
those objectives, and shall be in such amount and payable in such manner and on
such terms as are determined by the Board of Directors of the Company in good
faith. Nothing contained in this subsection (b) shall obligate the Company to
pay a bonus to Executive, unless the Board of Directors of the Company
determines to award such a bonus to Executive.
(c) The right to participate in any insurance plans
maintained by the Company from time to time to the extent that Executive's
position, tenure, salary, age, health and other qualifications make him
eligible to participate, and such other fringe benefits as are provided to the
other senior management employees of the Company, provided that the Company
shall not be required to adopt or continue any insurance plans or fringe
benefits.
(d) Reimbursement for all reasonable business expenses
incurred by Executive in connection with the Business of the Company (including
car allowance) subject to compliance with the expense reimbursement policies
established by the Company and in sufficient detail to comply with Internal
Revenue Service Regulations.
(e) A grant, as of the Effective Date, of a number of options
to purchase Common Stock of the Company determined in accordance with the
Company's Long Term Incentive Compensation Program and issued under the
existing Stock Incentive Plans of the Company. The exercise price of such
options shall be determined by the formula established by the Board of
Directors under such Program. Such options will have a term of ten years and
will vest in one-fourth increments over four years from the date of grant.
(f) Executive shall be eligible for annual grants of
additional options to purchase Common Stock of the Company under the Company's
Long Term Incentive Compensation Program.
-3-
<PAGE> 4
(g) The remuneration and benefits set forth in this Section 3
shall be the only compensation payable to Executive with respect to his
employment hereunder, and Executive shall not be entitled to receive any
compensation in addition to that set forth in this Section 3 for any services
rendered by him in any capacity to the Company or any affiliated corporation
unless agreed to in writing by the Company or such affiliated corporation.
4. Term and Termination of this Agreement. The term of employment of
Executive pursuant to this Agreement shall commence on the Effective Date and
shall continue for a term of four (4) years, or until sooner terminated as
provided herein.
(a) Executive's employment hereunder may be terminated:
(i) Upon the death or Disability of Executive;
(ii) By the Company, immediately for Cause;
(iii) By Executive upon ninety (90) days prior
written notice to the Company;
(iv) By Company immediately upon written notice
to Executive; or
(v) By mutual agreement between Executive and
the Company.
(b) Except as set forth below, upon termination of
Executive's employment hereunder pursuant to this Section 4, the Company shall
have no further obligation to Executive or his personal representative with
respect to remuneration due under this Agreement, except for Base Salary earned
but unpaid at date of termination, provided however, Executive's covenants in
Sections 5 and 6 of this Agreement shall survive the termination of Executive's
employment hereunder. Upon termination of Executive's employment hereunder
pursuant to Section 4(a)(iv) above, Executive shall be entitled to receive
severance pay (the "Severance Amount") consisting of an amount equal to (i) the
then current annualized Base Salary plus (ii) the average of the annual bonus
actually paid to or accrued for Executive hereunder for the two (2) most recent
fiscal years of the Company ending prior to the date of termination, paid
together over a twelve (12) month period in accordance with the Company's
standard payroll practices in effect at the time of termination. If Executive
elects to continue coverage on the Company's health plan upon termination of
employment pursuant to Section 4(a)(iv) above, the Company will pay the monthly
premiums for the first twelve months of the eligible continuation period or
until Executive obtains employment and has satisfied any necessary waiting
periods under the new employer's health plan, whichever is sooner. It is
understood that Executive's coverage under the Company's disability, accidental
death or dismemberment and group life insurance plans cease as of the date of
termination. If Executive fails to observe the requirements of Sections 5 or 6
hereof, then the Company shall have no obligation to pay any portion of the
Severance Amount remaining unpaid to Executive.
-4-
<PAGE> 5
5. Ownership, Non-Disclosure, and Non-Use of Trade Secrets.
(a) The following terms used in this Section 5 shall have the
definitions set forth below:
(i) "Excluded Information" means any data or information
that is a Trade Secret hereunder (1) that has been voluntarily
disclosed to the public by the Company or has become generally known
to the public (except where such public disclosure has been made by or
through the Executive or by a third person or entity with the
knowledge of the Executive without authorization by the Company); (2)
that has been independently developed and disclosed by parties other
than the Executive or the Company to the Executive or to the public
generally without a breach of any obligation of confidentiality by any
such person running directly or indirectly to the Company; or (3) that
otherwise enters the public domain through lawful means.
(ii) "Trade Secrets" means information which derives
economic value, actual or potential, from not being generally known
and not being readily ascertainable to other persons who can obtain
economic value from its disclosure or use and which is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy or confidentiality. Trade Secrets may include either technical
or non-technical data, including without limitation, (1) any useful
process, machine, chemical formula, composition of matter, or other
device which (A) is new or which Executive has a reasonable basis to
believe may be new, (B) is being used or studied by the Company and is
not described in a printed patent or in any literature already
published and distributed externally by the Company, and (C) is not
readily ascertainable from inspection of a product of the Company; (2)
any engineering, technical, or product specifications including those
of features used in any current product of the Company or to be used,
or the use of which is contemplated, in a future product of the
Company; (3) any application, operating system, communication system,
or other computer software (whether in source or object code) and all
flow charts, algorithms, coding sheets, routines, subroutines,
compilers, assemblers, design concepts, test data, documentation, or
manuals related thereto, whether or not copyrighted, patented or
patentable, related to or used in the Business of the Company; or (4)
information concerning the customers, suppliers, products, pricing
strategies of the Company, personnel assignments and policies of the
Company, or matters concerning the financial affairs and management of
the Company or any parent, subsidiary, or affiliate of the Company;
provided however, that Trade Secrets shall not include any Excluded
Information.
(b) Executive acknowledges and agrees that all Trade Secrets,
and all physical embodiments thereof, are confidential to and shall be and
remain the sole and exclusive property of the Company and that any Trade
Secrets produced by the Executive during the period of Executive's employment
by the Company shall be considered "work for hire" as such term is defined in
17 U.S.C. Section 101, the ownership and copyright of which shall be vested
solely in the Company. Executive agrees (i) immediately to disclose to the
Company all Trade Secrets developed in whole or part by Executive during the
term of Executive's's employment by the Company, and (ii) at the request and
expense of the Company, to do all things and sign all documents or instruments
-5-
<PAGE> 6
reasonably necessary in the opinion of the Company to eliminate any ambiguity
as to the rights of the Company in such Trade Secrets including, without
limitation, providing to the Company Executive's full cooperation in any
litigation or other proceeding to establish, protect, or obtain such rights.
Upon request by the Company, and in any event upon termination of Executive's
employment by the Company for any reason, Executive shall promptly deliver to
the Company all property belonging to the Company including, without
limitation, all Trade Secrets (and all embodiments thereof) then in Executive's
custody, control or possession.
(c) Executive agrees that all Trade Secrets of the Company
received or developed by Executive as a result of Executive's employment with
the Company will be held in trust and strictest confidence, that Executive will
protect such Trade Secrets from disclosure, and that Executive will make no use
of such Trade Secrets, except in connection with Executive's employment
hereunder, without the Company's prior written consent. The obligations of
confidentiality contained in this Agreement will apply during Executive's
employment by the Company and (i) with respect to all Trade Secrets consisting
of scientific or technical data, at any and all times after expiration or
termination (for whatever reason) of such employment; and (ii) with respect to
all other Trade Secrets, for a period of two (2) years after such expiration or
termination, unless a longer period of protection is provided by law.
6. Noncompete; Nonsolicitation Covenants.
(a) The following terms used in this Section 6 shall have the
definitions set forth below:
(i) "Affiliate" means any person or entity directly or
indirectly controlling, controlled by, or under common control with
Executive. As used herein, the word "control" means the power to
direct the management and affairs of a person.
(ii) "Area" means all of North America.
(iii) "Competing Enterprise" means any person or any
business organization of whatever form, engaged directly or indirectly
within the Area in the Business of the Company.
(b) Executive covenants that Executive shall, during the term
of this Agreement and for a period of one (1) year following the termination,
for whatever reason, of Executive's employment by the Company, observe the
following separate and independent covenants:
(i) Neither Executive nor any Affiliate will, without
the prior written consent of the Company, within the Area, either
directly or indirectly, (A) become financially interested in a
Competing Enterprise (other than as a holder of less than five percent
of the outstanding voting securities of any entity whose voting
securities are listed on a national securities exchange or quoted by
the National Association of Securities Dealers, Inc. automated
quotation system), or (B) engage in or be employed by any Competing
Enterprise as a consultant, officer, director, or executive or
managerial employee.
-6-
<PAGE> 7
(ii) Neither Executive nor any Affiliate will, without
the prior written consent of the Company, either directly or
indirectly, on Executive's own behalf or in the service or on behalf
of others, solicit, divert, or appropriate, or attempt to solicit,
divert, or appropriate, to any Competing Enterprise within the Area,
any person or entity whose account with the Company was serviced by or
under Executive's direction or supervision during the term of this
Agreement.
(iii) Neither Executive nor any Affiliate will, without
the Company's prior written consent, either directly or indirectly, on
Executive's own behalf or in the service or on behalf of others,
solicit, divert, or hire away, or attempt to solicit, divert, or hire
away, to any Competing Enterprise, any person employed by the Company,
whether or not such employee is a full-time or a temporary employee of
the Company and whether or not such employment is pursuant to written
agreement and whether or not such employment is at will.
7. Remedies. Executive acknowledges and agrees that the Company is
engaged in the Business of the Company in and throughout the Area, and that by
virtue of the training, duties, and responsibilities attendant with Executive's
employment by the Company and the special knowledge of the business and
operations of the Company that Executive will have as a consequence of
Executive's employment by the Company, great loss and irreparable damage would
be suffered by the Company if the Executive should breach or violate any of the
terms or provisions of the covenants and agreements set forth herein. Executive
further acknowledges and agrees that each such covenant and agreement is
reasonably necessary to protect and preserve the interest of the Company.
Therefore, in addition to all the remedies provided at law or in equity,
Executive agrees and consents that the Company shall be entitled to a temporary
restraining order and a permanent injunction to prevent a breach or
contemplated breach of any of the covenants or agreements of Executive
contained herein. The existence of any claim, demand, action or cause of action
of Executive against the Company shall not constitute a defense to the
enforcement by the Company of any of the covenants or agreements herein whether
predicated upon this Agreement or otherwise, and shall not constitute a defense
to the enforcement by the Company of any of its rights hereunder.
8. General Provisions.
(a) In the event that any one or more of the provisions, or
parts of any provisions, contained in the Agreement shall for any reason be
held to be invalid, illegal, or unenforceable in any respect by a court of
competent jurisdiction, the same shall not invalidate or otherwise affect any
other provision hereof, and this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained herein.
Specifically, but without limiting the foregoing in any way, each of the
covenants of the parties to this Agreement contained herein shall be deemed and
shall be construed as a separate and independent covenant and should any part
or provision of any of such covenants be held or declared invalid by any court
of competent jurisdiction, such invalidity shall in no way render invalid or
unenforceable any other part or provision thereof or any other covenant of the
parties not held or declared invalid.
-7-
<PAGE> 8
(b) This Agreement and the rights and obligations of the
Company hereunder may be assigned by the Company to any subsidiary of or
successor to the Company, and shall inure to the benefit of, shall be binding
upon, and shall be enforceable by any such assignee, provided that any such
assignee shall agree to assume and be bound by this Agreement. This Agreement
and the rights and obligations of Executive hereunder may not be assigned by
Executive.
(c) The waiver by the Company of any breach of this Agreement
by Executive shall not be effective unless in writing, and no such waiver shall
operate or be construed as a waiver of the same or another breach on a
subsequent occasion.
(d) This Agreement and the rights of the parties hereunder
shall be governed by and construed in accordance with the laws of the State of
Texas. The parties agree that any appropriate state court located in Dallas
County, Texas or any Federal Court located in Dallas, Texas shall have
exclusive jurisdiction of any case or controversy arising under or in
connection with this Agreement and shall be a proper forum in which to
adjudicate such case or controversy. The parties consent to the jurisdiction of
such courts.
(e) This Agreement embodies the entire agreement of the
parties relating to the employment of Executive by the Company. No amendment or
modification of this Agreement shall be valid or binding upon the Company or
Executive unless made in writing and signed by the parties. All prior
understandings and agreements relating to the employment of Executive by the
Company (including the Prior Agreement) are hereby expressly terminated and
superseded.
(f) Any notice, request, demand, or other communication
required to be given hereunder shall be made in writing and shall be deemed to
have been fully given if personally delivered or if mailed by United States
Mail, certified or registered, postage prepaid, to the parties at the following
addresses (or at such other addresses as shall be given in writing by any party
to the other party hereto):
If to Executive:
Ronald R. Ross
816 Hills Creek Drive
McKinney, TX 75070
If to Company:
Wm. Cameron & Co. dba Cameron Ashley Building Products
11651 Plano Road
Dallas, TX 75243
-8-
<PAGE> 9
(g) This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, and it shall not
be necessary for the same counterpart of this agreement be signed by all of the
undersigned in order for the agreements set forth herein to be binding upon all
of the undersigned in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company and Executive have each
executed and delivered this Agreement as of the date first above written.
COMPANY:
CAMERON ASHLEY BUILDING PRODUCTS, INC.
By: /s/ John S. Davis
------------------------------------
John S. Davis, Vice President &
General Counsel
EXECUTIVE:
/s/ Ronald R. Ross
---------------------------------------
Ronald R. Ross
-9-
<PAGE> 1
EXHIBIT 10.8.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of the 25th day of May, 1999,
between CAMERON ASHLEY BUILDING PRODUCTS, INC. (the "Company") and WALTER J.
MURATORI, a resident of the State of Texas("Executive").
BACKGROUND
Executive has been employed by the Company and its subsidiary, Ashley
Aluminum, LLC (formerly Ashley Aluminum, Inc.) ("Ashley") pursuant to an
Employment Agreement dated September 1, 1996 (the "Prior Agreement") as
President of the Company and President and Chief Executive Officer of Ashley.
The Board of Directors of the Company desires to modify, renew and extend the
employment relationship with Executive, and Executive desires to continue
employment on the terms and conditions set forth below. This Agreement will
amend, replace and supersede the Prior Agreement.
AGREEMENT
In consideration of the continued employment of Executive by the
Company, the premises, and the mutual agreements hereinafter set forth, the
parties agree:
1. Definitions. The following terms used herein shall have the
definitions set forth below:
(a) "Business" or "Business of the Company" means the
business of distributing patio and screen enclosure products, vinyl and
aluminum building products, windows, fascia, soffit, fasteners, and other
exterior building products and roll forming aluminum building products.
(b) "Cause" means conduct amounting to fraud or dishonesty
against the Company; Executive's willful violation of Sections 2(a) or (b)
hereof, or any of the Company's work rules or policies or repeated absences
from work without a reasonable excuse, if the Board of Directors of the Parent
notifies Executive of such violation or absence in writing and Executive fails
to cure such violation or absenteeism within five (5) days after written notice
has been given, provided that written notice relating to such violation or
absenteeism shall only be given once as it relates to a particular manner of
conduct; intoxication with alcohol or drugs while on Company business during
regular business hours; a conviction or plea of guilty or nolo contendere to a
felony or a crime involving dishonesty against the Company; or Executive's
failure to observe the requirements of Sections 2(c), 5 or 6 hereof.
<PAGE> 2
(c) "Disability" means (i) the inability of Executive to
perform the duties of Executive's employment due to physical or emotional
incapacity or illness, where such inability is expected to be a long-continued
and indefinite duration or (ii) Executive shall be entitled to (x) disability
retirement benefits under the federal Social Security Act or (y) recover
benefits under any long-term disability plan or policy maintained by the
Company. In the event of a dispute, the determination of Disability shall be
made by the Board of Directors of the Company and shall be supported by advice
of a physician competent in the area to which such Disability relates.
(d) "Effective Date" means the date set forth above.
2. Terms of Engagement; Duties
(a) The Company hereby employs Executive, commencing on the
Effective Date, and Executive hereby accepts employment by the Company subject
to the terms and conditions hereof. Executive is engaged initially with the
title and functions of Vice Chairman, President and Chief Operating Officer of
the Company. Executive shall report to and shall perform the duties assigned by
the Board of Directors of the Company from time to time, and as are provided in
the Bylaws of the Company. At all times during the term of this Agreement, the
Executive shall be employed as a senior executive of the Company with
appropriate and commensurate title, rank and status and Executive shall retain
the president position of any division or unit of the Company in the future
that contains substantially all of the assets of the Company as are held by the
Company on the Effective Date.
(b) Throughout the term of this Agreement, Executive shall:
(i) devote all of Executive's business effort,
time, energy, and skill (reasonable vacations and reasonable absences
due to illness excepted) to the duties assigned by the Board of
Directors of the Company;
(ii) faithfully, loyally, and industriously
perform such duties, subject to the control and supervision of the
Board of Directors of the Company; and
(iii) diligently follow and implement all
management policies and decisions of the Company that are communicated
to Executive.
(c) During the term of this Agreement, Executive shall not be
engaged (whether or not during normal business hours) in any other business or
professional activity, whether or not such activity is pursued for gain, profit
or other pecuniary advantage that is contrary to the provisions of Section
2(b)(i) above; provided, however, that this restriction shall not be construed
as preventing Executive from (i) investing his personal assets in businesses
which do not compete with the Company in such form or manner as will not
require any services on the part of Executive in the operation or the affairs
of the companies in which such investments are made and in which his
participation is solely that of an investor or (ii) purchasing securities in
any corporation whose securities are regularly traded provided that such
purchase shall not result in his collectively owning beneficially at any time
five (5%) percent or more of the equity securities of any corporation engaged
in a business competitive to that of the Company.
-2-
<PAGE> 3
3. Compensation. In consideration of the services rendered by
Executive pursuant to this Agreement, the Company shall provide the following:
(a) A base salary of Three Hundred Forty Thousand Dollars
($340,000) per annum (the "Base Salary") which Base Salary will be reviewed
periodically and may be increased by the Company from time to time. The Base
Salary shall be paid in accordance with the Company's standard payroll
practices in effect from time to time, and shall be subject to such deductions
and withholdings as are required by law or by policies of the Company.
(b) Executive shall be eligible to be considered for an
annual cash performance bonus, which may consist of an amount of up to one
hundred percent (100%) of the Base Salary in the applicable year based on the
attainment of performance objectives established by the Board of Directors of
the Company in good faith and Executive's contributions to the attainment of
those objectives, and shall be in such amount and payable in such manner and on
such terms as are determined by the Board of Directors of the Company. Nothing
contained in this subsection (b) shall obligate the Company to pay a bonus to
Executive, unless the Board of Directors of the Company determines to award
such a bonus to Executive.
(c) The right to participate in any insurance plans
maintained by the Company from time to time to the extent that Executive's
position, tenure, salary, age, health and other qualifications make him
eligible to participate, and such other fringe benefits as are provided to the
other senior management employees of the Company, provided that the Company
shall not be required to adopt or continue any insurance plans or fringe
benefits.
(d) Reimbursement for all business reasonable expenses
authorized by the Company and incurred by Executive in connection with the
Business of the Company (including car allowance) subject to compliance with
the expense reimbursement policies established by the Company and in sufficient
detail to comply with Internal Revenue Service Regulations.
(e) A grant, as of the Effective Date, of a number of options
to purchase Common Stock of the Company determined in accordance with the
Company's Long Term Incentive Compensation Program and issued under the
existing Stock Incentive Plans of the Company. The exercise price of such
options shall be determined by the formula established by the Board of
Directors under such Program. Such options will have a term of ten years and
will vest in one-fourth increments over four years from the date of grant.
(f) Executive shall be eligible for annual grants of
additional options to purchase Common Stock of the Company under the Company's
Long Term Incentive Compensation Program.
(g) The remuneration and benefits set forth in this Section 3
shall be the only compensation payable to Executive with respect to his
employment hereunder, and Executive shall not be entitled to receive any
compensation in addition to that set forth in this Section 3 for any services
rendered by him in any capacity to the Company or any affiliated corporation
unless agreed to in writing by the Company or such affiliated corporation.
-3-
<PAGE> 4
4. Term and Termination of this Agreement. The term of
employment of Executive pursuant to this Agreement shall commence on the
Effective Date and shall continue for a term of four (4) years, or until sooner
terminated as provided herein.
(a) Executive's employment hereunder may be terminated:
(i) Upon the death or Disability of Executive;
(ii) By the Company, immediately for Cause;
(iii) By Executive upon ninety (90) days prior
written notice to the Company;
(iv) By Company immediately upon written notice
to Executive; or
(v) By mutual agreement between Executive and
the Company.
(b) Except as set forth below, upon termination of
Executive's employment hereunder pursuant to this Section 4, the Company shall
have no further obligation to Executive or his personal representative with
respect to remuneration due under this Agreement, except for Base Salary earned
but unpaid at date of termination, provided however, Executive's covenants in
Sections 5 and 6 of this Agreement shall survive the termination of Executive's
employment hereunder. Upon termination of Executive's employment hereunder
pursuant to Section 4(a)(iv) above, Executive shall be entitled to receive
severance pay (the "Severance Amount") consisting of an amount equal to (i) the
then current annualized Base Salary plus (ii) the average of the annual bonus
actually paid to or accrued for Executive hereunder for the two (2) most recent
fiscal years of the Company ending prior to the date of termination, paid
together over a period of twelve (12) months in accordance with the Company's
standard payroll practices in effect at the time of termination. If Executive
elects to continue coverage on the Company's health plan upon termination of
employment pursuant to Section 4(a)(iv) above, the Company will pay the monthly
premiums for the first twelve months of the eligible continuation period or
until Executive obtains employment and has satisfied any necessary waiting
periods under the new employer's health plan, whichever is sooner. It is
understood that Executive's coverage under the Company's disability, accidental
death or dismemberment and group life insurance plans cease as of the date of
termination. If Executive fails to observe the requirements of Sections 5 or 6
hereof, then the Company shall have no obligation to pay any portion of the
Severance Amount remaining unpaid to Executive.
5. Ownership, Non-Disclosure, and Non-Use of Trade Secrets.
(a) The following terms used in this Section 5 shall
have the definitions set forth below:
-4-
<PAGE> 5
(i) "Excluded Information" means any data or
information that is a Trade Secret hereunder (1) that has been
voluntarily disclosed to the public by the Company or has become
generally known to the public (except where such public disclosure has
been made by or through the Executive or by a third person or entity
with the knowledge of the Executive without authorization by the
Company); (2) that has been independently developed and disclosed by
parties other than the Executive or the Company to the Executive or to
the public generally without a breach of any obligation of
confidentiality by any such person running directly or indirectly to
the Company; or (3) that otherwise enters the public domain through
lawful means.
(ii) "Trade Secrets" means information which derives
economic value, actual or potential, from not being generally known
and not being readily ascertainable to other persons who can obtain
economic value from its disclosure or use and which is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy or confidentiality. Trade Secrets may include either technical
or non-technical data, including without limitation, (1) any useful
process, machine, chemical formula, composition of matter, or other
device which (A) is new or which Executive has a reasonable basis to
believe may be new, (B) is being used or studied by the Company and is
not described in a printed patent or in any literature already
published and distributed externally by the Company, and (C) is not
readily ascertainable from inspection of a product of the Company; (2)
any engineering, technical, or product specifications including those
of features used in any current product of the Company or to be used,
or the use of which is contemplated, in a future product of the
Company; (3) any application, operating system, communication system,
or other computer software (whether in source or object code) and all
flow charts, algorithms, coding sheets, routines, subroutines,
compilers, assemblers, design concepts, test data, documentation, or
manuals related thereto, whether or not copyrighted, patented or
patentable, related to or used in the Business of the Company; or (4)
information concerning the customers, suppliers, products, pricing
strategies of the Company, personnel assignments and policies of the
Company, or matters concerning the financial affairs and management of
the Company or any parent, subsidiary, or affiliate of the Company;
provided however, that Trade Secrets shall not include any Excluded
Information.
(b) Executive acknowledges and agrees that all Trade Secrets,
and all physical embodiments thereof, are confidential to and shall be and
remain the sole and exclusive property of the Company and that any Trade
Secrets produced by the Executive during the period of Executive's employment
by the Company shall be considered "work for hire" as such term is defined in
17 U.S.C. Section 101, the ownership and copyright of which shall be vested
solely in the Company. Executive agrees (i) immediately to disclose to the
Company all Trade Secrets developed in whole or part by Executive during the
term of Executive's's employment by the Company, and (ii) at the request and
expense of the Company, to do all things and sign all documents or instruments
reasonably necessary in the opinion of the Company to eliminate any ambiguity
as to the rights of the Company in such Trade Secrets including, without
limitation, providing to the Company Executive's full cooperation in any
litigation or other proceeding to establish, protect, or obtain such rights.
Upon request by the Company, and in any event upon termination of Executive's
employment by the Company for any reason, Executive shall promptly deliver to
the Company all
-5-
<PAGE> 6
property belonging to the Company including, without limitation, all Trade
Secrets (and all embodiments thereof) then in Executive's custody, control or
possession.
(c) Executive agrees that all Trade Secrets of the Company
received or developed by Executive as a result of Executive's employment with
the Company will be held in trust and strictest confidence, that Executive will
protect such Trade Secrets from disclosure, and that Executive will make no use
of such Trade Secrets, except in connection with Executive's employment
hereunder, without the Company's prior written consent. The obligations of
confidentiality contained in this Agreement will apply during Executive's
employment by the Company and (i) with respect to all Trade Secrets consisting
of scientific or technical data, at any and all times after expiration or
termination (for whatever reason) of such employment; and (ii) with respect to
all other Trade Secrets, for a period of two (2) years after such expiration or
termination, unless a longer period of protection is provided by law.
6. Noncompete; Nonsolicitation Covenants.
(a) The following terms used in this Section 6 shall
have the definitions set forth below:
(i) "Affiliate" means any person or entity
directly or indirectly controlling, controlled by, or under common
control with Executive. As used herein, the word "control" means the
power to direct the management and affairs of a person.
(ii) "Area" means all of North America.
(iii) "Competing Enterprise" means any person or
any business organization of whatever form, engaged directly or
indirectly within the Area in the Business of the Company.
(b) Executive covenants that Executive shall, during the term
of this Agreement and for a period of one (1) year following the termination,
for whatever reason, of Executive's employment by the Company, observe the
following separate and independent covenants:
(i) Neither Executive nor any Affiliate will,
without the prior written consent of the Company, within the Area,
either directly or indirectly, (A) become financially interested in a
Competing Enterprise (other than as a holder of less than five percent
of the outstanding voting securities of any entity whose voting
securities are listed on a national securities exchange or quoted by
the National Association of Securities Dealers, Inc. automated
quotation system), or (B) engage in or be employed by any Competing
Enterprise as a consultant, officer, director, or executive or
managerial employee.
(ii) Neither Executive nor any Affiliate will,
without the prior written consent of the Company, either directly or
indirectly, on Executive's own behalf or in the service or on behalf
of others, solicit, divert, or appropriate, or attempt to solicit,
divert, or appropriate, to any Competing Enterprise within the Area,
any person or entity
-6-
<PAGE> 7
whose account with the Company was serviced by or under Executive's
direction or supervision during the term of this Agreement.
(iii) Neither Executive nor any Affiliate will,
without the Company's prior written consent, either directly or
indirectly, on Executive's own behalf or in the service or on behalf
of others, solicit, divert, or hire away, or attempt to solicit,
divert, or hire away, to any Competing Enterprise, any person employed
by the Company, whether or not such employee is a full-time or a
temporary employee of the Company and whether or not such employment
is pursuant to written agreement and whether or not such employment is
at will.
7. Remedies. Executive acknowledges and agrees that the Company
is engaged in the Business of the Company in and throughout the Area, and that
by virtue of the training, duties, and responsibilities attendant with
Executive's employment by the Company and the special knowledge of the business
and operations of the Company that Executive will have as a consequence of
Executive's employment by the Company, great loss and irreparable damage would
be suffered by the Company if the Executive should breach or violate any of the
terms or provisions of the covenants and agreements set forth herein. Executive
further acknowledges and agrees that each such covenant and agreement is
reasonably necessary to protect and preserve the interest of the Company.
Therefore, in addition to all the remedies provided at law or in equity,
Executive agrees and consents that the Company shall be entitled to a temporary
restraining order and a permanent injunction to prevent a breach or
contemplated breach of any of the covenants or agreements of Executive
contained herein. The existence of any claim, demand, action or cause of action
of Executive against the Company shall not constitute a defense to the
enforcement by the Company of any of the covenants or agreements herein whether
predicated upon this Agreement or otherwise, and shall not constitute a defense
to the enforcement by the Company of any of its rights hereunder.
8. General Provisions.
(a) In the event that any one or more of the provisions, or
parts of any provisions, contained in the Agreement shall for any reason be
held to be invalid, illegal, or unenforceable in any respect by a court of
competent jurisdiction, the same shall not invalidate or otherwise affect any
other provision hereof, and this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained herein.
Specifically, but without limiting the foregoing in any way, each of the
covenants of the parties to this Agreement contained herein shall be deemed and
shall be construed as a separate and independent covenant and should any part
or provision of any of such covenants be held or declared invalid by any court
of competent jurisdiction, such invalidity shall in no way render invalid or
unenforceable any other part or provision thereof or any other covenant of the
parties not held or declared invalid.
(b) This Agreement and the rights and obligations of the
Company hereunder may be assigned by the Company to any subsidiary of or
successor to the Company, and shall inure to the benefit of, shall be binding
upon, and shall be enforceable by any such assignee, provided that any such
assignee shall agree to assume and be bound by this Agreement. This Agreement
and the rights and obligations of Executive hereunder may not be assigned by
Executive.
-7-
<PAGE> 8
(c) The waiver by the Company of any breach of this Agreement
by Executive shall not be effective unless in writing, and no such waiver shall
operate or be construed as a waiver of the same or another breach on a
subsequent occasion.
(d) This Agreement and the rights of the parties hereunder
shall be governed by and construed in accordance with the laws of the State of
Texas. The parties agree that any appropriate state court located in Dallas
County, Texas or any Federal Court located in Dallas, Texas shall have
exclusive jurisdiction of any case or controversy arising under or in
connection with this Agreement and shall be a proper forum in which to
adjudicate such case or controversy. The parties consent to the jurisdiction of
such courts.
(e) This Agreement embodies the entire agreement of the
parties relating to the employment of Executive by the Company. No amendment or
modification of this Agreement shall be valid or binding upon the Company or
Executive unless made in writing and signed by the parties. All prior
understandings and agreements relating to the employment of Executive by the
Company (including the Prior Agreement) are hereby expressly terminated and
superseded.
(f) Any notice, request, demand, or other communication
required to be given hereunder shall be made in writing and shall be deemed to
have been fully given if personally delivered or if mailed by United States
Mail, certified or registered, postage prepaid, to the parties at the following
addresses (or at such other addresses as shall be given in writing by any party
to the other party hereto):
If to Executive:
Walter J. Muratori
5445 Caruth Haven #426
Dallas, TX 75225
If to Company:
Cameron Ashley Building Products, Inc.
11651 Plano Road
Dallas, TX 765243
-8-
<PAGE> 9
(g) This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, and it shall not
be necessary for the same counterpart of this agreement be signed by all of the
undersigned in order for the agreements set forth herein to be binding upon all
of the undersigned in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company and Executive have each executed and
delivered this Agreement as of the date first above written.
COMPANY:
CAMERON ASHLEY BUILDING PRODUCTS, INC.
By: /s/ John S. Davis
---------------------------------
John S. Davis, Vice President &
General Counsel
EXECUTIVE:
/s/ Walter J. Muratori
--------------------------------------
Walter J. Muratori
-9-
<PAGE> 1
EXHIBIT 10.20.1
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, 1999.
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, in renewal and extension of the
Change in Control Employment Agreement dated June 1, 1996 (the "Prior
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.
<PAGE> 2
(c) "Subsidiary" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if each
of the 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
- 2 -
<PAGE> 3
(iii); and provided further that any director elected to the 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.
- 3 -
<PAGE> 4
(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 Bonus
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 and programs
- 4 -
<PAGE> 5
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.
- 5 -
<PAGE> 6
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 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 to the Executive and the
- 6 -
<PAGE> 7
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 claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii)
- 7 -
<PAGE> 8
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) subject to any prior election by the Executive to
receive such deferred amounts in installments, 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> 9
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
- 9 -
<PAGE> 10
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(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
- 10 -
<PAGE> 11
rights as the Executive may have under any contract or agreement with the
Company 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
- 11 -
<PAGE> 12
the Executive resulting 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> 13
(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
- 13 -
<PAGE> 14
to contest such denial of refund prior to the expiration of 30 days after 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 Texas, 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
- 14 -
<PAGE> 15
agreement executed by the parties hereto or their respective successors and
legal representatives.
(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
- 15 -
<PAGE> 16
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 Agreement. From and after the Effective Date this Agreement
shall supersede any other agreement between the parties with respect to the
subject matter hereof, including the Prior Agreement, and the parties
acknowledge that this Agreement is executed in renewal and extension of the
Prior Agreement.
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.
/s/ Ronald R. Ross
-------------------------------------
Ronald R. Ross
CAMERON ASHLEY BUILDING
PRODUCTS, INC.
By: /s/ John S. Davis
----------------------------------
John S. Davis, Vice President &
General Counsel
- 16 -
<PAGE> 1
EXHIBIT 10.20.2
FIRST AMENDMENT TO
CHANGE IN CONTROL EMPLOYMENT AGREEMENT
FIRST AMENDMENT by and between Cameron Ashley Building Products, Inc.,
a Georgia corporation (the "Company") and RONALD R. ROSS (the "Executive"),
dated as of the ___ day of October, 1999 to the Change in Control Employment
Agreement dated June 1, 1999 (the "Agreement").
This Amendment is executed to modify certain terms of the definition of
"Change in Control" hereunder to delete all references to CGW Southeast Partners
I. L.P.("CGW") to reflect the fact that CGW no longer owns a block of stock of
the Company in excess of the 30% "control" factor as established by such
definition of Change in Control.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Amendment. Paragraph 2 of the Agreement is amended in its entirely
as follows:
"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")(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 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 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; or
<PAGE> 2
(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 Board of Directors to avoid or settle a threatened or actual proxy
contest shall in no event be deemed to be an Incumbent Director."
2. Ratification. Except as amended hereby, the Agreement shall remain
in full force and is hereby ratified and affirmed.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and 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.
/s/ Ronald R. Ross
----------------------------------------
Ronald R. Ross
CAMERON ASHLEY BUILDING
PRODUCTS, INC.
By: /s/ John S. Davis
-------------------------------------
John S. Davis, Vice President &
General Counsel
- 2 -
<PAGE> 1
EXHIBIT 10.21.1
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 1999.
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, in renewal and extension of the
Change in Control Employment Agreement dated June 1, 1996 (the "Prior
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.
<PAGE> 2
(c) "Subsidiary" shall mean any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if each of the
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
-2-
<PAGE> 3
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
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.
-3-
<PAGE> 4
(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 Bonus 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.
-4-
<PAGE> 5
(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 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
-5-
<PAGE> 6
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.
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 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
-6-
<PAGE> 7
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 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
-7-
<PAGE> 8
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 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) subject to any prior election by the Executive to
receive such deferred amounts in installments, 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
-8-
<PAGE> 9
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
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
-9-
<PAGE> 10
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 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
-10-
<PAGE> 11
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 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
-11-
<PAGE> 12
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 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
-12-
<PAGE> 13
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,
(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.
-13-
<PAGE> 14
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 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.
-14-
<PAGE> 15
(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 Texas, 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.
(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
5445 Caruth Haven #426
Dallas, Texas 75225
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.
-15-
<PAGE> 16
(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 Agreement. From and after
the Effective Date this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof, including the Prior
Agreement, and the parties acknowledge that this Agreement is executed in
renewal and extension of the Prior Agreement.
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.
/s/ Walter J. Muratori
----------------------------------------
Walter J. Muratori
CAMERON ASHLEY BUILDING
PRODUCTS, INC.
By: /s/ John S. Davis
------------------------------------
John S. Davis, Vice President &
General Counsel
-16-
<PAGE> 1
EXHIBIT 10.21.2
FIRST AMENDMENT TO
CHANGE IN CONTROL EMPLOYMENT AGREEMENT
FIRST AMENDMENT by and between Cameron Ashley Building Products, Inc.,
a Georgia corporation (the "Company") and WALTER J. MURATORI (the "Executive"),
dated as of the ___ day of October, 1999 to the Change in Control Employment
Agreement dated June 1, 1999 (the "Agreement").
This Amendment is executed to modify certain terms of the definition of
"Change in Control" hereunder to delete all references to CGW Southeast Partners
I. L.P.("CGW") to reflect the fact that CGW no longer owns a block of stock of
the Company in excess of the 30% "control" factor as established by such
definition of Change in Control.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Amendment. Paragraph 2 of the Agreement is amended in its entirely
as follows:
"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")(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 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 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; or
<PAGE> 2
(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 Board of Directors to avoid or settle a threatened
or actual proxy contest shall in no event be deemed to be an Incumbent
Director."
2. Ratification. Except as amended hereby, the Agreement shall remain
in full force and is hereby ratified and affirmed.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and 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.
/s/ Walter J. Muratori
--------------------------------------------
Walter J. Muratori
CAMERON ASHLEY BUILDING
PRODUCTS, INC.
By: /s/ John S. Davis
---------------------------------------
John S. Davis, Vice President &
General Counsel
-2-
