UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ________)*
CAMERON ASHLEY BUILDING PRODUCTS, INC.
(Name of Issuer)
COMMON STOCK (INCLUDING ASSOCIATED PREFERRED STOCK PURCHASE RIGHT)
(Title of Class of Securities)
13329010
(CUSIP Number)
BART A. MCLEAN
CGW, INC.
TWELVE PIEDMONT CENTER, SUITE 210
ATLANTA, GEORGIA 30305
404-816-3255
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
January 17, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 33
<PAGE>
- -----------------------------------------------
CUSIP NO. 13329010
- -----------------------------------------------
- ---- ---------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
CGW SOUTHEAST I, INC.
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) X
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
GEORGIA
- ---- ---------------------------------------------------------------------------
- -------------------- ------- ---------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 938,121 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
938,121 (SEE ITEM 5.)
- -------------------- ------- ---------------------------------------------------
- ---- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
938,121 (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.8% (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
HC, CO
- ---- ---------------------------------------------------------------------------
Page 2 of 33
<PAGE>
- -----------------------------------------------
CUSIP NO. 13329010
- -----------------------------------------------
- ---- ---------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
CGW SOUTHEAST PARTNERS I, L.P.
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) X
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
GEORGIA
- ---- ---------------------------------------------------------------------------
- -------------------- ------- ---------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 938,121 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
938,121 (SEE ITEM 5.)
- -------------------- ------- ---------------------------------------------------
- ---- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
938,121 (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.8% (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
- ---- ---------------------------------------------------------------------------
Page 3 of 33
<PAGE>
- -----------------------------------------------
CUSIP NO. 13329010
- -----------------------------------------------
- ---- ---------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
RICHARD L. CRAVEY
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) X
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- ---- ---------------------------------------------------------------------------
- -------------------- ------- ---------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 938,121 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
938,121 (SEE ITEM 5.)
- -------------------- ------- ---------------------------------------------------
- ---- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
938,121 (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.8% (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
- ---- ---------------------------------------------------------------------------
Page 4 of 33
<PAGE>
- -----------------------------------------------
CUSIP NO. 13329010
- -----------------------------------------------
- ----- --------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
EDWIN A. WAHLEN, JR.
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) X
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
3 SEC USE ONLY
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- ----- --------------------------------------------------------------------------
- --------------------- ------- --------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 938,121 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
938,121 (SEE ITEM 5.)
- --------------------- ------- --------------------------------------------------
- ----- --------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
938,121 (SEE ITEM 5.)
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.8% (SEE ITEM 5.)
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
- ----- --------------------------------------------------------------------------
Page 5 of 33
<PAGE>
- -----------------------------------------------
CUSIP NO. 13329010
- -----------------------------------------------
- ----- --------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
CGW, INC.
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) X
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
3 SEC USE ONLY
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
GEORGIA
- ----- --------------------------------------------------------------------------
- --------------------- ------- --------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0 (SEE ITEM 5.)
- --------------------- ------- --------------------------------------------------
- ----- --------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 (SEE ITEM 5.)
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0% (SEE ITEM 5.)
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
HC, CO
- ----- --------------------------------------------------------------------------
Page 6 of 33
<PAGE>
- -----------------------------------------------
CUSIP NO. 13329010
- -----------------------------------------------
- ---- ---------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
CGW SOUTHEAST IV, L.L.C.
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) X
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
GEORGIA
- ---- ---------------------------------------------------------------------------
- -------------------- ------- ---------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0 (SEE ITEM 5.)
- -------------------- ------- ---------------------------------------------------
- ---- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0% (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
OO
- ---- ---------------------------------------------------------------------------
Page 7 of 33
<PAGE>
- -----------------------------------------------
CUSIP NO. 13329010
- -----------------------------------------------
- ---- ---------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
CGW SOUTHEAST PARTNERS IV, L.P.
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) X
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS
BK, AF
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
GEORGIA
- ---- ---------------------------------------------------------------------------
- -------------------- ------- ---------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0 (SEE ITEM 5.)
- -------------------- ------- ---------------------------------------------------
- ---- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0% (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
- ---- ---------------------------------------------------------------------------
Page 8 of 33
<PAGE>
- -----------------------------------------------
CUSIP NO. 13329010
- -----------------------------------------------
- ----- --------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
CBP HOLDINGS, INC.
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) X
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
3 SEC USE ONLY
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
4 SOURCE OF FUNDS
BK, AF
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
GEORGIA
- ----- --------------------------------------------------------------------------
- --------------------- ------- --------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0 (SEE ITEM 5.)
- --------------------- ------- --------------------------------------------------
- ----- --------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 (SEE ITEM 5.)
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0% (SEE ITEM 5.)
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
- ----- --------------------------------------------------------------------------
Page 9 of 33
<PAGE>
- -----------------------------------------------
CUSIP NO. 13329010
- -----------------------------------------------
- ----- --------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
CBP ACQUISITION CORP.
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) X
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
3 SEC USE ONLY
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
GEORGIA
- ----- --------------------------------------------------------------------------
- --------------------- ------- --------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0 (SEE ITEM 5.)
- --------------------- ------- --------------------------------------------------
- ----- --------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 (SEE ITEM 5.)
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0% (SEE ITEM 5.)
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
- ----- --------------------------------------------------------------------------
Page 10 of 33
<PAGE>
- -----------------------------------------------
CUSIP NO. 13329010
- -----------------------------------------------
- ---- ---------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
RONALD R. ROSS
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) X
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- ---- ---------------------------------------------------------------------------
- -------------------- ------- ---------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 188,661 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 188,661 (SEE ITEM 5.)
------- ---------------------------------------------------
------- ---------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0 (SEE ITEM 5.)
- -------------------- ------- ---------------------------------------------------
- ---- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
188,661 (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.2% (SEE ITEM 5.)
- ---- ---------------------------------------------------------------------------
- ---- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
- ---- ---------------------------------------------------------------------------
Page 11 of 33
<PAGE>
- -----------------------------------------------
CUSIP NO. 13329010
- -----------------------------------------------
- ----- --------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
WALTER J. MURATORI
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) X
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
3 SEC USE ONLY
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- ----- --------------------------------------------------------------------------
- --------------------- ------- --------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 292,505 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 292,505 (SEE ITEM 5.)
------- --------------------------------------------------
------- --------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0 (SEE ITEM 5.)
- --------------------- ------- --------------------------------------------------
- ----- --------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
292,505 (SEE ITEM 5.)
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.4% (SEE ITEM 5.)
- ----- --------------------------------------------------------------------------
- ----- --------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
- ----- --------------------------------------------------------------------------
Page 12 of 33
<PAGE>
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (this "Schedule 13D") relates
to the common stock and the associated preferred stock purchase rights
("Shares" or "Common Stock") of Cameron Ashley Building Products, Inc.,
a Georgia corporation ("Cameron Ashley"). The principal executive
offices of Cameron Ashley are located at 11651 Plano Road, Dallas,
Texas 75243.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(c), (f) This Schedule 13D is filed jointly on behalf of
the following persons (collectively, the "Reporting Persons"): (1) CGW
Southeast I, Inc., a Georgia corporation ("CGW I, Inc."), (2) CGW
Southeast Partners I, L.P., a Georgia limited Partnership ("CGW I"),
(3) Richard L. Cravey ("Cravey"), (4) Edwin A. Wahlen, Jr. ("Wahlen"),
(5) CGW, Inc., a Georgia corporation ("CGW, Inc."), (6) CGW Southeast
IV, L.L.C., a Georgia limited liability company ("CGW LLC"), (7) CGW
Southeast Partners IV, L.P., a Georgia partnership ("CGW IV"), (8) CBP
Holdings, Inc., a Georgia corporation ("CBP Holdings"), (9) CBP
Acquisition Corp., a Georgia corporation ("CBP Acquisition"), (10)
Ronald R. Ross ("Ross"), and (11) Walter J. Muratori ("Muratori").
Cravey, Wahlen, Ross and Muratori are all citizens of the United States
of America.
The address of the principal offices of (1) CGW I, Inc., (2)
CGW I, (3) CGW, Inc., (4) CGW LLC, (5) CGW IV, (6) CBP Holdings and (7)
CBP Acquisition is Twelve Piedmont Center, Suite 210, Atlanta, Georgia
30305. The business address of Cravey and Wahlen is Twelve Piedmont
Center, Suite 210, Atlanta, Georgia 30305. The business address of Ross
and Muratori is 11651 Plano Road, Dallas, Texas 75243.
The general partner of CGW I is CGW I, Inc. The general
partner of CGW IV is CGW LLC, and the manager of CGW LLC is CGW, Inc.
CBP Holdings is currently a wholly owned subsidiary of CGW IV, and CBP
Acquisition is a wholly owned subsidiary of CBP Holdings. Cravey and
Wahlen are the directors of each of CGW I, Inc. and CGW, Inc. Ross is
the Chairman and Chief Executive Officer of Cameron Ashley, and
Muratori is the Vice Chairman, President and Chief Operating Officer of
Cameron Ashley.
CGW I, Inc. and CGW, Inc., through their managed partnerships,
including CGW I and CGW IV, are private equity investment firms focused
on acquisitions and recapitalizations of middle-market companies.
As a result of the entering into the agreements described in
Items 3 and 4 below, the Reporting Persons may be deemed to have formed
a group with each other and Citigroup Venture Capital, Ltd. ("CVC"),
for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934
and Rule 13d-5(b)(1) promulgated thereunder. The filing of this
Schedule 13D is not an affirmation or admission that the Reporting
Persons and CVC, or any of them, have formed such a group or constitute
a group for any purpose.
To the best knowledge of the Reporting Persons, Annex A
attached hereto and incorporated herein by reference sets forth, as of
the date hereof, the name, business address, present principal
occupation or employment and citizenship of each executive officer and
director of (1) CGW I, Inc., (2) CGW, Inc., (3) CBP Holdings and (4)
CBP Acquisition.
(d)-(e) During the last five years, none of the Reporting
Persons nor, to the knowledge of the Reporting Persons, any of the
executive officers or directors of (1) CGW I, Inc., (2) CGW, Inc., (3)
CGW Holdings or (4) CBP Acquisition has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), or
been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect
to such laws.
Page 13 of 33
<PAGE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
CBP Holdings plans to obtain the funds to consummate the
transaction described in Item 4 from borrowings under a credit facility
to be established with Fleet Capital Corporation (the "Senior
Facility") and a credit facility to be established with an affiliate of
J.H. Whitney & Co. (the "Junior Facility" and, together with the Senior
Facility, the "Facilities") and from equity investments in CBP Holdings
by CGW IV, CVC and participating members of Cameron Ashley senior
management.
Pursuant to a Letter Agreement dated January 17, 2000, between
CGW IV and CVC (the "Investment Letter"), CGW IV and CVC have each
agreed to invest $25.5 million in equity in CBP Holdings for the
purpose of CBP Holdings's acquisition of Cameron Ashley, subject to the
execution of definitive documents memorializing such agreement, the
absence of any adverse change in Cameron Ashley's business, the receipt
of the financing described below in this Item 3, and other conditions.
The Investment Letter provides that members of Cameron Ashley
management shall have the opportunity to invest an aggregate of
$4,000,000 in equity in CBP Holdings. The Investment Letter further
provides that the board of directors of CBP Holdings will consist of
two persons designated by CGW IV, two persons designated by CVC, two
persons who are senior members of Cameron Ashley management and one
person not an officer or employee of CBP Holdings selected by both CGW
and CVC. Discussions have been initiated with Ross and Muratori
about an investment in CBP Holdings and positions on the board of CBP
Holdings. In addition, participating members of Cameron Ashley senior
management may exchange outstanding options to purchase Shares for
options to purchase CBP Holdings common stock and may have the
opportunity to invest outstanding Shares in exchange for CBP Holdings
common stock.
CGW IV entered into a Commitment Letter dated December 6,
1999, with Fleet Capital Corporation, pursuant to which Fleet Capital
Corporation agreed, through a lending syndicate to be arranged and
subject to satisfaction of the conditions set forth therein, to provide
up to $315 million in senior, secured debt to CBP Holdings (the "Fleet
Commitment Letter"). The Senior Facility will be secured by
substantially all of the tangible and intangible assets of the
corporation surviving the merger described in Item 4 and its
subsidiaries, and will consist of a revolving loan facility of up to
$225 million; a term loan facility of up to $65 million; and a capital
expenditure facility of up to $25 million.
The Fleet Commitment Letter reflects that the Senior Facility
will bear interest at a rate based on the prime rate or Eurodollar rate
plus an applicable margin ranging to 350 basis points, depending on the
borrower's leverage and the particular facility. The Senior Facility
will mature on the earlier of March 1, 2004, and the fifth anniversary
of the closing of the merger described in Item 4. The Senior Facility
will contain customary financial and other covenants.
CGW IV and CBP Holdings entered into a Commitment Letter dated
January 13, 2000, with J. H. Whitney & Co. (the "Whitney Commitment
Letter"), pursuant to which J. H. Whitney Mezzanine Fund, L.P. agreed
to provide, subject to satisfaction of the conditions set forth
therein, $55 million in unsecured, subordinated debt.
The Junior Facility will bear interest at 15%. The Junior
Facility will mature at the earlier of a Liquidation Event (as defined
in the Whitney Commitment Letter) or on the eighth anniversary of the
merger described in Item 4. The Junior Facility will also contain
customary financial and operating covenants.
The Whitney Commitment Letter provides that, upon closing of
the merger described in Item 4, J. H. Whitney Mezzanine Fund, L.P. will
receive a warrant or other equity security to purchase 4% of the equity
of the surviving corporation in such merger, on a fully diluted basis.
Page 14 of 33
<PAGE>
The Credit Facilities are subject to, among other conditions,
the completion of due diligence investigations of Cameron Ashley, with
the results of the investigations being satisfactory to the lenders,
the absence of any material adverse change in the business of Cameron
Ashley and the consummation of the merger described in Item 4.
The merger agreement referenced in Item 4 below requires CBP
Holdings to use its reasonable efforts to enter into definitive
documents with respect to the financing contemplated in the Fleet
Commitment Letter and the Whitney Commitment Letter or alternative
financing, before the filing of Cameron Ashley's proxy statement
relating to the merger agreement.
This description of the Credit Facilities is summary in nature
and is not intended to be a complete description thereof and is
qualified in its entirety by reference to the full text of each of the
Fleet Commitment Letter and the Whitney Commitment Letter, which are
filed as exhibits hereto and incorporated by reference herein.
ITEM 4. PURPOSE OF TRANSACTION
On January 17, 2000, CBP Holdings, CBP Acquisition and Cameron
Ashley entered into an agreement and plan of merger (the "Merger
Agreement"), a copy of which is attached as an exhibit hereto and
incorporated herein by reference. CBP Holdings entered into the Merger
Agreement with the intent of acquiring control of, and the entire
equity interest in, Cameron Ashley and replacing the board of directors
of Cameron Ashley.
Pursuant to the Merger Agreement, but subject to satisfaction
of the conditions precedent set forth therein, CBP Acquisition will
merge with and into Cameron Ashley, with Cameron Ashley surviving the
merger.
As a result of the merger:
o Each outstanding share of Common Stock, together
with the associated preferred stock purchase
rights issued pursuant to that certain Rights
Agreement, dated August 19, 1997, as amended,
between Cameron Ashley and SunTrust Bank,
Atlanta, other than Shares held by CBP Holdings,
will be cancelled and converted into the right to
receive $15.10 in cash.
o Each Share held by CBP Holdings will be cancelled.
o Each outstanding share of CBP Acquisition common
stock will be converted into one share of common
stock of the surviving corporation.
o Each outstanding stock option to purchase Shares
granted under any stock option plan, compensation
plan or arrangement of Cameron Ashley or
outstanding warrant to purchase Shares will be
cancelled, and the holder thereof will be paid by
Cameron Ashley for each such option or warrant an
amount equal to the product of (i) the excess of
$15.10 over the applicable exercise price per
Share and (ii) the number of Shares such holder
could have purchased pursuant to such option or
warrant immediately prior to the effective time
of the merger.
Page 15 of 33
<PAGE>
o The directors of CBP Acquisition will become the
initial directors of the surviving corporation,
each to hold his or her office in accordance with
the constituent documents of the surviving
corporation.
o The officers of Cameron Ashley will be the initial
officers of the surviving corporation.
o The articles of incorporation of Cameron Ashley
will become the articles of incorporation of the
surviving corporation.
o The bylaws of Cameron Ashley will become the bylaws
of the surviving corporation.
Conditions to the merger of Cameron Ashley with and into CBP
Acquisition include:
o Approval of the merger by the shareholders of
Cameron Ashley.
o Receipt by CBP Holdings of the financing described
in the Fleet Commitment Letter and the Whitney
Commitment Letter or of alternative financing with
terms no less favorable than that specified
therein.
The total consideration to be paid by CBP Holdings for Cameron
Ashley, including cash to be paid in exchange for outstanding Shares
and in exchange for the cancellation of outstanding options and
warrants and including the refinancing and assumption of debt of
Cameron Ashley and its subsidiaries, is approximately $320 million.
Upon consummation of the transactions contemplated by the
Merger Agreement, the Shares will be delisted from the New York Stock
Exchange.
References to, and descriptions of, the Merger Agreement as
set forth in this Item 4 are qualified in their entirety by reference
to the copies of the Merger Agreement included as an exhibit to this
Schedule 13D and incorporated herein.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a)-(c) CGW I is the shareholder of record of 938,121 Shares,
which constitute approximately 10.8% of the outstanding Common Stock,
based on 8,694,954 Shares outstanding on January 17, 2000, as
represented by Cameron Ashley in the Merger Agreement. As the general
partner of CGW I, CGW I, Inc. has the power to direct the voting and
disposition of such shares. Messrs. Cravey and Wahlen, as the sole
directors of CGW I, Inc., may be deemed to have, in turn, the power to
direct the voting and disposition of such 938,121 shares.
Ross beneficially owns, and has sole voting and dispositive
power over, approximately 68,661 Shares, and Muratori beneficially
owns, and has sole voting and dispositive power over, approximately
137,502 Shares. Ross also beneficially owns 120,000 Shares purchasable
upon exercise of options exercisable within 60 days, for a total of
188,661 Shares beneficially owned, which constitute approximately 2.2%
of the outstanding Common Stock. Muratori also beneficially owns
155,003 Shares purchasable upon exercise of options exercisable within
60 days, for a total of 292,505 Shares beneficially owned, which
constitute approximately 3.4% of the outstanding Common Stock. Neither
Ross nor Muratori has effected any transactions in Shares during the
past 60 days.
Other than as set forth in this Schedule 13D, to the best of
the Reporting Persons' knowledge as of the date hereof, none of any of
the Reporting Persons, any general partner of any of the Reporting
Persons, any person in control (ultimately or otherwise) of any of the
Reporting Persons, or any executive officer or director thereof
beneficially owns any Common Stock, and there have been no transactions
in Shares effected during the past 60 days by any of the foregoing.
To the knowledge of the Reporting Persons, except as described
in this Schedule 13D, none of CVC, any person in control (ultimately or
otherwise) of CVC, or any executive officer or director thereof
beneficially owns any Common Stock, and there have been no transactions
in Shares effected during the past 60 days by CVC, any person in
control of CVC
Page 16 of 33
<PAGE>
(ultimately or otherwise), or any executive officer or director
thereof; provided, however, certain investment banking affiliates of
CVC may beneficially own Shares, including Shares that may be held in
discretionary or advisory accounts with CVC affiliates, and such CVC
affiliates, directly or in connection with such discretionary or
advisory accounts, may acquire, hold, vote or dispose of Common Stock,
including transactions that may have occurred in the past 60 days.
Beneficial ownership of Shares shown on the cover pages of
this Schedule 13D for each of the Reporting Persons assumes that the
Reporting Persons have not formed a group for purposes of Section
13(d)(3) under the Securities Exchange Act of 1934 and Rule
13d-5(b)(1) promulgated thereunder. If the Reporting Persons were
deemed to have formed a group for purposes of Section 13(d)(3) and Rule
13d-5(b)(1), the group would be deemed to own beneficially (and may be
deemed to have shared voting and dispositive power over) 1,419,287
Shares in the aggregate, constituting approximately 16.3% of the Shares
outstanding on January 17, 2000, as represented by Cameron Ashley in
the Merger Agreement.
The filing of this Schedule 13D is not an admission by any
Reporting Person of the existence of any group or of beneficial
ownership of any securities other than securities held of record by
such Reporting Person.
(d) The partners of CGW I have the right to receive a portion
of the proceeds from the sale of the Shares held by CGW I, including a
portion of any proceeds received upon the merger described in Item 4.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
The information set forth in Items 2 through 5, inclusive, is
hereby incorporated herein by reference. Copies of the Merger
Agreement, the Investment Letter, the Fleet Commitment Letter and the
Whitney Commitment Letter are included as exhibits to this Schedule 13D
and incorporated herein by reference. To the best of the Reporting
Persons' knowledge, except as described in this Schedule 13D, there are
at present no contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 hereof and
between any such persons and any person with respect to any securities
of Cameron Ashley. Without limiting the generality of the immediately
preceding sentence, the Reporting Persons have not discussed, or
reached any agreement, arrangement or understanding, explicit or
implicit, as to the voting of any Shares held by Messrs. Ross and
Muratori. CGW I, Inc. does, however, anticipate causing the Shares held
by CGW I to be voted in favor of the merger described in Item 4 at any
meeting of Cameron Ashley shareholders held for the purpose of voting
on such merger.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following documents are filed as exhibits to this Scheduled 13D:
(a) Agreement and Plan of Merger dated January 17, 2000, among
Cameron Ashley Building Products, Inc., CBP Holdings, Inc. and CBP
Acquisition Corp.
(b) Letter Agreement dated January 17, 2000, between CGW
Southeast Partners IV, L.P. and Citigroup Venture Capital, Ltd.
(c) Commitment Letter dated December 6, 1999, among Fleet
Capital Corporation, BancBoston Robertson Stephens Inc. and CGW
Southeast Partners IV, L.P., including Outline of Terms and Conditions
dated December 6, 1999.
(d) Commitment Letter dated January 13, 2000, between J. H.
Whitney & Co. and CGW Southeast Partners IV, L.P.
Page 17 of 33
(e) Joint Filing Statement dated January 21, 2000, among the
signatories to this Schedule 13D.
Page 18 of 33
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
1/21/00 CGW SOUTHEAST I, INC.
- ---------------------------
Date
By: /s/ Bart A. McLean
----------------------------
Name: Bart A. McLean
---------------------------
Title: Managing Director
------------------------
Page 19 of 33
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
CGW SOUTHEAST PARTNERS I, L.P.
1/21/00
------------------------ By: CGW Southeast I, Inc.,
Date its general partner
By: /s/ Bart A. McLean
----------------------------
Name: Bart A. McLean
-------------------------
Title: Managing Director
------------------------
Page 20 of 33
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
1/21/00 /s/ Richard L. Cravey
------------------- ---------------------
Date RICHARD L. CRAVEY
Page 21 of 33
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
1/21/00 /s/ Edwin A. Wahlen, Jr.
------- ------------------------
Date EDWIN A. WAHLEN, JR.
Page 22 of 33
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
CGW, INC.
1/21/00 By: /s/ Bart A. McLean
------- ------------------
Bart A. McLean, Vice President
Page 23 of 33
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
CGW SOUTHEAST IV, L.L.C.
1/21/00 By: CGW, Inc.,
------- its manager
Date
By: /s/ Bart A. McLean
----------------------------------
Bart A. McLean, Vice President
Page 24 of 33
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
CGW SOUTHEAST PARTNERS IV, L.P.
1/21/00 By: CGW Southeast IV, L.L.C.
-------- its general partner
Date
By: CGW, Inc.
its manager
By: /s/ Bart A. McLean
-----------------------------
Bart A. McLean, Vice President
Page 25 of 33
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
1/21/00 CBP HOLDINGS, INC.
-------
Date
By: /s/ Bart A. McLean
-------------------------
Bart A. McLean, President
Page 26 of 33
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
1/21/00 CBP ACQUISITION CORP.
-------
Date
By: /s/ Bart A. McLean
---------------------------
Bart A. McLean, President
Page 27 of 33
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
1/21/00 /s/ Ronald R. Ross
------- ------------------
Date RONALD R. ROSS
Page 28 of 33
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
1/21/00 /s/ Walter J. Muratori
------- ----------------------
Date WALTER J. MURATORI
Page 29 of 33
<PAGE>
ANNEX A
-------
EXECUTIVE OFFICERS AND DIRECTORS
OF
CGW SOUTHEAST I, INC.
- -------------------------- ----------------------------------------------------
NAME POSITION WITH REPORTING PERSON
- -------------------------- ----------------------------------------------------
Richard L. Cravey Director, President and Managing Director
- -------------------------- ----------------------------------------------------
Edwin A. Wahlen, Jr. Director, Vice President, Secretary and Managing
Director
- -------------------------- ----------------------------------------------------
William A. Davies Managing Director and Assistant Secretary
- -------------------------- ----------------------------------------------------
Garrison M. Kitchen Managing Director
- -------------------------- ----------------------------------------------------
Bart A. McLean Managing Director
- -------------------------- ----------------------------------------------------
James A. O'Donnell Managing Director
- -------------------------- ----------------------------------------------------
For each person indicated above, the principal occupation or employment
is managing director of Cravey, Green & Wahlen, a private equity investment firm
that supports management teams in acquisitions and recapitalizations of
middle-market companies, and the business address is Twelve Piedmont Center,
Suite 210, Atlanta, Georgia 30305. Each person above is a citizen of the United
States of America.
Page 30 of 33
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
OF
CGW, INC.
- ----------------------------- ------------------------------------------------
NAME POSITION WITH REPORTING PERSON
- ----------------------------- ------------------------------------------------
Edwin A. Wahlen, Jr. Director, President and Treasurer
- ----------------------------- ------------------------------------------------
Richard L. Cravey Director, Vice President and Secretary
- ----------------------------- ------------------------------------------------
William A. Davies Vice President
- ----------------------------- ------------------------------------------------
Michael D. Long Vice President
- ----------------------------- ------------------------------------------------
Bart A. McLean Vice President
- ----------------------------- ------------------------------------------------
Garrison M. Kitchen Vice President
- ----------------------------- ------------------------------------------------
James A. O' Donnell Vice President
- ----------------------------- ------------------------------------------------
Richard L. Cravey, Jr. Vice President
- ----------------------------- ------------------------------------------------
Roy Bowman Vice President
- ----------------------------- ------------------------------------------------
For each person indicated above, the principal occupation or employment
is managing director of Cravey, Green & Wahlen, a private equity investment firm
that supports management teams in acquisitions and recapitalizations of
middle-market companies, and the business address is Twelve Piedmont Center,
Suite 210, Atlanta, Georgia 30305. Each person above is a citizen of the United
States of America.
Page 31 of 33
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
OF
CBP HOLDINGS, INC.
- ------------------------------- ----------------------------------------------
NAME POSITION WITH REPORTING PERSON
- ------------------------------- ----------------------------------------------
Bart A. McLean Director and President
- ------------------------------- ----------------------------------------------
Richard L. Cravey, Jr. Director, Treasurer and Secretary
- ------------------------------- ----------------------------------------------
For each person indicated above, the principal occupation or employment
is managing director of Cravey, Green & Wahlen, a private equity investment firm
that supports management teams in acquisitions and recapitalizations of
middle-market companies, and the business address is Twelve Piedmont Center,
Suite 210, Atlanta, Georgia 30305. Each person above is a citizen of the United
States of America.
Page 32 of 33
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
OF
CBP ACQUISITION CORP.
- --------------------------------- ---------------------------------------------
NAME POSITION WITH REPORTING PERSON
- --------------------------------- ---------------------------------------------
Bart A. McLean Director and President
- --------------------------------- ---------------------------------------------
Richard L. Cravey, Jr. Director, Treasurer and Secretary
- --------------------------------- ---------------------------------------------
For each person indicated above, the principal occupation or employment
is managing director of Cravey, Green & Wahlen, a private equity investment firm
that supports management teams in acquisitions and recapitalizations of
middle-market companies, and the business address is Twelve Piedmont Center,
Suite 210, Atlanta, Georgia 30305. Each person above is a citizen of the United
States of America.
Page 33 of 33
Exhibit 7(a)
AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 17, 2000
BY AND AMONG
CAMERON ASHLEY BUILDING PRODUCTS, INC.,
CBP HOLDINGS, INC.
AND
CBP ACQUISITION CORP.
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
January 17, 2000, is entered into by and among Cameron Ashley Building Products,
Inc., a Georgia corporation (the "Company"), CBP Holdings, Inc., a Georgia
corporation ("Purchaser"), and CBP Acquisition Corp., a Georgia corporation and
a wholly owned subsidiary of Purchaser ("Acquisition Sub").
WHEREAS, the Board of Directors of each of Purchaser and Acquisition
Sub have approved the execution and delivery of this Agreement and have
determined that it is advisable and in the best interests of their respective
shareholders, that the Company and Acquisition Sub combine pursuant to the
Merger (as hereinafter defined) in which Acquisition Sub will merge with and
into the Company in accordance with the Georgia Business Corporation Code
("GBCC") and upon the terms and subject to the conditions set forth herein, with
the Company being the surviving corporation;
WHEREAS, the Board of Directors of the Company (the "Board") has, in
light of and subject to the terms and conditions set forth herein, in accordance
with the recommendation of a duly-constituted special committee of independent
members of the Board (the "Special Committee"), and after considering the
long-term prospects and interests of the Company and its shareholders (i)
determined that the consideration to be paid for each Share (as hereinafter
defined) in the Merger (other than Shares held by Purchaser or any affiliate
thereof) is fair to the holders of such Shares and that the Merger is in the
best interests of such shareholders, (ii) approved and adopted this Agreement
and (iii) resolved to recommend that the holders of such Shares approve this
Agreement and the Merger upon the terms and subject to the conditions set forth
herein; and
WHEREAS, Purchaser, Acquisition Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Purchaser, Acquisition Sub and the Company
hereby agree as follows:
-1-
<PAGE>
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the GBCC, at the Effective Time (as
hereinafter defined) the Company and Acquisition Sub shall consummate a merger
(the "Merger") pursuant to which (a) Acquisition Sub shall merge with and into
the Company and the separate corporate existence of Acquisition Sub shall
thereupon cease, (b) the Company shall be the successor or the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Georgia and (c) the corporate existence of the Company with all of its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger.
Section 1.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause (a) a Certificate of Merger to be executed and filed on the
date of the Closing (as hereinafter defined) (or on such other date as Purchaser
and the Company may agree) with the Secretary of State of Georgia in such form
as required by, and executed in accordance with the relevant provisions of, the
GBCC and (b) all other filings or recordings required by the GBCC in connection
with the Merger. Prior to the filing referred to in this Section 1.2, a closing
(the "Closing") will be held at the offices of Locke Liddell & Sapp LLP, 2200
Ross Avenue, Suite 2200, Dallas, Texas 75201, at 10:00 a.m., Dallas, Texas time
(or such other place, date and time as the parties may agree in writing). The
Merger shall become effective at such time as such Certificate of Merger is duly
filed with the Secretary of State of Georgia, or at such later time specified in
such Certificate of Merger (the time the Merger becomes effective being referred
to herein as the "Effective Time"). Subject to the terms and conditions hereof,
unless otherwise mutually agreed upon in writing by the authorized officers of
the Company and Purchaser, the parties hereto shall use their reasonable efforts
to cause the Effective Time to occur on the first business day following the
last to occur of (i) the effective date (including expiration of any applicable
waiting period) of the last required consent of any Governmental Entity having
authority over and approving or exempting the Merger and (ii) the date on which
the shareholders of the Company approve this Agreement and the Merger to the
extent such approval is required by applicable law; or such later date within
two (2) business days thereof as may be specified by Purchaser.
Section 1.3 Effects of the Merger. At the Effective Time, the Merger
shall have the effects as set forth in the applicable provisions of the GBCC.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the properties, rights, privileges, powers and franchises of
the Company and Acquisition Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Acquisition Sub shall become
the debts, liabilities and duties of the Surviving Corporation.
-2-
<PAGE>
Section 1.4 Amended and Restated Articles of Incorporation and Bylaws.
(a) The Amended and Restated Articles of
Incorporation (the "Restated Articles") of the Company in effect
immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until amended in accordance
with applicable law.
(b) The Bylaws of the Company in effect at the
Effective Time shall be the Bylaws of the Surviving Corporation until
amended in accordance with applicable law.
Section 1.5 Directors. The directors of Acquisition Sub at the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Restated Articles and the Bylaws of the
Surviving Corporation until each such director's successor is duly elected or
appointed and qualified.
Section 1.6 Officers. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Restated Articles and the Bylaws of the Surviving
Corporation until each such officer's successor is duly elected or appointed and
qualified.
Section 1.7 Subsequent Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Acquisition Sub
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either the Company or
Acquisition Sub, all such deeds, bills of sale, assignments and assurances and
to take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all rights, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
Section 1.8 Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of any of Purchaser, Acquisition
Sub or the Company:
(a) Each issued and outstanding share of Common
Stock, no par value, of the Company ("Share") immediately prior to the
Effective Time, together with the associated preferred stock purchase
rights (the "Rights") issued pursuant to that certain Rights Agreement,
dated as of August 19, 1997, as amended (the "Rights Agreement"), by
and between the Company and SunTrust Bank, Atlanta, Georgia, as Rights
Agent (other than (i) any Shares to be canceled pursuant to Sections
1.8(b) and 1.8(c) and (ii) any Dissenting Shares (as defined in Section
2.1 hereof)), shall be canceled and
-3-
<PAGE>
extinguished and be converted into the right to receive $15.10 in cash
(the "Merger Consideration"), payable to the holder thereof, without
interest thereon, upon the surrender of the certificate formerly
representing such Share in the manner provided in Section 2.2 hereof
and less any required withholding of Taxes (as hereinafter defined).
From and after the Effective Time, all such Shares shall no longer be
outstanding and shall be deemed to be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such
Shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration therefor, without interest
thereon, upon the surrender of such certificate in accordance with
Section 2.2 hereof, or the right, if any, to receive payment from the
Surviving Corporation of the "fair value" of such Shares as determined
in accordance with Article 13 of the GBCC.
(b) Each Share held in the treasury of the Company
and each Share owned by any Subsidiary of the Company immediately prior
to the Effective Time shall, by virtue of the Merger and without any
action on the part of Acquisition Sub, the Company or the holder
thereof, be canceled, retired and cease to exist and no payment or
distribution shall be made with respect thereto.
(c) Each Share held by Purchaser shall be canceled.
(d) As of the Effective Time, by virtue of the Merger
and without any action on the part of the holders of any Shares or
holders of Common Stock, par value $0.01 per share, of Acquisition Sub
("Acquisition Sub Common Stock"), each issued and outstanding share of
Acquisition Sub Common Stock shall be converted into one (1) validly
issued, fully paid and nonassessable share of common stock, no par
value per share, of the Surviving Corporation.
Section 1.9 Stock Options and Warrants. At or immediately prior to the
Effective Time, each outstanding stock option (an "Option") to purchase Shares
granted under any stock option plan, compensation plan or arrangement of the
Company or outstanding warrant (a "Warrant") to purchase Shares shall be
canceled and the holder of each such Option or Warrant (whether or not then
vested or exercisable) shall be paid by the Company promptly after the Effective
Time for each such Option or Warrant an amount equal to the product of (a) the
excess, if any, of the Merger Consideration over the applicable exercise price
per Share and (b) the number of Shares such holder could have purchased
(assuming full vesting and exercisability of such Option or Warrant) had such
holder exercised such Option or Warrant in full immediately prior to the
Effective Time.
Section 1.10 Shareholders' Meeting. If required by applicable law in
order to consummate the Merger, the Company, acting through the Board, shall, in
accordance with applicable law, subject to the terms and conditions of this
Agreement:
(a) as soon as reasonably practicable, duly call,
give notice of, convene and hold an annual or special meeting of its
shareholders (the "Shareholders'
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Meeting") for the purpose of considering and taking action upon the
approval of the Merger and the approval and adoption of this Agreement;
(b) except as permitted in Section 1.10(c) and 5.2
below, include in the Proxy Statement (as hereinafter defined) the
recommendation of the Board that shareholders of the Company vote in
favor of the approval of the Merger and the approval and adoption of
this Agreement;
(c) use reasonable efforts to obtain shareholder
approval (subject to the Board, after having consulted with legal
counsel, determining in good faith that the taking of such action would
constitute a breach of the Board's fiduciary obligations under
applicable law);
(d) prepare and file with the Securities and Exchange
Commission ("SEC") a preliminary proxy or information statement
relating to the Merger and this Agreement and use its best efforts to
obtain and furnish the information required to be included by it in the
proxy or information statement and, after consultation with Purchaser,
respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement, and cause a definitive
proxy or information statement, including any amendment or supplement
thereto (such proxy or information statement, together with any
amendments or supplements thereto, the "Proxy Statement") to be mailed
to its shareholders at the earliest practicable time; and
(e) incorporate into the Proxy Statement written
information provided by Purchaser concerning Purchaser and Acquisition
Sub required to be included in the Proxy Statement. The Company shall
not be responsible or liable for any untrue statement of a material
fact or omission to state a material fact required to be stated in the
Proxy Statement or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, to the
extent that any such untrue statement of a material fact or omission to
state a material fact was made by the Company in reliance upon and in
conformity with written information concerning Purchaser or Acquisition
Sub furnished to the Company by Purchaser specifically for use in the
Proxy Statement. Purchaser agrees that the written information
concerning Purchaser and Acquisition Sub provided by it for inclusion
in the Proxy Statement and each amendment or supplement thereto, at the
time of mailing thereof and at the time of the meeting(s) of
shareholders of the Company, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE II
DISSENTING SHARES; PAYMENT FOR SHARES
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Section 2.1 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, any Shares held by a holder who has demanded and perfected
his demand for payment for his Shares in accordance with Article 13 of
the GBCC and as of the Effective Time has neither withdrawn nor lost
his right to such appraisal ("Dissenting Shares") shall not be
converted into or represent a right to receive the Merger Consideration
pursuant to Section 1.8, but the holder thereof shall be entitled to
only such rights as are granted by the GBCC.
(b) Notwithstanding the provisions of Section 2.l(a),
if any holder of Shares who demands payment for his Shares under
Article 13 of the GBCC effectively withdraws or loses (through failure
to perfect or otherwise) his right to such payment under Article 13,
then as of the Effective Time or the occurrence of such event,
whichever later occurs, such holder's Shares shall automatically be
converted into and represent only the right to receive the Merger
Consideration as provided in Section 1.8(a), without interest thereon,
upon surrender of the certificate or certificates representing such
Shares pursuant to Section 2.2 hereof.
(c) The Company shall give Purchaser (i) prompt
notice of any such demands for payment under Article 13 of the fair
value of any Shares, withdrawals of such demands and any other
instruments served pursuant to the GBCC received by the Company and
(ii) the opportunity to direct all negotiations and proceedings with
respect to demands for payment under the GBCC. The Company shall not
voluntarily make any payment with respect to any demands for payment
and shall not, except with the prior written consent of Purchaser,
settle or offer to settle any such demands.
Section 2.2 Payment for Shares.
(a) Prior to the Effective Time, Purchaser shall
designate a bank or trust company, reasonably acceptable to the
Company, to act as paying agent in connection with the Merger (the
"Paying Agent") pursuant to a paying agent agreement providing for the
matters set forth in this Section 2.2 and otherwise reasonably
satisfactory to the Company. At the Effective Time, Purchaser shall
deposit, or cause to be deposited, in trust with the Paying Agent for
the benefit of holders of Shares the aggregate consideration to which
such holders shall be entitled at the Effective Time pursuant to
Section 1.8. Such funds shall be invested as directed by the Surviving
Corporation pending payment thereof by the Paying Agent to holders of
the Shares. Earnings from such investments shall be the sole and
exclusive property of the Surviving Corporation and no part thereof
shall accrue to the benefit of the holders of the Shares.
(b) As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each record holder, as
of the Effective Time, of an outstanding certificate or certificates
which immediately prior to the Effective Time represented outstanding
Shares (the "Certificates"), whose Shares were converted pursuant to
Section
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<PAGE>
1.8 into the right to receive the Merger Consideration (i) a letter of
transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions not inconsistent with this
Agreement) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for payment of the Merger Consideration
(together, the "Transmittal Documents"). Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent
or agents as may be appointed by Purchaser, together with such letter
of transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration for
each Share formerly represented by such Certificate, without any
interest thereon, and less any applicable withholding Taxes, and the
Certificate so surrendered shall forthwith be canceled. If payment of
the Merger Consideration is to be made to a Person (as hereinafter
defined) other than the Person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall
otherwise be in proper form for transfer, that the signatures on the
Certificate or any related stock power shall be properly guaranteed and
that the Person requesting such payment shall have paid any transfer
and other Taxes required by reason of the payment of the Merger
Consideration to a Person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction
of the Surviving Corporation that such Tax either has been paid or is
not applicable. Until surrendered in accordance with the provisions of
and as contemplated by this Section 2.2 each Certificate (other than
(i) Certificates representing Shares subject to Sections 1.8(b) and
1.8(c) and (ii) Dissenting Shares) shall be deemed at any time after
the Effective Time to represent only the right to receive the Merger
Consideration in cash as contemplated by this Section 2.2. Upon the
surrender of Certificates in accordance with the terms and instructions
contained in the Transmittal Documents, Purchaser shall cause the
Paying Agent to pay the holder of such Certificates in exchange
therefor cash in an amount equal to the Merger Consideration multiplied
by the number of Shares represented by such Certificate (other than
Certificates representing Dissenting Shares and Certificates
representing Shares held by Purchaser or in the treasury of the
Company).
(c) At the Effective Time, the stock transfer books
of the Company shall be closed and there shall not be any further
registration of transfers of any shares of capital stock thereafter on
the records of the Company. If, after the Effective Time, Certificates
are presented to the Surviving Corporation, they shall be canceled and
exchanged for the consideration provided for, and in accordance with
the procedures set forth, in this Article II. No interest shall accrue
or be paid on any cash payable upon the surrender of a Certificate or
Certificates which immediately before the Effective Time represented
outstanding Shares.
(d) From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect
to such Shares, except as otherwise provided herein or by applicable
law.
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<PAGE>
(e) If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed, the
Surviving Corporation shall pay or cause to be paid in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration for
the Shares represented thereby. When authorizing such payment of the
Merger Consideration in exchange therefor, the Board of Directors of
the Surviving Corporation may, in its discretion and as a condition
precedent to the payment thereof, require the owner of such lost,
stolen or destroyed Certificate to give the Surviving Corporation a
bond in such sum as it may direct as indemnity against any claim that
may be made against the Surviving Corporation with respect to the
Certificate alleged to have been lost, stolen or destroyed.
(f) Promptly following the date which is six (6)
months after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any cash
(including any earnings and interest received with respect thereto),
Certificates and other documents in its possession relating to the
Merger, which had been made available to the Paying Agent and which
have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject
to abandoned property, escheat or similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon
due surrender of their Certificates, without any interest thereon.
(g) The Merger Consideration paid in the Merger shall
be net to the holder of Shares in cash, subject to reduction only for
any applicable federal withholding Taxes or, as set forth in Section
2.2(b), stock transfer Taxes payable by such holder.
(h) Notwithstanding anything to the contrary in this
Section 2.2, none of the Paying Agent, Purchaser or the Surviving
Corporation shall be liable to any holder of a Certificate formerly
representing Shares for any amount properly delivered to a public
official pursuant to any applicable abandoned property, escheat or
similar law. If Certificates are not surrendered prior to two (2) years
after the Effective Time, unclaimed funds payable with respect to such
Certificates shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of all claims
or interest of any Person previously entitled thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the schedule delivered to Purchaser prior to the
execution of this Agreement setting forth specific exceptions to the Company's
representations and warranties set forth herein (the "Company Disclosure
Schedule"), the Company hereby represents and warrants to Purchaser as follows:
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Section 3.1 Organization and Qualification, Subsidiaries.
(a) The Company Disclosure Schedule sets forth in
Section 3.1(a) a complete list of all Subsidiaries of the Company that
are corporations (identifying its jurisdiction of incorporation, each
jurisdiction in which it is qualified and/or licensed to transact
business, and the number of shares owned and percentage ownership
interest represented by such share ownership) and all of its
Subsidiaries that are general or limited partnerships, limited
liability companies or other non-corporate entities (identifying the
law under which such entity is organized, each jurisdiction in which it
is qualified and/or licensed to transact business, and the amount and
nature of the ownership interest therein). Except as noted in Section
3.1(a) of the Company Disclosure Schedule, each of the Company and its
Subsidiaries is a corporation and each Subsidiary is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization and (as to corporations) has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted. Each
Subsidiary of the Company which is not a corporation has all power and
authority under its governing documents and the law under which it was
organized to own, lease and operate its properties and to carry on its
businesses as now being conducted. The minute book and other
organizational documents for each of the Company and its Subsidiaries
have been made available to Purchaser for its review and, except as
disclosed in Section 3.1(a) of the Company Disclosure Schedule, are
true and complete in all material respects as in effect as of the date
of this Agreement and accurately reflect in all material respects all
amendments thereto and all proceedings of the Board of Directors and
shareholders thereof. The Company has heretofore delivered or made
available to Purchaser accurate and complete copies of the Restated
Articles and Bylaws, as currently in effect, of the Company and
promptly will deliver to Purchaser, upon request, accurate and complete
copies of the certificate or articles of incorporation and bylaws, as
currently in effect, of each of its Subsidiaries. As used in this
Agreement, the term "Subsidiary" shall mean with respect to any party,
any corporation or other organization, whether incorporated or
unincorporated or domestic or foreign to the United States of which (i)
such party or any other Subsidiary of such party is a general partner
or (ii) at least a majority of the securities or other interests having
by their terms ordinary voting power to elect a majority of the board
of directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned
or controlled by such party or by any one or more of its Subsidiaries,
or by such party and one or more of its Subsidiaries.
(b) Each of the Company and its Subsidiaries is duly
qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or
licensing necessary, except in such jurisdictions where the failure to
be so duly qualified or licensed and in good standing would not,
individually or in aggregate, have a Company Material Adverse Effect.
As used in this Agreement, the term "Company Material Adverse Effect"
shall mean any change(s) or effect(s) that, individually or in the
aggregate, are materially adverse to the financial condition, business
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<PAGE>
or results of operations of the Company and its Subsidiaries, taken as
a whole, excluding in all cases: (i) events or conditions generally
affecting the industry in which the Company and its Subsidiaries
operate or arising from changes in general business or economic
conditions; (ii) any effect resulting from any change in law or GAAP,
which generally affects entities such as the Company or its
Subsidiaries; (iii) events resulting from the execution and/or
announcement of this Agreement; and (iv) any effect resulting from
compliance by the Company or any of its Subsidiaries with the terms of
this Agreement.
(c) Except as set forth in Section 3.1(c) of the
Company Disclosure Schedule, neither the Company nor any Subsidiary
owns (i) any equity interest, or option to purchase such an interest,
in any corporation or other entity or (ii) marketable securities where
the Company's or Subsidiary's equity interest in any entity exceeds
five percent (5%) of the outstanding equity of such entity on the date
hereof.
Section 3.2 Capitalization of the Company and its Subsidiaries.
(a) The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, no par value (the
"Common Stock"), and 100,000 shares of preferred stock, no par value
(the "Preferred Stock"). As of the date hereof, (i) 8,694,954 shares of
Common Stock are issued and outstanding and no shares of Preferred
Stock are outstanding and (ii) 10,413 shares of Common Stock have been
authorized for issuance but have not been issued. As of the date
hereof, 1,189,911 shares of Common Stock and no shares of Preferred
Stock are held in the treasury of the Company. All of the Shares have
been validly issued, are fully paid, nonassessable and have been issued
free of preemptive rights. Section 3.2 of the Company Disclosure
Schedule identifies the number of shares of each class of capital stock
of the Company which are reserved and subject to any Company Benefit
Plan, indicating the name of the plan, the date of the grant, the
holder of the option, the number of shares granted, the type of option
and the exercise price thereof. Section 3.2 of the Company Disclosure
Schedule also identifies the number of shares of each class of capital
stock of the Company which are reserved and subject to any warrant of
the Company, indicating the warrant agreement, the date of the warrant,
the holder of the warrant, the number of shares subject to the warrant
and the exercise price thereof. The actions to be taken in Section 1.9
hereof with respect to all outstanding options and warrants of the
Company are permissible under the terms of such options and warrants
without any further action on the part of the Company, Purchaser or the
holders of any such options or warrants. As of the date hereof, options
to purchase 1,630,285 shares of Common Stock were outstanding under
Company Benefit Plans and warrants to purchase 200,000 shares of Common
Stock were outstanding. Except as set forth above and except for the
Rights issued pursuant to the Rights Agreement, there are outstanding
(i) no shares of capital stock or other voting securities of the
Company, (ii) no securities of the Company or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (iii) no options or other rights to acquire
from the Company or any of its Subsidiaries, and no other contract,
understanding, arrangement or obligation (whether or not contingent) of
the Company or
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any of its Subsidiaries to issue or sell, directly or indirectly, any
capital stock, voting securities, securities convertible into or
exchangeable for capital stock or voting securities, or other
securities of the Company or any of its Subsidiaries, or any other
ownership interests in the Company or any of its Subsidiaries and (iv)
no equity equivalents, interests in the ownership or earnings of the
Company or any of its Subsidiaries or other similar rights
(collectively, "Company Securities"). Except for the put options
relating to the capital stock of Field Marketing, Inc., there are no
outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Company Securities.
(b) Except as set forth in Section 3.2 of the Company
Disclosure Schedule, all of the outstanding capital stock of, or other
ownership interests in, each Subsidiary of the Company, is owned by the
Company, directly or indirectly, free and clear of any Lien (as
hereinafter defined) or any other limitation or restriction (including
any restriction on the right to vote or sell the same, except as may be
provided as a matter of law) and is fully paid and non-assessable and
was issued free of preemptive rights. For purposes of this Agreement,
"Lien" shall mean, with respect to any asset (including, without
limitation, any security) any option, claim, mortgage, lien, pledge,
charge, security interest or encumbrance or restriction of any kind in
respect of such asset (other than rights or interests held by lessors
or sublessors under operating leases entered into in the ordinary
course of business and other than Permitted Liens). For purposes of
this Agreement, "Permitted Liens" shall mean (i) statutory Liens not
yet delinquent, (ii) Liens with respect to the properties or assets
that do not, individually or in the aggregate, materially detract from
the value or interfere with the use of the properties or assets or
otherwise materially impair present business operations at such
properties, (iii) Liens for Taxes and other governmental charges not
yet delinquent or the validity of which are being contested in good
faith by appropriate actions and (iv) Liens reflected on the 1999
Financial Statements or Section 3.2(b) of the Company Disclosure
Schedule.
(c) The Shares and the Rights constitute the only
class of equity securities of the Company or any of its Subsidiaries
registered or required to be registered under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(d) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a
party with respect to the voting of the capital stock of the Company or
any of the Subsidiaries.
(e) Other than as set forth in the 1999 Financial
Statements or in Section 3.2(e) of the Company Disclosure Schedule,
there is no outstanding material Indebtedness (as hereinafter defined)
of the Company or any of its Subsidiaries. Except as identified in the
1999 Financial Statements or in Section 3.2(e) of the Company
Disclosure Schedule, no such Indebtedness of the Company or its
Subsidiaries contains any restriction upon (i) the prepayment of such
Indebtedness, (ii) the incurrence of Indebtedness by the Company or its
Subsidiaries, respectively, or (iii) the ability of the Company or its
Subsidiaries to grant any Liens on its properties or assets. For
purposes
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of this Agreement, "Indebtedness" shall include (i) all indebtedness
for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices
and operating leases), (ii) any other indebtedness which is evidenced
by a note, bond, debenture or similar instrument, (iii) all obligations
under financing leases, (iv) all obligations in respect of acceptances
issued or created, (v) all liabilities secured by any Lien on any
property and (vi) all guarantee obligations.
Section 3.3 Authority Relative to this Agreement, Consents and
Approvals.
(a) The Company has all the necessary corporate power
and authority to execute and deliver this Agreement and to consummate
the Merger in accordance with the terms hereof (subject to obtaining
the necessary approval and adoption of this Agreement and approval of
the Merger by the shareholders of the Company as contemplated by
Section 1.10 hereof). The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
Merger have been duly and validly authorized by the Board and, except
for obtaining the approval of the Company's shareholders as
contemplated by Section 1.10 hereof, no other corporate action or
corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery by the Company of this Agreement
and the consummation by the Company of the Merger. This Agreement has
been duly and validly executed and delivered by the Company, and
assuming due and valid authorization, execution and delivery by
Purchaser and Acquisition Sub, constitutes a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance
or injunctive relief is subject to the discretion of the court before
which any proceedings may be brought).
(b) The Board has duly and validly approved, and
taken all corporate actions required to be taken by it for the
consummation of, the Merger, including, but not limited to, all actions
required to satisfy the provisions of Article VII of the Restated
Articles and all actions required to exempt this Agreement and the
transactions contemplated hereby from Sections 14-2-1131 through
14-2-1133 and 14-2-1110 through 14-2-1113 of the GBCC.
Section 3.4 SEC Reports, Financial Statements.
(a) Except as set forth on Section 3.4(a) of the
Company Disclosure Schedule, since October 31, 1998, the Company has
timely filed with the SEC all forms, reports, schedules, statements and
other documents required to be filed by it with the SEC pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), and the
SEC's rules and regulations promulgated thereunder and the Exchange Act
and the SEC's rules and regulations promulgated thereunder, including,
without limitation, any financial
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<PAGE>
statements or schedules included therein (any such documents filed
prior to the date hereof being collectively, the "Company SEC
Documents"). At the time filed, or in the case of registration
statements on their respective effective dates, the Company SEC
Documents (i) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case
may be, and the rules and regulations promulgated thereunder and (ii)
did not, at the time filed (or in the case of registration statements,
at the time of effectiveness), contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
No Subsidiary of the Company is required to file any form, report or
other document with the SEC. The audited financial statements dated
October 31, 1999 delivered to Purchaser (the "1999 Financial
Statements") and the financial statements included in the Company SEC
Documents filed since October 31, 1998 (i) have been prepared from, and
are in accordance with, the books and records of the Company and its
Subsidiaries, (ii) complied in all material respects with applicable
accounting requirements and with the published rules and regulations of
the SEC with respect thereto, (iii) have been prepared in accordance
with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and (iv) fairly present, in all
material respects, the consolidated financial position and the
consolidated results of operations and cash flows (and changes in
financial position, if any) of the Company and its Subsidiaries as of
the times and for the periods referred to therein, except that any such
Financial Statements that are unaudited, interim financial statements
were or are subject to normal and recurring year end adjustments, which
were not or are not expected to be material in amount or effect.
(b) The Company has heretofore delivered or made
available to Purchaser, in the form filed with the SEC (including any
amendments thereto), (i) its Annual Reports on Form 10-K for each of
the three fiscal years ended October 31, 1996, October 31, 1997 and
October 31, 1998, (ii) all definitive proxy statements relating to the
Company's meetings of shareholders (whether annual or special) held
since October 31, 1998 and (iii) all other reports or registration
statements filed by the Company with the SEC since October 31, 1998.
(c) The Company has heretofore furnished or made
available to Purchaser a complete and correct copy of any amendments or
modifications, which have not yet been filed by the Company with the
SEC, to all agreements, documents or other instruments which previously
had been filed by the Company and are currently in effect.
Section 3.5 Proxy Statement. The Proxy Statement to be sent to the
shareholders of the Company in connection with the Shareholders' Meeting, as of
the date first mailed to the shareholders of the Company and at the time of the
Shareholders' Meeting, and the Rule 13E-3 Transaction Statement on Schedule
13E-3 (together with all amendments and supplements thereto, the "Schedule
13E-3"), at the time filed with the SEC, will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or
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necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Proxy Statement and the Schedule
13E-3 will, when filed by the Company with the SEC, comply as to form in all
material respects with the applicable provisions of the Exchange Act and the SEC
rules and regulations promulgated thereunder. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to the statements made
in any of the foregoing documents based on written information supplied by or on
behalf of Purchaser, Acquisition Sub or any of their respective affiliates
specifically for inclusion therein.
Section 3.6 Consents and Approvals; No Violations. No filing with or
notice to, and no permit, authorization, consent or approval of, any court or
tribunal or any federal, state, county or local administrative, governmental or
regulatory body, agency, authority (including a self-regulated authority),
instrumentality, commission, board or body (a "Governmental Entity") is required
on the part of the Company or any of its Subsidiaries for the execution,
delivery and performance by the Company of this Agreement or the consummation by
the Company of the Merger, except (a) in connection with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (b) pursuant to the applicable requirements of the
Exchange Act and the SEC's rules and regulations promulgated thereunder, (c) the
filing and recordation of the Certificate of Merger pursuant to the GBCC or (d)
where the failure to obtain such permits, authorizations, consents or approvals
or to make such filings or give such notice would not have a Company Material
Adverse Effect. Except as disclosed in Section 3.6 of the Company Disclosure
Schedule, neither the execution, delivery or performance of this Agreement by
the Company nor the consummation by the Company of the Merger will (i) conflict
with or result in any breach of any provision of the respective Certificate or
Articles of Incorporation or Bylaws (or similar governing documents) of the
Company or of any its Subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
or require any consent pursuant to, or result in the creation of any Lien on any
asset of the Company or its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, except in the case
of (ii) or (iii) for any such violations, breaches, defaults (or rights of
termination, amendment, cancellation or acceleration), Liens or failures to
obtain consents which would not, individually or in the aggregate, have a
Company Material Adverse Effect.
Section 3.7 No Default. None of the Company or any of its Subsidiaries
is in default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a default or violation) of any term,
condition or provision of (a) its Certificate or Articles of Incorporation or
Bylaws (or similar governing documents), (b) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its Subsidiaries is now a party or by which any
of them or any of their respective properties or assets may be bound or (c) any
order, writ, injunction, decree, law,
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statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their respective properties or assets, except in the case of (b) or
(c) for violations, breaches or defaults which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
Section 3.8 No Undisclosed Liabilities. Except (a) for liabilities
incurred pursuant to the terms of this Agreement, (b) for liabilities that are
accrued or reserved against in the consolidated balance sheets of the Company
included in the 1999 Financial Statements or (c) as set forth in Section 3.8 of
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
has incurred any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that have, or would reasonably be expected to
have, a Company Material Adverse Effect or that would be required by GAAP to be
reflected or reserved against on a consolidated balance sheet, or in the notes
thereto, of the Company. Except as set forth in Section 3.8 of the Company
Disclosure Schedule, there is no Indebtedness of the Company and its
Subsidiaries which exceeds $50,000 and will accelerate or become due or result
in a right of redemption or repurchase on the part of the holder of such
Indebtedness (with or without due notice or lapse of time) as a result of this
Agreement or the Merger. Neither the Company nor any Subsidiary has incurred or
paid any liability since the date of the Company Balance Sheet except for such
liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect or (ii) in
connection with the transactions contemplated by this Agreement. Except as
disclosed in the Company SEC Documents or in Section 3.8 of the Company
Disclosure Schedule, neither the Company nor any Subsidiary is directly or
indirectly liable, by guarantee, indemnity, or otherwise, upon or with respect
to, or obligated, by discount or repurchase agreement or in any other way, to
provide funds in respect to, or obligated to guarantee or assume any liability
of any Person for any amount in excess of $100,000. As used in this Section 3.8,
the term "liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
Section 3.9 Litigation. Except as disclosed in the Company SEC
Documents or in Section 3.9 of the Company Disclosure Schedule, there is no
suit, claim, complaint, action, arbitration, criminal prosecution, governmental
or other examination, investigation, hearing, administrative or other proceeding
(collectively, "Litigation") pending or, to the knowledge of the Company,
threatened against, affecting or involving the Company or any of its
Subsidiaries or any of their respective properties or assets before any
Governmental Entity which is reasonably likely to have a Company Material
Adverse Effect. Except as disclosed in the Company SEC Documents or in Section
3.9 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is subject to any outstanding order, writ, injunction or decree
which is reasonably likely to have a Company Material Adverse Effect. Reserves
reflected on the 1999 Financial Statements are adequate for all Litigation
disclosed in the Company SEC Documents or in Section 3.9 of the Company
Disclosure Schedule. Section 3.9 of the Company Disclosure Schedule contains a
summary of all Litigation as of the date of this
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Agreement where the potential liability is reasonably likely to exceed $25,000
(i) to which the Company or any Subsidiary is a party or (ii) which names the
Company or any Subsidiary as a defendant or cross-defendant or for which the
Company or any Subsidiary has any potential liability.
Section 3.10 Compliance with Applicable Law. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which would not,
individually or in the aggregate, have a Company Material Adverse Effect. The
Company and its Subsidiaries are in compliance with the terms of the Company
Permits, except where the failure so to comply would not have a Company Material
Adverse Effect. The businesses of the Company and its Subsidiaries are not being
and have not been conducted in violation of any law, ordinance or regulation of
any Governmental Entity, except for violations or possible violations which,
individually or in the aggregate, would not have a Company Material Adverse
Effect. None of the directors, officers, agents, representatives or employees of
the Company or its Subsidiaries (in their capacity as directors, officers,
agents, representatives or employees) has taken any action or made any omission
which would violate any law, ordinance or regulation of any Governmental Entity,
except for violations or possible violations which, individually or in the
aggregate, would not have a Company Material Adverse Effect. Except as set forth
in Sections 3.9 or 3.10 of the Company Disclosure Schedule or in the Company SEC
Documents, no investigation or review by any Governmental Entity with respect to
the Company or any of its Subsidiaries, or with respect to any of their
respective directors, officers, agents, representatives or employees (in regard
to actions taken or omissions made in their capacity as directors, officers,
agents, representatives or employees) is pending or, to the knowledge of the
Company, threatened. Excluded from the scope of this representation and warranty
are all matters related to Environmental Laws, Materials of Environmental
Concern or Environmental Claims; these excluded matters, to the extent subject
to a representation and warranty under this Agreement, are covered exclusively
by Section 3.12.
Section 3.11 Employee Benefit Matters.
(a) All Company Benefit Plans (as defined in Section
3.11(h)) are listed in Section 3.11 of the Company Disclosure Schedule
or in the Company SEC Documents. True and complete copies of the
Company Benefit Plans (including: (i) all trust agreements or other
funding arrangements for such Company Benefit Plans (including
insurance contracts), and all amendments thereto, (ii) with respect to
any such Company Benefit Plans or amendments, all determination
letters, rulings, opinion letters, information letters, or advisory
opinions issued by the United States Internal Revenue Service, the
United States Department of Labor, or the Pension Benefit Guaranty
Corporation after December 31, 1992, (iii) annual reports or returns,
audited or unaudited financial statements, actuarial valuations and
reports and summary annual reports prepared for any Company Benefit
Plan with respect to the most recent three (3) plan years, (iv) the
most recent summary plan descriptions and any material modifications
thereto and (v) any filing or compliance action taken under Revenue
Procedures 98-22,
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99-13, or 99-31) have been provided or made available to the Purchaser.
Except as set forth in Section 3.1l(a) of the Company Disclosure
Schedule, each Company Benefit Plan has been administered and
maintained in all material respects in compliance with its terms, with
the material provisions of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), with the Internal Revenue Code of 1986,
as amended (the "Code"), and with all other applicable laws. Each
Company Benefit Plan intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service (the
"IRS") to be so qualified and no event has occurred that could
reasonably be expected to adversely affect the qualified status of such
Company Benefit Plan or the tax-exempt status of any trust. All
government approvals for tax exemption of any trust applicable to a
Company Benefit Plan have been timely obtained and all such approvals
as well as all IRS determination letters applicable to a Company
Benefit Plan continue in full force and effect. Neither the Company nor
any of its Subsidiaries has engaged in a transaction with respect to
any Company Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject the Company to
a Tax imposed by either Section 4975 of the Code or Section 502(i) of
ERISA. To the knowledge of the Company, there are no pending, nor has
the Company or any of its Subsidiaries received notice of any
threatened, claims against or otherwise involving any of the Company
Benefit Plans (other than routine claims for benefits). No Company
Benefit Plan is under audit or investigation by the IRS, the Department
of Labor or the Pension Benefit Guaranty Corporation and, to the
knowledge of the Company, no such audit or investigation is threatened.
Except as listed on Section 3.11(a) of the Company Disclosure Schedule,
all contributions and other payments required to be made as of the date
of this Agreement to, or pursuant to, the Company Benefit Plans have
been made or accrued for in the 1999 Financial Statements. Neither the
Company nor any entity under "common control" with the Company within
the meaning of Section 4001 of ERISA has at any time contributed to, or
been required to contribute to, any "pension plan" (as defined in
Section 3(2) of ERISA) that is subject to Title IV of ERISA or Section
412 of the Code, including, without limitation, any "multi-employer
plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA) and
neither the Company nor any such entity has at any time incurred or
could reasonably expect to incur any liability under Title IV of ERISA.
To the knowledge of the Company, neither the Company nor any of its
Subsidiaries nor any employee or agent thereof, has made any oral or
written representation to any participant in or beneficiary of a
Company Benefit Plan, or to any other individual or entity that is
contrary to the written or otherwise preexisting terms and provisions
of any Company Benefit Plan, which representations (in the aggregate)
could reasonably create a material liability for the Company.
(b) Except as listed on Section 3.11(b) of the
Company Disclosure Schedule or in the Company SEC Documents, the
consummation of the Merger will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Company Benefit Plan, employment or severance agreement,
trust, loan or other compensation or benefits agreement or arrangement
that will or may result in any payment (whether of severance pay,
unemployment compensation, golden parachute or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution,
increase in
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benefits or obligation to fund benefits with respect to any current or
former employee, officer, director, agent or consultant of the Company
or any Subsidiary. Except as listed on Section 3.11(b) of the Company
Disclosure Schedule, no such payment, acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits will cause a loss of tax deductions under Section 280G
of the Code.
(c) Except as listed on Section 3.11(c) of the
Company Disclosure Schedule, (i) neither the Company nor any of its
Subsidiaries maintains or contributes to any Company Benefit Plan which
provides, or has any liability to provide, life insurance, medical,
severance or other employee welfare benefits to any employee upon or
with respect to periods following his retirement or termination of
employment, except as may be required by Section 4980B of the Code and
(ii) there are no restrictions on the rights of the Company to amend or
terminate any such retiree health or benefit Plan without incurring any
liability thereunder.
(d) The actuarial present values of all accrued
deferred compensation entitlements (including entitlements under any
executive compensation, supplemental retirement, or employment
agreement) of employees and former employees of the Company and their
respective beneficiaries, have been fully reflected on the 1999
Financial Statements to the extent required by and in accordance with
GAAP.
(e) To the extent a Company Benefit Plan has excluded
any individual from coverage, such exclusion is (i) consistent with the
written terms of the Company Benefit Plan, (ii) enforceable under the
terms of such Plan, (iii) consistent with the terms of any agreement
with such individual (whether written or oral) and (iv) enforceable
under applicable law.
(f) Neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any administrator or fiduciary of
any Company Benefit Plan (or any agent of any of the foregoing) has
engaged in any transaction, or acted or failed to act in any manner
which could subject the Company or Purchaser to any direct or indirect
liability (by indemnity or otherwise) for breach of any fiduciary,
co-fiduciary or other duty under ERISA.
(g) Except as listed on Section 3.11(g) of the
Company Disclosure Schedule, all Company Benefit Plan documents and
annual reports or returns, audited or unaudited financial statements,
actuarial valuations, summary annual reports and summary plan
descriptions issued with respect to the Company Benefit Plans are
correct and complete and have been timely distributed to participants
of the Company Benefit Plans (as required by law).
(h) "Company Benefit Plan" means collectively, each
pension, retirement, profit-sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus or
other incentive plan, any other written or unwritten employee program,
arrangement, agreement or understanding, whether arrived
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at through collective bargaining or otherwise, any medical, vision,
dental or other health plan, any life insurance plan or any other
employee benefit plan or fringe benefit plan, including, without
limitation, any "employee benefit plan," as that term is defined in
Section 3(3) of ERISA, maintained by, sponsored in whole or in part by,
or contributed to by the Company or any of its Subsidiaries for the
benefit of employees, retirees, dependents, spouses, directors,
independent contractors or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries are eligible to participate. Company
Benefit Plans include (but are not limited to) "employee benefit plans"
as defined in Section 3(3) of ERISA and any other plan, fund, policy,
program, practice, custom, understanding or arrangement providing
compensation or other benefits to any current or former officer or
employee or director or independent contractor of the Company, or any
dependent or beneficiary thereof, maintained by the Company or under
which the Company has any obligation or liability, whether or not they
are or are intended to be (i) covered or qualified under the Code,
ERISA or any other applicable law, (ii) written or oral, (iii) funded
or unfunded, (iv) actual or contingent or (v) generally available to
any or all employees (or former employees) of the Company (or their
beneficiaries of dependents), including, without limitation, all
incentive, bonus, deferred compensation, flexible spending accounts,
cafeteria plans, vacation, holiday, medical, disability, share purchase
or other similar plans, policies, programs, practices or arrangements.
(i) Neither Purchaser nor the Company has any
liability or obligation with respect to any Company Benefit Plan
(including any previously adopted Company Benefit Plan) or any other
employee benefit, plan, program, arrangement or policy that covers
employees of the Company, other than those listed on Schedule 3.11 of
the Company Disclosure Schedule or reflected on the 1999 Financial
Statements or listed in the Company SEC Documents.
Section 3.12 Environmental Laws and Regulations.
(a) Except as shown on Section 3.12(a) of the Company
Disclosure Schedule, and except for such failures to comply which would
not, individually or in the, aggregate, be reasonably likely to have a
Company Material Adverse Effect, the Company and each of its
Subsidiaries (i) is and has been in full compliance with all
Environmental Laws (as defined in Section 3.12(b)) and including,
without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Materials of
Environmental Concern (as defined in Section 3.12(b)) or otherwise
relating to the manufacture, generation, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; (ii) has all permits, licenses, certificates,
variances, exemptions, orders, authorizations and approvals of
Governmental Entities ("Permits") required under all applicable
Environmental Laws, except for those Permits which, if the Company or a
Subsidiary did not have, such failure would not have a Company Material
Adverse Effect; and (iii) is in compliance with the terms and
conditions of such Permits.
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(b) For purposes of this Agreement, the term
"Environmental Laws" shall mean any and all codes, laws (including,
without limitation, common law), ordinances, regulations, reporting or
licensing requirements, rules, or statutes relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata),
including, without limitation (i) the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. ss.ss.9601 ET SEq.
("CERCLA"); (ii) the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act, 42 U.S.C. ss.ss.6901 et seq.,
("RCRA"); (iii) the Emergency Planning and Community Right to Know Act
(42 U.S.C. ss.ss.11001 et seq.); (iv) the Clean Air Act (42 U.S.C.
ss.ss. 7401 et seq.); (v) the Clean Water Act (33 U.S.C. I 1251 et
seq.); (vi) the Toxic Substances Control Act (15 U.S.C. I 2601 et
seq.); (vii) the Hazardous Materials Transportation Act (49 U.S.C.
ss.ss. 5101 et seq.); (viii) any state, county, municipal or local
statues, laws or ordinances similar or analogous to the federal
statutes listed in parts (i) - (vii) of this subparagraph, (ix) any
amendments to the statutes, laws or ordinances listed in parts (i) -
(viii) of this subparagraph, in existence on the date hereof, (x) any
rules, regulations, guidelines, directives, orders or the like adopted
pursuant to or implementing the statutes, laws, ordinances and
amendments listed in parts (i) - (ix) of this subparagraph in existence
on the date hereof; and (xi) any other law, statute, ordinance,
amendment, rule, regulation, guideline, directive, order or the like
now in effect relating to environmental, health or safety matters.
For purposes of this Agreement, the term "Materials
of Environmental Concern" shall mean any and all chemicals, substances,
wastes, materials, pollutants, contaminants, equipment or fixtures
defined as or deemed hazardous or toxic or otherwise regulated under
any Environmental Law, including, without limitation, RCRA hazardous
wastes, CERCLA hazardous substances, pesticides and other agricultural
chemicals, oil and petroleum products or byproducts and any
constituents thereof, lead or lead-based paints or materials, radon,
asbestos or asbestos-containing materials and polychlorinated biphenyls
(PCBs).
(c) Except as shown on Section 3.12(c) of the Company
Disclosure Schedule, and except for such written communications which
would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect, neither the Company nor any of
its Subsidiaries has received any written communication whether from a
Governmental Entity, citizens group, employee or otherwise, that
alleges that the Company or any of its Subsidiaries is not in full
compliance with or is potentially liable under any Environmental Laws.
In addition, no Lien has arisen on any properties or assets of the
Company or any Subsidiary under or as a result of any Environmental
Law.
(d) Except as shown on Section 3.12(d) of the Company
Disclosure Schedule, and except for such Environmental Claims which
would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect, the Company has not received
written notice of any claim, action, cause of action, investigation or
notice (together, "Environmental Claims") alleged, filed or being
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conducted by any Person alleging potential liability (including,
without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of,
based on or resulting from (i) the presence, disposal, placement,
burial, migration or release, of any Materials of Environmental Concern
at, on, under, to or from any location or (ii) circumstances forming
the basis of any violation, or alleged violation, of any Environmental
Law, that in either case is pending or threatened against the Company
or any of its Subsidiaries or against any Person whose liability for
any Environmental Claim the Company or any of its Subsidiaries has
retained or assumed either contractually or by operation of law.
(e) Except as set forth in Section 3.12(e) of the
Company Disclosure Schedule, there has been no disposal, placement,
burial or release of Materials of Environmental Concern by the Company
or any Subsidiary or, to the knowledge of the Company, by any other
Person, on, in, at or from any of the properties or facilities owned or
operated by the Company or any of its Subsidiaries, except for such
disposal, placement, burial or release which would not, individually or
in the aggregate, be reasonably likely to have a Company Material
Adverse Effect.
(f) Without in any way limiting the generality of the
foregoing, except as set forth in Section 3.12(f) of the Company
Disclosure Schedule and, except for any of the matters below which
would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect, (i) there are no above ground
storage tanks, underground storage tanks, oil/water separators, water
treatment facilities or septic systems located on any property owned,
leased, operated or controlled by the Company or any of its
Subsidiaries, (ii) there is no asbestos contained in or forming part of
any building, building component, structure or office space owned,
leased, operated or controlled by the Company or any of its
Subsidiaries and (iii) no PCBs or PCB-containing items are used or
stored at any property owned, leased, operated or controlled by the
Company or any of its Subsidiaries.
(g) Except as set forth in Section 3.12(g) of the
Company Disclosure Schedule, the Company and each of its Subsidiaries
are not subject to any Environmental Laws requiring the performance of
site assessment for Materials of Environmental Concern, or the removal
or remediation of Materials of Environmental Concern, or the giving of
notice to or receiving the approval of any Governmental Entity, or the
recording or delivery to other Persons of any disclosure document or
statement pertaining to environmental matters by virtue of the Merger
or as a condition to the Merger.
Section 3.13 Rights Agreement. The Company has taken all necessary
action so that the execution of this Agreement, announcement or consummation of
the Merger and announcement or consummation of the other transactions
contemplated by this Agreement do not and will not (a) cause the Rights issued
pursuant to the Rights Agreement to separate from the shares of Common Stock to
which they are attached or to be triggered or to become exercisable, (b) cause
any Person to become an Acquiring Person (as such term is defined in the Rights
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Agreement) or (c) give rise to a Distribution Date or a Triggering Event (as
each such term is defined in the Rights Agreement). The Company has furnished to
Purchaser true and complete copies of all amendments to the Rights Agreement
that fulfill the requirements of this Section 3.13 and such amendments are in
full force and effect.
Section 3.14 Brokers. No broker, finder or investment banker (other
than Credit Suisse First Boston Corporation (the "Financial Advisor")), a true
and correct copy of whose engagement agreement has been provided to Purchaser)
is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of the Company.
Section 3.15 Absence of Certain Changes. Except as disclosed in Section
3.15 of the Company Disclosure Schedule or in the Company SEC Documents, since
October 31, 1998, the Company and each of its Subsidiaries have conducted their
respective businesses only in the ordinary course of business and consistent
with past practice and (a) there has not been any Company Material Adverse
Effect and (b) the Company has not taken any of the actions set forth in
paragraphs (a) through (r) of Section 5.1.
Section 3.16 Taxes. Except as set forth in Section 3.16 of the Company
Disclosure Schedule:
(a) Each of the Company and its Subsidiaries has (i)
duly filed (or there have been filed on its behalf) with the
appropriate Tax Authorities (as hereinafter defined) all Tax Returns
(as hereinafter defined) required to be filed by it on or prior to the
date of this Agreement, and each such Tax Return is correct and
complete in all material respects and (ii) duly paid in full or, made
adequate accruals and reserves in its books and records in accordance
with GAAP with full provision (or there has been paid or such provision
has been made on its behalf for its sole benefit and recourse) for the
payment of, all Taxes for all periods ending on or prior to the date of
this Agreement, except for those Taxes being contested in good faith.
(b) There are no Liens for Taxes upon any property or
assets of the Company or any Subsidiary thereof, except for Liens for
Taxes not yet due and for which adequate reserves have been established
in accordance with GAAP with full provision made for the payment
thereof.
(c) Neither the Company nor any of its Subsidiaries
has made any change in accounting methods, received a ruling from any
Tax Authority or signed an agreement with regard to Taxes reasonably
likely to have a Company Material Adverse Effect.
(d) No Audit (as hereinafter defined) by a Tax
Authority is presently pending with regard to any Taxes or Tax Returns
of the Company or any of its Subsidiaries and, to the knowledge of the
Company, no such Audit is threatened.
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(e) An Audit of each United States federal income Tax
Return of the Company or any of its Subsidiaries has been completed by
the applicable Tax Authorities (or the applicable statutes of
limitation for the assessment of Taxes for such periods have expired)
for all periods through and including 1996, and no adjustments were
asserted as a result of such Audits which have not been finally
resolved and fully paid.
(f) There are no agreements, consents or waivers to
extend the statutory period of limitations applicable to the assessment
or payment of any Taxes or deficiencies against the Company or any of
its Subsidiaries, and no power of attorney applicable to either the
Company or any of its Subsidiaries with respect to any Taxes is in
force.
(g) Neither the Company nor any of its Subsidiaries
is a party to, or is bound by, any agreement, arrangement or policy
relating to the allocation, indemnification or sharing of Taxes.
(h) The Company, as the common parent of an
affiliated group of corporations (as defined in Section 1504 of the
Code) consisting solely of the Company and the Subsidiaries that are
"includable corporations" (within the meaning of Section 1504(b) of the
Code), has filed since 1994 a consolidated return for United States
federal income Tax purposes on behalf of itself and such Subsidiaries
and neither the Company nor any of such Subsidiaries has been a member
of an affiliated group filing a consolidated United States federal Tax
Return other than the affiliated group in which they are currently
members and of which the Company is the common parent.
(i) With respect to completed pay periods, the
Company and each of its Subsidiaries has withheld from its employees,
independent contractors, creditors, stockholders, customers and third
parties, and timely paid to the appropriate Tax Authority, proper
amounts in all material respects with all Tax withholding provisions of
applicable law.
(j) No power of attorney is currently in force with
respect to any matter relating to Taxes that could affect the Company
or any of its Subsidiaries.
(k) Neither the Company nor any Subsidiary shall
become obligated in connection with the closing of the Merger for the
payment of any amount described in Section 162(m)(1) of the Code.
(l) "Audit" means any audit, assessment or other
examination relating to Taxes by any Tax Authority or any judicial or
administrative proceedings relating to Taxes. "Tax" or "Taxes" means
all federal, state, local and foreign taxes, levies, tariffs, duties
(including custom duties) and other assessments and obligations
(including liability with respect to unclaimed property) of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, penalties or costs applicable or related
thereto, imposed, assessed or collected by any Tax Authority. "Tax
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Authority" means the IRS and any other Governmental Entity (domestic or
foreign) responsible for the administration, assessment or collection
of any Taxes. "Tax Returns" mean all federal, state, local and foreign
tax returns (including information returns), declarations, statements,
reports, requests, schedules and forms, including other documents or
information submitted in connection therewith and any amendments
thereto.
Section 3.17 Intellectual Property.
(a) Each of the Company and its Subsidiaries owns or
has a license or other right to use all intellectual property used in
and material to the conduct of its business, including, without
limitation, all patents and patent applications, trademarks, trademark
registrations and applications, copyrights and copyright registrations
and applications, service marks and service names, computer software,
technology rights and licenses, know-how, trade secrets, proprietary
processes and formulae, franchises and inventions (collectively, the
"Intellectual Property"), free and clear of all Liens.
(b) Section 3.17(b) of the Company Disclosure
Schedule sets forth a list of all license agreements (other than
license agreements for non-customized third-party software) under which
the Company or any of its Subsidiaries has granted or received the
right to use any Intellectual Property, and neither the Company nor any
of its Subsidiaries is in default under any such license.
(c) Except as disclosed in the Company SEC Documents
or in Section 3.17(c) of the Company Disclosure Schedule, no Person has
a right to receive a royalty or similar payment in respect of any item
of Intellectual Property pursuant to any contractual arrangements
entered into by the Company or any of its Subsidiaries or otherwise. To
the knowledge of the Company, no former or present employees, officers
or directors of the Company or any Subsidiary hold any right, title or
interest, directly or indirectly, in whole or in part, in or to any
Intellectual Property.
(d) There are no claims or suits pending or, to the
knowledge of the Company, threatened (i) alleging that the conduct of
the Company's or any of its Subsidiary's business infringes upon or
constitutes the unauthorized use of the proprietary rights of any third
party or (ii) challenging the ownership, use, validity or
enforceability of the Intellectual Property. To the knowledge of the
Company, no Intellectual Property of the Company or any Subsidiary is
being violated or infringed upon by any third party. There are no
settlements, consents, judgments, orders or other agreements which
restrict the Company's or any of its Subsidiary's rights to use any
Intellectual Property.
(e) Except as set forth in the Company SEC Documents
or in Section 3.17(e) of the Company Disclosure Schedule, the Company
has made no binding commitments to make any material expenditure in
relation to the hardware or software or communications systems used or
planned to be used in connection with the Company's business. All
material computer equipment and systems used by any of the Company and
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its Subsidiaries and, to the knowledge of the Company, any major
supplier of the Company or its Subsidiaries recognize the advent of the
year 2000 and can correctly recognize and manipulate date information
relating to dates on or after January 1, 2000, and the operation and
functionality of such computer systems has not been adversely affected
by the advent of the year 2000 or any manipulation of data featuring
date information relating to dates before, on or after January 1, 2000,
in each case, except for such failures to recognize, manipulate,
operate or function as would not reasonably be expected to have a
Company Material Adverse Effect.
Section 3.18 Labor Matters.
(a) (i) There is no labor strike, dispute, slowdown,
stoppage or lockout actually pending, or to the knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries, (ii) except as discussed on Section 3.18(a)(ii) of the
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to or bound by any collective bargaining or
similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of the Company or any of its Subsidiaries,
(iii) except as disclosed on Section 3.18(a)(iii) of the Company
Disclosure Schedule, none of the employees of the Company or any of its
Subsidiaries is represented by any labor organization and the Company
does not have any knowledge of any union organizing activities among
the employees of the Company or any of its Subsidiaries, (iv) there are
no written personnel policies, rules or procedures applicable to
employees of the Company or any of its Subsidiaries, other than the
Company Benefit Plans and those set forth on Section 3.18(a)(iv) of the
Company Disclosure Schedule, true and correct copies of which have
heretofore been delivered or made available to Purchaser, (v) each of
the Company and its Subsidiaries is, and has at all times been, in
compliance, in all material respects, with all applicable laws and
regulations respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety
and health, and is not engaged in any unfair labor practices as defined
in the National Labor Relations Act or other applicable laws, except
for such non-compliance which has not had a Company Material Adverse
Effect, (vi) there is no unfair labor practice charge or complaint
against the Company pending or, to the knowledge of the Company,
threatened before the National Labor Relations Board or any similar
state or foreign agency, (vii) there is no material pending grievance
arising out of any collective bargaining agreement or other grievance
procedure and (viii) to the knowledge of the Company, no charges with
respect to or relating to the Company are pending before the Equal
Employment Opportunity Commission or any other agency responsible for
the prevention of unlawful employment practices which, if determined
adversely to the Company, would have or could reasonably be expected to
have a Company Material Adverse Effect.
(b) In any ninety (90)-day period during the twelve
(12) months ending on the date of the Agreement, (i) neither the
Company nor any of its Subsidiaries has effectuated a "plant closing,"
(as defined in the Worker Adjustment and Retraining
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Notification Act (the "WARN Act")) affecting any site of employment or
one or more facilities or operating units within any site of employment
or facility of the Company and (ii) there has not occurred a "mass
layoff" (as defined in the WARN Act) affecting any site of employment
or facility of the Company or any of its Subsidiaries; nor has the
Company or any of its Subsidiaries been affected by any transaction or
engaged in layoffs or employment terminations sufficient in number to
trigger application of any similar state, local or foreign law or
regulation.
Section 3.19 Opinion of Financial Advisor. The Financial Advisor has
delivered its opinion, dated the date of this Agreement, to the Special
Committee and the Board to the effect that, as of such date, and based upon and
subject to the matters stated in the opinion, the Merger Consideration to be
received in the Merger by the holders of Shares (other than Purchaser and its
affiliates) is fair from a financial point of view to such holders. A copy of
the written opinion will be delivered to Purchaser promptly following receipt
thereof by the Special Committee.
Section 3.20 Real Property.
(a) Section 3.20 of the Company Disclosure Schedule
sets forth a complete list of all real property owned or leased by the
Company or any of its Subsidiaries or otherwise used by the Company or
any of its Subsidiaries in, and material to, the conduct of their
business or operations (collectively, together with all buildings,
structures and other improvements and fixtures located on or under the
land described in this Section 3.20 and all easements, rights and other
appurtenances thereto, the "Real Property"). The Company or its
Subsidiaries has good title to the owned Real Property and good
leasehold interests in the leased Real Property, free and clear of all
Liens. Copies of (i) all deeds, title insurance policies (including
copies of exception documents thereunder) and surveys of the Real
Property and (ii) all documents evidencing all Liens upon the Real
Property, to the extent such are in the files and records of the
Company, have been furnished or made available to Purchaser or will be
furnished or made available to Purchaser as promptly as practicable
after the date of this Agreement. Except for the matters disclosed in
the Company SEC Documents or in Section 3.20 of the Company Disclosure
Schedule, there are no proceedings, claims, disputes or, to the
Company's knowledge, conditions affecting any Real Property that would
reasonably be expected to curtail or interfere with the use of such
property, nor is an action of rezoning or eminent domain pending or, to
the knowledge of the Company, threatened for all or any portion of the
Real Property.
(b) All buildings on the Real Property are free of
material title and physical defects which do not have, individually or
in the aggregate, a Company Material Adverse Effect.
(c) Each of the Company and its Subsidiaries has
obtained all appropriate certificates, licenses, permits, easements and
rights of way, including proofs of dedication, required to use and
operate the Real Property in the manner in which the Real Property is
currently being used and operated, except for such easements,
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certificates, licenses, permits or rights of way the failure of which
to have obtained does not have, individually or in the aggregate, a
Company Material Adverse Effect.
(d) To the Company's knowledge, neither the Company
nor any of its Subsidiaries is in violation in any material respect of
any applicable building, zoning, health or other law, ordinance,
regulation, contractual restriction or covenant in respect of the use
or occupation of the Real Property or structures or their operations
thereon.
Excluded from the scope of this representation and
warranty are all matters related to Environmental Laws, Materials of
Environmental Concern or Environmental Claims; these excluded matters,
to the extent subject to a representation and warranty under this
Agreement, are covered by Section 3.12.
Section 3.21 Material Contracts.
(a) Section 3.21(a) of the Company Disclosure
Schedule lists each of the following contracts and agreements of the
Company and each of its Subsidiaries (such contracts and agreements,
together with all contracts and agreements disclosed in Section 3.17(b)
of the Disclosure Schedule, being "Material Contracts"):
(i) each contract, agreement and other
arrangement for the purchase of inventory, spare parts, other
materials or personal property with any supplier or for the
furnishing of services to the Company or any of its
Subsidiaries or otherwise related to the businesses of the
Company or any of its Subsidiaries under the terms of which
the Company or any of its Subsidiaries: (A) have paid or
otherwise given consideration of more than $50,000 in the
aggregate during the fiscal year ended October 31, 1999 or (B)
are likely to pay or otherwise give consideration of more than
$250,000 in the aggregate over the remaining term of such
contract;
(ii) each contract, agreement and other
arrangement for the sale of inventory or other personal
property or for the furnishing of services by the Company or
any of its Subsidiaries which: (A) is likely to involve
consideration of more than $50,000 in the aggregate during the
fiscal year ended October 31, 1999 or (B) is likely to involve
consideration of more than $100,000 in the aggregate over the
remaining term of the contract;
(iii) all material broker, distributor,
dealer, manufacturer's representative, franchise, agency,
consulting and advertising contracts and agreements to which
the Company or any of its Subsidiaries is a party;
(iv) all management contracts (including
those relating to severance, change of control, termination or
retirement) and contracts with independent contractors or
consultants (or similar arrangements) to which the
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Company or any of its Subsidiaries is a party and which
provide for payments to any Person in any calendar year in
excess of $50,000;
(v) all contracts and agreements relating to
Indebtedness of the Company or any of its Subsidiaries in
excess of $25,000 or to any direct or indirect guaranty by the
Company or any of its Subsidiaries of Indebtedness of any
other Person in excess of $25,000;
(vi) all contracts and agreements that limit
or purport to limit the ability of the Company or any of its
Subsidiaries to compete in any line of business or with any
Person or in any geographic area or during any period of time;
(vii) any exchange-traded or
over-the-counter swap, forward, future, option, cap, floor or
collar financial contract or any other interest rate or
foreign currency protection contract not included on its
balance sheet which is a financial derivative contract;
(viii) any other contract or amendment
thereto that would be required to be filed as an exhibit to a
Form 10-K filed by Company with the SEC as of the date of this
Agreement (excluding this Agreement or any other agreements
contemplated by or related to this Agreement or the Merger);
(ix) all contracts and agreements that
provide indemnification rights or obligations of the Company
or any of its Subsidiaries, which provide for potential
payments after the Effective Time to any Person in excess of
$250,000; and
(x) all other contracts and agreements,
whether or not made in the ordinary course of business, which
are material to the Company and its Subsidiaries, taken as a
whole, or to the conduct of the business of the Company and
its Subsidiaries, taken as a whole, or the absence of which
would, in the aggregate, have or reasonably be expected to
have a Company Material Adverse Effect.
(b) Each Material Contract: (i) is legal, valid and
binding on the Company or the respective Subsidiary which is a party
thereto and, to the knowledge of the Company, the other parties
thereto, and is in full force and effect and (ii) upon consummation of
the Merger, except to the extent that any consents set forth in Section
3.6 of the Company Disclosure Schedule are not obtained, shall continue
in full force and effect without penalty or other adverse consequence.
Except as set forth in Section 3.21(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries (x) is in
breach of, or default under, any Material Contract or (y) to the
knowledge of the Company, has repudiated or waived any material
provision thereunder.
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(c) Except as shown at Section 3.21 of the Company
Disclosure Schedule, no other party to any Material Contract is, to the
knowledge of the Company, in material breach thereof or material
default thereunder.
(d) Except as set forth in Section 3.21(d) of the
Company Disclosure Schedule, there is no contract, agreement or other
arrangement granting any Person any preferential right to purchase any
Company Securities or any properties or assets of the Company or any of
its Subsidiaries.
Section 3.22 Suppliers and Customers. Since October 31, 1998, no
material licensor, vendor, supplier, licensee or customer of the Company or any
of its Subsidiaries has canceled or otherwise modified (in a manner materially
adverse to the Company) its relationship with the Company or its Subsidiaries
and, to the Company's knowledge, (a) no such Person has notified the Company or
any of its Subsidiaries of its intention to do so and (b) the consummation of
the Merger will not affect any of such relationships in a manner that would
result in a Company Material Adverse Effect.
Section 3.23 Accounts Receivable, Inventory.
(a) The accounts receivable of the Company and its
Subsidiaries as set forth on the most recent consolidated balance sheet
included in the 1999 Financial Statements (the "Company Balance Sheet")
delivered prior to the date of this Agreement or arising since the date
thereof are valid and genuine; have arisen out of bona fide sales and
deliveries of goods, performance of services and other business
transactions in the ordinary course of business consistent with past
practice; and are not subject to valid defenses, set-offs or
counterclaims. The allowance for collection losses on the Company
Balance Sheet and reserves for the return of inventory have been
determined in accordance with GAAP consistently applied and, to the
knowledge of the Company, are sufficient to provide for any losses or
returns which may be sustained on realization of the accounts
receivable or return of inventory shown in the Company Balance Sheet.
(b) As of the date of the Company Balance Sheet, the
inventories shown on the Company Balance Sheet consisted in all
material respects of items of a quantity and quality usable or saleable
in the ordinary course of business. All of such inventories were
acquired in the ordinary course of business. All such inventories are
valued on the Company Balance Sheet in accordance with GAAP, applied on
a basis consistent with the Company's past practices.
Section 3.24 Insurance. Section 3.24 of the Company Disclosure Schedule
lists the Company's material insurance policies. Such policies are in adequate
amounts and cover risks customarily insured against by businesses of the type
operated by the Company and its Subsidiaries. All such policies are in full
force and effect, all premiums with respect thereto covering all periods up to
and including the date of this Agreement have been paid, and no notice of
cancellation or termination has been received with respect to any such policy.
Such policies will remain in full force and effect through the respective dates
set forth in Section 3.24 of the
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Company Disclosure Schedule. Except as set forth in Section 3.24 of the Company
Disclosure Schedule, there are presently no claims for amounts exceeding in any
individual case $250,000 pending under such policies of insurance and no notices
of claims in excess of such amounts have been given by the Company or any of its
Subsidiaries under such policies.
Section 3.25 Title and Condition of Properties. The Company and its
Subsidiaries own good title, free and clear of all Liens, to all of the personal
property and assets shown on the Company Balance Sheet, except for assets which
have been disposed of to nonaffiliated third parties since the date of the
Company Balance Sheet, in the ordinary course of business. All of the machinery,
equipment and other tangible personal property and assets owned or used by the
Company or its Subsidiaries are in good condition and repair, except for
ordinary wear and tear not caused by neglect and are usable in the ordinary
course of business, except for any matter otherwise covered by this sentence
which would not have, individually or in the aggregate, a Company Material
Adverse Effect. All assets which are material to the Company's business on a
consolidated basis and held under leases or subleases by the Company or any of
its Subsidiaries are held under valid contracts enforceable in accordance with
their respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such contract is in full force and effect.
Section 3.26 Statements True and Correct. No representation or warranty
of the Company contained in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Section 3.27 Board Recommendation. The Board, at a meeting duly called
and held, has by unanimous vote of those directors present (who constituted all
of the directors then in office) (a) determined that this Agreement and the
Merger are fair to and in the best interests of the shareholders of the Company
(other than Purchaser or any affiliate thereof) and (b) resolved to recommend
that such holders of the shares of Common Stock approve and adopt this Agreement
and approve the Merger.
Section 3.28 Required Vote. The affirmative vote of the holders of
shares of Common Stock representing a majority of all shares entitled to vote at
the Shareholders' Meeting is required to approve and adopt this Agreement and
approve the Merger. No other vote of the shareholders of the Company is required
by law, the Restated Articles, the Bylaws of the Company or otherwise in order
for the Company to consummate the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser hereby represents and warrants to the Company as follows:
Section 4.1 Organization. Each of Purchaser and Acquisition Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia. Each of Purchaser and Acquisition Sub has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
Section 4.2 Authority Relative to this Agreement. Each of Purchaser and
Acquisition Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the Merger in accordance with the terms
hereof. The execution, delivery and performance of this Agreement by Purchaser
and Acquisition Sub and the consummation of the Merger by Purchaser and
Acquisition Sub have been duly and validly authorized by the Board of Directors
of Purchaser and the Board of Directors of Acquisition Sub, and no other
corporate action or other proceedings on the part of Purchaser or Acquisition
Sub are necessary to authorize the execution and delivery by Purchaser and
Acquisition Sub of this Agreement or to consummate the Merger. This Agreement
has been duly and validly executed and delivered by Purchaser and Acquisition
Sub and, assuming due and valid authorization, execution and delivery by the
Company, constitutes a valid, legal and binding agreement of Purchaser and
Acquisition Sub, enforceable against Purchaser and Acquisition Sub in accordance
with its terms, (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought).
Section 4.3 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state securities or blue sky
laws, the HSR Act and the filing and recordation of a Certificate of Merger as
required by the GBCC, no filing with or notice to, and no permit, authorization,
consent or approval of, any Governmental Entity is necessary for the execution
and delivery by Purchaser or Acquisition Sub of this Agreement or the
consummation by Purchaser or Acquisition Sub of the Merger, except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings or give such notice would not have a Purchaser Material Adverse
Effect. Neither the execution, delivery or performance of this Agreement by
Purchaser or Acquisition Sub, nor the consummation by Purchaser and Acquisition
Sub of the Merger, will (a) conflict with or result in any breach of any
provision of the Certificate or Articles of Incorporation or Bylaws of Purchaser
or Acquisition Sub, (b) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) or require any
consent pursuant to, or result in the creation of any Lien on any asset of
Purchaser or Acquisition Sub under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Purchaser or Acquisition Sub is a party
or by which either of them or any of their respective properties or assets may
be bound or (c) violate any order, writ, injunction, decree, law, statute, rule
or regulation applicable to Purchaser or Acquisition Sub or any of their
respective properties or assets, except in the case of (b) or (c) for any such
violations, breaches,
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defaults (or rights of termination, amendment, cancellation or acceleration),
Liens or failures to obtain consents which would not individually or in the
aggregate, have a Purchaser Material Adverse Effect. As used in this Agreement,
the term "Purchaser Material Adverse Effect" shall mean any change or effect
that is materially adverse to the business, results of operations or condition
(financial or otherwise) of Purchaser or Acquisition Sub other than any change
or effect that does not affect Purchaser's or Acquisition Sub's ability to
perform its obligations under this Agreement.
Section 4.4 Proxy Statement. None of the information supplied by
Purchaser in writing for inclusion in the Proxy Statement or Schedule 13E-3
will, at the respective times filed with the SEC and first published or sent or
given to holders of Shares, and in the case of the Proxy Statement, at the time
that it or any amendment or supplement thereto is mailed to the Company's
shareholders, at the time of the Shareholders' Meeting or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Schedule 13E-3 will, when filed by Purchaser with the SEC,
comply as to form in all material respects with the provisions of the Exchange
Act and the SEC's rules and regulations promulgated thereunder.
Section 4.5 Financing. Purchaser has provided the Company with complete
and correct copies of (a) a commitment letter dated December 6, 1999 from Fleet
Capital Corporation pursuant to which it has committed, subject to the terms and
conditions set forth therein, to provide a senior credit facility in an
aggregate amount of $315 million (the "Senior Commitment Letter") and (b) a
commitment letter dated January 13, 2000 from J.H. Whitney & Co. pursuant to
which it has committed, subject to the terms and conditions set forth therein,
to purchase subordinated notes in an aggregate amount of $55 million
(collectively, the "Financing Commitments," and the financing to be provided
pursuant to the foregoing, the "Financing"). As of the date hereof, the
Financing Commitments have not been withdrawn. If such Financing has been
obtained at the Effective Time, Purchaser will have available $55 million in
equity for purposes of financing the Merger.
Section 4.6 Brokers. Except as set forth in a disclosure letter to be
provided separately to the Company by Purchaser, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of
Purchaser.
Section 4.7 No Default. Neither Purchaser nor Acquisition Sub is in
default or violation (and no event has occurred which, with notice or the lapse
of time or both, would constitute a default or violation) of any term, condition
or provision of (a) its Articles of Incorporation or Bylaws, (b) any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which Purchaser or Acquisition Sub is now a party or by which any
of them or any of their respective properties or assets may be bound or (c) any
order, writ, injunction, decree, law, statute, rule or regulation applicable to
Purchaser or Acquisition Sub or any of their respective properties or assets,
except in the case of (b) or (c) for
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violations, breaches or defaults that would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect.
Section 4.8 Litigation. Except as would not reasonably be expected to
have a Purchaser Material Adverse Effect, there is no Litigation pending or, to
the knowledge of Purchaser, threatened against, affecting or involving Purchaser
or Acquisition Sub or any of their respective properties or assets before any
Governmental Entity, and neither Purchaser nor Acquisition Sub is subject to any
outstanding order, writ, injunction or decree.
Section 4.9 Compliance with Applicable Law. Purchaser and Acquisition
Sub hold all permits, licenses, variances, exemptions, orders and approvals of
all Governmental Entities necessary for the lawful conduct of their respective
businesses (the "Purchaser Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect.
Purchaser and Acquisition Sub are in compliance with the terms of the Purchaser
Permits, except where the failure so to comply would not have a Purchaser
Material Adverse Effect. The businesses of Purchaser and Acquisition Sub are not
being and have not been conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for violations or possible
violations which, individually or in the aggregate, would not have a Purchaser
Material Adverse Effect. None of the directors, officers, agents,
representatives or employees of Purchaser or Acquisition Sub (in their capacity
as directors, officers, agents, representatives or employees) has taken any
action or made any omission which would violate any law, ordinance or regulation
of any Governmental Entity, except for violations or possible violations which,
individually or in the aggregate, would not have a Purchaser Material Adverse
Effect. No investigation or review by any Governmental Entity with respect to
Purchaser or Acquisition Sub or with respect to any of their respective
directors, officers, agents, representatives or employees (in regard to actions
taken or omissions made in their capacity as directors, officers, agents,
representatives or employees) is pending or, to the knowledge of Purchaser,
threatened.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business of the Company. Except as expressly
contemplated by this Agreement, during the period from the date hereof until the
Effective Time, each of the Company and its Subsidiaries will conduct its
operations in the ordinary course of business consistent with past practice and
preserve intact its business organization and assets and maintain its rights and
franchises. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, until the Effective Time the
Company will not, and the Company will not permit its Subsidiaries to, without
the prior written consent of Purchaser (which will not be unreasonably withheld
or delayed):
(a) amend or propose to amend the charter, bylaws or
other governing instruments of the Company or any of its Subsidiaries;
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(b) authorize for issuance, issue, sell, deliver, or
agree or commit to issue, sell or deliver, dispose of, encumber or
pledge (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any securities, except as disclosed at Section 5.1(b)
of the Company Disclosure Schedule or as required by agreements with
the Company's employees under the Company Benefit Plans as in effect as
of the date hereof, or amend any of the terms of any such securities or
agreements outstanding as of the date hereof, except as specifically
contemplated by this Agreement;
(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, or redeem or otherwise
acquire any of its securities, except intercompany cash dividends in
the ordinary course of business;
(d) (i) incur or assume any long-term or short-term
debt or issue any debt securities, except for borrowings under existing
lines of credit in the ordinary course of business and in amounts not
in excess of an aggregate of $1,000,000 (on a consolidated basis); (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of
any other Person, except in the ordinary course of business consistent
with past practice and in amounts not material to the Company and its
Subsidiaries, taken as a whole, and except for obligations of wholly
owned Subsidiaries of the Company to the Company or to other wholly
owned Subsidiaries of the Company; (iii) make any loans, advances or
capital contributions to, or investments in, any other Person (other
than to wholly owned Subsidiaries of the Company or customary loans or
advances to employees in the ordinary course of business consistent
with past practice and in amounts not material to the maker of such
loan or advance) or make any change in its existing borrowing or
lending arrangements for or on behalf of any such Person, whether
pursuant to, a Company Benefit Plan or otherwise; (iv) pledge or
otherwise encumber shares of capital stock of the Company or any of its
Subsidiaries; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon;
(e) adopt a plan of complete or partial liquidation
or adopt resolutions providing for the complete or partial liquidation,
dissolution, consolidation, merger, restructuring or recapitalization
of the Company or any of its Subsidiaries;
(f) (i) make any change in the compensation payable
or to become payable to any of its officers, directors, employees,
agents or consultants (other than general increases in wages to
employees in the ordinary course consistent with past practice as
disclosed in Section 5.1(f) of the Company Disclosure Schedule) or to
Persons providing management services; (ii) pay any severance or
termination cost or any bonus other than pursuant to written contracts
in effect on the date of this Agreement or
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disclosed in Section 5.1(f) of the Company Disclosure Schedule or enter
into or amend any severance agreements with officers of the Company or
any Subsidiary; (iii) make any loans to any of its officers, directors,
employees, affiliates, agents or consultants; (iv) adopt, amend or
terminate any new or existing Company Benefit Plan (other than as
required by applicable law); or (v) permit a new Option Period (as such
term is defined in the Employee Stock Purchase Plan) to commence under
the Employee Stock Purchase Plan after the Shareholders' Meeting;
(g) acquire, sell, transfer, lease, encumber or
dispose of any assets outside the ordinary course of business or any
assets which in the aggregate are material to the Company and its
Subsidiaries, taken as a whole, or enter into any commitment or
transaction outside the ordinary course of business consistent with
past practice which would be material to the Company and its
Subsidiaries, taken as a whole;
(h) except as may be required as a result of a change
in law or in GAAP, change any of the Tax or accounting principles or
practices used by it or make any material Tax election or amend any Tax
Return previously filed or settle any material Audit;
(i) revalue in any material respect any of its
assets, including, without limitation, writing down the value of
inventory or writing-off notes or accounts receivable other than in the
ordinary course of business;
(j) (i) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other
business organization or division thereof or any equity interest
therein; (ii) enter into any contract or agreement other than in the
ordinary course of business consistent with past practice which would
be material to the Company and its Subsidiaries, taken as a whole;
(iii) authorize any new capital expenditure or expenditures which,
individually, is in excess of $50,000 or, in the aggregate, are in
excess of $100,000, except for the budgeted capital expenditures listed
in Section 5.1(j) of the Company Disclosure Schedule; or (iv) enter
into or amend any contract, agreement commitment or arrangement
providing for the taking of any action that would be prohibited
hereunder;
(k) discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business of liabilities fully reflected or reserved
against in, or contemplated by, the consolidated 1999 Financial
Statements (or the notes thereto) of the Company and its Subsidiaries
or incurred in the ordinary course of business consistent with past
practice;
(l) permit any insurance policy naming the Company as
a beneficiary or a loss payable payee to be canceled or terminated
without notice to Purchaser, unless the Company shall have obtained a
comparable replacement policy;
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(m) enter into or amend any employment contract
between the Company or any Subsidiary and any Person having a base
salary thereunder in excess of $100,000 per year (unless such amendment
is required by law) that the Company or any Subsidiary does not have
the unconditional right to terminate without liability (other than
liability for services already rendered), at any time on or after the
Effective Time;
(n) commence or settle any Litigation other than in
accordance with past practice and, with respect to any settlement, for
an amount greater than $250,000;
(o) enter into, modify, amend or terminate any
Material Contract (including any standstill agreement, loan contract
with an unpaid balance exceeding $250,000 or any of the agreements
referred to in Section 5.10 hereof) or waive, release, compromise or
assign any material rights or claims, except in the ordinary course of
business;
(p) take any action that would adversely affect the
ability of any party to this Agreement to perform its covenants and
agreements under this Agreement;
(q) take any action that would cause an event of
default under any Material Contract;
(r) cause (or permit to exist) any circumstances that
would result in a Company Material Adverse Effect; or
(s) take, or agree in writing or otherwise to take,
any of the actions described in Sections 5.1(a) through 5.1(r) or any
action which would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect as of the date
when made.
Section 5.2 Acquisition Proposals. Except as hereinafter provided,
neither the Company nor any of its Subsidiaries shall, directly or indirectly,
through any officer, director, agent or otherwise, solicit, initiate or
knowingly encourage the submission of any proposal or offer from any Person (as
hereinafter defined) relating to any acquisition or purchase of all or (other
than in the ordinary course of business) a substantial portion of the assets of,
or a substantial equity interest in, the Company or any of its Subsidiaries or
any recapitalization, business combination or similar transaction with the
Company or any of its Subsidiaries (any such proposal or offer being an
"Acquisition Proposal") or participate in any negotiations regarding, or furnish
to any other Person any non-public information with respect to, or take any
other action to knowingly facilitate the making of an Acquisition Proposal.
Notwithstanding the foregoing provisions of this Section 5.2, (a) the Company
may engage in discussions or negotiations with a third party who seeks to
initiate such discussions or negotiations and may furnish such third party
information concerning the Company and its Subsidiaries, in each case only in
response to a request for such information or access which was not solicited,
initiated or knowingly encouraged by the Company or any of its affiliates, (b)
the Board or the Special Committee may take and disclose to the Company's
shareholders a position contemplated by
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Rule l4e-2 promulgated under the Exchange Act and (c) following receipt of an
Acquisition Proposal from a third party, the Board or the Special Committee may
withdraw or modify its recommendation referred to in Section 1.10, but in each
case referred to in the foregoing clauses (a) through (c) only to the extent
that the Board or the Special Committee shall conclude in good faith after
consultation with legal counsel that the failure to take such action could
reasonably be determined to be a breach of the Board's or the Special
Committee's fiduciary obligations to the Company's shareholders under applicable
law. In connection with any party's Acquisition Proposal, the Company will enter
into an appropriate confidentiality agreement with such party. The Company will
immediately cease all existing activities, discussions and negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. From and
after the execution of this Agreement, the Company shall promptly notify
Purchaser of the receipt of any Acquisition Proposal, and, in any such notice to
Purchaser, shall indicate in reasonable detail the material terms thereof and
the identity of the other party or parties involved. Nothing in this Section 5.2
shall preclude the Company from making any disclosure to its shareholders that
is required under applicable law. As used in this Agreement, "Person" shall mean
a natural person, entity, organization or association, including, but not
limited to, a partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Entity, group acting in concert or any person acting in a
representative capacity.
Section 5.3 Access to Information.
(a) Between the date hereof and the Effective Time,
the Company will give Purchaser and its authorized representatives and
Persons providing or committed to provide Purchaser with financing for
the Merger and their representatives, reasonable access to all
employees, plants, offices, warehouses and other facilities and
properties and to all books and records of the Company and its
Subsidiaries, will permit Purchaser to make such inspections (including
any physical inspections or soil or groundwater investigations) as it
may reasonably request and will cause the Company's officers and those
of its Subsidiaries to furnish Purchaser with such financial and
operating data and other information with respect to the business and
properties of the Company and any of its Subsidiaries as Purchaser may
from time to time reasonably request.
(b) Each of the Company and the Purchaser will hold
and will cause its consultants, advisors, representatives, agents and
employees, including, without limitation, its auditors, attorneys,
financial advisors and other consultants and advisors (including
financing sources), to hold in confidence, unless compelled to disclose
by judicial or administrative process or, in the written opinion of its
legal counsel, by other requirements of law, all documents and
information concerning the other party furnished to it in connection
with this Agreement (except to the extent that such information can be
shown to have been (i) previously known by the disclosing party from
sources other than the other party, its directors, officers,
representatives or affiliates, (ii) in the public domain through no
fault of the disclosing party or its affiliates or (iii) later lawfully
acquired by the disclosing party on a non-confidential basis from other
sources who are not known by the disclosing party to be bound by a
confidentiality agreement or
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otherwise prohibited from transmitting the information to the
disclosing party by a contractual, legal or fiduciary obligation) and
will not release or disclose such information to any other Person,
except its auditors, attorneys, financial advisors and other
consultants and advisors (including financing sources) in connection
with this Agreement who need to know such information. If the Merger is
not consummated, such confidence shall be maintained and, if requested
by or on behalf of the Company or the Purchaser, the other party hereto
will, and will use all reasonable efforts to cause its auditors,
attorneys, financial advisors and other consultants, agents and
representatives to return or destroy all copies of written information
furnished by the Company or Purchaser, as applicable, for purposes of
evaluating the Merger. It is understood that each of the parties hereto
shall be deemed to have satisfied its obligation to hold such
information confidential if it exercises the same care as it takes to
preserve confidentiality for its own similar information.
(c) Prior to the consummation of the Merger, the
Company and its accountants, counsel, agents and other representatives
shall cooperate with Purchaser by providing information about the
Company which is reasonably necessary for Purchaser and its
accountants, counsel, agents and other representatives to prepare the
syndication or other materials to be delivered to potential financing
sources in connection with the Merger (the "Financing Documents") and
such other documents and information with respect to such documents as
may be reasonably requested. Notwithstanding anything in this Agreement
to the contrary, Purchaser may disclose, or cause its representatives
to disclose, and at the request of Purchaser, the Company shall
disclose, information concerning the Company and its Subsidiaries, and
their respective businesses, assets and properties, and the Merger in
the Financing Documents and to prospective financing sources in
connection with the Merger.
(d) Each party hereto agrees to give the other party
notice as soon as practicable after any determination by it of any fact
or occurrence relating to the other party which it has discovered
through the course of its investigation and which represents, or is
reasonably likely to represent, either a material breach of any
representation, warranty, covenant or agreement of the other party or
which has had or is reasonably likely to have a Company Material
Adverse Effect or a Purchaser Material Adverse Effect, as applicable.
Section 5.4 Additional Agreements; Reasonable Efforts.
(a) Prior to the consummation of the Merger upon the
terms and subject to the conditions of this Agreement, each of
Purchaser, Acquisition Sub and the Company agree to use its
commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the Merger as promptly as
practicable, including, but not limited to, (i) the preparation and
filing of all forms, registrations and notices required to be filed to
consummate the Merger and the taking of such actions as are necessary
to obtain any requisite approvals, consents, orders, exemptions or
waivers by any third party
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or Governmental Entity, (ii) the preparation of any Financing Documents
reasonably requested by Purchaser, (iii) the satisfaction of the other
parties' conditions to the consummation of the Merger and (iv)
obtaining consents of all third parties necessary, proper or advisable
for the consummation of the Merger. In addition, no party hereto shall
take any action after the date hereof that would reasonably be expected
to materially delay the obtaining of, or result in not obtaining, any
permission, approval or consent from any Governmental Entity necessary
to be obtained prior to the consummation of the Merger.
(b) Prior to the consummation of the Merger, each
party hereto shall promptly consult with the other parties hereto with
respect to, provide any necessary information with respect to and
provide the other parties (or their counsel) copies of, all filings
made by such party with any Governmental Entity or any other
information supplied by such party to a Governmental Entity in
connection with this Agreement and the Merger. Each party hereto shall
promptly inform the other parties of any communication from any
Governmental Entity regarding the Merger. If any party hereto or
affiliate thereof receives a request for additional information or
documentary material from any such Governmental Entity with respect to
the Merger, then such party will endeavor in good faith to make, or
cause to be made, as soon as reasonably practicable and after
consultation with the other parties, an appropriate response in
compliance with such request. To the extent that transfers of Company
Permits are required as a result of execution of this Agreement or
consummation of the Merger, the Company shall use commercially
reasonable efforts to effect such transfers.
(c) Notwithstanding the foregoing, nothing in this
Agreement shall be deemed to require Purchaser to (i) enter into any
agreement with any Governmental Entity or to consent to any order,
decree or judgment requiring Purchaser to hold separate or divest, or
to restrict the dominion or control of Purchaser or any of its
affiliates over, any of the assets, properties or businesses of
Purchaser, its affiliates or the Company, in each case as in existence
on the date hereof, or (ii) defend against any Litigation brought by
any Governmental Entity seeking to prevent the consummation of the
Merger.
(d) The Company agrees to use reasonable efforts to
assist Purchaser in connection with structuring or obtaining the
Financing in connection with consummation of the Merger.
Section 5.5 Public Announcements. Each of Purchaser and the Company
agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the Merger without the prior consent
of the other party, which consent shall not be unreasonably withheld or delayed;
provided, however, that such disclosure can be made without obtaining such prior
consent if (a) the disclosure is required by law or by obligations pursuant to
any listing agreement with any national securities exchange and (b) the party
making such disclosure has first used reasonable efforts to consult with the
other party about the form and substance of such disclosure.
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Section 5.6 Indemnification.
(a) Purchaser agrees that all rights to
indemnification or exculpation now existing in favor of the present and
former directors, officers, employees and agents of the Company and its
Subsidiaries as provided in their respective charters or bylaws or
otherwise in effect as of the date hereof with respect to matters
occurring prior to the Effective Time shall survive the Merger and
shall continue in full force and effect and shall not be amended,
repealed or otherwise modified for a period of six and one-half (6 1/2)
years from the Effective Time in any manner that would affect adversely
the rights thereunder of individuals who prior to or at the Effective
Time were such present or former directors, officers, employees or
agents of the Company or its Subsidiaries.
(b) Purchaser shall cause the Surviving Corporation
to maintain in effect for not less than five (5) years from the
Effective Time the policies of the directors' and officers' liability
and fiduciary insurance most recently maintained by the Company
(provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions
which are not materially less favorable to the beneficiaries thereof so
long as such substitution does not result in gaps or lapses in
coverage) with respect to matters occurring prior to the Effective
Time, provided that in no event shall the Surviving Corporation be
required to expend more than an amount per year equal to 200% of the
current annual premiums paid by the Company (the "Premium Amount") to
maintain or procure insurance coverage pursuant hereto, and further
provided that if the Surviving Corporation is unable to obtain the
insurance called for by this Section 5.6(b), the Surviving Corporation
will obtain the maximum insurance coverage obtainable for the Premium
Amount per year.
(c) After the Effective Time, Purchaser and the
Surviving Corporation shall, to the fullest extent that a Georgia
corporation may now or hereafter legally indemnify its own officers and
directors, indemnify and hold harmless, each present director or
officer of the Company and each Subsidiary (collectively, the
"Indemnified Parties") against all costs and expenses (including
attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether asserted or
commencing before or after the Effective Time), whether civil,
criminal, administrative or investigative, arising out of or pertaining
to any action or omission in their capacity as an officer or director
occurring before or at the Effective Time (including, without
limitation, the Merger and all actions taken in contemplation of, or to
effect the Merger), for a period of six and one-half (6 1/2) years
after the date hereof. Without limiting the generality of the
foregoing, in the event of any such claim, action, suit, proceeding or
investigation, (i) the Surviving Corporation or Purchaser, as the case
may be, shall pay as incurred, each Indemnified Party's legal and other
expenses (including costs of investigation and preparation), including
the fees and expenses of counsel selected by the Indemnified Party,
which counsel shall be reasonably satisfactory to the Surviving
Corporation or Purchaser, promptly after statements therefor are
received and (ii) the Surviving Corporation and Purchaser shall
cooperate in the defense of any such matter; provided,
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however, that neither the Surviving Corporation nor Purchaser shall be
liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld or delayed); and provided
further that neither the Surviving Corporation nor Purchaser shall be
obligated pursuant to this Section 5.6(c) to pay the fees and expenses
of more than one (1) counsel for all Indemnified Parties in any single
action, except to the extent that two (2) or more of such Indemnified
Parties shall have conflicting interests in the outcome of such action;
and provided further that, in the event that any claim for
indemnification is asserted or made within such six and one-half (6
1/2) year period, all rights to indemnification in respect of such
claim shall continue until the disposition of such claim. The parties
intend, to the extent not prohibited by applicable law, that the
indemnification provided for in this Section 5.6(c) shall apply without
limitation to negligent acts or omissions of any Indemnified Party. Any
determination to be made as to whether any Indemnified Party has met
any standard of conduct imposed by law shall be made by legal counsel
reasonably acceptable to such Indemnified Party, Purchaser and the
Surviving Corporation, retained at the Surviving Corporation's expense.
The Surviving Corporation or Purchaser shall pay all expenses,
including counsel fees and expenses, that any Indemnified Party may
incur in enforcing the indemnity and other obligations provided for in
this Section 5.6. Notwithstanding the foregoing, the Purchaser and the
Surviving Corporation shall have no additional indemnification
obligations hereunder with respect to any costs that would otherwise be
covered under the Surviving Corporation's directors' and officers'
liability and fiduciary insurance policies.
(d) In the event the Surviving Corporation or
Purchaser or any of their respective successors or assigns after the
Effective Time (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all
of its properties and assets to any Person, then, and in each such
case, proper provision shall be made so that the successors and assigns
of the Surviving Corporation or Purchaser, as the case may be, shall
assume the obligations set forth in this Section 5.6.
(e) This Section 5.6 is intended to benefit the
Indemnified Parties and the other Persons otherwise covered by this
Section 5.6 and their respective heirs, executors and personal
representatives and shall be binding on the successors and assigns of
Purchaser and the Surviving Corporation. This Section 5.6 shall not
limit or otherwise adversely affect any rights any Indemnified Party or
any other Person otherwise covered by this Section 5.6 may have under
any agreement with the Company or any Subsidiary or the Company's or
any Subsidiary's respective Certificate or Articles of Incorporation or
Bylaws.
(f) In consideration for the indemnification rights
set forth herein, the Company shall request prior to the Effective Time
general releases from all directors and former directors (who were
directors at any time after October 31, 1997) and officers of the
Company and the Subsidiaries releasing the Purchaser, the Company and
the Subsidiaries and their officers, directors, employees and agents of
any claim that they or any of them may have against Purchaser, the
Company or its Subsidiaries (and their
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officers, directors, employees and agents), exclusive of employment
compensation obligations or obligations arising under this Section 5.6.
Section 5.7 State Takeover Laws. The Company shall take all necessary
steps to exempt the Merger from, or if necessary to challenge the validity or
applicability of Sections 14-2-1131 through 14-2-1133 and 14-2-1110 through
14-2-1113 of the GBCC.
Section 5.8 Rights Agreement. The Company shall take all necessary
action (including, if required, redeeming all of the outstanding Rights (as
defined in the Rights Agreement) or amending or terminating the Rights
Agreement) so that (a) the entering into of this Agreement and consummation of
the Merger do not and will not result in any Person becoming able to exercise
any Rights under the Rights Agreement or enabling or requiring the Rights to be
separated from the shares of Common Stock to which they are attached or to be
triggered or to become exercisable and (b) no Rights are outstanding at the
Effective Time.
Section 5.9 Disclosure Schedule Supplements. From time to time after
the date of this Agreement and prior to the Effective Time, the Company will
supplement or amend the Company Disclosure Schedule with respect to any matter
hereafter arising which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described in the
Company Disclosure Schedule or which is necessary to correct any information in
a schedule or in any representation and warranty of the Company which has been
rendered inaccurate thereby. For purposes of determining the accuracy of the
representations and warranties of the Company contained in this Agreement in
order to determine the fulfillment of the conditions set forth in Article VI,
the Company Disclosure Schedule shall be deemed to include only that information
contained therein on the date of this Agreement and shall be deemed to exclude
any information contained in any subsequent supplement or amendment thereto.
Section 5.10 Change of Control Agreements. The Company has change of
control agreements with the Persons listed in Section 5.10 of the Company
Disclosure Schedule which provide certain benefits upon (a) consummation of the
Merger and/or (b) a termination of employment following the Effective Time.
Purchaser shall take all appropriate steps necessary to, and will, give
reasonable advance notice prior to the Effective Time of its intention to
continue employment, or not to continue employment, to each such Person. The
Company has previously made written disclosure to Purchaser of the total
estimated amount payable to such Persons for all obligations owed to them under
all contractual and Company Benefit Plan arrangements assuming that the
employment of each such Person was terminated during the year in which the
Effective Time occurred.
Section 5.11 Purchaser's Financing. Purchaser shall use its best
efforts to obtain the Financing on the terms contemplated by the Financing
Commitments (other than the terms set forth in the eighth paragraph of the
Senior Commitment Letter relating to changes in the terms of the financing
described by such Senior Commitment Letter) or alternative financing on terms no
less favorable than those set forth in the Financing Commitments (again, other
than the terms in the eighth paragraph of the Senior Commitment Letter referred
to above) (such financing,
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"Alternative Financing") and to satisfy the conditions to such Financing as
detailed in the Commitments delivered to the Company pursuant to Section 4.5
hereof. In addition, Purchaser shall use its reasonable efforts to enter into
definitive agreements with respect to the Financing or Alternative Financing
prior to the mailing of the Proxy Statement, which obligation shall in no way
(i) restrict the conditions that may be imposed in such definitive agreements
with respect to the closing of such Financing or Alternative Financing or (ii)
alter the Company's obligation to mail the Proxy Statement to its shareholders
at the earliest practicable time. For the avoidance of doubt, obtaining
Alternative Financing shall not require Purchaser to pay greater financing or
other fees than as set forth in the Financing Commitments or require Purchaser
to issue any equity to any source of such Alternative Financing beyond what is
contemplated by the Financing Commitments.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions to Each Party's Obligations to Effect the
Merger.
(a) The respective obligations of each party hereto
to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any and all of
which may be waived in whole or in part to the extent permitted by
applicable law:
(i) Shareholder Approval. The Merger and
this Agreement shall have been approved and adopted by the
affirmative vote of the shareholders of the Company by the
requisite vote.
(ii) Statutes, Court Orders. No statute,
rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
enforced by any court or Governmental Entity of competent
jurisdiction which prohibits, restrains, enjoins or restricts
the consummation of the Merger; and there shall be no order or
injunction of a court of competent jurisdiction in effect
precluding consummation of the Merger.
(iii) Regulatory Approvals. All consents of,
filings and registrations with, and notifications to, all
Governmental Entities required for consummation of the Merger
shall have been obtained or made and shall be in full force
and effect and all waiting periods required by law for
consummation of the Merger shall have expired.
(iv) Consents and Approvals. Each party
hereto shall have obtained any and all consents required for
consummation of the Merger (other than those referred to in
Section 6.1(a)(iii)) or for the preventing of any default
under any contract or permit of such party which, if not
obtained or made, is
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reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect or a Purchaser Material
Adverse Effect, as applicable.
(v) Purchaser Financing. Purchaser shall
have obtained the Financing on the terms contemplated by the
Financing Commitments or alternative financing on terms no
less favorable than those set forth in the Financing
Commitments, unless the failure to obtain the Financing was
the result of a failure by Purchaser to perform any covenant
or condition contained therein or herein or the inaccuracy of
any representation or warranty of Purchaser.
(b) The obligation of the Company to effect the
Merger is also subject to the satisfaction (or waiver) at or prior to
the Closing of each of the following additional conditions:
(i) Accuracy of Representations and
Warranties. All representations and warranties made by
Purchaser and Acquisition Sub herein shall be true and correct
in all material respects (except for representations and
warranties qualified by materiality or Purchaser Material
Adverse Effect which shall be correct in all respects) when
made and as of the Effective Time, with the same force and
effect as though such representations and warranties had been
made on and as of the Effective Time, except for changes
permitted or contemplated by this Agreement and except for
representations and warranties that are made as of a specified
date or time, which shall be true and correct in all material
respects (except for representations and warranties qualified
by materiality or Purchaser Material Adverse Effect which
shall be correct in all respects) only as of such specific
date or time.
(ii) Compliance with Covenants. Purchaser
and Acquisition Sub shall have performed in all material
respects all obligations and agreements, and complied in all
material respects with all covenants, contained in this
Agreement to be performed or complied with by them prior to or
as of the Effective Time.
(iii) Officer's Certificate. The Company
shall have received a certificate of Purchaser and Acquisition
Sub, dated as of the Closing Date, signed by an executive
officer of each of Purchaser and Acquisition Sub, to evidence
satisfaction of the conditions set forth in Section 6.1(b)(i)
and (ii).
(c) The respective obligations of Purchaser and
Acquisition Sub to effect the Merger is also subject to the
satisfaction (or waiver) at or prior to the Closing of each of the
following additional conditions:
(i) Accuracy of Representations and
Warranties. All representations and warranties made by the
Company herein shall be true and correct in all material
respects (except for representations and warranties qualified
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by materiality or Company Material Adverse Effect which shall
be correct in all respects and except that the representations
and warranties set forth at Section 3.2(a) shall be true and
correct in all respects) when made and as of the Effective
Time, with the same force and effect as though such
representations and warranties had been made on and as of the
Effective Time, except for changes permitted or contemplated
by this Agreement and except for representations and
warranties that are made as of a specified date or time, which
shall be true and correct in all material respects (except for
representations and warranties qualified by materiality or
Company Material Adverse Effect which shall be correct in all
respects) only as of such specific date or time.
(ii) Compliance with Covenants. The Company
shall have performed in all material respects all obligations
and agreements, and complied in all material respects with all
covenants, contained in this Agreement to be performed or
complied with by it prior to or as of the Effective Time
(except that the covenant set forth in Section 5.1(a) shall
have been performed in all respects).
(iii) Officer's Certificate. Purchaser shall
have received (A) a certificate of the Company, dated as of
the Closing Date, signed by an executive officer of the
Company, to evidence satisfaction of the conditions set forth
in Section 6.1(c)(i) and (ii) and (B) certified copies of
resolutions duly adopted by the Board and the Company's
shareholders evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance
of this Agreement, and the consummation of the Merger.
(iv) Rights Agreement. A Triggering Event
(as defined in the Rights Agreement) shall not have occurred,
and the Rights shall not have become (A) non-redeemable or (B)
exercisable for capital stock of Purchaser upon consummation
of the Merger.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
Section 7.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time notwithstanding
any requisite approval and adoption of this Agreement and approval of the Merger
by the shareholders of the Company:
(a) by mutual written consent duly authorized by the
Board of Directors of the Company and the Board of Directors of each of
Acquisition Sub and Purchaser; or
(b) by Purchaser or the Company if (i) any court or
Governmental Entity of competent jurisdiction shall have issued an
order, decree or ruling or taken any
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other action restraining, enjoining or otherwise prohibiting the Merger
(including the denial of any consent of a Governmental Entity required
for consummation of the Merger) and such order, decree, ruling or other
action is or shall have become final and nonappealable or (ii) the
Effective Time is not occurring concurrently therewith on or before
June 30, 2000 (the "Drop Dead Date"); provided, however, that the right
to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of
the Effective Time to occur on or before such date; or
(c) by Purchaser if the Board shall have withdrawn,
modified, failed to reaffirm or changed its recommendation or approval
in respect of this Agreement or the Merger, or shall have adopted any
resolution to effect the foregoing, or shall have affirmed, recommended
or authorized entering into any other Acquisition Proposal; or
(d) by Purchaser if there shall have been a breach of
the Company's representation set forth in Section 3.2(a) or covenant
set forth in Section 5.1(c) or a material breach of any of the
Company's other representations, warranties or covenants which breach
cannot be or has not been cured within ten (10) days following receipt
of written notice of such breach; or
(e) by the Company if there shall have been a
material breach of any of Purchaser's representations, warranties or
covenants which breach cannot be or has not been cured within ten (10)
days of the receipt of written notice thereof; or
(f) by the Purchaser or the Company (provided that
the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained in this
Agreement) in the event the shareholders of Company fail to vote their
approval and adoption of this Agreement and the approval of the Merger
at the Shareholders' Meeting where such matters were presented to such
shareholders for approval and voted upon; or
(g) by the Company if, a Person or group (other than
Purchaser or any of its affiliates) shall have made a bona fide
Acquisition Proposal that the Board or the Special Committee determines
in good faith that failing to accept or recommend to the Company's
shareholders such Acquisition Proposal could reasonably be determined
to constitute a breach of the fiduciary duties of the Board or the
Special Committee to the Company's shareholders under applicable law
after consultation with (i) a nationally recognized investment banking
firm regarding the financial superiority of the Acquisition Proposal
and (ii) legal counsel; provided that such termination under this
clause (g) shall not be effective until payment of the fee required by
Section 7.3 hereof.
Section 7.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become void and have no effect, without any liability on the
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<PAGE>
part of any party hereto or its affiliates, directors, officers or shareholders,
other than the provisions of this Section 7.2 and Sections 5.3(b), 7.3 and
Article VIII hereof. Nothing contained in this Section 7.2 shall relieve any
party from liability for any breach of this Agreement.
Section 7.3 Fees and Expenses.
(a) Except as otherwise provided in this Section 7.3,
each of the parties hereto shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with this
Agreement and the Merger, including filing and application fees,
printing fees, and fees and expenses of its own financial or other
consultants, investment bankers, accountants and counsel, except that
the filing fee in connection with any HSR Act filing or any other
required consent or approval shall be shared equally by Purchaser and
Company.
(b) Notwithstanding the foregoing,
(i) if this Agreement is terminated by
Purchaser pursuant to Section 7.1(d),
(ii) if the Merger is not consummated as a
result of the failure of Company to satisfy any of the
conditions set forth in Section 6.1(c), or
(iii) if this Agreement is terminated by
Purchaser pursuant to Section 7.1(c) or the Company pursuant
to Section 7.1(g),
then Company shall promptly pay Purchaser the sum of (A) $1 million,
which amount represents the best estimate by the parties hereto of the
value of the management time, overhead, opportunity costs and other
unallocated costs of Purchaser incurred by or on behalf of Purchaser in
connection with this Agreement and the Merger which cannot be
calculated with certainty, plus (B) all the out-of-pocket costs and
expenses of Purchaser, including costs of counsel, investment bankers,
actuaries and accountants up to but not exceeding an additional $2
million in the aggregate.
(c) If no payment is due under Section 7.3(b) and the
Agreement is terminated or the Merger is not consummated, then the
Company shall promptly pay Purchaser all the out-of-pocket costs and
expenses of Purchaser, including costs of counsel, investment bankers,
actuaries and accountants, up to but not exceeding $2 million in the
aggregate unless
(i) the Agreement is terminated pursuant to
Section 7.1(a) or 7.1(e), or
(ii) the Merger is not consummated because
the conditions set forth at Section 6.1(a)(v) or 6.1(b) are
not satisfied.
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<PAGE>
(d) If, after the date of this Agreement and within
twelve (12) months following
(i) any termination of this Agreement
(1) by Purchaser pursuant to Section
7.1(c) or 7.1(d),
(2) by Company pursuant to Section
7.1(g), or
(3) by either Party pursuant to
Section 7.1(f) (with respect to approval of the
shareholders of the Company), or
(ii) failure to consummate the Merger by
reason of any failure of Company to satisfy the conditions
enumerated in Section 6.1(c) or Section 6.1(a)(i) (as such
section relates to approval by the shareholders of Company),
any third party shall acquire, merge with, combine with, purchase a
significant amount of assets of (including a significant amount of
assets of, or the stock of, any Subsidiary), or engage in any other
business combination with, or purchase any equity securities involving
an acquisition of 20% or more of the voting stock of, the Company on
terms that are financially superior to those of the Merger, or enter
into any letter of intent or agreement to do any of the foregoing
(collectively, a "Superior Business Combination"), such third party
that is a party to the Superior Business Combination shall pay to
Purchaser, (A) upon execution of such letter of intent or agreement
relating to such Superior Business Combination, the sum of (i) $1
million, which amount represents the best estimate by the parties
hereto of the value of the management time, overhead, opportunity costs
and other unallocated costs of Purchaser incurred by or on behalf of
Purchaser in connection with this Agreement and the Merger which cannot
be calculated with certainty, plus (ii) all the out-of-pocket costs and
expenses of Purchaser, including costs of counsel, investment bankers,
actuaries and accountants up to but not exceeding an additional $2
million in the aggregate, and (B) upon the consummation of any Superior
Business Combination that occurs within the later of 24 months from the
date hereof or 12 months from the date of such letter of intent or
agreement, an amount in cash equal to the product of $5 million and the
percentage of the Company assets or equity securities acquired in the
Superior Business Combination, which sum represents additional
compensation for Purchaser's loss (including expenses) as a result of
this Agreement and the Merger not being consummated. The amounts owed
under the preceding clauses (A) and (B) shall be reduced by any amounts
previously paid to Purchaser pursuant to subsection (b), (c) or (d) of
this Section 7.3. In the event such third party shall refuse to pay
such amounts within ten days of demand therefor by Purchaser, the
amounts shall be an obligation of Company and shall be paid by Company
promptly upon notice to Company by Purchaser.
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<PAGE>
(e) Nothing contained in this Section 7.3 shall
constitute or shall be deemed to constitute liquidated damages for the
willful breach by a party hereto of the terms of this Agreement or
otherwise limit the rights of the nonbreaching party.
Section 7.4 Amendment. Subject to applicable law, this Agreement may be
amended by action taken by the Company and Purchaser at any time before or after
approval of the Merger by the shareholders of the Company but, after any such
approval, no amendment shall be made which requires the approval of such
shareholders under applicable law without such approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of the parties
hereto.
Section 7.5 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained herein or in any document,
certificate or writing delivered pursuant hereto or (c) waive compliance by the
other party with any of the agreements, covenants or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of either party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time.
Section 8.2 Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof (including, without limitation, that certain
Confidentiality Agreement, as amended, between the Company and an affiliate of
Purchaser) and (b) shall not be assigned by operation of law or otherwise.
Section 8.3 Validity. If any provision of this Agreement, or the
application thereof to any Person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other Persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
Section 8.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing (including by facsimile with
written confirmation thereof) and unless otherwise expressly provided herein,
shall be delivered during normal business hours by hand, by Federal Express,
United Parcel Service or other nationally recognized overnight
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<PAGE>
commercial delivery service, or by facsimile notice, confirmation of receipt
received, addressed as follows, or to such other address as may be hereafter
notified by the respective parties hereto:
(a) If to Purchaser or Acquisition Sub:
CBP Holdings, Inc.
Attention: Bart A. McLean, President
Facsimile No.: (404) 816-3258
With a copy to:
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
Attention: Teri Lynn McMahon, Esq.
Facsimile No.: (404) 881-7777
(b) If to the Company:
Cameron Ashley Building Products, Inc.
11651 Plano Road
Dallas, Texas 75243
Attention: Ronald R. Ross, Chairman and CEO
Facsimile No.: (214) 860-5148
With a copy to:
The Special Committee
C/o Lawrence P. Klamon
2665 Dellwood Drive, N.W.
Atlanta, Georgia 30305-3519
Facsimile No.: (404) 885-1840
With a copy to:
Locke Liddell & Sapp LLP
2200 Ross Avenue
Suite 2200
Dallas, TX 75201
Attention: Guy Kerr, Esq.
Facsimile No.: (214) 740-8800
Section 8.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without regard to
the principles of conflicts of law thereof. The parties hereto hereby agree and
consent to be subject to the exclusive
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<PAGE>
jurisdiction of the United States District Court for the District of Georgia in
any suit, action or proceeding seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement or the Merger.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
law, (a) any objection that it may now or hereafter have to laying venue of any
suit, action or proceeding brought in such court and (b) any claim that any
suit, action or proceeding brought in such court has been brought in an
inconvenient forum.
Section 8.6 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 8.7 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Section 5.6 and this Article VIII,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 8.8 Signatures. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement. Copies of signatures
transmitted via facsimile shall constitute original signatures for all purposes
of this Agreement.
Section 8.9 Definition. For purposes of this Agreement, the term
"knowledge" shall mean with respect to the Company the actual knowledge of the
executive officers of the Company.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
CAMERON ASHLEY BUILDING PRODUCTS, INC.
By: /s/ Ronald R. Ross
-----------------------
Name: Ronald R. Ross
----------------------
Title: Chairman & CEO
---------------------
CBP HOLDINGS, INC.
By: /s/ Bart A. McLean
----------------------
Name: Bart A. McLean
---------------------
Title: President
-------------------
CBP ACQUISITION CORP.
By: /s/ Bart A. McLean
----------------------
Name: Bart A. McLean
---------------------
Title: President
---------------------
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Exhibit 7(b)
January 17, 2000
CGW Southeast Partners IV, L.P.
Twelve Piedmont Center
Suite 210
Atlanta, GA 30305
Attention: Mr. Bart McLean
Gentlemen:
We have been discussing a transaction in which CBP Holdings,
Inc., a newly-formed entity (the "Issuer") to be initially capitalized by
Citicorp Venture Capital, Ltd. (together with one or more of its affiliates or
associates, "CVC") and CGW Southeast Partners IV, L.P. ("CGW" or "you"), will
indirectly acquire (the "Acquisition") 100% of the outstanding stock of Cameron
Ashley Building Products, Inc. ("Cameron Ashley") from the holders thereof. In
consideration for our mutual commitment to invest $25.5 million each in the
Issuer on the terms and conditions set forth in this letter agreement and to
proceed further to consummate the Acquisition, we hereby agree as follows:
1. EXCLUSIVITY. In consideration of our mutual agreement to
consummate the Acquisition on terms substantially consistent with those set
forth in the term sheet attached hereto as Exhibit A, (i) you hereby agree that,
without the prior written consent of CVC, neither you nor any of your affiliates
will be involved in the consummation of the Acquisition, or enter into any
transaction related to the Acquisition (including without limitation any debt or
equity financing thereof), except in conjunction with CVC in a manner
substantially consistent with the terms set forth in the attached Exhibit A, and
(ii) CVC hereby agrees that, without your prior written consent, it will not be
involved in the consummation of the Acquisition, or enter into any transaction
related to the Acquisition (including without limitation any debt or equity
financing thereof), except in conjunction with you in a manner substantially
consistent with the terms set forth in the attached Exhibit A. Notwithstanding
the foregoing, if CGW has complied with the terms and conditions of this letter
agreement and (x) CVC elects not to fulfill its obligation hereunder because a
condition precedent to such obligation contained herein has not been satisfied,
or (y) CVC breaches the terms and conditions of this letter agreement, CGW may
provide the entire equity financing necessary to consummate the Acquisition or
introduce another provider of equity financing to the Acquisition in order to
consummate the Acquisition.
<PAGE>
2. CONDITIONS. The obligation of each of CVC and CGW hereunder
would be subject to the following conditions: (i) execution of mutually
acceptable equity documents and related documents, including, but not limited
to, a Stockholders Agreement, Registration Rights Agreement, and Securities
Purchase Agreements; (ii) receipt of any governmental or other regulatory
consents, approvals or licenses required to consummate the Acquisition; and
(iii) receipt of the cash proceeds of financing necessary to consummate the
Acquisition and provide for the ongoing working capital needs of Cameron Ashley
and satisfaction of all other closing conditions contained in the Agreement and
Plan of Merger, dated as of January 17, 2000, by and among the Issuer, CBP
Acquisition Corp., and certain other parties thereto (the "Merger Agreement").
3. ADDITIONAL AGREEMENTS. In addition to the other agreements
set forth herein, each of CVC and CGW hereby agree that (i) CGW shall cooperate
with CVC with respect to providing any information needed by CVC to prepare any
reports or documents required to be filed by either party with the Small
Business Administration shall be mutually consistent in form and substance, and
(ii) neither party shall, without the consent of the other party hereto, (A)
amend, or cause to be amended, the terms of the Merger Agreement, (B) enter into
any other agreement with respect to the Acquisition, including, without
limitation, the debt and equity financing arrangements of the Acquisition, (C)
waive any condition contained in the Merger Agreement or in any other document
related to the Merger Agreement or the Acquisition, (D) introduce any provider
of debt or equity financing to the Acquisition, other than (w) the parties
hereto, (x) Fleet Capital Corporation and Fleet Robertson Stephens, Inc., (y)
J.H. Whitney Mezzanine Fund, L.P. and its syndicate members, and (z) as provided
pursuant to the terms and conditions of this letter agreement, or (E) issue any
press release, make any public announcement, or file any document regarding the
Acquisition with any governmental authority or regulatory body.
4. COMMERCIALLY REASONABLE EFFORTS. Each of CVC and CGW hereby
agrees that, until such time as this letter agreement has terminated in
accordance with the terms and conditions of paragraph 6 hereof, it will use
commercially reasonable efforts and negotiate in good faith in order to
effectuate the Acquisition on terms substantially consistent with those set
forth in the attached Exhibit A.
5. CONFIDENTIALITY. Each of CVC and CGW agrees that neither it
not any of their affiliates, directors, officers, agents, representatives or
other employees shall make any public announcement with respect to this letter
agreement or the transactions contemplated hereby, or disclose the terms or
existence of this letter agreement to any third party (other than to their
respective advisors, representatives and agents, on a need-to-know basis, for
purposes of evaluating and negotiating the transactions contemplated by this
agreement) without the prior written consent of the other party.
6. TERMINATION. This letter agreement will automatically
terminate and be of no further force and effect upon the earlier of: (i) mutual
agreement of CVC and CGW; (ii) consummation of the Acquisition; and (iii) twelve
(12) months after the acceptance of this letter agreement by CGW; provided, that
paragraphs 5 and 7 hereof shall survive any termination of this letter
agreement. Notwithstanding anything in the previous sentence, the termination of
this letter
<PAGE>
agreement shall not affect any rights any party has with respect to the breach
of this letter agreement by another party hereto prior to such termination.
7. FEES AND EXPENSES. Costs and expenses incurred by each
party in connection with this letter and the Acquisition shall be borne by the
Issuer or Cameron Ashley pursuant to the terms of the Merger Agreement;
provided, that any third party out-of-pocket expenses incurred by CVC or CGW
prior to the consummation of the Acquisition shall be borne one-half by each
party to the extent that such expenses are not recoverable from the Issuer or
Cameron Ashley. CVC and CGW shall share equally any management fees and
investment banking fees payable in respect of the Acquisition; provided, that
CVC shall be entitled to direct the account and payees to which its portion of
such fees are to be paid. CVC shall be entitled to receive 50% of any payments
received by the Purchaser, net of out-of-pocket expenses incurred by the
Purchaser, pursuant to the terms and conditions of the Merger Agreement.
8. GOVERNING LAW; MISCELLANEOUS. This letter agreement shall
be governed by and construed in accordance with internal substantive laws of the
State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law or choice of law. This letter
agreement may be executed in counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one agreement. The
headings of the various sections of this letter agreement have been inserted for
reference only and shall not be deemed to be a part of this letter agreement.
* * * *
<PAGE>
CGW Southeast Partners IV, L.P.
January 17, 2000
Page 4
If you are in agreement with the terms set forth above and
desire to proceed with the transactions contemplated hereby on that basis,
please sign this letter agreement in the space provided below and return an
executed copy to the attention of David F. Thomas or Michael Bradley at the
above address no later than 5:00 p.m., New York time, on January 17, 2000.
Yours sincerely,
CITICORP VENTURE CAPITAL, LTD.
By: /s/ Michael Bradley
------------------------
Name: Michael Bradley
Title: Vice President
Accepted and Agreed to as of
the date first above written.
CGW SOUTHEAST PARTNERS IV, L.P.
By: CGW Southeast IV, LLC
By: CGW, Inc., its Manager
By: /s/ Bart McLean
-----------------------
Name: Bart McLean
Title: Vice President
<PAGE>
CGW Southeast Partners IV, L.P.
January 17, 2000
Page 5
EXHIBIT A
ACQUISITION OF CAMERON ASHLEY BUILDING PRODUCTS, INC.
SUMMARY OF CERTAIN TERMS OF INVESTMENT
INVESTORS: Citicorp Venture Capital, Ltd. ("CVC") and CGW
Southeast Partners IV, L.P. ("CGW").
ISSUER: CBP Holdings, Inc., a Georgia corporation.
INVESTMENT: Each of CVC and CGW shall invest $25.5 million in
the Issuer in exchange for common and/or
preferred equity securities of the Issuer. The
terms of the Issuer's equity securities shall be
mutually agreeable to each of CVC and CGW.
MANAGEMENT INVESTMENT: Members of management of Cameron Ashley Building
Products, Inc. ("Cameron Ashley") will have the
opportunity to invest an aggregate amount of at
least $4.0 million in the Issuer in exchange for
common and/or preferred equity securities of the
Issuer. A percentage of the Issuer's total
outstanding common equity securities will be
reserved for issuance to members of Cameron
Ashley management in the form of restricted stock
options (the "Stock Option Plan"). The ownership
interest of each of CVC and CGW in the Issuer
shall be diluted on a PRO RATA basis as a result
of any issuances of equity securities by the
Issuer to members of Cameron Ashley management,
whether pursuant to the Stock Option Plan or
otherwise.
SUBORDINATED LENDER WARRANTS: In consideration for providing subordinated
financing, J.H. Whitney Mezzanine Fund, L.P.
and/or one or more of its affiliates or
participants will receive warrants exercisable
for up to 4.0% of the Issuer's
<PAGE>
CGW Southeast Partners IV, L.P.
January 17, 2000
Page 6
fully-diluted common equity securities (the
"Subordinated Warrants"). The issuance of such
Subordinated Warrants shall dilute the ownership
interest of each of CVC and CGW in the Issuer on
a PRO RATA basis.
BOARD OF DIRECTORS: To be composed of seven individuals as follows:
two (2) shall be designated by CGW; two (2) shall
be designated by CVC; two (2) shall be senior
members of management of Cameron Ashley Building
Products, Inc. ("Cameron Ashley"); and one (1)
shall be an outside director to be agreed upon by
CGW and CVC.
The Issuer shall not undertake certain specified
actions without the consent of each of CGW and
CVC.
EQUITY RIGHTS: Holders of the Issuer's equity securities
shall be entitled to mutually agreed upon
tag-along rights and limited preemptive rights
and shall be subject to drag along rights.
REGISTRATION RIGHTS: Customary for transactions of this nature.
DOCUMENTATION: The funding of the Investment by each of CVC and
CGW shall be contingent upon the execution of
mutually acceptable transaction documents,
including, but not limited to, a Stockholders
Agreement, a Registration Rights Agreement, and
Securities Purchase Agreements.
Exhibit 7(c)
December 6, 1999
CGW Southeast Partners IV, LP
12 Piedmont Center, Suite 210
Atlanta, Georgia 30305
Attention: Bart A. McLean
Ladies and Gentlemen:
We are pleased to confirm the commitment of Fleet Capital Corporation (FCC),
subject to the terms and conditions in this letter and in the Outline referred
to below, to provide $315 million senior, secured credit facilities (the
FINANCING) to a newly formed entity (CAB) controlled by CGW Southeast Partners
IV, LP and its affiliates (CGW), in connection with the acquisition by CAB of
the capital stock of Cameron Ashley Building Products, Inc. (CAMERON, and such
acquisition, the ACQUISITION). The borrower(s) under the definitive credit
documents governing the Financing (the BORROWER) will be the surviving
corporation of the merger of CAB and Cameron (the MERGER).
The Borrower will secure its obligations in respect of the Financing with a
pledge of substantially all of its tangible and intangible assets and property,
including inventory, accounts receivable, equipment, real estate, capital stock
of subsidiary companies and intellectual property. All of the Borrower's
significant domestic subsidiaries will be co-borrowers or will guaranty the
Financing, at FCC's election, and will secure their obligations in respect of
the Financing (whether direct or pursuant to their guaranties) with a pledge of
substantially all of their tangible and intangible property.
FCC will act as agent (in such capacity, the AGENT) for itself and any other
lending institutions which may become party to the Financing (the LENDERS) and
BancBoston Robertson Stephens Inc. (BRSI) will act as the exclusive syndication
agent and arranger for the Lenders (the ARRANGER) with respect to the Financing.
We understand that the proceeds of the Financing will be used to pay, in part,
the consideration to be paid to existing shareholders of Cameron in connection
with the Acquisition and Merger, to refinance existing debt of Cameron, to pay
expenses of the Acquisition and Merger, to finance "Permitted Acquisitions" as
described in the Outline and to fund the continuing working capital needs of the
Borrower and its subsidiaries, including capital expenditures. The balance of
the funding required to consummate the Acquisition will be provided by the
issuance by the Borrower of $55 million original principal amount of unsecured
subordinated debt, on terms and conditions acceptable to FCC in its reasonable
judgment (the SUB DEBT) and an equity contribution by CGW and other investors of
$55 million (the EQUITY INVESTMENT).
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
CGW Southeast Partners IV, LP
Commitment Letter
December 6, 1999
FCC will provide the full amount of the Financing, but intends to syndicate the
Financing either before or after closing. Based on our discussions and on the
financial statements, projections and other information and documents previously
furnished to us, we are enclosing herewith an outline of terms and conditions
(the OUTLINE) which sets forth the principal terms on which FCC would be willing
to provide the proposed Financing (this letter and the Outline are collectively
referred to as the COMMITMENT LETTER) and BRSI would be willing to act as the
Arranger.
Our willingness to proceed with the proposed Financing is conditioned on (1)
there being no material misstatements in or omissions from the materials which
have previously been furnished in writing to us for our review, when taken as a
whole and in light of the circumstances in which such materials are presented,
(2) there being in our reasonable judgment no material adverse change in the
assets, business or financial condition of Cameron and its subsidiaries, taken
as a whole, or in the businesses and assets to be acquired in the Acquisition or
in the ability of the Borrower, any co-borrower or any subsidiary guarantor, to
perform its respective obligations described in the Outline, and (3)
satisfactory completion of our due diligence investigation with respect to
Cameron, including our completion of a Commercial Finance Exam, our receipt of
satisfactory environmental assessments with respect to real property owned or
operated by Cameron and its subsidiaries, satisfactory review of all financial
information (including substantiation of FY1999 PRO FORMA adjusted EBITDA of $55
million and review of tax matters), our receipt of satisfactory appraisals of
all fixed assets, real estate and satisfactory review of pending and threatened
litigation, and (4) satisfactory completion of other items more detailed in the
attached Outline. In addition, the proposed Financing is subject to the
condition that prior to closing of the Financing there are no material adverse
changes in governmental regulation or policy affecting us, Cameron or any of
Cameron's subsidiaries and no material changes or disruptions in the
syndication, financial or capital markets that could reasonably be expected to
materially impair the syndication of the Financing.
By your signature below, you agree to assist and cooperate with the Arranger in
its syndication efforts, including, but not limited to, promptly preparing and
providing materials and information reasonably deemed necessary by the Arranger
to complete successfully and otherwise facilitate the syndication of the
facilities described herein. In the event that such syndication cannot be
achieved in a manner reasonably satisfactory to FCC and BRSI under the structure
described in the Outline, you agree to cooperate with FCC and BRSI in developing
a mutually acceptable alternative structure that will permit a satisfactory
syndication of such credit facilities. Without limiting the foregoing, you
hereby agree: (a) that the Arranger shall have the exclusive right to syndicate
the Financing and manage all aspects of the syndication (including, without
limitation, in consultation with and subject to the reasonable approval of CGW,
decisions as to the selection of institutions to be approached and when they
will be approached, when their commitments will be accepted, which institutions
will participate, the allocations of the commitments among the syndicate lenders
and any titles to be given to any Lender participating in the Financing) and
that you will assist the Arranger and use reasonable efforts to cause Cameron
and its management to assist the Arranger in contacting and soliciting potential
co-lenders and will provide to the
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 2 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
CGW Southeast Partners IV, LP
Commitment Letter
December 6, 1999
Arranger, as its reasonable request, financial and organizational information as
well as financial projections needed for syndication purposes; (b) that the
Arranger shall be expressly permitted to distribute any and all documents and
information relating to the transactions contemplated hereby and received from
you or any other source to any potential lender, participant or assignee, on a
confidential basis and subject to reasonable confidentiality agreements
requested by you; (c) to make available CAB and CGW personnel, and to the extent
agreed to by Cameron, Cameron management personnel, responsible for the
Financing or operations of the Borrower or any subsidiary for meetings with
potential syndicate members upon reasonable notification and at reasonable times
to be mutually agreed; (d) to permit the Arranger to publish information in
respect of the Financing (including the Agent's and the Arranger's roles in the
structuring and financing thereof), subject to your reasonable prior approval of
the form and content thereof; and (e) that prior to or after the execution of
the definitive documentation for the Financing, FCC may syndicate all or any
portion of its commitment hereunder to one or more financial institutions after
consultation with and subject to the reasonable approval of CAB and the
Arranger, and further, that upon acceptance by FCC of a written commitment of
any entity to provide a portion of the Financing, FCC shall be released from a
portion of its commitment hereunder in an aggregate amount equal to the
commitment of such entity. In particular, and without limitation of the
foregoing, you , FCC and the Arranger agree to negotiate in good faith regarding
any changes in the definitive loan documents that may be requested in good faith
by prospective Lenders.
Although the Outline sets forth the principal terms of the Financing, you should
understand that FCC, the Agent and the Arranger reserve the right, after
consultation with the Borrower, to change the pricing, structure, terms or
amount of any portion of the Financing if FCC and the Arranger reasonably
determine that such changes are advisable in order to ensure a successful
syndication or an optimal credit structure for the Financing, so long as the
aggregate amount of the Financing shall not be reduced. Moreover, the Outline
does not purport to include all of the customary representations, warranties,
defaults, definitions and other terms which will be contained in the definitive
documents for the Financing, all of which must be reasonably satisfactory in
form and substance to us and our counsel and to you and your counsel prior to
proceeding with the Financing.
By your signature below, you agree to pay all reasonable out-of-pocket costs and
expenses incurred by FCC, the Agent and the Arranger and their respective agents
in connection with this Commitment Letter, the transactions contemplated hereby
and FCC's, the Agent's and the Arranger's ongoing due diligence in connection
therewith (the EXPENSES) (including, without limitation, reasonable attorneys'
fees and expenses (for a single special counsel for the Agent, as well as local
counsel in each relevant jurisdiction to address real estate and collateral
matters and an agreed upon amount for review by any documentation agent
appointed in the Financing)) whether or not such transactions are consummated.
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 3 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
CGW Southeast Partners IV, LP
Commitment Letter
December 6, 1999
Further, in consideration of the commitment contained herein, you agree to pay
the Agent the fees described in the letter enclosed herewith (the FEE LETTER) on
the dates and in the amounts provided in the Fee Letter.
By your signature below, you further agree to indemnify and hold harmless FCC,
BRSI, the Agent, the Arranger and each of their respective officers, directors,
employees, affiliates, agents and controlling persons from and against any and
all losses, claims, damages and liabilities to which any such person may become
subject arising out of, or in connection with, the Acquisition, this Commitment
Letter, the transactions contemplated hereby or any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
of such indemnified persons is a party thereto, and to reimburse each of such
indemnified persons, from time to time upon their demand, for any reasonable
legal or other expenses incurred in connection with investigating or defending
any of the foregoing, whether or not the transactions contemplated hereby are
consummated, PROVIDED that the foregoing indemnity will not, as to any
indemnified person, apply to losses, claims, damages, liabilities or related
expenses to the extent that they arise from the bad faith, willful misconduct or
gross negligence of such indemnified person.
You agree that this Commitment Letter is for your confidential use only and that
it will not be disclosed by you to any person (including any lender bidding for
the financing contemplated by this Commitment Letter) other than to the Board of
Directors of Cameron and its advisors, to your principals, to your employees,
officers, directors, accountants, attorneys, and other advisors, and to any
other person consented to by FCC, the Agent or the Arranger, in each case, only
in connection with the transactions contemplated hereby and on a confidential
basis.
Each of FCC, the Agent and the Arranger agrees to keep any information delivered
or made available by you to it confidential and not to disclose such information
other than to their respective employees, officers, attorneys and other advisors
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Financing or rendering advice in connection therewith,
PROVIDED that nothing herein shall prevent FCC, the Agent or the Arranger from
disclosing such information (a) to potential participants in and assignees of
the Financing subject to reasonable confidentiality agreements, (b) upon the
order of any court or administrative agency, (c) upon the request or demand of
any administrative or regulatory agency or authority, (d) to the extent that
such information has been publicly disclosed other than as a result of a
disclosure by FCC, the Agent or the Arranger or (e) otherwise as required by
law.
This Commitment Letter is delivered with the specific understanding that, except
as specifically set forth in the preceding paragraphs, it is not intended to
give rise to any legal liability on the part of either you or FCC or BRSI and
that the commitment set forth herein shall be considered withdrawn if for any
reason (1) you fail to return to FCC's office in Atlanta, Georgia by 5:00 p.m.
(Eastern time) on December 7, 1999 (the EXPIRATION DATE) the enclosed copy of
this Commitment Letter, the related Fee Letter signed by you, and a deposit in
the amount of $150,000 to be applied to the payment of our out-of-pocket
expenses for which you agree herein
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 4 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
CGW Southeast Partners IV, LP
Commitment Letter
December 6, 1999
to reimburse us, or (2) after such acceptance, definitive documentation
evidencing the Financing, acceptable to FCC, the Agent and the Arranger, has not
been executed and delivered by the Borrower on or before March 1, 2000. (If this
commitment is terminated, after acceptance, for any reason other than by the
closing and initial funding of the Financing, any unapplied balance of such
deposit will be returned to you.)
If the foregoing is in accordance with your understanding, please accept this
Commitment Letter by signing the enclosed duplicate in the space indicated and
returning it to us, together with a signed copy of the Fee Letter and the
expense deposit referred to above, on or prior to Expiration Date.
Very truly yours,
FLEET CAPITAL CORPORATION BANCBOSTON ROBERTSON STEPHENS INC.
/s/ Harold Blatt
By /s/ David W. Bell By for Thad D. Johnson
---------------------------- ----------------------
David W. Bell Thad D. Johnson
Senior Vice President Director
Agreed and accepted this 7th day
of December 1999
CGW SOUTHEAST PARTNERS IV, LP
By: /s/ Bart A. McLean
----------------------------
Title: partner
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 5 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
- --------------------------------------------------------------------------------
CAMERON ASHLEY BUILDING PRODUCTS, INC.
- --------------------------------------------------------------------------------
OUTLINE OF TERMS AND CONDITIONS
$315,000,000 SENIOR SECURED CREDIT FACILITIES
DECEMBER 6, 1999
- --------------------------------------------------------------------------------
THE PROPOSED TERMS AND CONDITIONS ARE PROVIDED FOR DISCUSSION PURPOSES ONLY AND
DO NOT CONSTITUTE AN OFFER, AGREEMENT OR COMMITMENT TO LEND. THE ACTUAL TERMS
AND CONDITIONS UPON WHICH FLEET CAPITAL CORPORATION ("FLEET") MIGHT EXTEND
CREDIT TO THE BORROWERS, OR BANCBOSTON ROBERTSON STEPHENS INC. ("BRSI") MIGHT
AGREE TO SYNDICATE THE FACILITIES, ARE SUBJECT TO SATISFACTORY COMPLETION OF DUE
DILIGENCE, CREDIT APPROVAL, SATISFACTORY REVIEW AND EXECUTION OF DOCUMENTATION
AND SUCH OTHER TERMS AND CONDITIONS AS MAY BE DETERMINED BY FLEET, BRSI AND
THEIR COUNSEL.
- --------------------------------------------------------------------------------
BORROWERS: The survivor of the merger of a newly created entity
("Newco") formed to acquire the outstanding capital
stock of Cameron Ashley Building Products, Inc. (such
survivor, the "Company" or "Cameron") together with
all of the Company's material domestic subsidiaries
(together with the Company, the "Borrowers"). At the
Agent's option, such subsidiaries may be guarantors,
rather than co-borrowers (in such case, the
"Guarantors"), provided that no guaranty will be
required of any non-US subsidiary if such guaranty
would result in adverse tax consequences to the
Company.
FACILITIES: Up to $315,000,000 aggregate senior secured credit
facilities consisting of the following:
(i) $225,000,000 Revolving Credit Facility (the
"Revolver"), including a $15,000,000 sublimit for
Standby Letters of Credit and a $10,000,000 Swingline
Facility;
(ii) Up to $65,000,000 Term Loan Loan (the "Term
Loan").
(iii) $25,000,000 Capex Facility (the "Capex
Facility").
The Revolver, Term Loan, and Capex Facility are
referred to herein as the "Credit Facilities" or
"Facilities."
Through the Bank of Nova Scotia ("Scotiabank"),
Cameron Ashley Canada, Ltd. will be provided with a
Canadian Revolving Credit Facility in an amount up to
[C$to be determined] (the "Canadian Revolver"). In
order to induce Scotiabank to provide the Canadian
Revolver, the Agent, on behalf of the Lenders, will
provide a Standby Letter of Credit for the benefit of
Scotiabank.
PURPOSE: Amounts drawn under the Revolver, Canadian Revolver
and Term Loan on the Closing Date will be used, in
conjunction with the subordinated debt proceeds and
equity contribution, both described herein, to
finance the purchase of the outstanding capital stock
of Cameron Ashley Building Products, Inc., to
refinance existing indebtedness, and to pay
transaction expenses. Thereafter, the
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 1 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
December 6, 1999 CAMERON ASHLEY BUILDING PRODUCTS, INC.
Outline of Terms and Conditions
- --------------------------------------------------------------------------------
Revolver and Capex Facility will be available to fund
on-going working capital and general corporate needs,
including capital expenditures and Permitted
Acquisitions.
GUARANTORS: Cameron and all domestic material operating
subsidiaries, which are Borrowers, shall provide
unlimited and unconditional guarantees of all
obligations under the Facilities.
ADMINISTRATIVE AGENT: Fleet Capital Corporation ("Fleet" or the "Agent").
ARRANGER: BancBoston Robertson Stephens Inc. ("BRSI") will
underwrite the full amount of Facilities as Arranger
and will syndicate the Facilities to a group of
lenders acceptable to the Borrowers and the Agent.
CLOSING DATE: Targeted to occur on or before March 1, 2000
("Closing").
FINAL MATURITY: March 1, 2004 or five (5) years from closing.
SECURITY: First priority security interest in and lien on
substantially all tangible and intangible assets
(including all intellectual property and rights to
payment(s) and related intangibles) of the domestic
Borrowers and Guarantors. Cameron will pledge all of
the capital stock of its subsidiaries (other than
non-US subsidiaries of which 65% of the capital stock
will be pledged).
AVAILABILITY: REVOLVER - Amounts under the Revolver may be drawn,
repaid and reborrowed, subject to availability under
the Borrowing Base, which shall be equal to the sum
of: (i) 85% of combined eligible accounts receivable;
plus (ii) 60% of combined eligible inventory. Amounts
repaid under the Revolver may be reborrowed. The
Borrowing Base, with accompanying accounts receivable
agings and inventory designations, will be reported
monthly, or at more frequent intervals as determined
by the Agent in its reasonable discretion. The Agent,
in its reasonable credit judgment, reserves the right
to conduct periodic commercial finance exams and
modify eligibility standards and establish and modify
reserves against Borrowing Base availability.
Availability at closing will be at least [to be
determined].
CANADIAN REVOLVER - The Canadian Revolver will also
be subject to a borrowing base equal to the sum of :
(i) 85% of combined eligible accounts receivable;
plus (ii) 60% of combined eligible inventory.
Advances under the Canadian Revolver may be made in
Canadian Dollars at the Borrower's option.
Final availability and eligibility criteria will be
based on the results of a commercial finance exam to
be performed by Fleet, or its designee, including a
Take Down exam to be completed pre-Closing. Fleet may
make adjustments to advance rates, eligibility
requirements, and reserves, etc. post-Closing, in its
sole and reasonable discretion.
TERM LOAN - Up to $65,000,000 of the Term Loan shall
be drawn in full at closing. The Term Loan amount
will be limited to i) 80% of the Orderly Liquidation
Value of Equipment plus ii) 60% of the Fair Market
Value of Real
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 2 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
December 6, 1999 CAMERON ASHLEY BUILDING PRODUCTS, INC.
Outline of Terms and Conditions
- --------------------------------------------------------------------------------
Estate plus iii) the lesser of $30,000,000 or such
amount mutually agreed upon that may be comfortably
amortized in years one through three.
CAPEX FACILITY - The Capex Facility will be available
for two years from closing, to finance the purchases
of equipment. Advances will be based on 80% of the
"hard cost" of newly purchased equipment and 80% of
the Orderly Liquidation Value of used equipment
purchased.
AMORTIZATION: REVOLVER AND CANADIAN REVOLVER - No amortization,
bullet at maturity.
TERM LOAN - Quarterly payments in arrears based on
the following annual amortization schedule. The first
payment date will be due 90 days from closing. The
balloon payment will be due on the fifth anniversary
of closing.
($ IN MILLIONS)
--------------- -------------------
Year Total
---- -----
1 $7,500
2 $10,000
3 $12,500
4 $12,500
5 $12,500
Balloon $10,000
Total $65,000
--------------- -------------------
If the Term Loan is not fully drawn, amortization
amounts will be based upon the pro-rata percentage of
the drawn Term Loan to the $65,000,000 Term Loan
maximum.
CAPEX FACILITY - Advances will be accumulated on a
quarterly basis (minimum $2,500M) and amortized over
a 5 year straight line schedule with a final payment
due on the same date as the final installment of the
Term Loan.
SWINGLINE FACILITY: Up to $10,000,000 of the Revolver will be available
for swingline advances ("Swingline Loans") to be made
available to the Borrowers by Fleet. Swingline Loans
will constitute usage under the Revolver (except for
Unused fee purposes) and will reduce availability of
the Revolver dollar for dollar. Swingline Loans made
by Fleet will be settled with the Lenders on a weekly
basis.
INTEREST RATE: Outstanding amounts under the Facilities shall accrue
interest at the Borrowers' option at the Alternate
Base Rate or the Eurodollar Rate, plus the Applicable
Margin. The term "Alternate Base Rate" would mean the
greater of the prime, base or equivalent rate of
interest announced or published from time to time
hereafter by Fleet National Bank. The Applicable
Margin for each of the Facilities will be determined
as follows:
<TABLE>
<CAPTION>
--------- -------------------- ------------------- ------------- ------------------------
LEVEL LEVERAGE RATIO REVOLVER UNUSED FEE TERM LOAN AND CAPEX
FACILITY
(Funded Debt/EBITDA) Euro + Base+ Euro + Base +
--------- -------------------- --------- --------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
I > 5.00x 3.00% 0.75% 0.500% 3.50% 1.25%
II 4.50 <= x <= 5.00x 2.75% 0.50% 0.375% 3.25% 1.00%
</TABLE>
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 3 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
December 6, 1999 CAMERON ASHLEY BUILDING PRODUCTS, INC.
Outline of Terms and Conditions
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
III 3.50x <= x < 4.50x 2.50% 0.25% 0.375% 3.00% 0.75%
IV 3.00x <= x < 3.50x 2.25% 0.00% 0.250% 2.75% 0.50%
V <= 3.00x 2.00% 0.00% 0.250% 2.50% 0.25%
--------- -------------------- --------- --------- ------------- ------------- ----------
</TABLE>
For purposes of calculating the Applicable Margin,
the Leverage Ratio is defined as the ratio of Total
Funded Debt divided by EBITDA, calculated on a
rolling four-quarter basis. Total Funded Debt and
EBITDA shall be determined on a consolidated basis in
accordance with GAAP (with pro forma adjustments for
future Permitted Acquisitions and related permitted
debt).
Minimum pricing will be set at Level II until the
Agent's receipt of the Borrowers' October 31, 2000
audited financial statement and compliance
certificate. Overdue principal, interest and fees
will bear interest at 2% over the rate otherwise
applicable thereto.
The interest rate on the Canadian Revolver for use by
Cameron Ashley Canada, Ltd. will be, at Borrower's
option, Scotiabank's (1) Canadian Prime Rate or (2)
Scotiabank's Canadian Bankers Acceptance Rate (CBA)
plus 50 basis points (subject to a handling fee of
C$200) for the applicable time period chosen. If the
CBA option is chosen borrowings may be made for the
available time periods of 1, 2, 3 or 6 months.
INTEREST PERIODS: Eurodollar rates may be selected for interest
periods of 1, 2, 3 or 6 months, as available.
UNUSED FEE: An Unused Fee will be payable quarterly in arrears
based on the average daily unused commitment
(excluding outstanding Letters of Credit but not
excluding borrowings under the Swingline Facility),
under the Revolver as set forth in the table above.
LETTER OF CREDIT FEES: Payable pro rata to the Lenders at the annual rate
equal to the Applicable Margin on Eurodollar Rate
Revolving Credit Loans and based on the maximum
amount available to be drawn under each Standby
Letter of Credit; standard fees and charges on all
documentary/commercial letters of credit. In
addition, the Borrowers will pay to the Issuing Bank
a fronting fee equal to 0.125% per annum on the
maximum amount of each Standby Letter of Credit. The
letter of credit fee and other charges associated
with the Standby Letter of Credit issued in favor of
Scotiabank must be paid by Cameron.
INTEREST PAYMENTS: Interest on Base Rate loans will be due and payable
monthly in arrears. Interest on Eurodollar Rate loans
will be due and payable at the earliest of the end of
each applicable interest period or quarterly. The
effective date of any change in the Applicable Margin
due to a change in the Borrowers' Leverage Ratio will
be the third business day following the receipt by
the Agent and the Lenders of the Borrowers' quarterly
financial information.
CASH MANAGEMENT: Fleet National Bank will be the primary depository
and disbursement bank for the Borrower for its
domestic accounts. In Canada, Scotiabank will be the
primary depository and disbursement bank.
FEES: As set forth in a separate agreement between CGW,
the Agent and the Arranger.
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 4 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
December 6, 1999 CAMERON ASHLEY BUILDING PRODUCTS, INC.
Outline of Terms and Conditions
- --------------------------------------------------------------------------------
VOLUNTARY PREPAYMENTS
AND COMMITMENT
REDUCTIONS: The Borrowers would be permitted to voluntarily
terminate and prepay the loans subject to Eurodollar
breakage costs, if any. The Borrowers may terminate
and prepay the loans in years without penalty.
Voluntary reductions of the Revolver and Capex
Facility commitments shall be permitted in whole or
in part with prior notice in a minimum amount of
$500,000 and increments of $100,000, but without
premium or penalty.
MANDATORY
PREPAYMENTS: Subject to certain baskets and other permissible
amounts to be determined, the Borrowers will be
required to make mandatory prepayments of the Credit
Facilities equal to:
o 50% of Excess Cash Flow, computed on the basis of
the Borrowers' annual audited financial
statements. Excess Cash Flow shall mean, for any
fiscal year of the Borrowers, consolidated
earnings before interest, taxes, depreciation and
amortization and any other non-cash charges minus
actual cash taxes paid, non-financed capital
expenditures and scheduled debt service payments
(including total interest and actual and
scheduled repayments of principal of any money
borrowed or capital lease obligation), for such
fiscal year, determined in accordance with GAAP;
to the extent Total Funded Debt/EBITDA is less
than 3.0:1 then the percentage of Excess Cash
Flow applied to prepayment will decrease to 25%.
o 100% of the net proceeds received from the sale
of or disposition of all or any part of the
assets of the Borrowers or any Guarantor (other
than in the ordinary course of business or for
consideration pertaining to sales not in the
ordinary course of business not to exceed in any
fiscal year of the Borrowers an aggregate amount
to be determined).
o 100% of the net proceeds received from the
issuance of debt or equity in excess of $5
million by the Borrower or any Guarantor, except
to the extent issued to a seller of a business
acquired by the Company. In the event of an IPO,
the percentage applied to prepayment will be 50%
of the net proceeds.
Mandatory prepayments shall be applied pro rata to
prepay without penalty or premium installments of the
Term Loan and Capex Facility loans in the inverse
order of maturity thereof. After the Term Loan and
Capex Facility loans have been repaid in full,
mandatory prepayments will be applied to the Revolver
and the commitment therefor will be permanently
reduced in the amount of any such prepayment.
FINANCIAL COVENANTS: Initially, to be tested monthly commencing the first
month following Closing, on a consolidated, rolling
twelve month basis (where applicable, including
trailing twelve month for future Permitted
Acquisitions), including, but not limited to, the
following:
o Maximum Total Funded Debt to EBITDA [Covenant
levels to be mutually determined];
o Minimum Fixed Charge Coverage Ratio [Covenant
levels to be mutually determined];
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 5 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
December 6, 1999 CAMERON ASHLEY BUILDING PRODUCTS, INC.
Outline of Terms and Conditions
- --------------------------------------------------------------------------------
o Minimum EBITDA/Interest Ratio [Covenant levels to
be mutually determined];
o Maximum Capital Expenditures [Covenant levels to be
mutually determined].
Assuming full covenant compliance and reasonable
adherence to projections, the Agent and Arranger will
consider relaxing covenant testing to quarterly in
years 2 through 5.
OTHER COVENANTS: Usual and customary for transactions of this nature,
and subject to limitations and exceptions to be
mutually agreed, including, but not limited to
limitations on additional indebtedness, liens,
investments, mergers and consolidations, asset sales,
transactions with affiliates, negative pledges,
restricted payments, distributions and dividends.
PERMITTED ACQUISITIONS: Prior consent of majority Lenders shall be required
for acquisitions with total consideration of more
than $15 million. Prior consent shall not be required
for acquisitions with total consideration of up to
$15 million, provided the conditions to outlined
below are met. Each such acquisition shall be defined
as a "Permitted Acquisition":
o Target shall be in a line of business substantially
similar to the Borrowers' existing lines.
o Proposed acquisition shall be "friendly".
o Borrowers shall provide notice of proposed
acquisition, including an information package for
Lenders at least 14 days in advance of the proposed
drawdown in order to confirm that the conditions
set forth herein are satisfied.
o Target shall have had positive trailing twelve
month pro forma EBITDA (as adjusted for anticipated
expense reductions, etc., referred to below).
o Acquisition structure shall meet minimum
requirements to be detailed in the Credit Agreement
or shall be otherwise reasonably acceptable to the
Lenders. Such conditions shall include, without
limitation, requirements that the Borrowers shall
own directly or indirectly a majority of the equity
interests in the target and shall control a
majority of any voting securities, and/or shall
otherwise control the governance of the target.
o Security interest shall be granted in all of the
target company's assets; the target company shall
be merged into the Borrowers, or if it is to be a
subsidiary of the Borrowers shall become an obligor
under the Facilities.
o The terms of any seller paper or subordinated debt
issued or incurred in connection with the
acquisition shall meet minimum requirements to be
detailed in the Credit Agreement or shall be
otherwise reasonably acceptable to the Lenders.
Such conditions shall include, without limitation,
a
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 6 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
December 6, 1999 CAMERON ASHLEY BUILDING PRODUCTS, INC.
Outline of Terms and Conditions
- --------------------------------------------------------------------------------
maximum cash interest rate, a cap on amortization
of principal prior to maturity and repayment of the
Facilities, the absence of financial covenants or
security interests and minimum standards for
subordination.
o No default or event of default shall exist at the
time of or after giving effect to the acquisition;
Borrowers shall demonstrate pro forma covenant
compliance based on combined pro forma trailing
twelve month operating performance, pro forma debt
and pro forma debt service based on pro forma
interest on total debt at then prevailing interest
rates. Any pro forma adjustments to historical
EBITDA of the target company shall be acceptable to
the Lenders in their reasonable discretion
(provided that contractual and adequately
documented reductions in former owner's
compensation, insurance and/or rental expense,
which will be effective as of the drawdown date,
shall be deemed acceptable).
o Commercial finance exams and appraisals, in the
Agent's reasonable discretion, and Phase I
environmental surveys satisfactory to the Agent and
Lenders if real estate is involved.
o Excess availability after giving effect to the
acquisition will be at least $30MM.
FINANCIAL REPORTING: Borrowers will agree to provide the following
reports:
ANNUAL FINANCIAL STATEMENTS prepared on a
consolidated basis in accordance with GAAP for the
current and prior fiscal year, all certified by a
nationally recognized firm of certified public
accountants and accompanied by an unqualified opinion
of such firm on the annual financial statements,
accompanied by covenant compliance calculations and a
representation by the Chief Financial Officer of the
Company that no Event of Default shall have occurred
or be continuing, all submitted to the Agent and
Lenders within 100 days of the end of each fiscal
year.
MONTHLY FINANCIAL STATEMENTS prepared on a
consolidated basis in accordance with GAAP for the
current and prior fiscal year accompanied by covenant
compliance calculations and a representation by the
Chief Financial Officer of the Company that no Event
or Default shall have occurred or be continuing, all
submitted to the Agent and Lenders within 30 days of
the end of each month.
CONDITIONS PRECEDENT: In addition to the usual and customary conditions to
lending in transactions of the type contemplated
herein, the obligation of the Agent and the Lenders
to provide the Credit Facilities shall be subject to
(but not limited to) the following conditions at or
prior to the Closing Date on a basis satisfactory to
the Agent:
o Consummation of the acquisition of capital stock of
Cameron on terms and conditions reasonably
satisfactory to the Agent.
o Evidence that affiliates and associates of CGW
Southeast Partners IV, LP have invested not less
than $55 million as common equity.
o Borrowers shall have issued and received gross
proceeds of not less than $55,000,000 from the
issuance of senior subordinated notes (the "Senior
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 7 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
December 6, 1999 CAMERON ASHLEY BUILDING PRODUCTS, INC.
Outline of Terms and Conditions
- --------------------------------------------------------------------------------
Subordinated Notes") on terms and conditions
reasonably satisfactory to the Agent.
o A review satisfactory to the Agent and its counsel
of all matters related to the Company's
environmental liability, if applicable.
o Satisfaction that the financial statements
delivered to the Agent fairly present the business
and financial condition of Cameron (and on a pro
forma basis, of the Borrowers) and their
subsidiaries.
o The Agent and the Arranger shall have received
projections satisfactory to them with respect to
the Borrowers and their subsidiaries, monthly for
the fiscal 2000 period, quarterly through fiscal
2001 and annually thereafter.
o No material adverse change, in the reasonable
judgment of the Agent and Arrangers, shall have
occurred in the business, assets or financial
condition of Cameron and its subsidiaries taken as
a whole since the most recent financial statements
provided to the Agent.
o The absence of any Default or Event of Default
under the loan documentation or under any material
contract or agreement of the Borrowers and their
subsidiaries; and accuracy of representations and
warranties in all material respects.
o At Closing, the ratio of Total Funded Debt divided
by pro forma EBITDA for the latest twelve month
period then ended, on a consolidated basis, shall
not exceed [to be determined]. For the purposes of
this calculation only, Total Funded Debt shall be
adjusted to reflect the Borrowers' average working
capital investment.
o The Agent shall have received a reasonably
satisfactory pro forma closing balance sheet,
adjusted to give effect to transactions
contemplated hereby.
o The negotiation, execution and delivery of loan and
security documentation reasonably satisfactory in
form and substance to the Borrowers, Agent and the
Arranger and their respective counsel, allof which
shall be in full force and effect on the Closing
Date, and the perfection of all security interests.
o There being no order or injunction or other pending
litigation in which there is a reasonable
possibility of a decision which would materially
adversely affect the ability of the Borrowers or
any subsidiaries to perform under the loan
documents or the Agent's or Lenders' rights in
respect thereof or their ability to exercise such
rights.
o Other conditions precedent specific to the
transaction and typical of facilities of this type,
including the Agent's receipt of satisfactory
corporate approval of the capital stock acquisition
and the related financings as well as opinions of
counsel satisfactory to the Agent as to, among
other matters, valid corporate existence and
authority, legality, validity and binding effect of
all loan, guaranty and security documents,
perfection of security interests, the absence of
any violation of law or regulation or conflict with
any existing contracts.
DOCUMENTATION: The Credit Facilities are subject to negotiation,
execution and delivery of a definitive credit
agreement and related security documents, guarantees
and any
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 8 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
December 6, 1999 CAMERON ASHLEY BUILDING PRODUCTS, INC.
Outline of Terms and Conditions
- --------------------------------------------------------------------------------
other documents as shall be reasonably requested by
the Agent. The credit agreement and related security
agreements will contain conditions precedent,
covenants, full cash dominion, events of default and
other provisions appropriate for transactions of this
size, type and purpose and acceptable to the parties
and their respective counsel.
EVENTS OF DEFAULT: Usual and customary, including (without limitation)
nonpayment, misrepresentation, breach of covenant or
agreement, insolvency, bankruptcy, ERISA, judgments,
Change of Control and cross defaults. No grace
periods on principal payments, certain other notices
or grace periods and/or thresholds to be agreed upon.
ASSIGNMENT AND
PARTICIPATIONS: Usual and customary for transactions of this type and
size. Each lender may assign all or a portion of its
loans and commitments under the Facilities, or sell
participations therein to another person(s), provided
that assignments shall be in a minimum amount of $5
million and shall be subject to certain conditions,
including but not limited to, the approval of the
Borrowers (so long as no Default or Event of Default
exists) and the Agent, such approvals not to be
unreasonably withheld.
SYNDICATION MATTERS: Fleet will act as the exclusive administrative agent
for the Facilities and BRSI will act as the exclusive
arranger, adviser and syndication manager for the
Facilities and, in such capacities, each of Fleet and
BRSI will perform the duties and exercise the
authority customarily associated with such roles. No
additional agents, co-agents, arrangers or
syndication managers will be appointed, unless the
Borrowers and each of Fleet and BRSI so agree.
Prior to or after the execution of definitive
documentation for the Facilities, Fleet reserves the
right to syndicate all or a portion of its commitment
to one or more financial institutions after
consultation with the Borrowers and BRSI. Upon the
acceptance by Fleet of the written commitment of any
Lender to provide a portion of the Facilities, Fleet
shall be released from a portion of its commitment in
an aggregate amount equal to the commitment of such
Lender.
BRSI will manage all aspects of the syndication,
including the selection of Lenders, the determination
of when BRSI will approach potential Lenders and the
final allocations among the Lenders. The Borrowers
agree to assist BRSI actively in achieving a timely
syndication that is reasonably satisfactory to BRSI,
such assistance to include, among other things, (a)
direct contact during the syndication between the
Borrowers' senior officers, representatives and
advisors, on the one hand, and prospective Lenders,
on the other hand at such times and places as BRSI
may reasonably request, (b) providing to BRSI all
financial and other information with respect to the
Borrowers and the transactions contemplated that BRSI
may reasonably request, including but not limited to
financial projections relating to the foregoing, and
(c) assistance in the preparation of a confidential
information memorandum and other marketing materials
to be used in connection with the syndication.
The Borrowers agree that, prior to and during the
syndication of the Facilities, except for the Senior
Subordinated Notes, the Borrowers will not permit any
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 9 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
December 6, 1999 CAMERON ASHLEY BUILDING PRODUCTS, INC.
Outline of Terms and Conditions
- --------------------------------------------------------------------------------
offering, placement or arrangement of any competing
issues of debt securities or commercial bank
facility(ies) of any Borrower and any of its
subsidiaries.
Fleet and BRSI shall be entitled, after consultation
with the Borrower, to change the pricing, structure,
terms or amount of any portion of the Facilities if
Fleet and BRSI determine that such changes are
advisable in order to ensure a successful syndication
or an optimal credit structure for the Facilities so
long as the aggregate amount of the Facilities shall
not be reduced.
EXPENSES AND
INDEMNIFICATION: The Borrowers and Guarantors will pay the Agent's and
Arranger's reasonable legal, due diligence, and other
out-of-pocket expenses incurred in connection with
the negotiation, preparation and execution of the
documentation and the establishment of the syndicate,
regardless of whether the Facilities close. The
Borrowers and the Guarantors jointly and severally
shall indemnify the Agent, the Arranger and the
Lenders (and all respective affiliates) against all
losses, liabilities, claims, damages or expense
relating to their loans, the loan documents, the
Borrowers' use of loan proceeds or the commitments,
including but not limited to attorneys and other
professional fees and settlement costs, excluding
those arising from the indemnified party's own bad
faith, gross negligence or willful misconduct.
AGENTS COUNSEL: Hunton & Williams
Atlanta, Ga.
GOVERNING LAW: State of Georgia.
- --------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION 10 CONFIDENTIAL
BANCBOSTON ROBERTSON STEPHENS INC.
Exhibit 7(d)
January 13, 2000
HIGHLY CONFIDENTIAL
- -------------------
Mr. Bart McLean
Partner
Cravey, Green & Wahlen
Twelve Piedmont Center, Suite 210
Atlanta, GA 30305
Dear Bart:
On behalf of J. H. Whitney & Co. ("J. H. Whitney" or "Whitney") we would like to
thank you for your time and consideration as we work together to structure an
investment in Cameron Ashley Building Products, Inc. (together with its
subsidiaries, "CABP" or the "Company"). We are enthusiastic about the
possibility of partnering with CGW Southeast Partners IV, L.P. ("CGW") and the
management team to make an investment in CABP.
COMMITMENT
- ----------
WMF is pleased to commit $55 million of senior subordinated notes (the "Notes")
based on the terms and conditions outlined in this letter and in Attachment A.
This commitment shall terminate on March 31, 2000 unless otherwise extended in
writing by WMF.
SOURCES AND USES
- ----------------
We understand that the sources and uses for the proposed transaction would be as
follows, subject to seasonal swings:
(DOLLARS IN MILLIONS):
SOURCES USES
- --------------------------------------- ---------------------------------------
NEW REVOLVER (A) $138.6 PURCHASE CABP EQUITY $134.5
TERM LOAN 65.0 REFINANCE EXISTING DEBT 162.1
SENIOR SUBORDINATED NOTES 55.0 FEES AND EXPENSES 17.0
COMMON EQUITY 55.0
------------- -------------
TOTAL SOURCES $313.6 TOTAL USES $313.6
============= =============
(a) $225.0 million committed facility at closing.
We understand the senior debt financing will be led by Fleet, and has the
following key terms: $225 million revolver (5 year maturity, Libor + 275 bps);
$65 million term loan (6 year maturity, Libor + 325bp); $25 million Capital
Expenditures facility (5 year maturity, Libor + 325bps). Borrowings outstanding
under the revolver at closing are expected to be approximately $140 million.
<PAGE>
OWNERSHIP SUMMARY
- -----------------
The expected ownership of the Company at closing will be as follows:
PRO FORMA FULLY DILUTED OWNERSHIP
- ------------------------------------------------------
CGW & PROSPECTIVE CO-INVESTORS 96.0%
WMF 4.0%
-------------
Total Ownership 100.0%
=============
NOTE: WE EXPECT A MANAGEMENT OPTION PLAN TO BE IN PLACE AT CLOSE, WHICH WILL NOT
DILUTE THE WMF OWNERSHIP.
CONDITIONS TO CLOSING
- ---------------------
The following describes the conditions to funding the Notes:
o DUE DILIGENCE. Our definitive offer and our entering into detailed
definitive documents for this transaction are conditioned upon the
completion of our business, financial, legal, regulatory, tax and
accounting due diligence, the results of which must be to our satisfaction.
Specifically, we expect this to include, but not be limited to:
1. Legal due diligence, including environmental and tax due diligence.
2. Key customer calls.
3. Key supplier calls.
4. Personal reference checks and background checks on the senior
management team.
5. A detailed review of PriceWaterhouseCoopers' ("PWC") accounting due
diligence findings. WMF will have the right to expand the scope of
PWC's work as it deems necessary; the cost of such additional work will
not exceed $25,000 unless otherwise approved by CGW, such approval not
to be unreasonably withheld. PWC will be available to discuss its work
with both the WMF and potential assignees of the Notes.
6. A detailed discussion/meeting with Nathan Gordon, the CEO of
Buildnet.com.
o MATERIAL ADVERSE CHANGE. There shall exist no change which could have a
material adverse impact on the Company's business, condition (financial or
otherwise), value, prospects or assets since December 15, 1999.
o MATERIAL MISSTATEMENTS. There shall exist no material misstatements in or
omissions from the materials which have previously been furnished in
writing to us for our review, when taken as whole and in light of the
circumstances in which such materials are presented.
o CONDUCT OF BUSINESS. Prior to closing, the Company will conduct its
business only in the normal course. In addition, the Company's shareholders
will do nothing, which could impair the value of its business, and there
will be no extraordinary payments, transactions, dividends or bonuses made
without the written consent of WMF.
2
<PAGE>
o DOCUMENTATION. Our proposal is conditioned upon satisfactory completion and
adoption of amendments to the Company's by-laws and certificate of
incorporation, and satisfactory negotiation and execution of detailed
definitive purchase, shareholder and other agreements necessary to provide
WMF with the rights described in this letter, in each case in form and
substance satisfactory to us.
o ACCESS. JHW will have adequate access to the Company's books, records, and
personnel for the purpose of conducting a thorough due diligence
investigation, and JHW and CGW agree to negotiate promptly, continuously,
and in good faith up to and including the closing date.
o AUTHORIZATIONS; CONSENTS. All applicable third party consents and
government authorizations, if any, shall have been obtained.
o OTHER CONDITIONS.
- CGW and prospective co-investors will complete the acquisition of CABP on
terms and conditions acceptable to WMF.
- CGW and prospective co-investors will lead a common equity investment of
at least $55.0 million, of which at least $2.0 million will be invested by
management.
- The management team led by Ronald Ross will remain in place.
- The Company generated EBITDA of $54.7 million (including $2.9 million of
add-backs relating to the CARE project and the discontinuation of Cameron
Ashley Financial Services) for the trailing twelve months ended October 31,
1999.
- Upon closing, senior financing of at least $315 million shall be in place
with unused availability under the revolver acceptable to WMF. Such senior
financing shall be on terms acceptable to WMF, including scheduled
amortization of no more than $7.5 million in loan year 1, $10 million in
loan year 2, and $12.5 million in loan year 3 and thereafter and
subordination terms shall be acceptable to WMF.
- CGW and management will agree to assist and cooperate with the
syndication of the Notes, as reasonably requested by WMF.
COSTS & EXPENSES
- ----------------
By execution of this letter, CGW agrees to pay all costs, fees and expenses
(including, without limitation, all legal fees and disbursements) incurred or to
be incurred by J. H. Whitney & Co. and/or WMF in connection with the
examination, review, documentation, and/or closing of this transaction, assuming
WMF is prepared to fund the Notes substantially on the terms herein, whether or
not this transaction ultimately closes.
3
<PAGE>
EXCLUSIVITY
- -----------
By signing this letter you agree that you will deal exclusively with J.H.
Whitney & Co. and WMF on this transaction and will end discussions with all
other potential subordinated debt and mezzanine investors in the Company (other
than potential participants in the Notes) beginning on the date you countersign
this agreement and continuing through March 31, 2000 (the "Exclusivity Period").
J.H. Whitney & Co., WMF and their affiliates will be granted access to the
Company's books, records and personnel for the purpose of conducting a thorough
due diligence investigation, and J.H. Whitney & Co., WMF and CGW agree to
negotiate promptly, continuously and in good faith up to and including the
closing date. If the transaction proposed herein is closed within one year from
the end of the Exclusivity Period, without WMF financing, and the WMF is
prepared to consummate the proposed financing on substantially the same terms
set forth herein, then an Opportunity Cost Fee of $500,000 will be paid to
J.H.Whitney & Co. by the undersigned.
INDEMNIFICATION
- ---------------
By executing this letter, CGW agrees, regardless of whether or not the
Transaction is ultimately completed, to indemnify and hold harmless WMF, J. H.
Whitney & Co., their respective affiliates and each of their respective
partners, officers, directors, representatives, employees and agents, from and
against all and any losses, claims, damages, and liabilities resulting from or
arising out of: (i) any breaches of this letter by CGW, or (ii) any litigation,
investigation or proceeding initiated or brought by any third party (other than
any affiliate, partner, officer, director, agent, employee or representative of
WMF or J. H. Whitney) relating hereto or thereto, and to reimburse upon demand
each of such indemnified parties currently and from time to time for any
reasonable legal or other expenses incurred in connection with investigating or
defending any of the foregoing; provided that the foregoing indemnity will not
apply to any losses, claims, damages, liabilities or related expenses to the
extent a court of competent jurisdiction shall have determined in a final
judgment that is not subject to further appeal that the foregoing shall have
resulted from the willful misconduct or gross negligence of any indemnified
party. CGW will be relieved of its obligation under the "Indemnification"
section if, in connection with the closing of the Transaction, the Company
assumes all such obligations of CGW on terms reasonably acceptable to WMF and
J.H. Whitney & Co.
PUBLIC DISCLOSURE
- -----------------
J.H. Whitney, WMF and CGW jointly will agree on the timing and content of any
disclosure relating to WMF's investment in the Company prior to its initial
public dissemination, and no such disclosure shall be made without our consent.
Prior to any such dissemination, our identity and interest in the Company shall
not be disclosed by CGW or any of its prospective co-investors or advisors.
TIMING / NEXT STEPS
- -------------------
This letter constitutes a commitment based on information that we have received
to date with respect to our potential investment in the Company. We are prepared
to dedicate our firm's resources and to move forward quickly towards finalizing
a WMF investment alongside the proposed equity investment by CGW and prospective
co-investors.
EXPIRATION OF J. H. WHITNEY'S COMMITMENT
- ----------------------------------------
This letter will expire at 5:00 p.m. on January 14, 2000, unless this letter has
been agreed to, accepted and executed by CGW and received by the undersigned
care of J.H. Whitney at the address set forth above. This letter shall be
governed by and construed in accordance with the laws of the state of New York
(without regard to principles or conflicts of law).
***********
4
<PAGE>
The entire J. H. Whitney partnership is enthusiastic about partnering with
Cravey, Green & Wahlen on this potential investment in Cameron Ashley Building
Products, Inc.
Very truly yours,
/s/ Joseph D. Carrabino, Jr. /s/ Elise T. Chowdhry /s/ David E. Kroin
JOSEPH D. CARRABINO, JR. ELISE T. CHOWDHRY DAVID E. KROIN
GENERAL PARTNER VICE PRESIDENT SENIOR ASSOCIATE
Agreed to and Accepted by:
CRAVEY, GREEN & WAHLEN
By: /s/ Bart A. McLean Date: 1/13/00
---------------------------------- ------------------------
Title: partner
-------------------------------
5
<PAGE>
ATTACHMENT A
SENIOR SUBORDINATED DEBT TERM SHEET
Issuer: Cameron Ashley Building Products, Inc. ("CABP"
or the "Company"). Assumed to be same issuer
as under the Senior Credit Facility.
Purchaser: J.H. Whitney Mezzanine Fund, L.P. ("WMF" or
the "Purchaser"). The Purchaser expects to
syndicate, assign or sell a portion of the
Notes.
Issue: Senior Subordinated Notes (the "Notes").
Amount of Issue: US $55.0 million.
Targeted Closing Date: To be determined, but expected to be around
March 15, 2000
Purchase Price: 100% of the Face Amount ("Par").
Maturity/Term: Eight years from the closing date.
Amortization: Bullet payment at Maturity.
Interest Rate: The Notes will bear interest at a fixed annual
interest rate equal to fifteen percent
(15.0%), payable each calendar quarter in
arrears, of which thirteen percent (13.0%)
will be paid in cash and two percent (2.0%)
will be paid-in-kind or compounded quarterly
at the Interest Rate and paid upon the earlier
of the Maturity or upon a Liquidity Event (as
hereinafter defined).
Subordination: The Notes will be subordinated in payment to
the Company's Senior Indebtedness.
Subordination language satisfactory to WMF
will be negotiated with the Senior Lenders.
The Notes will be senior to all existing and
future subordinated debt and seller debt.
Guarantees: To be determined based upon Senior Credit
Facility.
Board of Directors: WMF will be entitled to Board observation
rights. The Board of Directors will have no
fewer than 4 quarterly meetings annually.
Documentation: Documentation will contain such terms,
conditions, representations, warranties,
reporting requirements, covenants, including
financial covenants, customary for investments
of this type, and subordination terms as WMF
or its affiliates may require.
1
<PAGE>
ATTACHMENT A
SENIOR SUBORDINATED DEBT TERM SHEET
Financial and Other Covenants: Customary for transactions of this type,
including but not be limited to quarterly
tests of: interest and fixed charge coverage
ratio; leverage ratio and capital expenditure
limitations; limitation on total indebtedness;
limitation on sale or merger of business; and
other provisions and negative covenants which
measure and protect the creditworthiness of
the Company.
Events of Default: Customary Events of Default will include but
are not limited to: (i) failure to pay
interest or principal when due and payable;
(ii) failure to comply with the applicable
Purchase Agreements including violation of
covenants; (iii) failure to discharge material
judgments; (iv) bankruptcy or insolvency.
Optional Prepayment: The Notes may be prepaid in any Loan Year
following the closing in accordance with the
schedule below and at the following redemption
prices (expressed in percentages of principal
amount to be prepaid), plus accrued interest
to the date of the prepayment:
Loan Year (1) Redemption Price
-------------- ----------------
2000 105.0%
2001 103.0%
2002 102.0%
2003 101.0%
2004 and thereafter 100.0%
(1) YEAR 2000 BEGINS ON THE CLOSING DATE; EACH
SUBSEQUENT YEAR BEGINS ON THE ANNIVERSARY
DATE OF THE CLOSING.
Mandatory Repayment: WMF will have the right to repayment upon a
Liquidity Event (defined as a liquidation,
winding up, change of control merger, sale of
all or substantially all of the assets of the
Company or an initial public offering
("IPO")). Redemptions under this clause will
be at the prices set forth above under the
optional prepayment clause, except in the case
of a sale of all or substantially all of the
assets of the Company or an IPO of the
Company, in which case redemption will be at
101.0% through Loan Year 2003.
<PAGE>
ATTACHMENT A
SENIOR SUBORDINATED DEBT TERM SHEET
Warrants or Equivalent Shares: At the closing of this transaction, the
Purchaser will receive detachable warrants or
other securities which provide an equivalent
equity value in the Company (the "Warrants")
to acquire four percent (4.0%) of the fully
diluted stock or value in the Company at
closing. The Warrants will have a nominal
exercise price and will include a cashless
exercise feature. WMF will receive S-3 and
piggyback registration rights, tag
along/co-sale, pre-emptive and anti-dilution
provisions satisfactory to WMF. In addition,
WMF will grant drag-along rights to the
issuer.
Conditions to Closing: Conditions to closing are outlined in the
attached letter dated January 13, 2000.
3
Exhibit 7 (e)
JOINT FILING STATEMENT
Each of the undersigned agrees that (i) the Schedule 13D relating to the common
stock, no par value, of Cameron Ashley Building Products, Inc. has been adopted
and filed on behalf of each of them, (ii) all future amendments to such Schedule
13D will, unless written notice to the contrary is delivered as described below,
be jointly filed on behalf of each of them, and (iii) the provisions of Rule
13d-1(k)(1) under the Securities Exchange Act of 1934 apply to each of them.
Each of the persons signing this statement certifies to the other parties hereto
that:
o None of such person or, to the knowledge of such person, any general
partner of such person or any executive officer or director of such person
or any general partner of such person has, during the last five years, been
convicted in any criminal proceeding (excluding traffic violations or
similar misdemeanors).
o None of such person or, to the knowledge of such person, any general
partner of such person or any executive officer or director of such person
or any general partner of such person was during the last five years a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and, as a result of such proceeding, was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
Bart A. McLean is hereby designated and authorized to receive notices and
communications from the Securities and Exchange Commission with respect to the
subject Schedule 13D and any amendments thereto filed pursuant to this
statement.
This statement may be terminated with respect to the obligations to file jointly
future amendments to the subject Schedule 13D as to any of the undersigned upon
such person giving written notice thereof to each of the other parties hereto,
at the principal office thereof. This statement may be executed in counterparts.
January 21, 2000 CGW SOUTHEAST I, INC.
By: /s/ Bart A. McLean
----------------------
Name: Bart A. McLean
-------------------
Title: Managing Director
-------------------
<PAGE>
CGW SOUTHEAST PARTNERS I, L.P.
By: CGW Southeast I, Inc.,
its general partner
By: /s/ Bart A. McLean
----------------------
Name: Bart A. McLean
----------------------
Title: Managing Director
---------------------
/s/ Richard L. Cravey
---------------------
RICHARD L. CRAVEY
/s/ Edwin A. Wahlen, Jr.
------------------------
EDWIN A. WAHLEN, JR.
CGW, INC.
By: /s/ Bart A. McLean
-------------------------------
Bart A. McLean, Vice President
CGW SOUTHEAST IV, L.L.C.
By: CGW, Inc.,
its manager
By: /s/ Bart A. McLean
--------------------------------
Bart A. McLean, Vice President
CGW SOUTHEAST PARTNERS IV, L.P.
By: CGW Southeast IV, L.L.C.
its general partner
By: CGW, Inc.
its manager
By: /s/ Bart A. McLean
-------------------------------
Bart A. McLean, Vice President
2
<PAGE>
CBP HOLDINGS, INC.
By: /s/ Bart A. McLean
--------------------------
Bart A. McLean, President
CBP ACQUISITION CORP.
By: /s/ Bart A. McLean
--------------------------
Bart A. McLean, President
/s/ Ronald R. Ross
-----------------------------
RONALD R. ROSS
/s/ Walter J. Muratori
-----------------------------
WALTER J. MURATORI
