1
EXHIBIT B
Letter Agreement Dated Jan. 17, 2000
January 17, 2000
CGW Southeast Partners IV, L.P.
Twelve Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xx. Xxxx XxXxxx
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 Xxxxxxx
Xxxxxx Building Products, Inc. ("Xxxxxxx Xxxxxx") 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
2
introduce another provider of equity financing to the Acquisition in order to
consummate the Acquisition.
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 Xxxxxxx Xxxxxx
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 Xxxxxxxxx Xxxxxxxx, Inc., (y)
X.X. Xxxxxxx 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
3
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 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 Xxxxxxx Xxxxxx 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
Xxxxxxx Xxxxxx. 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.
* * * *
4
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 Xxxxx X. Xxxxxx or Xxxxxxx Xxxxxxx 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/ Xxxxxxx Xxxxxxx
------------------------
Name: Xxxxxxx Xxxxxxx
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/ Xxxx XxXxxx
-----------------------
Name: Xxxx XxXxxx
Title: Vice President
5
EXHIBIT A
ACQUISITION OF XXXXXXX XXXXXX 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 Xxxxxxx Xxxxxx Building
Products, Inc. ("Xxxxxxx Xxxxxx") 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 Xxxxxxx
Xxxxxx 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 Xxxxxxx Xxxxxx management,
whether pursuant to the Stock Option Plan or
otherwise.
SUBORDINATED LENDER WARRANTS: In consideration for providing subordinated
financing, X.X. Xxxxxxx 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
6
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 Xxxxxxx Xxxxxx Building
Products, Inc. ("Xxxxxxx Xxxxxx"); 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.
