October 9, 1997
VIA FEDERAL EXPRESS
Xxxxx Xxxxxxxx
Xxxxxxx Coie
1211 S.W. Fifth Avenue, Suite 0000
Xxxxxxxx, XX 00000-3715
RE: BMC WEST/LONE STAR - SIDE LETTER AGREEMENT
MTBR&F File No. 14-390.307
Dear Xxxxx:
The purpose of this letter is to confirm the understanding of my client, BMC
West Corporation ("Purchaser"), and your client, Lone Star Plywood & Door Corp.
("Seller"), regarding the calculation of adjustments to the Purchase Price under
the terms of the Asset Purchase Agreement dated as of October 6, 1997, (the
"Agreement"). The capitalized terms in this letter shall have the same meanings
as provided in the Agreement. This letter is not intended to amend the
Agreement, but is only intended to state, in a narrative format, how the
adjustments to the Purchase Price generally will be made.
1. The purchase price to be paid at the Closing will be an amount equal to (a)
the Base Purchase Price ($36 million) subject to an upward or downward
adjustment on the Closing Date based on the difference between the Asset
Value reflected on the Reference Balance Sheet and the Estimated Closing
Asset Value, less (b) the Estimated Closing Assumed Liabilities Value.
2. Within 120 days following the Closing Date, the Seller will deliver to the
Purchaser an unaudited Closing Balance Sheet. Subject to the resolution
pursuant to the Agreement of disputes by the Purchaser of amounts reflected
on the Closing Balance Sheet, the following adjustments to the purchase
price paid at the Closing will be made:
(A) If the Estimated Closing Net Asset Value (Estimated Closing Asset
Value less the Estimated Closing Assumed Liabilities Value) exceeds
the Net Asset Value reflected on the Closing Balance Sheet by at least
$10,000, the Seller shall pay to the Purchaser the amount of such
excess. For example, if there is no change between the
Asset Value reflected on the Reference Balance Sheet and the Estimated
Closing Asset Value, but the Estimated Closing Assumed Liabilities
were understated in excess of $10,000 when compared to the Assumed
Liabilities Value reflected on the Closing Balance Sheet, then the Net
Asset Value reflected on the Closing Balance Sheet would be
sufficiently less than the Estimated Closing Net Asset Value to
require an adjustment to the Purchase Price, and the amount of such
excess would be paid to the Purchaser from the Adjustment Escrow
Account.
(B) Conversely, if the Net Asset Value reflected on the Closing Balance
Sheet exceeds the Estimated Closing Net Asset Value by at least
$10,000, then there would be an upward adjustment in the Purchase
Price and the Purchaser would pay such excess to the Seller.
Please indicate your agreement to the foregoing by signing in the space
indicated below and returning a duplicate original to me for our records.
Very truly yours,
Xxxx X. Street
PSS/lc
AGREED to this __ day of October, 1997.
XXXXXXX COIE
By /s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx - Of the Firm
Attorneys for Seller
