Exhibit 99(a)
August 3, 1999
Mr. Alvin Weinstein, Ms. Joan Weinstein
and Mr. David Weinstein
1359 Broadway
Fourth Floor
New York, New York
Tender Facility Commitment Letter
Ladies and Gentlemen:
You have advised The Chase Manhattan Bank ("Chase") that you intend
to form or cause to be formed a holding company organized under the laws of the
State of Delaware ("Newco"), which will make a friendly tender offer (the
"Tender Offer") for all of the issued and outstanding shares of all classes of
common stock, par value $.01 per share (the "Shares"), of a corporation
identified to us as "Target," a Delaware corporation (the "Target"). Newco will
receive a capital contribution (the "Investor Contribution") from you consisting
of not less than 61.08% of all outstanding Shares. The Investor Contribution
will be comprised of approximately 51.01% of all outstanding Shares of class A
common stock and approximately 77.04% of all outstanding Shares of class B
common stock. Each reference in this Commitment Letter or the Term Sheet (as
defined below) to a percentage of Shares or percentage of outstanding Shares
shall mean such percentage determined on a fully diluted basis after giving
effect to the exercise of any warrants, options, conversion privileges or
similar rights.
You have advised Chase that prior to commencement of the Tender
Offer Newco and Target will have entered into an agreement and plan of merger in
the form previously delivered to us (in such form, referred to herein as the
"Merger Agreement") providing for the merger (the "Merger") of Newco with and
into Target (with Target as the surviving entity) as soon as practicable after
completion of the Tender Offer pursuant to the terms of which shareholders of
Target will be offered cash consideration not to exceed $7.875 per Share. The
Merger Agreement provides, among other things, that each shareholder of Target
(other than Newco and other than shareholders that have perfected appraisal
rights) that has not participated in the Tender Offer will, upon consummation of
the Merger, receive a cash merger price per Share equal to $7.875. The Tender
Offer and the Merger are collectively referred to herein as the "Transactions."
We understand that to finance the Tender Offer and certain related
expenses, Newco will require a senior credit facility of $12,500,000 (the
"Tender Facility") and will receive the Investor Contribution.
Chase is pleased to advise you of its commitment to provide that
entire amount of the Tender Facility upon and subject to the terms and
conditions set forth or referred to in this Commitment Letter and/or the Summary
of Principal Terms and Conditions attached hereto as Exhibit A (the "Term
Sheet"). As consideration for Chase's commitment hereunder, you agree to pay and
agree to cause Newco to pay Chase the nonrefundable fees described in the Term
Sheet and the Fee Letter dated the date hereof and delivered herewith (the "Fee
Letter"). To the extent that the Fee Letter amends, supplements or otherwise
modifies any of the terms hereof (including the terms of the Term Sheet), the
terms of the Fee Letter shall be controlling.
You hereby represent and covenant that (a) all information other
than forecasts and projections
("Information") concerning each of you, Newco, Target, its subsidiaires and the
Transactions that has been or will be made available to Chase by or on behalf of
any of you, Newco, Target, its subsidiaries or any authorized representatives of
any of the foregoing is or will be, when furnished, complete and correct in all
material respects and does not or will not, when furnished, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not materially misleading in light of
the circumstances under which such statements are made and (b) all forecasts and
projections that have been or will be made available to Chase by or on behalf of
any of you Newco, Target, its subsidiaries or any authorized representatives of
any of the foregoing have been or will be prepared in good faith based upon
assumptions that are reasonable at the time made and at the time the related
materials are furnished to Chase. You agree that if, at any time from and
including the date hereof until the closing of the Tender Facility, any of the
representations in the preceding sentence would be incorrect if the Information,
forecasts and projections were being furnished, and such representations were
being made, at such time, then you will promptly supplement the Information,
forecasts and projections previously furnished to Chase so that the
representations will be complete and correct under those circumstances.
Chase's commitment hereunder is subject to (a) Chase's completion
of, and satisfaction in all respects with, its ongoing due diligence
investigation of Newco, Target, its subsidiaries and the Transactions, (b)
Chase's not having become aware of information not previously disclosed to Chase
that Chase reasonably believes to be materially inconsistent with its
understanding, based on information provided to Chase prior to the date hereof,
of the business, operations, properties, assets, condition (financial or
otherwise), liabilities, prospects or material agreements of any of you, Target,
its subsidiaries and Newco, (c) there not having occurred events or changes that
would have or could reasonably be expected to have, individually or in the
aggregate, a material adverse change in the business, operations, assets,
liabilities, prospects or material agreements of Newco since its formation or of
Target or any of its subsidiaries since May 31, 1999 or of any of you since the
date hereof, (d) Chase's satisfaction in all respects (i) that the structure of
the Tender Offer and the Merger are consistent with the terms set forth in the
Merger Agreement, this Commitment Letter and the Term Sheet and are otherwise
satisfactory to Chase with respect to all tax, legal, accounting and other
matters, (ii) with the terms and conditions of the Tender Offer and all other
agreements to be entered into in connection with the Transactions, (iii) with
the capitalization, structure and equity ownership of Newco and Target and its
subsidiaries after giving effect to the Transactions, and (iv) with the terms
and conditions of all material agreements of Newco and Target and its
subsidiaries, (e) the negotiation, execution and delivery of definitive
documentation with respect to the Tender Facility satisfactory to Chase and its
counsel and (f) the other conditions set forth in the Term Sheet.
By executing this Commitment Letter you agree, and agree to cause
Newco, jointly and severally, to (a) indemnify and hold harmless Chase and its
officers, directors, employees, affiliates, agents and controlling persons from
and against any and all losses, claims, damages, liabilities and expenses, joint
or several, to which any such indemnified party may become subject arising out
of or in connection with this Commitment Letter, the Fee Letter, the Term Sheet,
the Transactions or the Tender Facility or any related transaction or claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any such indemnified party is a party thereto, and to
reimburse each such indemnified party upon demand 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, as to any such
indemnified party, apply to losses, claims, damages, liabilities or expenses to
the extent to the extent same are found by a final, nonappealable judgment of a
court to have resulted from the willful misconduct or gross negligence of such
indemnified party, and (b) to reimburse Chase from time to time upon demand for
all reasonable fees and out-of-pocket expenses incurred by Chase (including,
without limitation, out-of-pocket expenses of Chase's due diligence
investigation, travel expenses, consultant's fees and expenses and reasonable
fees, charges and disbursements of counsel) in connection with the preparation
of this Commitment Letter, the Term Sheet, the Fee Letter and the definitive
documentation for the Tender Facility and the security arrangements in
connection therewith. Notwithstanding any other provision of this Commitment
Letter, the Term Sheet, the Fee Letter or any other document, no indemnified
party shall be liable for any damages arising from the use by others of
information or other materials obtained through electronic, telecommunications
or other information transmission systems, or for any special, indirect,
consequential or punitive damages in connection with its activities related to
the Tender Facility.
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You acknowledge that Chase and its affiliates may be providing debt
financing, equity capital or other services (including financial advisory
services) to other companies in respect of which you may have conflicting
interests regarding the transactions described herein and otherwise. Neither
Chase nor any of its affiliates will use confidential information obtained from
you by virtue of the transactions contemplated by this Commitment Letter or its
other relationships with you in connection with its performance of services for
other companies, and neither Chase nor any of its affiliates will furnish any
such information to other companies. You also acknowledge that neither Chase nor
any of its affiliates has any obligation to use in connection with the
transactions contemplated by this Commitment Letter, or to furnish to you,
Newco, Target or any of their respective affiliates, confidential information
obtained by Chase or any of its affiliates from other companies.
This Commitment Letter and Chase's commitment hereunder shall not be
assignable by you without the prior written consent of Chase and any attempted
assignment without such consent shall be null and void. Neither this Commitment
Letter, nor the Fee Letter nor the Term Sheet may be amended or any provision
hereof waived or modified except by an instrument in writing signed by each of
you and Chase. This Commitment Letter may be executed in any number of
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one agreement. Delivery of an executed counterpart of
a signature page of this Commitment Letter by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof. This Commitment
Letter is intended to be solely for the benefit of the parties hereto and is not
intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto. This Commitment Letter shall be governed
by, and construed in accordance with, the laws of the State of New York.
You hereby agree that you will not disclose this Commitment Letter,
the Term Sheet, the Fee Letter, the contents of any of the foregoing or the
activities of Chase pursuant hereto or thereto to any party without the prior
written approval of Chase, except that you may disclose (a) this Commitment
Letter, the Term Sheet and the Fee Letter and the contents hereof and thereof
(i) to your respective attorneys, accountants and advisors on a confidential and
need-to-know basis and (ii) as may be compelled in a judicial or administrative
proceeding (in which case you agree to inform us promptly thereof); provided,
that if you shall have previously accepted this Commitment Letter in accordance
with the terms hereof, you may deliver a copy of this Commitment Letter and the
Term Sheet (but not the Fee Letter) to the Target and its advisors for their
review in connection with the Transactions.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force and
effect regardless of whether definitive financing documentation relating to the
Tender Facility shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or Chase's commitment hereunder.
If the foregoing correctly set forth our mutual agreement, please
indicate your acceptance of the terms hereof and of the Term Sheet and the Fee
Letter by (i) signing in the appropriate space provided below and returning to
Chase the enclosed duplicate originals of this Commitment Letter and the Fee
Letter not later than 5:00 p.m. (New York time) on August 4, 1999 and (ii)
paying to Chase the fees payable pursuant to the Fee Letter upon such
acceptance. Chase's commitment hereunder will expire at such time in the event
that Chase has not received such acceptance in accordance with the immediately
preceding sentence. In the event that the initial borrowing under the Tender
Facility does not occur on or before October 31, 1999, then this Commitment
Letter and Chase's commitments hereunder shall terminate automatically.
Chase is pleased to have been given the opportunity to assist with
the financing of the Transactions.
Very truly yours,
THE CHASE MANHATTAN BANK
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By: /s/ David Gibbs
--------------------------
Name: David Gibbs
Title: Vice President
Accepted and agreed to as
of the date first above written by:
/s/ Alvin Weinstein
- -----------------------------------
Mr. Alvin Weinstein
/s/ Joan Weinstein
- -----------------------------------
Ms. Joan Weinstein
/s/ David Weinstein
- -----------------------------------
Mr. David Weinstein
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Exhibit A
$12,500,000
Summary of Principal Terms and Conditions
Tender Facility
August 3, 1999
----------------------
The following sets forth terms and conditions for a $12,500,000
Senior Secured Credit Facility that will be available to a holding company
organized under the laws of the State of Delaware ("Newco") in connection with
Newco's proposed friendly tender offer (the "Tender Offer") of not more than
$7.875 per share for all of the issued and outstanding shares of common stock,
par value $.50 per share (the "Shares"), of a corporation identified to us as
"Target," a Delaware corporation (the "Target"), pursuant to an agreement and
plan of merger in the form previously delivered to Chase (as defined below) (in
such form, referred to herein as the "Merger Agreement") providing for the
merger (the "Merger") of Newco with and into Target (with Target as the
surviving entity) as soon as practicable after completion of the Tender Offer
pursuant to the terms of which shareholders of Target will be offered cash
consideration not to exceed $7.875 per Share. Prior to consummation of the
Tender Offer, Newco shall receive a capital contribution (the "Investor
Contribution") consisting of not less than 61.08% of all outstanding Shares. The
Investor Contribution will be comprised of approximately 51.01% of all
outstanding Shares of class A common stock and approximately 77.04% of all
outstanding Shares of class B common stock.
I. Parties
Borrower: Newco
Guarantors: Alvin Weinstein, Joan Weinstein and David Weinstein will
provide unlimited, joint and several guarantees of
obligations arising under the Tender Facility.
Shareholders of Newco other than these three individuals
will provide limited recourse guarantees of obligations
arising under the Tender Facility, with recourse limited
exclusively to the capital stock of Newco pledged to
Chase by such shareholder as contemplated below.
Lender: The Chase Manhattan Bank ("Chase")
II. Tender Facility
Amount: $12,500,000 (the "Tender Facility")
Availability: Loans under the Tender Facility (the "Tender Loans")
will be available for multiple drawings during the
period commencing on the earliest date (in no event
later than October 31, 1999) on which Newco accepts any
Shares for payment (excluding Shares contributed to
Newco pursuant to the Investor Contribution) in and
pursuant to the terms of the Tender Offer (the "Closing
Date") and ending on the fifth business day following
the Closing Date; provided, that in no event may the
amount of the Tender Loans made available to
Newco exceed 50% of the aggregate value of all Shares
which have been pledged by Newco to Chase as described
below (such value to be based on a per
1
Share value of $7.875).
Amortization: The Tender Loans will be repayable upon the "Maturity
Date," defined as the earliest to occur of (i) the date
that the Merger is consummated and (ii) the date that is
120 days after the Closing Date.
Purpose: The proceeds of the Tender Loans will be used to finance
(a) the acquisition by Newco of Shares in accordance
with the Merger Agreement and (b) the payment of
interest, fees and other expenses incurred in connection
with the Transactions.
III. Certain Payment Provisions
Interest Rate: The rate of interest publicly announced by Chase as its
Prime Rate.
Default Rate: At any time when Newco is in default in the payment of
any principal, interest, fees or other amounts due under
the Tender Facility, such amount shall bear interest at
2% above Chase's Prime Rate.
Rate Basis: All per annum rates shall be calculate on the basis of a
year of 360 days.
Interest Payment: Interest on the Tender Loans shall be due and payable on
the Maturity Date and thereafter upon demand.
Fees: As set forth in the attached Fee Letter.
Optional Prepayments
and
Commitment Reductions: Newco may prepay the Tender Loans and/or reduce the
Tender Facility in whole or in part (subject to minimum
amounts to be agreed upon) at any time without penalty.
Amounts prepaid in respect of the Tender Loans may not
be reborrowed.
Mandatory Prepayments: If at any time the aggregate amount of the outstanding
Tender Loans together with accrued interest thereon
exceeds 50% of the aggregate value of all Shares which
have been pledged by Newco to Chase as described below
(such value to be based on a per Share value of $7.875),
then Newco shall be required to prepay the Tender Loans
in an amount sufficient to eliminate such excess.
IV. Collateral
Collateral: The obligations of Newco in respect of the Tender
Facility shall be secured by a perfected first priority
security interest in all of the capital stock of Newco
and all Shares owned by Newco, whether acquired in the
Tender Offer or otherwise.
V. Certain Conditions
Initial Conditions: The availability of the Tender Facility shall be
conditioned upon satisfaction of, among other things,
the following conditions precedent on or before October
31, 1999:
(a) Newco and the Guarantors shall have executed and
delivered
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satisfactory definitive documentation with respect
to the Tender Facility (the "Credit
Documentation").
(b) The Merger Agreement shall not have been amended,
supplemented or otherwise modified without the
prior written consent of Chase and Chase shall
have had an opportunity to review and shall be
satisfied in all respects with the terms and
conditions of (i) the Tender Offer and all other
agreements to be entered into in connection with
the Transactions and (ii) all materials,
agreements and documents filed publicly by Newco
or Target in connection with the Trnasactions.
(c) The Board of Directors of Target (including a
majority of the independent Directors) shall have
approved the Tender Offer.
(d) Newco shall have received the Investor
Contribution.
(e) Prior to or concurrently with the making of the
initial Tender Loans Newco shall have acquired
Shares in accordance with the Merger Agreement and
there shall not have been any material change in
the number of Shares outstanding on the date
hereof.
(f) Newco shall have no outstanding indebtedness,
liens or preferred equity other than indebtedness
and liens under the Tender Facility.
(g) All governmental, shareholder and third party
approvals (including debtholders', landlords' and
other consents) necessary or advisable in
connection with the Tender Offer, the Merger, the
Tender Facility and/or the continuing operations
of Newco and Target after consummation of the
Tender Offer and the Merger, shall have been
obtained and be in full force and effect, and all
applicable waiting periods shall have expired
without any action being taken or threatened by
any competent authority that would restrain,
prevent or otherwise impose adverse conditions on
the Tender Offer, the Merger or the financing
thereof. Without limiting the foregoing, Chase
shall be satisfied that consummation of the
Transactions would not constitute (i) a default or
event of default under Target's existing Note
Purchase Agreement with John Hancock Mutual Life
Insurance Company or the senior notes issued
thereunder or (ii) an event otherwise requiring
repayment of all or any portion of the
indebtedness outstanding under said note purchase
agreement and notes. There shall be no order,
injunction or restraining order that would prevent
or delay the consummation of or impose adverse
conditions on the Tender Offer or the Merger.
(h) Chase shall have received (i) a satisfactory
projected pro forma balance sheet of Newco and
Target and its subsidiaries as at the Closing Date
and after giving effect to the Tender Offer and
the financing contemplated hereby, consistent with
the statement of proposed sources and uses
previously furnished to Chase.
(i) Chase shall have received all fees and expenses
required to be paid to it on or before the Closing
Date, whether pursuant to the Fee Letter, the
Credit Documentation or otherwise.
(j) Chase shall have received such legal and solvency
opinions and such
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other documents and instruments as are customary for
transactions of this type or as Chase may reasonably
request.
On-Going Conditions: The making of each Tender Loan shall be conditioned upon
(a) the accuracy of all representations and warranties
in the Credit Documentation (including, without
limitation the material adverse change and litigation
representations) and (b) there being no default or event
of default in existence at the time of, or after giving
effect to the making of, such Tender Loan.
VI. Certain Documentation Matters
The Credit Documentation shall contain representations,
warranties, covenants and events of default customary
for financings of the type contemplated herein and other
terms reasonably deemed appropriate by Chase in the
context of the Transactions, including, without
limitation:
Representations
and Warranties: Financial statements (including pro forma financial
statements); absence of undisclosed liabilities; no
material adverse change; corporate existence; compliance
with law; corporate power and authority; enforceability
of Credit Documentation; no conflict with law or
contractual obligations, no material litigation; no
default; ownership of property; no third party
indebtedness or liens; no burdensome restrictions;
intellectual property; taxes, Federal Reserve
regulations; ERISA; Investment Company Act:
subsidiaries; environmental matters; solvency; labor
matters; year 2000 matters; accuracy of disclosure;
creation and perfection of liens in favor of Chase
Affirmative Covenants: Delivery of financial statements, reports, officer's
certificates and other materials and information
requested by Chase; payment of obligations; continuation
of business and maintenance of existence, rights and
privileges; compliance with laws and contractual
obligations; maintenance of property and insurance;
maintenance of books and records; notices of defaults,
litigation and other material events; and further
assurances (including, without limitation, with respect
to security interests in favor of Chase in
after-acquired property)
Negative Covenants: Limitations on indebtedness; liens; guarantee
obligations; mergers, consolidations, liquidations and
dissolutions (but permitting the Merger); sales of
assets; leases; dividends and other payments; capital
expenditures; investments; loans and advances;
modification of agreements; transactions with
affiliates; sale/leasebacks; changes in fiscal year;
negative pledges; changes in lines of business; changes
in passive holding company status of Newco
Events of Default: Nonpayment of principal, interest, fees or other amounts
when due; material inaccuracy of representations and
warranties; violation of covenants (subject, in the case
of certain affirmative covenants to a grace period to be
agreed upon); cross-default; bankruptcy events; certain
ERISA events; material judgments; actual or asserted
invalidity of any guarantee or security document or
security interest; change of control
Expenses and
Indemnification: Newco will pay all reasonable expenses and charges of
Chase incurred in connection with the preparation,
execution and delivery, administration and enforcement,
as well as waivers and modifications, of the Credit
Documentation (including the reasonable fees, charges
and disbursements of Chase's counsel), as well as all
documentary taxes (if any). Chase, its officers,
directors,
4
employees, advisors, agents and affiliates will have no
liability for, and will be indemnified and held harmless
against, any and all losses, claims, damages,
liabilities and expenses arising out of or relating to
the Tender Facility, the proposed use of proceeds
thereof, the Tender Offer, the Merger or other
transactions contemplated herein, except to the extent
same are found by a final, nonappealable judgment of a
court to have resulted from the gross negligence or
willful misconduct of the indemnified party.
Assignments and
Participation: Chase will be permitted to participate and assign loans,
notes and commitments without the consent of Newco or
the Guarantors.
Governing
Law and Forum: State of New York
Counsel to Chase: Kaye, Scholer, Fierman, Hays & Handler, LLP
5
August 3, 1999
Mr. Alvin Weinstein, Ms. Joan Weinstein
and Mr. David Weinstein
1359 Broadway
Fourth Floor
New York, New York
Tender Facility Fee Letter
Ladies and Gentlemen:
Reference is made to the Commitment Letter dated the date hereof
(including the attached Term Sheet, the "Commitment Letter") between us and you
regarding the Transactions and tender offer financing described therein.
Capitalized terms used but not defined herein are used with the meanings
assigned to them in the Commitment Letter. This letter agreement is the Fee
Letter referred to in the Commitment Letter.
As consideration for Chase's commitment under the Commitment Letter,
you agree jointly and severally to pay to Chase an underwriting fee in an amount
equal to $125,000. You hereby agree that such fee is fully earned upon your
acceptance of the Commitment Letter, although it shall be payable in two equal
installments. The first installment of $62,500 shall be payable upon, and shall
be a condition precedent to, your acceptance of the Commitment Letter. The
second installment of $62,500 shall be payable on the Closing Date (as defined
in the Term Sheet attached to the Commitment Letter).
You agree that, once paid, the fees or any part thereof payable hereunder
and under the Commitment Letter shall not be refundable under any circumstances,
regardless of whether the transactions or borrowings contemplated by the
Commitment Letter are consummated. All fees payable hereunder and under the
Commitment Letter shall be paid in immediately available funds and shall be in
addition to your compensation, reimbursement and indemnity obligations arising
under the Commitment Letter and/or the Credit Documentation.
It is understood and agreed that this Fee Letter shall not constitute or
give rise to any obligation to provide any financing; such an obligation will
arise only to the extent provided in the Commitment Letter if accepted in
accordance with its terms. This Fee Letter may not be amended, modified or
waived except by an instrument in writing signed by Chase and each of you. This
Fee Letter may be executed in any number of counterparts, each of which shall be
an original, and all of which, when taken together, shall constitute one
agreement. Delivery of an executed signature page of this Fee Letter by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. This Fee Letter shall be governed by, and construed in
accordance with, the laws of the State of New York.
You agree that this Fee Letter and its contents are subject to the
confidentiality provisions of the Commitment Letter.
Please confirm that the foregoing is our mutual understanding by signing
and returning to us an executed counterpart of this Fee Letter.
Very truly yours,
THE CHASE MANHATTAN BANK
By: /s/ David Gibbs
--------------------------
Name: David Gibbs
Title: Vice President
Accepted and agreed to as
of the date first above written by:
/s/ Alvin Weinstein
- -----------------------------------
Mr. Alvin Weinstein
/s/ Joan Weinstein
- -----------------------------------
Ms. Joan Weinstein
/s/ David Weinstein
- -----------------------------------
Mr. David Weinstein