Exhibit (b)(3)
XXXXXX XXXXXXX XXXXXXXX & CO.
January 14, 1998
Bruckmann, Xxxxxx, Xxxxxxxx & Co., Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Reference is made to the draft Agreement and Plan of Merger (the
"Merger Agreement"), dated as of January 14, 1998, between MEDIQ
Incorporated (the "Company") and MQ Acquisition Corporation ("Acquiror"),
providing for the merger of Acquiror with and into the Company (as provided
for in the Merger Agreement) (the "Merger").
We are pleased to advise you that the funds managed by Xxxxxx Xxxxxxx
Xxxxxxxx & Co. (principally Health Care Capital Partners) ("FFT") are
committed to invest up to $30,000,000 in securities of the Acquiror which
will be converted in the Merger into a combination of equity securities of
the Company (the "Investment"). The amount of the Investment shall be
determined by Bruckmann, Xxxxxx, Xxxxxxxx & Co., Inc. and its affiliates
(collectively "BRS"), but shall in no event be less than $20,000,000 (the
"Minimum Investment"). The Investment (i) is being made to permit Acquiror to
consummate the Merger and the other transactions contemplated by the draft
Merger Agreement, all as provided in the draft Merger Agreement and the
Information previously provided by you to us with respect to the structure
and pricing of the transaction, and (ii) will be made on a pari pasu basis
with the investment by BRS and Xxxxx Associates ("Xxxxx"), and the terms of
the securities received by FFT shall be on terms no less favorable than those
securities received by BRS and Xxxxx.
In the event the Merger is consummated, any transaction or management
fees entitled to be received by BRS pursuant to the Merger shall be shared as
follows: (i) BRS shall be entitled to the first 25% thereof; and (ii) each of
BRS, FFT and Xxxxx shall be entitled to a pro rata share of the balance
(based on the amount invested by BRS, FFT and Xxxxx in the securities of the
Acquiror), provided that BRS in its sole discretion may modify the allocation
of any management fees at any time after the first anniversary of closing. In
the event the Merger is not consummated, any break-up fees (or profit in
connection with option agreements with the Company's stockholders) or expense
reimbursement entitled to be received by BRS pursuant to the Merger Agreement
(in each case, net of any out-of-pocket expenses incurred and paid by BRS,
FFT or Xxxxx in connection with the transactions contemplated hereby) shall
be shared as follows: (i) BRS shall be entitled to the first 25% thereof, and
(ii) BRS, FFT and Xxxxx shall share the balance 60%, 24% and 16%,
respectively. Consistent with the preceding sentence, any out-of-pocket
expenses or liquidated damages incurred and paid by BRS, FFT or Xxxxx in
connection with the transactions contemplated hereby, to the extent such
expenses are not reimbursed by the Company, shall be borne as follows: (i)
the first 25% thereof shall be borne by BRS; and (ii) the balance shall be
borne 60% by BRS, 24% by FFT and 16% by Xxxxx. FFT shall reimburse BRS
promptly for all such expenses required to be borne by FFT.
FFT's obligation hereunder and the Investment are conditioned on (a) the
negotiation and execution of (i) a definitive Merger Agreement, (ii)
documentation for the financing necessary to consummate the transactions
contemplated hereby and (iii) a customary Stockholders Agreement among FFT,
BRS and the other investors providing for, among other things, FFT's right to
customary representation on the Board of Directors of the Company, all in
form and substance reasonably satisfactory to FFT and (b) the fulfillment to
Acquiror's reasonable satisfaction (after consultation with FFT) of all the
conditions to Acquiror's obligations under the Merger Agreement. We realize
that our commitment is an obligation to invest only the Minimum Investment
and any additional amount (up to an aggregate of $30,000,000) requested by
BRS.
Our obligations under this letter will expire on June 30, 1998 unless
extended by our mutual agreement.
Xxxxxx Xxxxxxx Xxxxxxxx & Co., LLC
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Member
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Accepted and agreed this
14th day of January, 1998
Bruckmann, Xxxxxx, Xxxxxxxx & Co., Inc.
By: /s/ Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxx
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Title: Managing Director
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