EXHIBIT 99.2
SUN CAPITAL ACQUISITION CORP.
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
000-000-0000
January 29, 2002
Xx. X. Xxxx Buckenham, President
WebLink Wireless, Inc.
0000 Xxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Dear Xxxx:
We are very enthusiastic regarding the potential acquisition of WebLink
Wireless, Inc. ("WLW" or the "Company") by Sun Capital Acquisition Corp. or its
affiliate ("Acquisition"). As such, we are pleased to present to you this letter
agreement whereby Acquisition will, subject to the terms and conditions set
forth herein, acquire, free and clear of all liens, all those assets of WLW
selected by Acquisition pursuant to the Purchase Agreement (defined below) (the
"Purchased Assets") through a section 363 transaction which may, at the
Company's option, be implemented through a plan of reorganization pursuant to
sections 1123 and 1129 of the Bankruptcy Code.
Acquisition's equity capital will be provided by Sun Capital Partners II, LP
(the "Fund"), a $200 million fund raised in April 2001 by Sun Capital Partners,
Inc. ("Sun Capital"). Participating in the Fund are leading fund-of-funds
investors, university endowments, pension funds, financial institutions and high
net worth individuals, families and trusts. Sun Capital is a leading private
investment firm focused on leveraged buyouts of market leading companies that
can benefit from our in-house operating professionals and experience. Sun
Capital invests in companies with leading market positions, long-term
competitive advantages and significant barriers to entry. Sun Capital has
invested in approximately 30 companies during the past several years with
combined sales in excess of $2.0 billion.
1. Purchase Price. Acquisition shall purchase the Purchased Assets, free and
clear of all liens, for the following consideration (collectively, the "Purchase
Price"):
(a) $20,000,000 (the "Cash Purchase Price");
(b) a note in the principal amount of $7,000,000, due and payable five
years from the date of the closing of the transactions contemplated by this
letter agreement, with interest paid currently at the prime rate, and subject to
a subordination agreement satisfactory, in form and substance, to Acquisition's
senior lender, in its sole discretion (the "Subordinated Note"), which
subordination agreement shall provide that the Subordinated Note will be
subordinate in right of payment to the indebtedness advanced by Acquisition's
senior lender and shall limit such subordination to a mutually agreed upon
maximum amount of indebtedness;
(c) equity in Acquisition, of the same class or classes (and in the
same proportion if more than one class) as the equity in Acquisition held by the
Fund or its affiliates, equal to 15% of Acquisition's capital stock (the
"Stock");
(d) a note with a principal amount of $2,700,000, which is secured by
those Purchased Assets in which Glenayre Electronics, Inc. currently possesses a
security interest, and with other terms to be determined by Acquisition (the
"Glenayre Note"); and
(e) the assumption of (i) the Company's obligations, arising after the
closing of the transactions contemplated in this letter agreement, pursuant to
the Assumed Contracts (as defined below), (ii) those post-petition,
non-bankruptcy related trade payables and accrued expenses mutually agreed upon
by Acquisition and the Company in their sole discretion and (iii) such other
liabilities or obligations of the Company as are specified in the Purchase
Agreement.
2. Plan Implementation. The section 363 transaction contemplated hereby may be
implemented through confirmation of a plan of reorganization containing terms
and conditions in no way conflicting with or derogating from the Purchase
Agreement (the "Plan"). The Company will provide Acquisition with a reasonable
opportunity to review and comment upon all motions, applications, drafts of the
Plan and the related disclosure statement and supporting papers prepared by or
on behalf of the Company relating to this letter agreement (including forms of
orders and notices to interested parties) prior to the filing thereof in the
Company's chapter 11 case.
3. Definitive Purchase Agreement. Acquisition and WLW will use mutual reasonable
best efforts to negotiate and execute a definitive purchase agreement (the
"Purchase Agreement") on or prior to the twenty-ninth (29th) day after the
Bankruptcy Court (as defined below) shall have entered an order approving the
Expense Reimbursement (the "Contingency Termination Date"), which Purchase
Agreement shall contain terms consistent with the terms of this letter agreement
and other customary terms and conditions for transactions of this nature,
including without limitation the following terms and conditions (it being
expressly understood that if the Purchase Agreement Date has not occurred on or
before the Contingency Termination Date, this letter agreement shall terminate
and no party shall have any further obligation hereunder (other than (i) the
obligation of the Company to pay Acquisition the Expense Reimbursement and (ii)
the entitlements under Section 5(g) with respect to the Expense Reimbursement)):
(a) the Company and Acquisition (as the case may be) shall have
received all necessary government and third-party approvals, consents or
authorizations, including, but not limited to any consents from the Federal
Communications Commission, as Acquisition and the Company shall deem necessary
in their sole discretion;
(b) Acquisition shall have obtained its lenders' approval to
consummate, and provide financing for, the transactions contemplated hereunder
and to provide working capital sufficient to operate the business following the
closing of the transactions contemplated by this letter agreement, in such
amounts and upon terms and conditions satisfactory to Acquisition in its sole
discretion;
(c) As soon as practicable, but in no event later than February 21,
2002, the Clerk of the Bankruptcy Court of the Northern District of Texas (the
"Bankruptcy Court") shall have entered an order, in form and substance
satisfactory to Acquisition (the "Procedures Order"), approving the Termination
Fee, the Expense Reimbursement and the bid procedures contained in paragraph 5
of this letter agreement, and the Company shall use its best efforts to cause
the Bankruptcy Court to enter the Procedures Order at the earliest possible
date;
(d) on or before the 37th day after the entry of the Procedures Order,
the Clerk of the Bankruptcy Court shall have entered an order, in form and
substance satisfactory to Acquisition, approving the Company's disclosure
statement for the Plan (the "Disclosure Statement Order"). Thereafter (but prior
to entry of an order confirming a plan), such disclosure statement order shall
not become the subject of any stay or the subject of an order granting a motion
for leave to file an interlocutory notice of appeal;
(e) on or before the 41st day after the entry of the Disclosure
Statement Order, the Clerk of the Bankruptcy Court shall have entered an order
pursuant to section 363 of the Bankruptcy Code (the "Approval Order"), in form
and substance satisfactory to Acquisition, confirming the results of the
Auction, if any, authorizing the Company to enter into the Purchase Agreement,
confirming that Acquisition constitutes a good faith purchaser within the
meaning of Section 363(m) of the Bankruptcy Code and authorizing the transfer of
the Purchased Assets to Acquisition free and clear of liens, claims,
encumbrances and interests; it being understood that the Approval Order may be
in the form of an order confirming the Plan;
(f) the Company shall assign to Acquisition such executory contracts
and leases of the Company selected by Acquisition and identified pursuant to the
Purchase Agreement without adequate assurance of future performance liability
pursuant to section 365(f)(2) of the Bankruptcy Code (the "Assumed Contracts");
it being understood that the Company shall be responsible for any and all cure
costs pursuant to section 365(b) of the Bankruptcy Code; provided that in no
event shall the Company or Acquisition be responsible for any such cure costs
that, when aggregated with the cost of implementation of the Plan, exceed the
cash in the Company at the closing (without taking into account any portion of
the Cash Purchase Price), unless and to the extent otherwise agreed by
Acquisition and the Company;
(g) the Purchased Assets shall include all of the cash (net of (i) the
cost of implementation of the Plan and (ii) the cure costs described in
paragraph 3(f) above) in the Company at the closing; provided that if there is
more than $5,000,000 in net cash at the closing, the Purchased Assets shall
include only the first $5,000,000 of net cash;
(h) the Stock shall contain transfer restrictions mutually agreeable to
Acquisition and the Company, which transfer restrictions shall be specified in a
stockholders' agreement which shall be attached as an exhibit to the Purchase
Agreement;
(i) the Stock shall be distributed in a structure mutually agreeable to
Acquisition and the Company such that Acquisition and the Company are satisfied
with regard to the identity of the holders of the Stock and the number of such
holders, which structure shall be specified in the Purchase Agreement; and
(j) Acquisition shall provide the Company with a deposit or other
satisfactory security in the amount of $250,000 upon the entry of the Procedures
Order.
4. Due Diligence. Prior to the Contingency Termination Date, Acquisition will
complete its due diligence review to its sole satisfaction, which due diligence
review will include facility visits, meetings with senior management and a
review of WLW's books, records and legal documents by Acquisition, as well as
its legal and accounting advisors.
5. Non-Solicitation; Bid Procedures; Termination Fee and Expense Reimbursement.
(a) Until the Contingency Termination Date and thereafter, except to
the extent set forth in the procedures for solicitation of competing bids
described in paragraph 5(b) below, without the consent of Acquisition, the
Company shall not, directly or indirectly, solicit or initiate from any other
person or entity the submission of any offer or proposal relating to the
acquisition of all or any material portion of the Purchased Assets, or the
capital stock of the Company, and shall neither negotiate nor enter into any
agreement (except for confidentiality agreements) with any person or entity
other than Acquisition concerning the acquisition of all or any portion of the
Purchased Assets or of the capital stock of the Company. Notwithstanding the
foregoing, nothing herein shall preclude the Company from taking any action in
its chapter 11 case seeking to sell, pursuant to the auction process established
in this letter agreement, the Purchased Assets.
(b) The Company, shall make available to other prospective purchasers
of the Company and the Purchased Assets the opportunity to acquire the same only
through the following procedures:
(i) Promptly after (but in no case before) the date (the
"Disclosure Statement Date") when the Clerk of the Bankruptcy Court
shall have entered on the docket an order, in form and substance
satisfactory to Acquisition, approving the Company's disclosure
statement for the Plan, the Company shall mail to all parties in
interest and known interested parties, and if it so elects, publish in
appropriate media, notice that the Company will accept competing bids
to acquire the Purchased Assets on terms and conditions which are
substantially the same as those set forth in the Purchase Agreement,
which bids shall conform to, and be submitted in the manner set forth
in, this paragraph 5(b) (each a "Qualifying Bid").
(ii) Promptly after (but in no case before) the Disclosure
Statement Date, upon request by a prospective offeror to the Company,
the Company shall, upon execution by such prospective offeror of a
confidentiality agreement in form and substance reasonably satisfactory
to the Company and delivery of such prospective offeror's certified
financial statements for the preceding two years (or of other evidence
establishing to the Company's satisfaction such prospective offeror's
financial capability to timely consummate a purchase of the Company or
the Purchased Assets), provide such person (a "Prospective Purchaser")
with access to all relevant business and financial information and with
access to representatives of the Company necessary to enable the
Prospective Purchaser to evaluate the Company and its assets and
liabilities for the purpose of submitting a competing offer for the
Company or the Purchased Assets. In addition, after (but in no case
before) the Disclosure Statement Date the Company may provide to a
Prospective Purchaser an offering memorandum describing the Company's
assets and businesses and will have a complete data room available to
Prospective Purchaser.
(iii) To be a Qualified Bid, a bid must: (x) be submitted to
the Company and Acquisition in writing not less than 10 calendar days
prior to the hearing (the "Sale Hearing") on approval of the Purchase
Agreement; (y) contain offers to purchase the Purchased Assets for cash
in an amount of not less than the sum of $30,700,000 plus the
Termination Fee plus the Expense Reimbursement, to be paid in full at
closing on terms and conditions which are substantially the same as
those contained in the Purchase Agreement (including the consummation
of the sale through the Plan); and (z) contain evidence that the person
or entity submitting such bid has received debt and/or equity funding
commitments sufficient in the aggregate to finance the purchase of the
Purchased Assets, including proof of deposit of an amount equal to the
Termination Fee in escrow with an escrow agent, subject to the
jurisdiction of the Bankruptcy Court until completion of the sale and
payable to Acquisition at the Closing or at such time as the Company
becomes entitled thereto.
(iv) Competing bids must be no more conditional than the terms
and conditions contained in the Purchase Agreement and cannot contain
any financing or due diligence contingencies of any kind.
(v) In the event that the Company has received Qualifying Bids
in accordance with subparagraphs (i), (ii), (iii) and (iv) above, then
no more than one day prior to the Sale Hearing, the Company shall
conduct an auction sale of the Purchased Assets (the "Auction") at
which time all persons, including Acquisition, shall be entitled to
make higher bids to acquire all of the Purchased Assets. In the
Auction, all topping bids shall be made in not less than $250,000
increments. The Company must determine the highest and best bid at the
Auction based on the net benefit to the estate, taking into account
throughout the Auction, the payment of the Termination Fee and Expense
Reimbursement to Acquisition if it is not the successful bidder.
(c) Subject to paragraph 5(e), in the event that Acquisition is not the
successful bidder at the Auction or the transactions contemplated hereby are not
consummated for any reason, other than the material breach by Acquisition of
this letter agreement or the Purchase Agreement or a failure to satisfy certain
conditions to closing (the "No Fee Conditions") to be specified by the parties
in the Purchase Agreement (to include, without limitation, the condition
described in paragraph 3(b) and the condition requiring approval of the Federal
Communications Commission if the failure to obtain such approval is solely
because Acquisition is not eligible to own FCC licenses), then the Company shall
pay to Acquisition a termination fee equal to $1,000,000 (the "Termination
Fee"). Any amounts paid to Acquisition under this paragraph 5(c) shall be in
addition to the Expense Reimbursement.
(d) The Company shall pay to Acquisition an amount equal to the
reasonable out-of-pocket costs and expenses incurred by Acquisition in
connection with its legal, environmental, accounting and business due diligence
and the preparation and negotiation of this letter agreement and the Purchase
Agreement in the event that after the Bankruptcy Court enters the Procedures
Order, the transactions contemplated hereby are not consummated for any reason
other than the material breach by Acquisition of this letter agreement
or the Purchase Agreement; provided that the Company's maximum liability under
this paragraph 5(d) shall be $500,000 (the "Expense Reimbursement").
(e) Notwithstanding the provisions of paragraph 5(c), the Termination
Fee shall not be payable to Acquisition unless and until (i) the Purchase
Agreement Date (as defined below) shall occur on or prior to the Contingency
Termination Date and if Acquisition is the successful bidder it promptly
executes such Purchase Agreement, (ii) Acquisition shall have waived the
contingency set forth in paragraph 3(b) on or prior to the 30th day after the
Purchase Agreement Date and (iii) Acquisition shall have waived the contingency
set forth in paragraph 4 on or prior to the Contingency Termination Date;
provided that the limitation in clause (i) of this paragraph 5(e) shall only
apply if the Company is pursuing the transaction contemplated hereby and is
otherwise in compliance with this letter agreement or the Purchase Agreement as
applicable. For purposes of this letter agreement, the term "Purchase Agreement
Date" shall mean the date on which there shall be a Purchase Agreement that
Acquisition and the Company execute or state in writing that they are prepared
to execute.
(f) No party submitting any other offer to purchase the Purchased
Assets or a Qualifying Bid shall be entitled to any expense reimbursement or
termination or similar fee.
(g) The Termination Fee, the Expense Reimbursement and any other
amounts due Acquisition under this letter agreement or the Purchase Agreement
shall be entitled to superpriority administrative expense priority, senior to
all other administrative claims against the Company's estate and shall be
payable out of the Company's cash or other collateral securing the Company's
obligations to its senior secured lenders, prior to any recovery by such
lenders.
6. Binding Effect; Counterparts; Miscellaneous. Neither party shall have any
legally binding obligation to the other unless and until the Bankruptcy Court
enters the Procedures Order. This letter agreement may be signed in two or more
counterparts, any one of which need not contain the signature of more than one
party, but all such counterparts taken together will constitute one and the same
agreement and shall be governed by the laws of the State of Delaware. This
letter agreement may not be assigned by either party without the other party's
written consent, except that Sun Capital Acquisition Corp. may assign this
letter agreement to another affiliate of Sun Capital Partners, Inc. without such
consent.
If you are in agreement with the terms of this letter agreement, please sign in
the space provided below and return a signed copy. This letter agreement will
expire unless executed by the Company by 11:00 a.m. (Eastern Standard Time) on
January 30, 2002. We will then immediately work toward implementing our plans
for consummating the transaction. In the meantime, if you have any questions or
comments, please feel free to contact me so that I may answer any questions that
you may have.
Very truly yours,
Sun Capital Acquisition Corp. Agreed and Accepted as of
By: , 2002:
---------------------------
WebLink Wireless, Inc.
By:
------------------------------ -----------------------------------
M. Xxxxxx Xxxx Name:
Vice President Title:
The below agent, on behalf of itself and the other lenders under WebLink's
Credit Agreement dated as of March 23, 1999, as amended, hereby confirms its
agreement subject to paragraph 6 (a) to comply with paragraph 5(a) above as if
it were substituted for "the Company" therein, (b) to the provisions of
paragraphs 5(c), (d), (e), (f) and (g) above, and (c) support the bid procedures
set forth in paragraph 5(b) above (it being expressly understood that if the
Purchase Agreement Date has not occurred on or before the Contingency
Termination Date, this letter agreement shall terminate and no party shall have
any further obligation hereunder (other than (i) the obligation of the Company
to pay Acquisition the Expense Reimbursement and (ii) the entitlements under
Section 5(g) with respect to the Expense Reimbursement)).
Acknowledged by Bankers Trust Company, as
Agent:
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Name:
Title:
Date:
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Name:
Title:
Date:
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Acknowledged by
Xxxxxx Xxxxxxx Xxxx Xxxxxx:
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Name:
Title:
Date:
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