CHASE CAPITAL PARTNERS
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
December 22, 1999
WM ACQUISITION, INC.
c/o Parthenon Capital
000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Xxxxxxxxx: (000) 000-0000
Ladies and Gentlemen:
Chase Capital Partners (together with one or more of its affiliated
investment funds, "CCP") is pleased to offer this commitment to purchase your
securities for the purpose of effecting a recapitalization of WILMAR INDUSTRIES,
INC., a New Jersey corporation (the "Company") pursuant to a Merger (the
"Merger") of WM ACQUISITION, INC., a New Jersey corporation ("Merger Sub") into
the Company. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Merger Agreement (as defined below).
Pursuant to the merger agreement substantially in the form attached
hereto (the "Merger Agreement") you will provide an aggregate of $235 million of
consideration (the "Aggregate Consideration") to the Company's stockholders
based on an offer price of $18.25 per share. The Aggregate Consideration
includes all amounts necessary to cash out or repay all outstanding shares of
preferred stock, common stock, warrants and options, except for the rollover of
approximately $3 million of stock by the Company's founder. Management of the
Company will invest in common stock and preferred stock of Merger Sub in a cash
or exchange transaction. We understand that the total amount needed to fund the
Merger, including the payment of related fees and expenses of Merger Sub, and
refinancing the Company's outstanding indebtedness, and to provide working
capital availability will be approximately $324.1 million, which is expected to
be provided as set forth below:
(in millions)
Senior Secured Credit Facility $150.0
Senior Subordinated Notes 40.0
Redeemable Preferred Stock 133.0
Common Stock 1.1
Total $324.1
a. Commitment. CCP hereby commits to providing a portion of the
common and preferred stock components of the Aggregate
Consideration through the purchase of up to $40__million of
newly issued shares of Preferred Stock and newly issued shares
of Merger Sub's Common Stock, representing approximately 26.5%
and 29.9% of the common and preferred equity to be outstanding
immediately following the closing of the transaction. After
the Merger, except for an employee option plan pursuant to
which options to acquire up to 5% of the outstanding shares of
common stock of the Company will be outstanding or available
for grant, there will be no outstanding options, warrants or
other rights exercisable for or securities convertible into or
exchangeable for common stock of the Company. CCP's commitment
is subject to the following conditions.
i. The New Equity Investors (the "Investors") referred
to in Schedule A shall have fully funded their
commitments as set forth therein and, following the
Merger, the capitalization of the Company shall be as
set forth in Schedule A;
ii. The terms of the Preferred Stock shall be consistent
with the attached Preferred Stock Term Sheet and
shall be in form reasonably acceptable to CCP;
iii. The execution and delivery of mutually acceptable
Purchase Agreements for the Common Stock and
Preferred Stock between you and the Investors,
containing standard representations, warranties and
covenants; and
iv. The execution and delivery of a mutually acceptable
Shareholders Agreement consistent with the attached
Wilmar Shareholders' Agreement Term Sheet.
b. Merger Documentation. Merger Sub and the Company will execute
or cause to be executed and delivered on or before the Closing
Date referred to in paragraph__8 hereof, all necessary
documentation, including forms of securities, the Merger
Agreement, the Debt Financing Commitments, the other Equity
Financing Commitments, and the other agreements, documents,
instruments, certificates and assurances from Merger Sub, the
Company and such other persons as CCP and its counsel may
reasonably request and containing such terms and conditions as
CCP shall reasonably approve (collectively, the "Financing
Documents"), correct and complete copies of which you have
delivered to us. Prior to the Closing Date, the Financing
Documents may not be amended, supplemented, restated or
terminated and no condition, covenant or other provision
contained in the Financing Documents may be waived without
CCP's consent which shall not be unreasonably withheld. Copies
of all of the Financing Documents and other documents to which
Merger Sub is, or the Company will be, a party (or between the
Investors or with management) will be delivered to CCP
promptly. CCP and its counsel shall be entitled to review and
comment on all future Financing Documents and other documents
to which Merger Sub is, or the Company will be, a party (or
between the Investors or with management).
c. Closing Conditions. In addition to the matters referred to in
paragraphs 1 and 2, CCP's obligations to consummate this
commitment shall be subject to the conditions that Merger Sub
shall have entered into the Merger Agreement, all conditions
precedent to the closing of the transactions contemplated by
the Merger Agreement shall have been satisfied or waived to
the satisfaction of CCP and the merger shall be consummated
immediately following CCP's purchase of your stock.
d. Filings. Xxxxxx Sub agrees to provide copies of all filings to
be made with and notices to be given by Xxxxxx Sub or the
Company to any governmental or regulatory authority prior to
making such filing or providing such notice with
respect to the Merger and the related financing transactions
and not to make any such filing to which CCP is a party
without CCP's prior consent or to which Merger Sub is a party
without prior consultation with CCP. CCP and Merger Sub agree
to jointly prepare, and cooperate with each other with respect
to, any and all governmental or regulatory filings to which
Merger Sub or CCP is a filing or reporting person.
e. No Solicitation. Without CCP's prior consent, until the
closing of the transactions contemplated hereby or the date
referred to in Section__7.1(b) of the Merger Agreement, Merger
Sub and Parthenon Capital will not and will not permit any of
their respective affiliates (or authorize or permit any of
their respective representatives) to take, directly or
indirectly, any action to initiate, assist, solicit, receive,
negotiate, encourage or accept any offer or inquiry from any
person (other than persons from which financing is arranged by
CCP or its affiliates or persons who you have referred to CCP
or its affiliates and whom have been approved by CCP) to (a)
provide any debt or equity financing other than as
contemplated by the Debt Financing Commitments and the Equity
Financing Commitments (collectively, a "Financing") or
purchase all or substantially all of the assets or any capital
stock of Merger Sub or the Company (whether through a purchase
of stock, merger, asset sale or related transaction) (a "Sale
of the Company"), (b)__reach any agreement or understanding
(whether or not such agreement or understanding is absolute,
revocable, contingent or conditional) for, or otherwise
attempt to consummate, any Financing or Sale of the Company or
(c)__furnish or cause to be furnished any information with
respect to Merger Sub, the Company or any of their respective
affiliates to any person (other than as contemplated by this
letter) who you, or any of your representatives, know or have
reason to believe is in the process of considering any
Financing or Sale of the Company. The obligations under this
paragraph shall terminate and be of no further force and
effect in the event that this letter is terminated by CCP in
accordance with its terms.
f. Fees and Expenses.
i. If Merger Sub receives any payment pursuant to
Section__7.5 of the Merger
Agreement, it will promptly (a)__pay to CCP its Pro
Rata Portion of the difference between any
Termination Amount and the portion of the Termination
Amount payable to PaineWebber Incorporated and
(b)__pay or reimburse CCP for all of its
out-of-pocket expenses (including all fees and
expenses of counsel, accountants, investment bankers,
experts and consultants to CCP) incurred by CCP or on
its behalf in connection with or related to the
authorization, preparation, negotiation, execution
and performance of this letter and the
administration, enforcement, amendment, modification
or waiver hereof, the preparation, printing, filing
and mailing of the Proxy Statement, the solicitation
of stockholder approvals and all other matters
related to the closing of the transactions
contemplated hereby (the "Expenses"); provided that
to the extent that the aggregate amount of Expenses
to be paid or reimbursed to the parties to the Equity
Financing Commitments exceeds the maximum amount paid
to Holdings or Merger Sub, then each such person will
be entitled to receive its Pro Rata Portion of such
maximum amount. For purposes hereof, "Pro Rata
Portion" shall mean, with respect to any person
signing an Equity Financing Commitment simultaneously
herewith, (a)__the number of shares of Preferred
Stock to be purchased by such person pursuant to the
applicable Equity Financing Commitment divided by
(b)__the aggregate number of shares of Preferred
Stock to be purchased by all persons providing Equity
Financing Commitments. Upon the consummation of the
Merger, Merger Sub shall reimburse CCP and its
affiliates for all reasonable out-of-pocket expenses
(including but not limited to expenses of CCP's due
diligence investigation, consultants' fees, travel
expenses and reasonable fees, disbursements and other
charges of counsel), in each case incurred in
connection with this letter, the Merger, the
transactions contemplated hereby and thereby and any
related documentation and the administration,
enforcement, amendment, modification or waiver hereof
and thereof.
ii. In addition to the commitment set forth in paragraph
1 hereof, CCP hereby commits to provide an equity
investment in Merger Sub in an amount equal to its
Pro Rata Portion, not to exceed $307,700, of any
amount required by Merger Sub to satisfy its
obligation to pay the Expenses of the Company
pursuant to Section 7.5(d) of the Merger Agreement.
g. Expiration Date. The commitment set forth herein shall expire
automatically, unless accepted in writing by you before 5:00
p.m. (EST) on December 23, 1999.
h. Closing Date. The commitment to purchase Common Stock and
Preferred Stock herein, as so accepted by you, shall expire if
the Merger is not closed on or before June 30, 2000.
i. Confidentiality. This letter is delivered to you on the
understanding that neither the existence of this letter nor
any of its terms or substance shall be publicly disclosed,
directly or indirectly, except (a)__as may be compelled to be
disclosed in a judicial or administrative proceeding or as
otherwise required by law, (b)__on a confidential and
"need-to-know" basis, to your officers, directors, employees,
agents, financing sources and advisors who are directly
involved in the consideration of this matter and (c)__on a
confidential basis to the Company and its advisors and agents
in connection with the Merger.
j. No Assignment. The commitment evidenced by this letter shall
not be assignable by you or Merger Sub without CCP's prior
written consent, and the granting of such consent in a given
instance shall be solely in the discretion of CCP, and, if
granted, shall not constitute a waiver of this requirement as
to any subsequent assignment.
If the foregoing is acceptable to you, please sign and return a copy of
this letter not later than the expiration date described in paragraph 8,
whereupon this letter will constitute the commitment of CCP to provide the
aforementioned financing subject to the terms and conditions hereof. This letter
supersedes any prior agreements relating to the subject matter hereof, including
the letter, dated December 21, 1999, from CCP to you, which is of no force and
effect. This letter shall be governed by and construed in accordance with the
laws of the State of New York, without regard to principles of conflicts of law.
Very truly yours,
CHASE CAPITAL PARTNERS
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
---------------------------
Title: General Partner
Agreed to and Accepted on this
22nd day of December, 1999.
WM ACQUISITION, INC.
By: /s/ Xxxx Xxxxxx
---------------------
Title: Vice President
