[LETTERHEAD OF BEAR XXXXXXX]
As of January 19, 1999
Xx. Xxxxx Xxxxxx
Xx. Xxxxxx Xxxxxx
Xx. Xxxxxxx Xxxxxx
The Trust of Xxxxxxx Xxxxxx
Xxxxxx Merger LLC
Gentlemen:
We understand that Sbarro Merger LLC and Sbarro, Inc. (the "Company") have
entered into an Agreement and Plan of Merger dated as of January 19, 1999,
pursuant to which, among other things, all shareholders of the Company, other
than the Continuing Shareholders (as defined in the Agreement and Plan of
Merger), will receive $28.85 per share in cash (the "Transaction").
You have informed us that the aggregate cash purchase price, together with fees
and expenses, will result in a total Transaction cost of approximately $408
million. You have informed us that the Transaction cost will be funded by: (A)
approximately $138 million of cash and marketable securities which is expected
to be available to the Company at the closing of the Transaction, (B)
approximately $300 million of total debt financing, based in all material
respects on the terms and conditions set forth in a term sheet delivered by you
to the Special Committee of the Company's Board of Directors considering the
Transaction (the "Debt Financing"). The Debt Financing shall include either a
bank revolving credit facility, which shall have undrawn availability on the
closing date of the Transaction, or excess cash to fund the Company's ongoing
working capital needs, including capital expenditures.
You have asked Bear, Xxxxxxx & Co. Inc. ("Bear Xxxxxxx") to act as placement
agent and arranger in connection with the Debt Financing.
This letter will confirm that, based upon and subject to (a) the foregoing, (b)
the information concerning the Company supplied to us by the Continuing
Shareholders and the Company, and (c) current market conditions, Bear Xxxxxxx is
highly confident as of the date hereof of its ability to place and arrange the
Debt Financing, subject to each of the following: (I) the negotiation of
definitive language with respect to the terms and conditions of the senior notes
included in the Debt Financing as set forth in the term sheet referred to above
and the negotiation of other acceptable terms and conditions of the Debt
Financing, including, but not limited to, interest rate, price and other
covenants; (II) the negotiation of acceptable terms, and the execution of
acceptable documentation, related to the Transaction and the Debt Financing;
(III) no material adverse change in the business, prospects, condition
(financial or otherwise) or results of operations of the Company; (IV)
satisfactory completion of legal due diligence; (V) nothing coming to our
Sbarro Merger LLC
As of January 19, 1999
Page 2
attention which shall contradict or call into question (A) the information
previously provided to us by the Continuing Shareholders or the Company or (B)
the results of our financial due diligence investigation; (VI) no material
adverse change in market conditions for new issues of high yield debt or
syndicated bank loan facilities; (VII) no material adverse change in conditions
of the financial and capital markets generally, and (VIII) the Continuing
Shareholders' and the Company's full cooperation with respect to the marketing
of the Debt Financing. The acceptability of each of the foregoing will be
determined in the sole discretion of Bear Xxxxxxx' Commitment Committee.
This letter does not constitute a commitment or undertaking on the part of Bear
Xxxxxxx to provide any part of the Debt Financing described above and does not
ensure the successful placement, arrangement or completion of the Debt
Financing. Bear Xxxxxxx does not and shall not have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Company, the
Continuing Shareholders or any other person or entity in connection with this
letter.
You are hereby authorized to deliver a copy of this letter to the Continuing
Shareholders' and the Company's respective affiliates and representatives;
provided, however, that in connection with the Transaction and the related Debt
Financing, no public reference to Bear Xxxxxxx or this letter shall be made by
the Continuing Shareholders or the Company or any of its respective
representatives or affiliates without our express written consent.
Yours sincerely,
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
Senior Managing Director
