EXECUTION COPY
January 6, 1997
SLM International, Inc.
00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxxxx X. Xxxxxxxxx
Dear Sirs:
The purpose of this letter is to confirm the agreement between
Wellspring Associates, L.L.C. ("Wellspring") and SLM International, Inc. (the
"Company") with respect to the purchase, on the terms and conditions hereinafter
set forth, by Wellspring of shares of Issued New Common Stock (as such term is
defined in the First Amended Plan of Reorganization for the Company and certain
of its affiliates, dated as of November 12, 1996 (the "Amended Plan")) that
would otherwise be distributed to the holder of the NHLE Claims under Section
4.D. of the Amended Plan and the holders of the Allowed Maska U.S. Unsecured
Claims and Allowed Non-Maska Unsecured Claims who timely avail themselves of the
Cash Option in accordance with Sections 4.G.3 and 4.H.3 of the Amended Plan
(such shares, collectively, the "Shares"). All capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Amended Plan.
1. Purchase Price. The purchase price per share for each of the
Shares shall be $8.50. As promptly as practicable after the date on which
Ballots are required to be delivered in respect of the Amended Plan but in any
event on or prior to the tenth business day preceding the Effective Date, the
Company shall notify Wellspring in writing as to the number of Shares in respect
of which the Cash Option has been exercised and which are to be purchased by
Xxxxxxxxxx hereunder. Within three business days after the later of (i)
Wellspring's receipt of such notification and (ii) the Bankruptcy Court's
approval of the Company's execution and delivery of, and the performance of its
obligations under, this letter agreement, Wellspring shall deliver a letter of
credit to the Company in a face amount equal to the aggregate purchase price
payable hereunder in respect of the Shares as security for Wellspring's
performance of its obligations hereunder (the "Letter of Credit"). The Letter of
Credit shall entitle the Company to draw the face amount thereof upon
satisfaction of all the conditions precedent hereinafter set forth and shall
contain such other customary terms and conditions.
2. Conditions. (a) Wellspring's obligation to purchase the Shares
hereunder shall be subject to the satisfaction of the following conditions:
(1) A plan of reorganization for the Debtors shall have been
confirmed by the Bankruptcy Court (the "Plan"), the order confirming the Plan
shall have been entered and all conditions precedent to the effectiveness of
such Plan shall have been satisfied or waived.
(2) The Plan shall provide (i) that no more than 6.5 million shares
of Authorized New Common Stock shall be issued under the Plan (other than as
provided in the Amended Plan and disclosed in the Amended Disclosure Statement);
(ii) for the economic treatment of the Lender Claims, the NHLE Claim, the
Allowed Maska U.S. Unsecured Claims and Allowed Non-Maska Unsecured Claims on a
basis consistent with the economic treatment of such Claims under the Amended
Plan; and (iii) in all other material respects, the Plan shall be substantially
in the form of the Amended Plan.
(3) The several Purchase Agreements, dated as of August 22, 1996,
between Wellspring Associates L.L.C. and holders of the Lender Claims shall not
have been terminated (collectively, the "Purchase Agreement") other than as a
result of Wellspring's breach thereof.
(b) The Company's obligation to sell, transfer and deliver the
Shares to Wellspring hereunder shall be subject to the satisfaction of the
following conditions:
(1) The Plan shall have been confirmed by the Bankruptcy Court.
(2) All conditions precedent to the effectiveness of the Plan shall
have been satisfied or waived.
(3) All representations and warranties of Wellspring hereunder shall
have been true and correct, in all material respects, when made.
3. Closing. The closing of the transaction provided for in this
letter agreement (the "Closing") shall take place on the later of (i) the
Effective Date and (ii) the first business day following the date on which each
of the conditions set forth immediately above shall have been satisfied or
waived. At the Closing, the Company shall deliver certificates representing the
Shares to Wellspring conveying to Wellspring good and valid title to the Shares,
free and clear of all liens (other than such liens as may have been or may be
created by and through Wellspring) and Wellspring shall cause an amount equal to
the product of (i) the number of Shares to be purchased hereunder multiplied by
(ii) $8.50 to be paid by wire transfer of immediately available funds to an
account of the Company or of the Disbursing Agent, such account to be designated
by the Company by written notice to Wellspring at least 3 business days prior to
the Closing.
4. Representations. (a) Due Authorization, No Conflict, No Consents,
Enforceability. Wellspring represents and warrants to the Company that (i) it
has full corporate power and authority to execute and deliver this letter
agreement and to perform all of its obligations hereunder; (ii) no consent,
approval or authorization from any person or entity is required to obtained in
connection with Xxxxxxxxxx's execution and delivery of this letter agreement and
the performance of its obligations hereunder; (iii) the execution and delivery
of this letter agreement and the performance by Xxxxxxxxxx of its obligations
hereunder will not violate its operating agreement and will not result in a
violation or breach of, or a default under, any agreement to which Wellspring is
a party or by which any of its assets or properties is bound; and (iv) assuming
the due execution and delivery by the Company of this letter agreement, this
letter agreement constitutes a binding obligation of Wellspring, enforceable
against it in accordance with its terms. The Company represents and warrants to
Wellspring that (i) subject to Bankruptcy Court approval of this letter
agreement, it has full corporate power and authority to execute and deliver this
letter agreement and to perform all of its obligations hereunder; (ii) other
than the approval of the Bankruptcy Court, no consent, approval or authorization
from any person or entity is required to obtained in connection with the
Company's execution and delivery of this letter agreement and the performance of
its obligations hereunder; (iii) the execution and delivery of this letter
agreement and the performance by the Company of its obligations hereunder will
not violate the Amended SLMI Certificate of Incorporation or By-Laws and will
not result in a violation or breach of, or a default under, the Amended Plan or
any agreement to which the Company or the Reorganized SLMI is a party or by
which any of its assets or properties is bound; and (iv) assuming the due
execution and delivery by the Wellspring of this letter agreement and Bankruptcy
Court approval hereof, this letter agreement constitutes a binding obligation of
the Company, enforceable against it in accordance with its terms.
(b) Investment Intent. Wellspring represents and warrants to the
Company that its purchase of the Shares is for its own account with the present
intention of holding such Shares for purposes of investment and that Wellspring
has no present intention of selling such Shares in a public distribution in
violation of the federal securities laws or any applicable state securities
laws.
(c) No Registration. Wellspring acknowledges that the Shares have
not been registered under the Securities Act or any state securities laws by
reason of specific exemptions under the provisions thereof, the availability of
which depend in part upon the bona fide nature of Wellspring's investment intent
and the accuracy of Xxxxxxxxxx's representation in this paragraph 4 above.
Wellspring further acknowledges that the Company is relying upon Xxxxxxxxxx's
representation in subparagraph (b) for the purpose of determining whether the
sale of Shares hereunder meets the requirements for such exemption.
(d) Restricted Securities. Wellspring acknowledges that the Shares
may be "restricted securities" under the applicable federal securities laws and
that the Securities Act and the rules
of the Securities and Exchange Commission provide in substance that a holder of
"restricted securities" may dispose of such securities only pursuant to an
effective registration statement under the Securities Act or in a transaction
exempt from the registration requirements of the Securities Act. Wellspring
further acknowledges that, except as provided in the Amended Plan, the Company
is not obligated to register the Shares. Wellspring further acknowledges that no
public market exists for the Shares.
(e) Accredited Investor. Wellspring represents and warrants to the
Company that it is an "accredited investor" as that term is defined in Rule
501(e) promulgated under the Securities Act and that it is financially able to
bear the economic risk of an investment in the Shares, including the total loss
thereof.
(f) Purchase Agreement. Wellspring represents and warrants that, as
of the date hereof, (1) it has waived the condition to its obligation to close
the transactions contemplated by the Purchase Agreement set forth at Section
9(c) of the Purchase Agreement and (2) the Amended Plan, in its current form,
satisfies the condition to its obligation to close the transactions contemplated
by the Purchase Agreement set forth at Section 9(b).
5. Covenants. The Company hereby covenants and agrees that it shall
use its best efforts to seek and obtain Bankruptcy Court approval of its
execution and delivery of, and the performance of its obligations under, this
letter agreement as promptly as practicable and, pending such approval and
thereafter, the Company shall not solicit any other proposal relating to the
funding of the Cash Option and shall not enter into any agreement (other than
this letter agreement) relating thereto. The Company hereby covenants and agrees
that (i) as soon as practicable after the Effective Date, Reorganized SLMI shall
file, at its expense, the Shelf Registration Statement; (ii) Reorganized SLMI
shall use its best efforts to have the Shelf Registration Statement declared
effective as soon as practicable after such filing and to keep the Shelf
Registration Statement continuously effective (by filing supplements or
amendments thereto as necessary) until the fourth anniversary of the effective
date thereof; and (iii) all of the Shares to be acquired by Wellspring hereunder
and under the Purchase Agreements shall be included in the Shelf Registration
Statement. Xxxxxxxxxx agrees to cooperate with the Company in the preparation
and filing of the Shelf Registration Statement. In addition, the Company hereby
covenants and agrees that it shall take all such action as Wellspring may
reasonably request to exempt the purchase by Wellspring of the Shares hereunder
and under the Purchase Agreements from the provisions of Section 203 of the
Delaware General Corporation Law.
Section 6. Specific Performance. Each of Wellspring, on the one
hand, and the Company, on the other hand, acknowledge and agree that the breach
of this letter agreement would cause irreparable damage to the other party and
that the other party may not have an adequate remedy at law. Therefore, the
obligations of each of Wellspring and the Company under this letter agreement
shall be enforceable by a decree of specific performance issued by
any court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. Such remedies shall, however,
be cumulative and not exclusive and shall be in addition to any other remedies
available under this letter agreement, at law or in equity.
Section 7. Complete Agreement; Modification of Agreement. This
letter agreement constitutes the complete agreement between the parties with
respect to the subject matter hereof. This agreement may not be modified,
altered, amended or waived except by an agreement in writing signed by each of
the parties hereto and, in the case of the Company, only with the approval of
Committee.
Section 8. Severability. Wherever possible, each provision of this
letter agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this letter agreement shall
be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
letter agreement.
Section 9. Parties. This letter agreement shall be binding upon, and
inure to the benefit of, the parties and their respective successors and assigns
(including specifically with respect to the Company, Reorganized SLMI). Nothing
in this letter agreement, express or implied, shall give to any person or
entity, other than the parties, any benefit or any legal or equitable right,
remedy or claim under this letter agreement.
Section 10. Governing Law. THIS LETTER AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE.
Section 11. Termination. This letter agreement shall terminate
automatically at 5:00 p.m. EST on March 31, 1997 if the Closing shall not
theretofore have occurred. Wellspring may terminate this letter agreement at any
time after February 28, 1997 by notice in writing to the Company in the event
that the Bankruptcy Court shall not have entered an order approving the
Company's execution, delivery and performance of its obligations hereunder on or
prior to such date. Upon termination of this letter agreement, this letter
agreement shall be of no further force or effect and no party shall have any
continuing liability to any other party hereunder; provided, however, that, no
termination shall limit the remedies of any party hereto in respect of any
breach occurring prior to such termination.
Section 12. Notices. All notices hereunder shall be deemed given if
in writing and delivered or sent by telecopy, courier or by registered or
certified mail (return receipt
requested) to the following addresses or telecopier numbers (or at such other
addresses or telecopier numbers as shall be specified by like notice):
a. if to Wellspring, to:
Wellspring Associates L.L.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-1579
Attention: Xxxx Xxxxxxxx
with copies to:
Xxxxxx, Xxxxxxxx, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-1470
Attention: Xxxxx X. Xxxxxxxxx
if to the Company, to:
SLM International, Inc.
00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxxxx X. Xxxxxxxxx
with copies to:
Xxxxxxxx, Xxxxxx, Xxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxxx X. Xxxxxxxx, Esq.
and:
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxxx X. Xxxxxx, Esq.
Any notice given by delivery, mail, or courier shall be effective
when received. Any notice given by telecopier shall be effective upon oral or
machine confirmation of transmission.
* * * * * * *
If the foregoing is acceptable to you, please execute and return to
Wellspring the duplicate copy of this letter enclosed herewith, whereupon this
letter shall become a binding agreement between us.
WELLSPRING ASSOCIATES L.L.C.
By: /s/ XXXXXXX X. XXXXXXXX
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Principal
SLM INTERNATIONAL, INC.
By: /s/ XXXX X. XXXXX
---------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President, Finance
