EXHIBIT 99.5
MASTER CAPITALIZATION AGREEMENT
This Agreement is made as of ______________, 2004 among SAC HOLDING
CO., a Pennsylvania corporation (the "COMPANY"), and each of the Investors
signatory hereto (the "INVESTORS").
PREAMBLE
The Company was formed for the purpose of acquiring the stock of
Sylvan, Inc. ("SYLVAN") pursuant to the terms of an Agreement and Plan of Merger
dated as of November 16, 2003 (as the same may be amended, the "MERGER
AGREEMENT") among Sylvan, the Company and Xxxxxx Associated Companies, Inc.
("XXXXXX"). The Investors desire to purchase certain securities of the Company
with cash or shares of Sylvan common stock in order to provide financing for
such acquisition. Therefore, the parties severally, and not jointly, agree as
follows with the intent to be legally bound.
AGREEMENT
1. Purchase and Sale of Securities. On the Closing Date (defined
below), the Company will sell to each Investor identified on Exhibit A, and each
such Investor will purchase from the Company, the amount and type of shares of
capital stock of the Company set forth beside such Investor's name on Exhibit A
for the cash purchase price set forth on Exhibit A. Without limiting the
generality of the foregoing, the Investors acknowledge that (a) pursuant to a
Stock Purchase Agreement dated as of November 15, 2003 (the "STOCK PURCHASE
AGREEMENT") among the Company, Xxxxxx and Steel Partners II, L.P., the Company
acquired 537,771 shares of Sylvan common stock for a purchase price of
$6,587,694.75 ($12.25/share), which shares will be canceled in the Merger, (b)
Xxxxxx loaned the purchase price for such shares to the Company and (c) such
loan was previously converted into shares of the Company's common stock at the
rate of $12.25/share as a result of which Xxxxxx currently owns 537,771 shares
of the Company.
2. Contribution of Securities. On the Closing Date, each Investor
identified on Exhibit B shall contribute to the Company the shares of common
stock of Sylvan the Investor owns identified on Exhibit B. Each such Investor
shall receive, for each such share of Sylvan common stock contributed, one share
of common stock of the Company. Such contribution shall be made pursuant to the
Contribution Agreements in the forms attached hereto as Exhibit C-1 and C-2.
3. Senior Subordinated Debt and Bridge Financing. At the Closing,
Xxxxxx shall make a loan to the Company in the amount of $26.5 million in the
form of senior subordinated indebtedness pursuant to the Note Purchase Agreement
and Senior Subordinated Promissory Note pursuant to documentation in
substantially the forms of Exhibit D-1 and D-2 hereto. $20.5 million of such
senior subordinated indebtedness is intended to be a bridge loan and will be due
and payable no later than ten days following the closing of the Merger.
4. The Closing. The closing of the transactions contemplated hereby
(the "CLOSING") will take place at the offices of Xxxxx & Xxxxxxx, P.C., 11
Stanwix Street, 15th Floor, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 on such date as is
required by the disbursing agent in the Merger in order for the Company to have
funds available to pay the Merger consideration, as determined by the Company.
The date when the Closing occurs is referred to herein as the "CLOSING DATE". At
the Closing, the Company
will deliver to each Investor certificates evidencing the number of shares being
purchased by such Investor upon payment of the purchase price therefor in
immediately available funds or contribution of shares of common stock of Sylvan,
as the case may be. As soon as is practicable after the Closing, (a) the Company
will be merged with and into Sylvan, with Sylvan to be the surviving
corporation, in accordance with the terms of the Merger Agreement (the
"MERGER"), (b) each Investor's shares of common stock of the Company will be
exchanged for securities of Sylvan in accordance with the terms of the Merger
Agreement and (c) each Investor will enter into a Stockholders Agreement in
substantially the form previously agreed to. The date when the foregoing
transactions occur is referred to as the "EFFECTIVE DATE".
5. Restrictions on Transfer. The Investors acknowledge that the
Securities have not been registered under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), or any applicable state securities laws, and may not be
transferred in the absence of an effective registration statement under such
laws except pursuant to an exemption from such laws. If Securities are being
transferred pursuant to such an exemption, then the transferor will give prior
written notice of such exemption to the Company, and the Company may request an
opinion of the transferor's counsel as to the availability of such exemption,
which opinion and counsel must be reasonably satisfactory to the Company. The
Securities are also subject to restrictions on transfer as set forth in the
Stockholders Agreement. Each certificate evidencing capital stock will bear a
legend in the form specified in the Stockholders Agreement.
6. Fees and Expenses. The Company (or, following the Merger, Sylvan)
will (a) pay, or reimburse Xxxxxx for, all reasonable fees and expenses that it
incurs or has incurred in connection with the formation and capitalization of
the Company and the transactions contemplated by the Transaction Documents and
the Steel Partners Agreement (including the preparation and negotiation of such
documents) and (b) pay to Xxxxxx the sum of $60,000 as a reimbursement for its
payment of the Seller Reimbursement under and as defined in the Steel Partners
Agreement.
7. Miscellaneous. This Agreement: (a) may be amended only by a writing
signed by each of the parties; (b) may not be assigned, pledged or otherwise
transferred, whether by operation of law or otherwise, without the prior consent
of the other parties, except that an Investor may assign all or a portion of his
or its rights hereunder to a Permitted Transferee (as defined in the
Stockholders Agreement) so long as such transferee joins this Agreement as an
Investor and the Stockholders Agreement as a Stockholder; provided, that no such
assignment will relieve the transferring Investor of his or its obligation to
purchase Securities hereunder except with respect to Securities actually
purchased by such transferee; (c) may be executed in several counterparts, each
of which is deemed an original but all of which constitute one and the same
instrument; (d) contains the entire agreement of the parties with respect to the
transactions contemplated hereby and supersedes all prior written and oral
agreements, and all contemporaneous oral agreements, relating to such
transactions; (e) is governed by, and will be construed and enforced in
accordance with, the laws of the Commonwealth of Pennsylvania, without giving
effect to any conflict of laws rules; and (f) is binding upon, and will inure to
the benefit of, the parties and their respective heirs, successors and permitted
assigns.
SIGNATURE PAGE TO MASTER CAPITALIZATION AGREEMENT
COMPANY
SAC HOLDING CO.
By:
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Title:
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INVESTORS:
XXXXXX ASSOCIATED COMPANIES, INC.
By:
-------------------------------------
Title:
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XX XXXXXX FAMILY LIMITED PARTNERSHIP
By:
-------------------------------------
Title:
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Xxxxx X. Xxxxxx
XXXXX X. XXXXXX AND XXXXXX X. XXXXXX
JOINT TENANTS BY THE ENTIRETIES
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Xxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
WESTMONT LIMITED PARTNERSHIP
By:
-------------------------------------
Name:
-----------------------------------
Title:
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XXXX X. XXXXXX REVOCABLE TRUST DATED
1/4/99
By:
-------------------------------------
Name:
-----------------------------------
Title:
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XXXXXXX X. XXXXXX, XX. SECOND AMENDED
AND RESTATED REVOCABLE TRUST AGREEMENT
DATED 2/16/00
By:
-------------------------------------
Name:
-----------------------------------
Title:
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RIDGEPOINT HOLDINGS LIMITED PARTNERSHIP
By:
-------------------------------------
Name:
-----------------------------------
Title:
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Xxxxxx X. Xxxxxx
MAVERICK HOLDINGS LIMITED PARTNERSHIP
By:
-------------------------------------
Name:
-----------------------------------
Title:
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XXXXXXX X. XXXXXX SECOND AMENDED AND
RESTATED REVOCABLE TRUST DATED 12/13/95
By:
-------------------------------------
Name:
-----------------------------------
Title:
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NEAR L.P.
By: EARN, LLC
By:
-------------------------------------
Name:
-----------------------------------
Title:
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EXHIBIT A
INVESTORS CONTRIBUTING CASH
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SHARES OF SAC HOLDINGS, INC.
NAME OF INVESTOR CASH TO BE ISSUED
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Xxxxxx Associated Companies, Inc. $28,217,424* 2,303,463
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XX Xxxxxx Family Limited Partnership $625,000 51,020
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Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx joint tenants by
entirety $625,000 51,020
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Westmont Limited Partnership $625,000 51,020
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Ridgepoint Holdings Limited Partnership $875,000 71,429
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Maverick Holdings Limited Partnership $375,000 30,612
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Xxxxxxx X. Xxxxxx Second Amended and Restated Revocable
Trust dated 12/13/95 $625,000 51,020
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NEAR L.P. $1,000,000 81,633
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EXHIBIT B
INVESTORS CONTRIBUTING STOCK
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SHARES OF SAC HOLDINGS, INC.
NAME OF INVESTOR SYLVAN SHARES TO BE ISSUED
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Xxxxx X. Xxxxxx 15,300 15,300
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Xxxx X. Xxxxxx Revocable Trust dated 1/4/99 1,000 1,000
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Xxxxxxx X. Xxxxxx, Xx. Second Amended and
Restated Revocable Trust Agreement dated 2/16/00 2,500 2,500
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Xxxxxx X. Xxxxxx 1,000 1,000
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