Exhibit 2
X.X. XXXXXXX, XXXXXX & CO., INC.
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, X.X., 00000-0000
October 21, 1996
Xxxxx & Xxxxx Company
00000 Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxx
Gentlemen:
Warburg, Xxxxxx Investors, L.P. ("WPI") has offered to purchase from The
Prudential Insurance Company of America ("Prudential") all of the debt and
warrants and 130,233 shares of preferred stock in Xxxxx & Xxxxx Company (the
"Company") which are currently held by Prudential (the "Securities").
Specifically, the Securities include Prudential's revolving credit note(s);
senior note(s); PIK note(s) (collectively, the "Notes"); warrants and
convertible preferred stock in the Company.
Upon acceptance of this letter as indicated by your signature below, WPI hereby
grants to the Company an option, for the Option Term set forth below, to
purchase the Securities as an entirety, effective upon WPI's purchase of the
Securities from Prudential, on the following terms:
1. EXERCISE PRICE: $23 million plus any accrued and unpaid
interest due to WPI as per paragraph 2, below. No interest
or dividends will accrue or be due or payable on the
Securities during the Option Term, described below,
notwithstanding any stated interest or dividend rate or
other terms of such Securities.
2. INTEREST: The Company will pay WPI interest at an annual rate of 10%
through the last day of January, 1997 and 12% thereafter, payable on
the last day of each month during the Option Term, in arrears, based on
WPI's $23 million cost to purchase the Securities.
3. TERM: From the date of purchase of the Securities by WPI
through April 16, 1997 (the "Option Term").
4. CLOSING: The closing will occur two business days after
receipt by WPI of written notice of the Company's intent to
exercise the option, with the purchase price payable in
immediately available funds against delivery of the Notes
which shall be marked "Canceled" and certificates
representing the Securities to be sold. WPI will transfer
title to the Securities free and clear of any lien or
encumbrance. WPI and the Company agree to sign such
documents as are necessary to effect the cancellation of the
Notes and the assignment and transfer of the Securities from
WPI to the Company as provided herein.
Effective upon grant of this option, the Company will extend the expiration date
on WPI's warrants to purchase in the aggregate 1,012,358 shares of Company
common stock from the current expiration of January 29, 1998 to January 29,
2002.
The accrual and payment of any and all interest and dividends under the terms of
the Securities will be waived during the Option Term. If the option is not
exercised, interest and dividends on the Securities will begin to accrue
pursuant to the terms of the Securities effective April 16, 1997, and the
interest provided for pursuant to paragraph 2 herein shall cease.
The Company will reimburse WPI for interest paid by WPI to Prudential on behalf
of the Company in connection with WPI's purchase of the Securities from
Prudential, presently anticipated to be approximately $305,000, upon completion
of such purchase.
Each of WPI and the Company agrees that the other is or may be in possession of
material inside information with respect to the Company and waives any claims
with respect thereto.
During the Option Term the Securities shall be legended to state that the
Securities are subject to this option agreement. Any assignment of the
Securities by WPI during the Option Term shall be subject to this option
agreement.
If the above terms are acceptable, please sign below indicating your acceptance
and return a signed copy to me via facsimile.
Very truly yours,
WARBURG, XXXXXX INVESTORS, L.P.
By: Warburg, Xxxxxx & Co.
By: /S/ XXXX X. XXXXXXXXX
Xxxx X. Xxxxxxxxx, Partner
ACCEPTED AND AGREED
XXXXX & XXXXX COMPANY
By: /S/ XXXXXX X. XXXXXX
Name: XXXXXX X. XXXXXX
Title: SENIOR VICE PRESIDENT
