EXHIBIT (d)(4)
January 27, 2002
J Holdings Corp.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Equity Capital Commitment
Gentlemen:
Reference is made to that certain Agreement and Plan of Merger
(the "Agreement"), dated as of the date hereof, by and among J Holdings Corp., a
Delaware corporation ("Parent"), J Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of Parent (the "Purchaser"), and Xxxxx Xxxxx, Inc., a
Delaware corporation (the "Company"), which agreement contemplates the
acquisition by Parent of 100% of the outstanding shares of the Company (such
acquisition, together with agreements related thereto or contemplated thereby,
representing the "Transaction"). In connection therewith and in order to
finance, in part, the Transaction, ACI Capital Co., Inc. (the "Investor") is
pleased to advise you that it hereby commits to provide Parent with $6 million
of equity capital (the "Investment"), to be allocated between preferred stock
(the "Senior Preferred") and common stock of Parent on a nine-to-one basis. The
Investor's commitment to provide the Investment is subject in all respects to
satisfaction of the terms and conditions contained in this commitment letter and
in the Outline of Terms and Conditions attached hereto as Exhibit A (the "Term
Sheet").
The Investor's commitment to provide the Investment is subject
to (i) the negotiation, execution and delivery of definitive documentation
thereof, including, without limitation, a Certificate of Designations of the
Senior Preferred, in form and substance satisfactory to the Investor, Parent and
their respective counsel, (ii) the satisfaction of the conditions precedent to
the closing of the Transaction set forth in Sections 6.1 and 6.3 (other than
Section 6.3(c) of the Agreement), (iii) all conditions precedent to the
obligation of the Senior Lender (as defined in the Agreement) to consummate the
Senior Financing (as defined in the Agreement) having been met and the Senior
Lender shall intend to and shall be willing and prepared to consummate the
Senior Financing, in each case other than with respect to any conditions
relating to the equity capital investment contemplated by this commitment
letter, the equity commitment letter of each of DB Capital Investors, L.P.
("DBCI") and SJF Enterprises, Inc., of even date herewith, and the subordinated
debt facility commitment letter of each of ACI and DBCI, each of even date
herewith, and (iv) satisfaction of the conditions set forth in the Term Sheet
attached hereto.
The offer made by the Investor in this commitment letter is
contingent upon execution of the Agreement, and should the Agreement be
executed, the commitment by the Investor to provide the Investment shall expire
immediately upon the earlier of (i) the termination of the Agreement and (ii)
the Expiration Date (as defined in the Agreement), as may be extended in
accordance with the terms of the Agreement.
Should the terms and conditions of the offer contained herein
meet with your approval, please indicate your acceptance by signing and
returning a copy of this commitment letter to the Investor.
This commitment letter, including the attached Term Sheet (i)
supersedes all prior discussions, agreements, commitments, arrangements,
negotiations or understandings, whether oral or written, of the parties with
respect to the subject matter hereof and thereof, (ii) shall be governed by the
law of the State of New York, (iii) shall be binding upon the parties and their
respective successors and assigns, (iv) may not be relied upon or enforced by
any other person or entity other than the parties hereto and Purchaser, and (v)
may be signed in multiple counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same instrument.
If this commitment letter becomes the subject of a dispute, each of the parties
hereto hereby waives trial by jury. This commitment letter may be amended,
modified or waived only in a writing signed by the parties hereto.
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Please confirm that the foregoing is in accordance with your understanding by
signing and returning to the Investor the enclosed copy of this Commitment
Letter on or before the close of business on the date hereof, whereupon this
Commitment Letter shall become a binding agreement between us.
Very truly yours,
ACI CAPITAL CO., INC.
By: /s/ XXXXX X. XXXX
--------------------------------
Name: Xxxxx X. Xxxx
Title: Managing Director
Xxxxxx and accepted on this
27th day of January, 2002:
J HOLDINGS CORP.
By: /s/ XXXXX X. XXXX
----------------------------
Name: Xxxxx X. Xxxx
Title: President
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EXHIBIT A
OUTLINE OF TERMS AND CONDITIONS FOR PROPOSED EQUITY FINANCING
This Outline of Terms and Conditions is part of the Commitment Letter, dated
January __, 2002 (the "Commitment Letter"), addressed to J Holdings Corp. by ACI
Capital Co., Inc. (the "Investor") and is subject to the terms and conditions of
the Commitment Letter. Capitalized terms used herein shall have the meanings set
forth in the Commitment Letter unless otherwise defined herein.
ISSUER: J Holdings Corp.
TOTAL ISSUANCE
OF PREFERRED: $18 million
TOTAL ISSUANCE
OF COMMON: $2 million
COMMITMENT
BY INVESTOR: $5.4 million in senior preferred stock (the "Preferred"),
having an aggregate liquidation preference of $5.4
million, and $600,000 in shares of Common Stock (the
"Common"), at a price of $0.10 per share.
MANDATORY
REDEMPTION
OF PREFERRED: Five years.
PREFERRED
DIVIDENDS: Cumulative undeclared dividends (declarable only in cash),
payable at the rate of 15% per annum, or such lower rate
as would ensure for any time in which ACI remains a holder
of the Preferred that the combined interest + dividend
rate payable on the Issuer's capital (which shall be an
amount equal to the sum of the Purchaser Debt Financing
(as defined in the Agreement), Preferred and Common (which
includes paid in capital and additional paid in capital))
does not exceed 15% for any annual period (the applicable
rate at any time being the "Base Rate"); provided,
however, that the foregoing limitation shall only apply to
the extent that ACI remains subject to applicable
limitations prescribed by the Small Business
Administration ("SBA"). The rate paid on the Issuer's
capital shall be calculated in a manner consistent with
applicable regulations of the SBA.
USE OF PROCEEDS: To finance the Transaction and the general working capital
needs of the Issuer.
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OPTIONAL
REDEMPTION: At the option of the Issuer, with no penalty.
TRANSFERABILITY: Subject to restrictions contained in the Stockholders'
Agreement.
COVENANTS: Standard for this type of security, including, but not
limited to, reporting requirements, change of control
restrictions, approval of mergers, acquisitions, equity
issuances, payment of dividends, debt incurrence,
redemption of equity or debt, amendments to the preferred
stock, amendments of equity rights, amendments to the
Issuer's charter and bylaws, changes in the Issuer's
management, material changes in business strategy,
increase in size of Board, etc. Such covenants will not
restrict the Issuer's ability to incur debt for the sole
purpose of prepaying Preferred.
CONDITIONS: Customary conditions precedent, including, without
limitation:
1) Negotiation, execution, delivery of definitive
documentation.
2) Closing of the Transaction contemplated by the
Agreement.
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