EXHIBIT 4.2
X. X. XXXXXXX, XXXXXX & CO., INC.
000 XXXXXXXXX XXXXXX, XXX XXXX, X.X. 00000-0000
December 11, 1996
Xxxxx & Xxxxx Company
00000 Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxx
Gentlemen:
Warburg, Xxxxxx Investors, L.P. ("WPI") hereby grants to Xxxxx & Xxxxx Company
(the "Company") an option, for the Option Term set forth below, to purchase $15
million in Revolving Credit Notes and Senior Notes of the Company held by WPI
(the "Debt Securities") as an entirety as set forth below.
1. EXERCISE PRICE: $13 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 Debt Securities during the Option Term, described
below, notwithstanding any stated interest 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 the
exercise price.
3. TERM: From the date hereof through April 16, 1997, unless the company is
in active discussions with a lender(s) or investor(s) who has expressed
interest in funding the Exercise Price, in which case the term would extend
through July 15, 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 Debt Securities which shall be marked "Canceled". WPI will transfer
title to the Debt Securities in the same manner and with the same
representations and warranties as it transferred title to the Purchased
Securities as set forth in the Tri-Party Agreement between WPI, the Company
and Xxx X. Xxxxxxx dated December 11, 1996. WPI and the Company agree to
sign such documents as are necessary to effect the cancellation of the Debt
Securities and the assignment and transfer of the Debt Securities from WPI
to the Company as provided herein.
The accrual and payment of any and all interest under the terms of the Debt
Securities will be waived during the Option Term. If this option is not
exercised, interest on the Debt Securities will begin to accrue pursuant to the
terms of the Securities effective the first day after the expiration of the
Option Term, and the interest provided for pursuant to paragraph 2 herein shall
cease.
During the Option Term the Debt Securities shall be legended to state that the
Debt Securities are subject to this option agreement. Any assignment of the
Debt Securities by WPI during the Option Term shall be subject to this option
agreement.
After the expiration of the Option Term, the Company will continue to have the
right to repay the Debt Securities in total for $13 million in cash, i.e., a $2
million discount from face value; such discount would apply to the November 1999
principal payment, if any of the Debt Securities remaining outstanding at such
date. However, no discount applies to other than cash repayments.
Notwithstanding anything herein to the contrary, after the expiration of the
Option Term, the ability of the Company to prepay the debt in whole or in part,
pursuant to the terms of the Debt Securities, and all other terms of the Debt
Securities, shall remain in full force and effect.
Very truly yours,
WARBURG, XXXXXX INVESTORS, L.P.
By: Warburg, Xxxxxx & Co.
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx, Partner
ACCEPTED AND AGREED
XXXXX & XXXXX COMPANY
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Senior Vice President
and General Counsel
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