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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 4 TO
SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
AMERICAN SAFETY RAZOR COMPANY
(Name of Subject Company)
J.W. CHILDS EQUITY PARTNERS II, L.P.
RSA HOLDINGS CORP. OF DELAWARE
RSA ACQUISITION CORP.
(Bidders)
COMMON STOCK, $0.01 PAR VALUE PER SHARE
(Title of Class of Securities)
029362100
(CUSIP Number of Class of Securities)
ADAM SUTTIN
C/O J.W. CHILDS EQUITY PARTNERS II, L.P.
ONE FEDERAL STREET
BOSTON, MA 02110
(617) 753-1100
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
COPY TO:
MARIO A. PONCE, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 455-2000
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This Amendment No. 4 amends and supplements the Tender Offer Statement on
Schedule 14D-1 filed on February 22, 1999 (as amended, the "Schedule 14D-1")
relating to the offer by RSA Acquisition Corp., a Delaware corporation (the
"Purchaser"), a wholly owned subsidiary of RSA Holdings Corp. of Delaware, a
Delaware corporation (the "Parent"), to purchase all of the outstanding shares
of Common Stock, $0.01 par value per share (the "Shares"), of American Safety
Razor Company, a Delaware corporation (the "Company"), at a purchase price of
$14.125 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
February 22, 1999 (the "Offer to Purchase"), and in the related Letter of
Transmittal. RSA Holdings Corp. of Delaware is a wholly owned subsidiary of J.W.
Childs Equity Partners II, L.P. Unless otherwise indicated, all capitalized
terms used but not defined herein shall have the meanings assigned to them in
the Schedule 14D-1.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
Item 3(a) and (b) of the Schedule 14D-1 are hereby amended and supplemented
as follows:
On April 13, 1999, the Parent distributed a Supplement to the Offer to
Purchase dated April 13, 1999, the full text of which is set forth in Exhibit
(a)(12) and incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 4(a) and (b) of the Schedule 14D-1 are hereby amended and supplemented
as follows:
On April 8, 1999, the Purchaser, NationsBank, N.A., NationsBanc Montgomery
Securities LLC and DLJ Capital Funding, Inc. entered into a Revised Commitment
Letter whereby the expiration date of the commitments and undertakings was
extended, the full text of which is set forth in Exhibit (b)(3).
On April 13, 1999, the Parent distributed a Supplement to the Offer to
Purchase dated April 13, 1999, the full text of which is set forth in Exhibit
(a)(12) and incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
Item 5(a)-(e) of the Schedule 14D-1 are hereby amended and supplemented as
follows:
On April 13, 1999, the Parent distributed a Supplement to the Offer to
Purchase dated April 13, 1999, the full text of which is set forth in Exhibit
(a)(12) and incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Item 6(a) and (b) of the Schedule 14D-1 are hereby amended and supplemented
as follows:
On April 13, 1999, the Parent distributed a Supplement to the Offer to
Purchase dated April 13, 1999, the full text of which is set forth in Exhibit
(a)(12) and incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
Item 7 of the Schedule 14D-1 is hereby amended and supplemented as follows:
On April 13, 1999, the Parent distributed a Supplement to the Offer to
Purchase dated April 13, 1999, the full text of which is set forth in Exhibit
(a)(12) and incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
Item 10(f) of the Schedule 14D-1 is hereby amended and supplemented as
follows:
On April 13, 1999, the Parent distributed a Supplement to the Offer to
Purchase dated April 13, 1999, the full text of which is set forth in Exhibit
(a)(12) and incorporated herein by reference.
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 of the Schedule 14D-1 is hereby amended and supplemented to add the
following:
(a)(12) Supplement to the Offer to Purchase dated April 13, 1999.
(b) (3) Revised Commitment Letter, dated April 8, 1999, to the Purchaser
from NationsBank, N.A., NationsBanc Montgomery Securities LLC and
DLJ Capital Funding, Inc.
(c) (3) Amendment, dated as of April 8, 1999, to the Agreement and Plan of
Merger, dated as of February 12, 1999, by and among the Parent, the
Purchaser and the Company (incorporated by reference to Exhibit
11(c)(3) to Amendment No. 3 to Schedule 14D-1, dated April 9,
1999).
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
RSA Holdings Corp. of Delaware
By: /s/ ADAM L. SUTTIN
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Name: Adam L. Suttin
Title: President
RSA Acquisition Corp.
By: /s/ ADAM L. SUTTIN
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Name: Adam L. Suttin
Title: President
J.W. Childs Equity Partners II,
L.P.
By: J.W. Childs Advisors II,
L.P.,
its general partner
By: J.W. Childs Associates,
L.P.,
its general partners
By: J.W. Childs Associates,
Inc.,
its general partner
By: /s/ ADAM L. SUTTIN
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Name: Adam L. Suttin
Title: Vice President
Date: April 13, 1999
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NO.
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<S> <C> <C>
(a)(12) Supplement to the Offer to Purchase dated April 13, 1999.
(b) (3) Revised Commitment Letter, dated April 8, 1999, to the
Purchaser from NationsBank, N.A., NationsBanc Montgomery
Securities LLC and DLJ Capital Funding, Inc.
(c) (3) Amendment, dated as of April 8, 1999, to the Agreement and
Plan of Merger, dated as of February 12, 1999, by and among
the Parent, the Purchaser and the Company (incorporated by
reference to Exhibit 11(c)(3) to Amendment No. 3 to Schedule
14D-1, dated April 9, 1999).
</TABLE>
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SUPPLEMENT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AMERICAN SAFETY RAZOR COMPANY
AT
$14.20 NET PER SHARE
BY
RSA ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
RSA HOLDINGS CORP. OF DELAWARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 2:00 P.M., NEW YORK CITY TIME ON
FRIDAY, APRIL 23, 1999 UNLESS THE OFFER IS EXTENDED
To: The Stockholders
of American Safety Razor Company
This Supplement (the "Supplement") to the Offer to Purchase dated February
22, 1999 (the "Original Offer to Purchase") changes certain of the terms and
conditions of the Offer set forth in the Original Offer to Purchase and updates
and/or supplements certain other information contained therein. Capitalized
terms used but not otherwise defined herein shall have the meanings set forth in
the Original Offer to Purchase.
On April 8, 1999, the parties to the Merger Agreement executed an amendment
thereto (the "Amendment"). The Amendment, among other things, (i) increases the
purchase price from $14.125 net per Share to $14.20 net per Share; (ii) extends
the Expiration Date to April 23, 1999; (iii) extends the Outside Date (as
defined below) to April 23, 1999; (iv) modifies certain of the representations
and covenants provided by the Company and the Purchaser and the Parent, due to
certain recent developments with respect to the Company that are described below
under "Recent Developments Regarding the Company" (the "Cotton Liability"); (v)
provides Parent the option to effect the Merger as a Short Form Merger (as
defined below) or otherwise; and (vi) eliminates the obligation of the Company
to pay Parent the Fee or Expenses in the event the Merger Agreement is
terminated as a result of the Cotton Liability.
The Board of Directors of the Company has determined that the Merger
Agreement, as amended by the Amendment, and the transactions contemplated
thereby, including each of the Offer and the Merger, are fair to and in the best
interests of the stockholders of the Company and continues to recommend that the
holders of the Shares accept the offer and tender their Shares to the Purchaser.
Purchase Price. The purchase price to be paid by RSA Acquisition Corp.,
subject to the terms and conditions of the Offer, for each Share validly
tendered and not properly withdrawn in response to its offer to purchase for
cash all outstanding Shares is increased to $14.20 net per Share from $14.125
net per Share.
Expiration Date. The Expiration Date is extended to April 23, 1999. Upon
the terms and subject to the conditions of the Offer (including, if the Offer is
further extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered and not properly withdrawn on or prior to 2:00 p.m., New York
City time, on April 23, 1999.
Acceptance for Payment and Payment for Shares. Upon the terms and subject
to the conditions of the Offer (including, if the Offer is further extended or
amended, the terms and conditions of any such extension
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or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered and not properly withdrawn on or prior to the Expiration Date
as soon as practical after the Expiration Date.
Certain Conditions of the Offer. Clause (ii) of the first full paragraph
of Section 15, entitled "Certain Conditions of the Offer", of the Original Offer
to Purchase is deleted in its entirety and replaced with the following:
"(ii) at any time on or after the date of the Merger Agreement and prior to
the Expiration Date, any of the following conditions occurs or has occurred:"
Source and Amount of Funds. A total of $210.8 million is expected to be
required to (i) fund payment of the cash consideration in the Offer and the
Merger and (ii) pay the fees and expenses incurred in connection with such
transactions and the financings thereof. The transactions contemplated by the
Merger Agreement, as amended, will be funded by (i) approximately $90 million in
equity investment contributions made by JWCP or one of its affiliates to the
Parent (the "Equity Investment"), (ii) approximately $65.8 million of borrowings
by the Company pursuant to a senior secured credit facility (the "New Credit
Facility") with a group of financial institutions led by NationsBank, N.A.,
NationsBanc Montgomery Securities LLC and DLJ Capital Funding, Inc. which
facility provides for aggregate commitments of up to $190 million and (iii)
approximately $55 million of unsecured, pay-in-kind subordinated debt issued by
the Parent to JWCP or one of its affiliates (the "JWC Note"). If the Debt Offer
is consummated, a total of $311.8 million is expected to be required to (i) fund
payment of the cash consideration in the Offer and the Merger, (ii) repay or
repurchase certain indebtedness of the Company (including pursuant to the Debt
Offer) and (iii) pay the fees and expenses incurred in connection with such
transactions and the financings thereof. If the Debt Offer is consummated, the
transactions contemplated by the Merger Agreement, as amended, and the Debt
Offer will be funded by (i) the Equity Investment, (ii) the JWC Note and (iii)
approximately $166.8 million of borrowings by the Company under the New Credit
Facility.
In return for its Equity Investment, JWCP or one of its affiliates will
receive shares of common stock, par value $.01 per share (the "Parent Common
Stock"), issued by Parent. Following the consummation of the Offer and the
Merger, JWCP and its affiliates will own all of the outstanding capital stock of
Parent.
The New Credit Facility will be a senior secured facility consisting of a
$25 million revolving credit facility (the "Revolving Credit Facility") and a
term loan facility of up to $165 million (the "Term Loan Facility"). The Term
Loan Facility will consist of a $65 million senior secured Tranche A Facility
and a $100 million senior secured Tranche B Facility. The Purchaser will be the
initial borrower for drawings under the Term Loan Facility which will be used to
fund that portion of the cash consideration in the Offer not funded by the
proceeds of the Equity Investment and the JWC Note. The Company, as the
surviving corporation in the Merger, will be the borrower under the Term Loan
Facility for drawings which are used to fund the repayment of certain existing
indebtedness of the Company and the payment of fees and expenses incurred in
connection with the Offer and Merger and any borrowings made under the Revolving
Credit Facility. Upon consummation of the Merger, the Company will assume the
Purchaser's obligations under the Term Loan Facility and the JWC Note will be
refinanced with the proceeds of additional drawings under the New Credit
Facility. The Revolving Credit Facility will be available for working capital
requirements and general corporate purposes and shall include a sublimit for the
issuance of standby and commercial letters of credit.
The final maturity of the loans under the Tranche A Facility (the "Tranche
A Term Loans") will be the sixth anniversary of the closing of the New Credit
Facility (the "Credit Closing") with interim amortization commencing on the
ninth month after the Credit Closing. The final maturity of the loans under the
Tranche B Facility (the "Tranche B Term Loans," and together with the Tranche A
Term Loans, the "Term Loans") will be the eighth anniversary of the Credit
Closing, with minimal amortization of the initial aggregate Tranche B Term Loan
advances in each of the first six years, and the remainder amortized equally
over the final two years. The Revolving Credit Facility will be available until
the sixth anniversary of the Credit Closing, and extensions of credit
outstanding thereunder on such date will mature on such date. In the event that
more than $20 million in principal amount of the Senior Notes remains
outstanding after any payments for such Senior Notes required to be made by the
Company under the Senior Notes indenture, the maturity of the Term Loan Facility
and the Revolving Credit Facility will automatically be changed to January 31,
2005.
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Mandatory prepayments of loans under the New Credit Facility will be
required with (1) the proceeds of certain non-ordinary course asset sales and
other dispositions of property, (2) 75% of excess cash flow, which will be
reduced to 50% upon the achievement of certain minimum financial ratios and (3)
the proceeds of certain issuances of equity and debt securities, in each case
subject to certain exceptions.
With respect to the interest rates applicable to the New Credit Facility,
the borrower has the option of choosing interest rates per annum equal to a
margin (the "Applicable Margin") over either a domestic base rate or a
"eurodollar" rate. For loans made during the first six months after the closing
of the New Credit Facility, the Applicable Margin is constant; the interest rate
fluctuates only to the extent that the domestic base rate or eurodollar
borrowing rate changes, which changes occur based on factors independent of the
Company's financial performance. During such six-month period, (1) in the event
that the ratio of total debt of the borrower and its subsidiaries to the sum of
EBITDA of the borrower and its subsidiaries plus certain costs (the "Leverage
Ratio") is less than 4.0:1, the Applicable Margin under (a) the Tranche A
Facility and the Revolving Credit Facility will be 3.00% per annum in the case
of eurodollar borrowings and 2.00% per annum in the case of base rate
borrowings, and (b) the Tranche B Facility will be 3.50% per annum in the case
of eurodollar borrowings, and 2.50% per annum in the case of base rate
borrowings, (2) in the event that the Leverage Ratio is greater than or equal to
4.0:1, the Applicable Margin under (a) the Tranche A Facility and the Revolving
Credit Facility will be 3.25% per annum in the case of eurodollar borrowings and
2.25% per annum in the case of base rate borrowings, and (b) the Tranche B
Facility will be 3.75% per annum in the case of eurodollar borrowings, and 2.75%
per annum in the case of base rate borrowings and (3) in the event that the
Company repurchases more than $20 million in principal amount of the Senior
Notes after the closing of the Tender Offer pursuant to the Merger Agreement, as
amended, and in any event on or before April 30, 1999 (the "Credit Closing
Date") the Applicable Margin under (a) the Tranche A Facility and the Revolving
Credit Facility will be 3.25% per annum in the case of eurodollar borrowings and
2.25% per annum in the case of base rate borrowings, and (b) the Tranche B
Facility will be 3.75% per annum, in the case of eurodollar borrowings and 2.75%
per annum in the case of base rate borrowings. Interest rates applicable to
loans made after the six-month anniversary of the closing of the New Credit
Facility will fluctuate based both on changes in the domestic base rate and
eurodollar borrowing rate and on the Company's EBITDA and debt levels. During
any payment default under the loan documentation, the applicable borrower will
pay an additional 2.0% in interest on any outstanding loans.
Commencing on the Credit Closing Date, the borrower will pay a commitment
fee on the unused portions of (1) the Revolving Credit Facility of 0.50%
(calculated on a 360-day basis) and (2) the Term Loan Facility of 2.75%
(calculated on a 360-day basis), in each case, such fee to be payable quarterly
in arrears and on the date of termination or expiration of the commitments.
The borrower will pay letter of credit fees that are equal to the
Applicable Margin that would apply at such time to advances under the Revolving
Credit Facility, for which the borrower chose a eurodollar-based rate of
interest. In addition, the borrower will pay a fronting fee of 0.25% per annum
to the issuer of letters of credit for its own account. Both the letter of
credit fees and the fronting fees will be calculated on the amount available to
be drawn under each outstanding letter of credit.
The Company and each of the Parent, the Purchaser and, from and after the
consummation of the Merger, each of the existing and future direct and indirect
subsidiaries (with the exception of certain foreign subsidiaries) of the Parent
(collectively, the "Guarantors") will grant the administrative agent and the
various lenders under the New Credit Facility valid and perfected first priority
liens and security interests in substantially all of their assets.
The New Credit Facility will contain numerous operating and financial
covenants, including, without limitation, requirements to maintain minimum
ratios of EBITDA to interest, maximum levels of debt in relation to EBITDA and a
minimum fixed-charge coverage ratio. In addition, the New Credit Facility will
include covenants relating to the delivery of financial statements, reports and
notices, limitations on liens, limitations on sales and other disposals of
assets, limitations on debt and other liabilities, limitations on capital
expenditures, limitations on investments, mergers, acquisitions, loans and
advances, limitations on dividends and other distributions, limitation on
prepayment, maintenance of property, environmental matters, employee
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benefit matters, maintenance of insurance, nature of business, compliance with
applicable laws, corporate existence and rights, payment of taxes and access to
information and properties. The New Credit Facility will also contain events of
default usual and customary in transactions of this nature.
The JWC Note will be unsecured pay-in-kind subordinated debt issued by the
Parent to JWCP or one of its affiliates. The JWC Note shall be subordinated to
the prior payment in full of all senior debt, including but not limited to, the
effective subordination of the JWC Note to the Existing Notes and the New Credit
Facility. The JWC Note will bear interest at the rate of 12.5% per annum, paid
in kind quarterly in arrears, with such interest to be computed on the basis of
twelve 30-day months in a year of 360 days. The final maturity date for the JWC
Note shall be eight and one-half years after the closing date. The JWC Note
shall contain covenants usual and customary for transactions of this nature and
shall contain events of default usual and customary for transactions of this
nature, including (i) the failure to pay principal when due and (ii) events of
insolvency, bankruptcy and judgment defaults.
Merger Agreement; Shareholders Agreement; Purpose of the Offer; the Merger;
Plans for the Company. On April 8, 1999, the parties to the Merger Agreement
executed the Amendment. Pursuant to the Amendment, the purchase price has been
increased from $14.125 net per Share to $14.20 net per Share and the Expiration
Date has been extended to April 23, 1999. The Amendment also provides that
either party may terminate the Merger Agreement if, among other things, the
Purchaser shall have failed, subject to certain exceptions, to pay for the
Common Shares pursuant to the Offer by April 23, 1999 (the "Outside Date"),
thereby extending the Outside Date by 15 days from the date originally
contemplated. The Amendment also modifies certain of the representations and
covenants provided by the Company and the Purchaser and the Parent due to
certain recent developments with respect to the Company that are described below
(see "Recent Developments Regarding the Company"). Pursuant to the Amendment, in
the event that Parent, the Purchaser or any other subsidiary of Parent shall
acquire at least 90% of the outstanding Shares pursuant to the Offer if the
Parent, the Purchaser or any other subsidiary of Parent determines in its sole
discretion, to utilize the provisions of Section 253 of the DGCL, the parties
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the consummation of the Offer, without a
meeting of the stockholders of the Company, in accordance with Section 253 of
the DGCL (the "Short-Form Merger"). The determination to use the Short-Form
Merger to effect the Merger is, notwithstanding the acquisition of 90% or more
of the outstanding Shares pursuant to the Offer, at the sole discretion of the
Parent, the Purchaser or any other subsidiary of the Parent. There are therefore
no assurances that the Short-Form Merger will be used to effect the Merger. The
Amendment provides that if the Merger Agreement is terminated by Parent or
Purchaser as a result of the Cotton Liability, Parent and Purchaser shall not be
entitled to either the Fee or their Expenses.
The preceding discussion is a summary of the provisions of the Amendment, a
full copy of which is included as Exhibit No. (c)(3) to the Amendment No. 3 to
the Schedule 14d-1 filed with the Commission. Shareholders are urged to read the
Amendment in its entirety.
Certain Legal Matters and Regulatory Approvals. On March 1, 1999, the
Parent filed with the FTC and the Antitrust Division the Premerger Notification
and Report Form in connection with the purchase of the Shares pursuant to the
Offer. On March 15, 1999 the 15-calendar day waiting period expired without the
FTC or the Antitrust Division having requested an extension for additional
information or documentary material.
Recent Developments Regarding the Company. The Company has informed JWCP,
the Parent and the Purchaser that during 1998 the Company purchased bleached
cotton from an outside supplier for use in its pharmaceutical coil business. The
Company converted this cotton from incoming bales into a coil, which was shipped
to its pharmaceutical customers to be used as filler in bottles of oral dosage
forms of pharmaceutical products to prevent breakage. During the period from
March through November of 1998, the process by which the Company's supplier
bleached this cotton was changed by introducing an expanded hydrogen peroxide
treatment. Subsequent testing indicated varying levels of residual hydrogen
peroxide in the cotton processed during this time period and the supplier in
November 1998 reduced the levels of hydrogen peroxide in its bleaching process.
The Company, to date, has received complaints from approximately 10 customers
alleging defects in the cotton supplied to them during the period and asserting
these defects may have led to changes in
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their products' pharmaceutical appearance, and with respect to a limited number
of products, potency. As of April 8, 1999, the Company has received notice of 2
claims for damages in the aggregate amount of approximately $1.7 million which
the Company believes primarily relate to alleged lost sales and merchandise
damage, and it is possible that additional damage claims might be forthcoming.
On March 2, 1999, at the request of the Food and Drug Administration, the
Company notified all (numbering approximately 85) of its pharmaceutical cotton
coil customers that it was withdrawing from the market those lots of cotton coil
which may contain elevated levels of hydrogen peroxide.
The Company has informed JWCP, the Parent and the Purchaser that the
Company has notified its supplier that, in the Company's view, the supplier is
primarily responsible for damages, if any, that may arise out of this matter. At
this time, the Company's supplier has agreed to be responsible for the cost of
fiber, bleaching and freight of returned product, but has not agreed to be
responsible for any other damages and has expressed an intention to assert
defenses to the Company's claims. The Company's insurance carriers have been
timely notified of the existence of the claim and have agreed to provide defense
in a reservation of rights letter, but are continuing to evaluate whether
coverage would apply to all aspects of the claims.
THE DEALER MANAGERS FOR THE OFFER ARE:
DONALDSON, LUFKIN & JENRETTE NATIONSBANC MONTGOMERY SECURITIES LLC
April 13, 1999
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EXHIBIT 11(B)(3)
April 8, 1999
RSA Acquisition Corp.
c/o J.W. Childs Equity Partners II, L.P.
One Federal Street
21st Floor
Boston, MA 02110
Attention: Mr. Adam Suttin
AMERICAN SAFETY RAZOR COMPANY
Ladies and Gentlemen:
Reference is made to the Commitment Letter dated February 12, 1999
(together with the Summary of Terms and Conditions attached thereto, the
"Commitment Letter") from NationsBank, N.A. ("NationsBank"), NationsBanc
Montgomery Securities LLC ("NMS") and DLJ Capital Funding, Inc. ("DLJ") to RSA
Acquisition Corp. (the "Purchaser"). Terms defined in the Commitment Letter and
not otherwise defined herein shall have the meanings set forth therein.
The Commitment Letter provides that the commitments and undertakings of
NationsBank, DLJ and NMS hereunder will expire on the earliest of (a) April 16,
1999 (unless the Closing Date occurs on or prior thereto), (b) the closing of
the Stock Tender Offer without the use of the Senior Credit Facilities and (c)
the acceptance by Holdings or any of its affiliates of an offer for all or any
substantial part of the capital stock or property and assets of Holdings and its
subsidiaries other than as part of the Transaction. Each of NationsBank, DLJ and
NMS are willing to extend the date referred to in clause (a) above to April 30,
1999 subject to the following conditions:
(a) NationsBank, NMS and DLJ will have, on or prior to April 8, 1999,
all information from Childs and the Company that NationsBank, NMS
and DLJ determine, in their reasonable judgment, to be necessary to
be included in the information memorandum to be distributed to the
potential Lenders, provided that any such information which relates
to the Cotton Liability (as defined below) must be received by
NationsBank, NMS and DLJ on April 8, 1999.
(b) The initial bank meeting of the potential Lenders shall be held on
or prior to April 14, 1999.
(c) On April 8, 1999, JWC or the Company will enter a binding commitment
for incremental insurance coverage relating to the Cotton Liability;
provided that the amount of such insurance shall be equal to
$50,000,000.
(d) On April 8, 1999, the Company will agree to make the representation
and warranty set forth on Annex I hereto in the definitive loan
documentation for the Senior Credit Facilities.
(e) The Closing Date shall not occur prior to April 22, 1999.
Each of the undersigned confirms that the condition precedent described in
the Term Sheet in clause (i) under the caption "Conditions Precedent to Closing"
has been satisfied.
For purposes of this letter, "Cotton Liability" means the potential
liability arising from the higher residual levels of hydrogen peroxide in the
cotton that the Company's pharmaceutical coil business received from its
supplier during the period from March through November of 1998, and "Subject
Cotton Coil" means the cotton coil produced by the Company and its subsidiaries
from the cotton received by its supplier during the period from March through
November of 1998.
<PAGE> 2
The Purchaser hereby agrees that the Arrangement Fee referred to in the Fee
Letter shall be an amount equal to 2.50% of the aggregate principal amount of
the commitments of NationsBank and DLJ under the Commitment Letter, provided
that the Prefunding Fee shall be eliminated.
The Purchaser hereby also agrees that if the syndication of the Senior
Credit Facilities has not been successfully completed on or prior to the initial
funding under the Senior Credit Facilities, the Purchaser and the Company shall
agree to such amendments and modifications of the definitive loan documentation
as may be reasonably requested by potential members of the syndicate for the
Senior Credit Facilities. The Purchaser hereby further agrees that the
definitive loan documentation will prohibit the sale of the Holdings Debt by JWC
to third parties unless,at the time of any such sale, the remaining unused
portion of the commitments under the Tranche B Term Facility shall be
terminated.
Very truly yours,
NATIONSBANK, N.A.
By:
--------------------------------------
Title:
NATIONSBANC MONTGOMERY
SECURITIES LLC
By:
--------------------------------------
Title:
DLJ CAPITAL FUNDING, INC.
By:
--------------------------------------
Title:
ACCEPTED AND AGREED TO
AS OF APRIL , 1999
RSA ACQUISITION CORP.
By:
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Title:
