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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934)
CONSO INTERNATIONAL CORPORATION
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(Name of the Issuer)
CONSO INTERNATIONAL CORPORATION
CIC ACQUISITION CO.
CIC ACQUISITION SUB, INC.
J. CARY FINDLAY
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(Name of Persons Filing Statement)
COMMON STOCK
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(Title of Class of Securities)
20854R 10 5
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(CUSIP Number of Class of Securities)
J. Cary Findlay
Conso International Corporation
513 North Duncan Bypass
Union, South Carolina 29379
Telephone 864/427-9004
Copies to:
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J. Norfleet Pruden, III Geoffrey W. Levin
Kennedy Covington Lobdell & Hickman, LLP Kirkland & Ellis
Bank of America Corporate Center, Suite 4200 Citicorp Center
100 North Tryon Street 153 East 53rd Street
Charlotte, North Carolina 28202-4006 New York, New York 10022-4675
Telephone 704/331-7442 Telephone 212/446-4904
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications On Behalf Of
Persons Filing Statement)
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This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C, or Rule
13e-3(c) under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities
Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [X]
Calculation Of Filing Fee
Transaction Valuation(1) Amount Of Filing Fee
--------------------- --------------------
$66,928,500 $13,385.70
[X] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
Amount previously paid: $13,385.70
Filing party: Conso International Corporation
Form or registration no.: Schedule 14A - Preliminary Proxy Statement
Date filed: October 20, 1999
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(1) Pursuant to Exchange Act Rule 0-11(b), 7,436,500 shares of Common
Stock of the Issuer are valued at $9.00 per share, based upon cash
merger consideration per share.
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INTRODUCTORY NOTE
This Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule
13E-3") relates to the proposed merger (the "Merger") of CIC Acquisition Sub,
Inc., a South Carolina corporation ("Acquisition Sub"), with and into Conso
International Corporation, a South Carolina corporation (the "Company"),
pursuant to the Merger Agreement dated as of October 5, 1999, by and among the
Company, Acquisition Sub and CIC Acquisition Co., a Delaware corporation
("Parent"), and the related Plan of Merger. In the Merger, certain shares of
the Company's Common Stock held by J. Cary Findlay, the Company's Chairman of
the Board, President and Chief Executive Officer, will be converted into stock
of the surviving corporation.
The cross reference sheet below is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the Proxy Statement
(the "Proxy Statement"), filed by the Corporation with the Securities and
Exchange Commission in preliminary form on October 20, 1999 of the information
required to be included in response to the items of Schedule 13E-3. The
information set forth in the Proxy Statement (including the appendixes thereto)
is hereby expressly incorporated herein by reference and the responses to each
item are qualified in their entirety by the information contained in the Proxy
Statement.
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CROSS REFERENCE SHEET
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Item in Schedule 13E-3 Caption or Location in Proxy Statement
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Item 1(a) Outside Front Cover Page; "Summary - The
Parties to the Transaction"; "The Special
Meeting - General"; "Certain Information
Concerning the Transaction Participants -
Conso"
Item 1(b) "Summary - The Special Meeting"; "The
Special Meeting - Record Date and Voting"
Items 1(c), (d) and (f) "Comparative Market Price Data and Dividends"
Item 1(e) Not applicable
Items 2(a) - (d) and (g) "Summary - The Parties to the
Transaction"; "Certain Information
Concerning the Transaction Participants"
Items 2(e) and (f) Not applicable
Items 3(a) and (b) "Summary - The Merger Agreement";
"Comparative Market Price Data and
Dividends"; "Special Factors - Background
of the Merger"; "Special Factors - Interests
of Certain Persons in the Merger"; "The
Merger Agreement"; "Financing of the
Merger"
Item 4(a) "Summary"; "Special Factors";
"The Special Meeting"; "The Merger"; "The
Merger Agreement"; Appendix A.
Item 4(b) "Summary - The Parties to the Transaction";
"Summary - The Merger"; "Summary - Certain
Effects of the Merger"; "Summary -
Interests of Certain Persons in the
Merger"; "Summary - The Merger Agreement";
"Summary - Financing of the Merger";
"Special Factors - Certain Effects of the
Merger"; "Special Factors - Background of
the Merger"; "Special Factors - Interests
of Certain Persons in the Merger"; "The
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Merger - Effects of the Merger"; "The
Merger - Plans or Proposals After the
Merger"; "The Merger Agreement -
Consideration to Be Received by
Shareholders"; "Financing of the Merger -
General"; "Financing of the Merger -
Equity Investments"
Items 5(a) - (g) "Summary - Certain Effects of the Merger";
"Special Factors - Certain Effects of the
Merger"; "Special Factors - Interests of
Certain Persons in the Merger"; "The Merger
- Effects of the Merger"; "The Merger -
Plans or Proposals After the Merger";
"Financing of the Merger - Equity
Investment"; "Certain Information
Concerning The Transaction Participants -
Directors and Executive Officers of Conso";
"Certain Information Concerning The
Transaction Participants - Parent and
Acquisition Sub"
Item 6(a) "Summary - Interests of Certain Persons in
the Merger"; "Summary - Financing of the
Merger"; "Special Factors - Interests of
Certain Persons in the Merger"; "Financing
of the Merger"
Item 6(b) "The Merger Agreement - Termination Fees;
Expenses"
Item 6(c) "Financing of the Merger - Senior Credit
Facility"
Item 6(d) Not Applicable
Items 7(a) - (d) "Summary - Certain Effects of the Merger";
"Summary - Interests of Certain Persons in
the Merger"; "Summary - U.S. Federal Income
Tax Consequences"; "Special Factors -
Background of the Merger"; "Special Factors
- Conso's Reasons for the Merger;
Recommendation of the Board of Directors";
"Special Factors - Certain Effects of the
Merger"; "Special Factors - Interests of
Certain Persons in the Merger";
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"Special Factors - Certain U.S. Federal
Income Tax Consequences of the Merger to
Shareholders"; "Special Factors - Effect of
the Merger on Conso Stock Options"
Items 8(a) - (f) "Summary - Quorum and Vote Required";
"Special Factors - Background of the
Merger"; "Special Factors - Opinion of
Financial Advisor"; "Special Factors -
Conso's Reasons for the Merger;
Recommendation of the Board of Directors";
"Special Factors - Conso's and J. Cary
Findlay's Belief as to the Fairness of the
Merger"; "Special Factors - Parent's and
Acquisition Sub's Belief as to the Fairness
of the Merger"; "The Special Meeting -
Record Date and Voting"
Items 9(a) - (c) "Special Factors - Background of the
Merger"; "Special Factors - Opinion of
Financial Advisors"; Appendix C
Item 10(a) "Security Ownership of Certain Beneficial
Owners and Management"
Item 10(b) "Comparative Market Price Data and
Dividends"
Item 11 "Summary - Interests of Certain Persons in
the Merger"; "Special Factors - Interests
of Certain Persons in the Merger"; "The
Special Meeting - Record Date and Voting";
"The Merger Agreement"; Appendix A
Items 12(a) and (b) "Summary - Voting of Shares of Certain
Holders"; "Special Factors - Conso's
Reasons for the Merger; Recommendation of
the Board of Directors"; "Special Factors -
Interests of Certain Persons in the
Merger"; "The Special Meeting - Record Date
and Voting"
Items 13(a) and (b) "Summary - Dissenter's Rights"; "The Merger
- Dissenter's Rights"; Appendix B
Item 13(c) Not Applicable
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Items 14 (a) "Selected Historical Consolidated Financial
Data"
Item 14 (b) Not Applicable
Item 15(a) "Summary"; "Special Factors - Background of
the Merger"; "Special Factors - Opinion of
Financial Advisor"; "Special Factors -
Interests of Certain Persons in the
Merger"; "The Special Meeting -
Solicitation of Proxies"
Item 15(b) Not Applicable
Item 16 Proxy Statement (and Appendixes thereto)
generally
Item 17(e) Appendix B
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ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) Reference hereby is made to the information set forth on the cover
page and the headings "Summary - The Parties to the Transaction", "The
Special Meeting - General" and "Certain Information Concerning the
Transaction Participants - Conso" of the Proxy Statement, which
information is incorporated herein by reference.
(b) Reference hereby is made to the information set forth under the
headings "Summary - The Special Meeting" and "The Special Meeting -
Record Date and Voting" in the Proxy Statement, which information is
incorporated herein by reference.
(c) Reference hereby is made to the information set forth under the
heading "Comparative Market Price Data and Dividends" in the Proxy
Statement, which information is incorporated herein by reference.
(d) Reference hereby is made to the information set forth under the
heading "Comparative Market Price Data and Dividends" in the Proxy
Statement, which information is incorporated herein by reference.
(e) Not applicable.
(f) Reference hereby is made to the information set forth under the
heading "Comparative Market Price Data and Dividends" in the Proxy
Statement, which information is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d) and (g) Reference hereby is made to the information set forth under
the headings "Summary - The Parties to the Transaction" and "Certain
Information Concerning the Transaction Participants" in the Proxy Statement,
which information is incorporated herein by reference.
(e)-(f) Not applicable.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a) Reference hereby is made to the information set forth under the
headings "Summary - The Merger Agreement," "Comparative Market Price
Data and Dividends," "Special Factors - Background of the Merger,"
"Special Factors - Interests of Certain Persons in the Merger," "The
Merger Agreement" and "Financing of the Merger" in the Proxy
Statement, which information is incorporated herein by reference.
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(b) Reference hereby is made to the information set forth under the
headings "Summary - The Merger Agreement," "Comparative Market Price
Data and Dividends," "Special Factors - Background of the Merger,"
"Special Factors - Interests of Certain Persons in the Merger," "The
Merger Agreement" and "Financing of the Merger" in the Proxy
Statement, which information is incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) Reference hereby is made to the information set forth under the
headings "Summary," "Special Factors,", "The Special Meeting," "The
Merger," "The Merger Agreement" and Appendix A in the Proxy Statement,
which information is incorporated herein by reference.
(b) Reference hereby is made to the information set forth under the
headings "Summary - The Parties to the Transaction," "Summary - The
Merger," "Summary - Certain Effects of the Merger," "Summary -
Interests of Certain Persons in the Merger," "Summary - The Merger
Agreement," "Summary - Financing of the Merger," "Special Factors -
Background of the Merger," "Special Factors - Certain Effects of the
Merger," "Special Factors - Interests of Certain Persons in the
Merger," "The Merger - Effects of the Merger," "The Merger - Plans or
Proposals After the Merger," "The Merger Agreement - Consideration to
Be Received by Shareholders," "Financing of the Merger - General" and
"Financing of the Merger - Equity Investments" in the Proxy Statement,
which information is incorporated herein by reference.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a)-(g) Reference hereby is made to the information set forth under the
headings "Summary - Certain Effects of the Merger," "Special Factors -
Certain Effects of the Merger," "Special Factors - Interests of
Certain Persons in the Merger," "The Merger - Effects of the Merger"
"The Merger - Plans or Proposals After the Merger," "Financing of the
Merger - Equity Investment," "Certain Information Concerning The
Transaction Participants - Directors and Executive Officers of Conso,"
and "Certain Information Concerning The Transaction Participants -
Parent and Acquisition Sub" in the Proxy Statement, which information
is incorporated herein by reference.
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ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) Reference hereby is made to the information set forth under the
headings "Summary - Interests of Certain Persons in the Merger,"
"Summary - Financing of the Merger," "Special Factors - Interests of
Certain Persons in the Merger" and "Financing of the Merger" in the
Proxy Statement, which information is incorporated herein by
reference.
(b) Reference hereby is made to the information set forth under the
heading "The Merger Agreement Termination Fees; Expenses" in the Proxy
Statement, which information is incorporated herein by reference.
(c) Reference hereby is made to the information set forth under the
heading "Financing of the Merger Senior Credit Facility" in the Proxy
Statement, which information is incorporated herein by reference.
(d) Not applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a)-(d) Reference hereby is made to the information set forth under the
headings "Summary - Certain Effects of the Merger," "Summary -
Interests of Certain Persons in the Merger," "Summary - U.S. Federal
Income Tax Consequences," "Special Factors - Background of the
Merger," "Special Factors - Conso's Reasons for the Merger;
Recommendation of the Board of Directors," "Special Factors - Certain
Effects of the Merger," "Special Factors - Interests of Certain
Persons in the Merger" and "Special Factors - Certain U.S. Federal
Income Tax Consequences of the Merger to Shareholders," "Special
Factors - Effect of the Merger on Conso Stock Options"in the Proxy
Statement, which information is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a)-(f) Reference hereby is made to the information under the headings
"Summary -Quorum and Vote Required," "Special Factors - Background of
the Merger," "Special Factors - Opinion of Financial Advisor,"
"Special Factors - Conso's Reasons for the Merger; Recommendation of
the Board of Directors," "Special Factors - Conso's and J. Cary
Findlay's Belief as to the Fairness of the Merger," "Special Factors -
Parent's and Acquisition Sub's Belief as to the Fairness of the
Merger" and "The Special Meeting -Record Date and Voting" in the Proxy
Statement, which information is incorporated herein by reference.
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ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a)-(c) Reference hereby is made to the information under the headings
"Special Factors - Background of the Merger," "Special Factors -
Opinion of Financial Advisor" and in Appendix C in the Proxy
Statement, which information is incorporated herein by reference.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) Reference hereby is made to the information under the heading
"Security Ownership of Certain Beneficial Owners and Management" in
the Proxy Statement, which information is incorporated herein by
reference.
(b) Reference hereby is made to the information under the heading
"Comparative Market Price Data and Dividends" in the Proxy Statement,
which information is incorporated herein by reference.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
Reference hereby is made to the information under the headings
"Summary - Interests of Certain Persons in the Merger," "Special
Factors - Interests of Certain Persons in the Merger," "The Special
Meeting Record Date and Voting," "The Merger Agreement" and the
information in Appendix A in the Proxy Statement, which information is
incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a)-(b) Reference hereby is made to the information under the headings
"Summary -Voting of Shares of Certain Holders," "Special Factors -
Conso's Reasons for the Merger; Recommendation of the Board of
Directors," "Special Factors - Interests of Certain Persons in the
Merger" and "The Special Meeting - Record Date and Voting," of the
Proxy Statement, which information is incorporated herein by
reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a)-(b) Reference hereby is made to the information under the headings
"Summary - Dissenter's Rights," "The Merger - Dissenter's Rights" and
in Appendix B in the Proxy Statement, which information is
incorporated herein by reference.
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(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) Reference hereby is made to the information under the heading
"Selected Historical Consolidated Financial Data" in the Proxy
Statement, which information is incorporated herein by reference.
(b) Not applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) The Issuer is engaged in the Rule 13e-3 transaction. As such, its
officers and employees are being used in connection with the Rule
13e-3 transaction. Reference hereby is made to the information under
the headings "Summary," "Special Factors - Background of the Merger,"
"Special Factors - Opinion of Financial Advisor" and "Special Factors
- Interests of Certain Persons in the Merger" in the Proxy Statement,
which information is incorporated herein by reference.
(b) Not applicable.
ITEM 16. ADDITIONAL INFORMATION.
Reference hereby is made to the Proxy Statement, the Appendixes
thereto and the exhibits hereto, which contain additional information
regarding the Merger, which information is incorporated herein by
reference.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
(a) Commitment Letter, dated October 1, 1999, by and among Suntrust
Equitable Securities Corporation, Suntrust Bank, Atlanta, Suntrust
Banks, Inc., Citicorp Venture Capital Limited and CIC Acquisition Co.
(b) Opinion of the Robinson-Humphrey Company, LLC (Attached as Appendix C
to the Proxy Statement and incorporated herein by reference)
(c) (1) Merger Agreement, dated as of October 5, 1999, by and among
Parent, Acquisition Sub, and the Company (Attached as Appendix A to
the Proxy Statement and incorporated herein by reference)
(2) Support Agreement, dated as of October 5, 1999, between CIC
Acquisition Sub, Inc. and J. Cary Findlay
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(3) Confidentiality Agreement dated May 5, 1999 referred to in
Section 4.3 of the Merger Agreement
(d) Proxy Statement (filed by the Company in preliminary form on
October 20, 1999 and incorporated herein by reference)
(e) Chapter 13 of the South Carolina Business Corporation Act (Attached as
Appendix B to the Proxy Statement and incorporated herein by
reference)
(f) Not applicable.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Date: October 20, 1999
CONSO INTERNATIONAL CORPORATION
By /s/ J. Cary Findlay
----------------------------------
Name: J. Cary Findlay
Title: Chairman, President and C.E.O.
CIC ACQUISITION CO.
By /s/ Michael Bradley
----------------------------------
Name: Michael Bradley
Title: Vice President
CIC ACQUISITION SUB, INC.
By /s/ Michael Bradley
----------------------------------
Name: Michael Bradley
Title: Vice President
/s/ J. Cary Findlay
-----------------------------------
J. Cary Findlay
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
(a) Commitment Letter, dated October 1, 1999, by and among Suntrust
Equitable Securities Corporation, Suntrust Bank, Atlanta, Suntrust
Banks, Inc., Citicorp Venture Capital Limited and CIC Acquisition Co.
(b) Opinion of the Robinson-Humphrey Company, LLC (Attached as Appendix C
to the Proxy Statement and incorporated herein by reference)
(c)(1) Merger Agreement, dated as of October 5, 1999, among Parent,
Acquisition Sub, and the Company (Attached as Appendix A to the Proxy
Statement and incorporated herein by reference)
(c)(2) Support Agreement, dated as of October 5, 1999, between CIC
Acquisition Sub, Inc. and J. Cary Findlay
(c)(3) Confidentiality Agreement dated May 5, 1999 referred to in Section 4.3
of the Merger Agreement
(d) Proxy Statement (filed by the Company in preliminary form on
October 20, 1999 and incorporated herein by reference)
(e) Chapter 13 of the South Carolina Business Corporation Act (Attached as
Appendix B to the Proxy Statement and incorporated herein by
reference)
(f) Not applicable.
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SunTrust Equitable Securities Corporation
Post Office Box 4418
Atlanta, Georgia 30302-4418
[SUNTRUST LOGO]
October 1, 1999
CIC Acquisition Co.
c/o Citicorp Venture Capital Limited
399 Park Avenue 14th Floor
New York, NY 10043
Attention: Mr. Michael Bradley
Vice President
Citicorp Venture Capital Limited
Re: Credit facilities totaling $93,000,000 (the "Credit Facilities")
arranged by SunTrust Equitable Securities Corporation ("SunTrust
Equitable Securities") to include senior secured credit facilities
totaling $78,000,000 (the "Senior Credit Facilities") committed by
SunTrust Bank, Atlanta ("SunTrust Bank") and subordinated debt totaling
$15,000,000 (the "Subordinated Debt") committed by SunTrust Banks, Inc.
("STBI", and together with SunTrust Bank and SunTrust Equitable
Securities, "SunTrust") for the recapitalization of Conso International
Corporation (with its subsidiaries, taken as a whole, "Conso" or the
"Company") through a reverse subsidiary merger with a subsidiary of CIC
Acquisition Co. ("CIC", "You" or the "Client"), an acquisition entity
formed and sponsored by Citicorp Venture Capital Limited ("CVC")
Dear Gentlemen:
Each of SunTrust Bank and STBI are pleased to confirm its respective
commitment to provide the entire amount of the Credit Facilities, subject to the
terms and conditions set forth in this letter and the terms attached hereto as
Annex A and Annex B, respectively (collectively, this "Commitment Letter"), for
the purposes of financing a CVC sponsored recapitalization of Conso by CIC and
certain members of management of the Company (the "Recapitalization"), paying
transaction related expenses and financing ongoing working capital needs of the
Company.
In accordance with CVC's request, SunTrust Bank agrees to act as sole
Agent for the Senior Credit Facilities, subject to the terms and conditions of
this Commitment Letter. In addition, SunTrust Equitable Securities will use its
commercially reasonable efforts to arrange, in consultation with You, a
syndicate of lenders (individually, a "Senior Lender" and collectively,
including SunTrust Bank, the "Senior Lenders") to purchase commitments in the
Senior Credit Facilities as provided for in a certain engagement letter between
You and SunTrust Equitable Securities dated as of even date herewith (the
"Engagement Letter"). SunTrust Bank will act as sole Agent for such Senior
Lenders in connection with the Senior Credit Facilities and assumes, in issuing
this Commitment Letter, that such a syndicate of Senior Lenders will be
assembled.
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Conso International Corporation
October 1, 1999
Page 2
The Senior Lenders invited by SunTrust Equitable Securities to
participate in this transaction will be subject to approval by You, such
approval not to be unreasonably withheld or delayed. As part of its syndication
effort, SunTrust Equitable Securities reserves the right to appoint co-agents or
to offer any other titles or share any portion of the fee received by SunTrust
at closing with other Senior Lenders as deemed appropriate by SunTrust.
Also in accordance with CVC's request, STBI will initially purchase the
Subordinated Debt and SunTrust Equitable Securities will use its commercially
reasonable efforts to locate one or more lenders (individually, a "Subordinated
Debt Lender"; collectively, including STBI, the "Subordinated Debt Lenders"; and
together with a Senior Lender or the Senior Lenders, a "Lender" or the
"Lenders") to purchase a portion of the Subordinated Debt from STBI as provided
for in the Engagement Letter provided, that in any event, at closing STBI shall
hold no less than $5,000,000 of the Subordinated Debt.
A. TERMS AND CONDITIONS OF THE CREDIT FACILITIES.
The Credit Facilities will have principal terms and conditions as set
forth in the term sheets attached hereto as Annex A and Annex B (the "Term
Sheets"). In addition, SunTrust Bank, STBI and the Lenders may require certain
other customary terms and conditions found in credit facilities of this type,
which may not be specifically listed on the Term Sheets.
B. SYNDICATION.
As set forth above, while SunTrust Bank and STBI have provided commitments for
the entire amount of the Credit Facilities subject to the terms and conditions
hereof, it is the intent of SunTrust to syndicate the Credit Facilities and, as
a material inducement to SunTrust Bank and STBI issuing the commitments set
forth herein, You have agreed to cooperate in such syndication process. SunTrust
Equitable Securities will manage all aspects of such syndications in
consultation with SunTrust Bank, STBI and the Clients, including the timing of
all offers to potential Lenders, the allocation of commitments, and the
determination of compensation provided and titles (such as co-agent, managing
agent, etc.). As consideration for this undertaking and the obligations of
SunTrust Bank and STBI hereunder, You agree that SunTrust Bank shall be the sole
Agent with respect to the Senior Credit Facilities, that STBI will be the lead
underwriter with respect to the Subordinated Debt, and that SunTrust Equitable
Securities will act as sole Arranger with respect to the remaining syndicate and
that no additional agents, co-agents underwriters or arrangers will be
appointed, or other titles conferred, without the prior written consent of
SunTrust. You also agree that no Lender will receive any compensation for its
participation in the Credit Facilities except as expressly set forth in the Term
Sheets or as agreed to and offered by SunTrust Equitable Securities.
In addition, You agree to use commercially reasonable efforts to assist
SunTrust Equitable Securities in forming syndicates acceptable to SunTrust and
You. Your assistance shall include but not be limited to: (i) using commercially
reasonable efforts to make senior management and representatives of Conso and
CVC available to participate in meetings and to provide information to potential
Lenders and participants at such times and places as SunTrust
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CIC Acquisition Corporation
October 1, 1999
Page 3
Equitable Securities may reasonably request; (ii) using your existing lending
relationships, and requesting that Conso use its existing lending relationships,
to assist in the syndication process; and (iii) using commercially reasonable
efforts to provide to SunTrust all information reasonably deemed necessary by
SunTrust to complete the syndication subject to confidentiality agreements in
form and substance reasonably satisfactory to You and SunTrust.
In issuing the commitments and undertakings hereunder and in arranging
and syndicating the Credit Facilities, SunTrust is relying on the accuracy of
all information furnished by You and Conso without independent verification
thereof. In addition, SunTrust shall be entitled, until the later of March 31,
2000 or 90 days after the closing of the Credit Facilities, after consultation
with You, to change the structure, terms or pricing of the Senior Credit
Facilities and/or the Subordinated Debt if the syndication of the Senior Credit
Facilities and/or the Subordinated Debt cannot be completed, and if SunTrust
Equitable Securities determines that such changes are necessary in order to
ensure a successful syndication of the Senior Credit Facilities and/or the
Subordinated Debt; provided that (i) the amount of the Senior Credit Facilities
and/or the Subordinated Debt, and the definition of the Borrowing Base
(including the amounts to be added to the Borrowing Base during the first year
after the Closing), remain unchanged; (ii) in SunTrust Equitable Securities'
determination, the pricing terms and structure of the Senior Credit Facilities
and Subordinated Debt shall be reasonably consistent with comparable
syndications occurring then in the market; (iii) fees as provided for in the Fee
Letter remain unchanged; (iv) additional preferred and/or common equity is not
required and (v) additional warrants or other "equity-kickers" are not required.
To ensure an orderly and effective syndication of the Credit
Facilities, CIC further agrees that until the earlier of the closing of the
Credit Facilities or the termination of this Commitment Letter, CIC will not,
and will not permit any of its affiliates or agents to, syndicate or issue,
attempt to syndicate or issue, announce or authorize the announcement of the
syndication or issuance of, or engage in discussions concerning the syndication
or issuance of, any debt facility or debt security (including any renewals
thereof) in connection with the Recapitalization except with the prior written
consent of SunTrust.
C. FEES.
The fees payable to SunTrust Bank, as Agent, and SunTrust Equitable
Securities, as Arranger, are set forth in that certain fee letter between You
and SunTrust dated as of even date herewith (the "Fee Letter"). The obligations
of SunTrust pursuant to this Commitment Letter are subject to the execution and
return of the Fee Letter by the Clients, which Fee Letter constitutes an
integral part of this Commitment Letter.
D. CONDITIONS PRECEDENT.
The commitments and undertakings of SunTrust Bank, STBI, and SunTrust
Equitable Securities are subject to: (i) the preparation, execution and delivery
of mutually acceptable loan documentation, including a credit agreement
incorporating substantially the terms and conditions outlined in this Commitment
Letter; (ii) the absence of (a) a material adverse change in the business,
condition (financial or otherwise), operations, properties or prospects of the
Company as reflected in its consolidated financial statements as of March 31,
1999 and (b) any material change after the date hereof in loan syndication,
financial or capital market conditions
<PAGE> 4
CIC Acquisition Corporation
October 1, 1999
Page 4
that, in SunTrust Equitable Securities' commercially reasonable judgment, would
materially impair syndication of the Credit Facilities; (iii) all information
made available to SunTrust by You or Conso, or any of your respective
representatives, in connection with the transactions contemplated hereby shall
be, to the best of Your knowledge, complete and correct in all material respects
as of the time given, subject to any supplemental information provided to
SunTrust from time to time so that this statement remains true, and will not, to
the best of Your knowledge, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements were made, realizing that projections are no guarantee of
future performance; and (iv) the payment in full of all fees, expenses and other
amounts payable hereunder and under the Fee Letter; and (v) a closing of the
Credit Facilities on or prior to January 31, 2000.
E. INDEMNITIES, EXPENSES, ETC.
1. Indemnification. You further agree to indemnify and hold harmless
SunTrust Equitable Securities and each Lender (including SunTrust Bank and STBI)
and each director, officer, employee, affiliate, and agent thereof (each, an
"indemnified person") against, and to reimburse each indemnified person, upon
its demand, for any losses, claims, damages, liabilities or other expenses
("Losses") incurred by such indemnified person insofar as such Losses arise out
of or in any way relate to or result from this Commitment Letter, the Fee
Letter, or the financings contemplated hereby, including, without limitation,
Losses participating in any legal proceeding relating to any of the foregoing
(whether or not such indemnified person is a party thereto); provided that the
foregoing will not apply to any Losses to the extent that such Losses result
from the gross negligence or willful misconduct of such indemnified person or
from the breach by such indemnified person of its obligations under this
Commitment Letter, the Fee Letter or the financings contemplated hereby. . The
Clients' obligations under this paragraph shall remain effective whether or not
definitive financing documentation is executed and notwithstanding any
termination of this Commitment Letter.
2. CONSEQUENTIAL DAMAGES. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NEITHER SUNTRUST BANK, STBI, NOR SUNTRUST EQUITABLE SECURITIES SHALL BE
RESPONSIBLE OR LIABLE TO THE CLIENTS OR ANY OTHER PERSON OR ENTITY FOR ANY
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
THIS COMMITMENT LETTER, THE FEE LETTER, THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
3. Expenses. In further consideration of the commitments and
undertakings of SunTrust hereunder, and recognizing that in connection herewith
SunTrust will be incurring certain costs and expenses (including, without
limitation, fees and disbursements of counsel, costs of establishing a rating
for the purpose of distribution to institutional investors, due diligence,
syndication, transportation, duplication, messenger and mailing), You hereby
agree to pay, or reimburse SunTrust upon closing of the syndication of the
Credit Facilities or, if not closed on or prior to January 31, 2000, on demand
for, all such reasonable out-of-pocket costs and expenses (whether incurred
before or after the date hereof), regardless of whether any of the transactions
contemplated hereby are consummated. You also agree to pay all reasonable
out-of-pocket costs and expenses of SunTrust (including, without limitation,
reasonable fees and
<PAGE> 5
CIC Acquisition Corporation
October 1, 1999
Page 5
disbursements of counsel) incurred in connection with the enforcement of any of
their rights and remedies hereunder. The Clients' obligation in respect of costs
and expenses shall survive the expiration or termination of this Commitment
Letter.
F. SPECIAL DISCLOSURE.
SunTrust Equitable Securities is a wholly owned subsidiary of STBI and
an affiliate of SunTrust Bank. SunTrust Equitable Securities is a broker/dealer
registered with the Securities and Exchange Commission (SEC) and a member of the
National Association of Securities Dealers, Inc. (NASD) and the Securities
Investor Protection Corporation (SIPC). Although it is a subsidiary of STBI,
SunTrust Equitable Securities is not a bank and is separate from any banking
affiliate of SunTrust Bank. SunTrust Equitable Securities is solely responsible
for its contractual obligations and commitments.
Securities and financial instruments sold, offered, or recommended by
SunTrust Equitable Securities are not bank deposits, are not insured by the
Federal Deposit Insurance Corporation (FDIC), or the SIPC, or any governmental
agency and are not obligations of or endorsed or guaranteed in any way by any
bank affiliated with SunTrust Equitable Securities or any other bank unless
otherwise stated.
You authorize STBI, SunTrust Equitable Securities and its affiliates,
including SunTrust Bank and any other SunTrust Bank affiliate, to share with
each other credit and other confidential or non-public information regarding the
Clients to the extent permitted by applicable laws and regulations. STBI,
SunTrust Equitable Securities, and all other SunTrust Bank affiliates will
strictly protect confidential client information. Therefore, any information
shared by us will be on a limited basis and only to people within our
organization who are part of our relationship team, except as otherwise provided
in this letter.
G. MISCELLANEOUS.
1. Effectiveness. This Commitment Letter shall constitute a binding
obligation of SunTrust for all purposes immediately upon the acceptance hereof
by the Company in the manner provided herein. Notwithstanding any other
provision of this Commitment Letter, SunTrust's commitments and undertakings as
set forth herein shall not be or become effective for any purpose unless and
until this Commitment Letter shall have been accepted by the Clients in the
manner specified below.
2. Acceptance by the Clients. If You are in agreement with the
foregoing, please sign and return the enclosed copy of this Commitment Letter,
together with a fully executed copy of the Fee Letter as provided therein, to
SunTrust Equitable Securities at 303 Peachtree Street, 24th Floor, Atlanta,
Georgia 30308, Attention: Gregory N. Waters, Managing Director.
3. Termination of Commitment Letter. Unless You have signed and
returned the enclosed copy of this Commitment Letter prior to 5:00 p.m.,
Atlanta, Georgia time, on Friday, October 8, 1999, SunTrust's obligations
hereunder shall terminate on such date. In no event shall SunTrust or any Lender
have any obligation to make the Credit Facilities available unless the Closing
Date shall have occurred on or prior to January 31, 2000 or a date otherwise
mutually agreed upon in writing (the "Expiration Date"). In addition to the
foregoing, this
<PAGE> 6
CIC Acquisition Corporation
October 1, 1999
Page 6
Commitment Letter may be terminated at any time by mutual agreement.
Furthermore, by acceptance of this Commitment Letter, any other commitments
outstanding with respect to the Credit Facilities by SunTrust will be
terminated.
4. No Third-Party Beneficiaries. This Commitment Letter is solely for
the benefit of the Clients and SunTrust, and no provision hereof shall be deemed
to confer rights on any other person or entity.
5. No Assignment. This Commitment Letter may not be assigned by You to
any other person or entity other than affiliates reasonably acceptable to
SunTrust, but all of the obligations of the Clients hereunder shall be binding
upon the successors and assigns of the Clients. SunTrust may not assign the
obligations herein to any other person other than pursuant to syndication, such
syndication being contingent upon acceptance of the terms of this Commitment
Letter.
6. GOVERNING LAW; CONSENT TO JURISDICTION. THIS COMMITMENT LETTER WILL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
Each of SunTrust and You irrevocably and unconditionally submit to the exclusive
jurisdiction of any court in the State of New York or the United States District
Court for the Southern District for the purpose of any suit, action or
proceeding arising out of or relating to this Commitment Letter. Service of any
process, summons, notice or document may be made by registered mail addressed to
You at the address listed on the first page of this Commitment Letter or to
SunTrust at the address specified in Section 2 hereof against such person for
any suit, action or proceeding brought in any such court pursuant to the
agreement. Each of SunTrust and You irrevocably and unconditionally waive any
objection to the laying of venue of any such suit, action or proceeding brought
in any such court and any claim that any such suit, action or proceeding has
been brought in any such court and any claim that any such suit, action or
proceeding has been brought in an inconvenient forum. A final judgment in any
such suit, action or proceeding brought in any such court may be enforced in any
other courts to whose jurisdiction SunTrust or You are or may be subject, by
suit upon judgment.
7. WAIVERS OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE CLIENTS AND SUNTRUST HEREBY WAIVES JURY TRIAL IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATED TO THIS COMMITMENT LETTER OR ANY OTHER
DOCUMENTS CONTEMPLATED HEREBY.
8. Counterparts. This Commitment Letter may be executed in any number
of separate counterparts, each of which shall collectively and separately,
constitute one agreement.
9. Entire Agreement. Upon acceptance by You as provided herein, this
Commitment Letter and the Term Sheet attached hereto and the Fee Letter
referenced herein shall supersede all understandings and agreements between the
parties to this Commitment Letter in respect of the transactions contemplated
hereby.
<PAGE> 7
CIC Acquisition Corporation
October 1, 1999
Page 7
10. Termination of Certain Obligations. All obligations of Clients
under this Commitment Letter other than indemnities under Paragraph E and the
fourth paragraph under Paragraph B terminate upon execution of definitive
documentation.
11. Ownership of CIC. CIC represents and warrants that it is directly
or indirectly wholly owned by CVC and that its officers and directors are
officers of CVC.
We look forward to working with CVC, CIC and Conso on the
Recapitalization.
Very truly yours,
SUNTRUST EQUITABLE SECURITIES SUNTRUST BANK, ATLANTA
CORPORATION
By: /s/ Gregory N. Waters By: /s/ David W. Penter
---------------------------- ----------------------------
Name: Gregory N. Waters Name: David W. Penter
Title: Managing Director Title: VP
SUNTRUST BANKS, INC.
By: /s/ Robert L. Dudiak
----------------------------
Name: Robert L. Dudiak
Title: Managing Director
ACCEPTED AND AGREED:
Date: October 5, 1999
-----------------------------
CIC ACQUISITION CO.
By: Michael T. Bradley
-----------------------------
Name: Michael T. Bradley
Title: Vice President
<PAGE> 8
CIC Acquisition Corporation
October 1, 1999
Page 8
We represent and warrant that CVC directly or indirectly owns all
issued and outstanding shares of stock of CIC and that all officers and
directors of CIC are officers of CVC.
CITICORP VENTURE CAPITAL LIMITED
By: /s/ Michael T. Bradley
-------------------------------
Title: Vice President
<PAGE> 9
CIC Acquisition Corporation
October 1, 1999
Page 9
[CVC TO PROVIDE SEPARATE LETTER CONFIRMING OWNERSHIP, OFFICERS AND DIRECTORS OF
CIC ACQUISITION CORPORATION]
<PAGE> 10
ANNEX A
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS OF
$78,000,000 SENIOR SECURED CREDIT FACILITIES
I. DESCRIPTION OF THE SENIOR SECURED CREDIT FACILITIES
SENIOR CREDIT FACILITIES: $ 25,000,000 Revolving Credit Facility
("Revolver") with a $2,000,000
Swing Line, a $3,000,000 Letter of
Credit sub-facility and a (pound)
7,000,000 sub-facility (the "UK
Sub-Facility")
$ 25,000,000 Term Loan A Facility ("Term
Loan A")
$ 28,000,000 Term Loan B Facility ("Term
------------ Loan B")
$ 78,000,000 Total Senior Credit Facilities
(the "Senior Credit Facilities")
BORROWER: Initially a wholly owned subsidiary of CIC
Acquisition Co. and upon consummation of the
merger of such subsidiary into Conso
International Corporation immediately after the
Recapitalization, Conso International
Corporation, who shall expressly assume all
obligations with respect to all Senior Credit
Facilities
UK BORROWER: British Trimmings Limited (the "UK Borrower")
who will borrow under the UK Sub-Facility. The
UK Borrower will not be obligated to repay any
borrowings made to the Borrower.
AGENT: SunTrust Bank, Atlanta ("SunTrust Bank" or the
"Agent").
ARRANGER: SunTrust Equitable Securities Corporation
("SunTrust Equitable Securities").
PURPOSE: To finance the recapitalization of the
Borrower, pay transaction related expenses and
finance ongoing working capital needs of the
Borrower.
SENIOR LENDERS: SunTrust Bank and a syndicate of financial
institutions acceptable to the Borrower,
SunTrust Bank and SunTrust Equitable Securities
(together, a "Senior Lender" or the "Senior
Lenders").
SWING LINE BANK: SunTrust Bank.
MATURITY: Revolver: December 31, 2004 ("Revolver
Maturity").
On each of the first
anniversary and the second
anniversary of closing, the
Borrower shall have the right
to request that the Revolver
Maturity be extended for one
additional year. Each Lender
will have the right to approve
or decline such request with
respect to its Revolver
commitment in its sole
discretion. No extensions of
the Revolver Maturity will be
permitted without the consent
of the Required Lenders, and
then only the commitments of
Lenders who agree to extend
will be extended.
Term Loan A: December 31, 2004 ("Term Loan
A Maturity").
Term Loan B: December 31, 2006 ("Term Loan
B Maturity").
Note: Italicized terms will have substantially the meanings set forth in the
attached Exhibit A ("Selected Definitions").
<PAGE> 11
Conso International Corporation
- -------------------------------------------------------------------------------
AVAILABILITY: Revolver: Availability will be governed
by a borrowing base to consist
of (i) 85% of Eligible Accounts
Receivable, plus (ii) 50% of
Eligible Inventory; plus (iii)
$3,000,000 during the first six
months following closing,
$2,000,000 during the next three
months and $1,000,000 during the
next three months (the
"Borrowing Base"). The Agent
reserves the right to establish
standards of eligibility and
reserves, in accordance with its
reasonable credit judgment, to
formulate the Borrowing Base.
The initial reserves, if any,
will be quantified with the
field audit and survey.
Term Loan A: Available in a single borrowing
at closing.
Term Loan B: Available in a single borrowing
at closing.
SCHEDULED Revolver: Payable in full at Revolver
PRINCIPAL PAYMENTS: Maturity.
Term Loan A: Payable in quarterly
installments based on the
amortization schedule outlined
in Exhibit C, with the first
principal payment due March 31,
2000, and the final principal
payment due at Term Loan A
Maturity.
Term Loan B: Payable in quarterly
installments based on the
amortization schedule outlined
in Exhibit C, with the first
principal payment due March 31,
2000, and the final principal
payment due at Term Loan B
Maturity.
II. PRICING AND PAYMENT TERMS FOR THE FACILITIES
INTEREST RATE OPTIONS: The Borrower shall be entitled to select
between the following interest rate options:
(i) Base Rate or (ii) LIBOR, plus an Applicable
Margin.
As used herein, Applicable Margin shall mean (x)
for the first six months, 3.25% with respect to
LIBOR advances and 1.75% with respect to Base
Rate advances on the Revolver and Term Loan A
and 3.75% with respect to LIBOR advances and
2.25% with respect to Base Rate advances on Term
Loan B and (y) thereafter, the percentage
designated in Exhibit B based on the Borrower's
ratio of Total Funded Debt to Adjusted EBITDA
for the preceding four fiscal quarter period
then ending, measured quarterly, such Applicable
Margin being effective as of the second business
day following the date that the Agent receives
the Borrower's applicable financial statements.
INTEREST PAYMENTS: Interest shall be calculated on the basis of a
365-day year for Base Rate advances and on a
360-day year for LIBOR advances and is payable
on outstanding advances as follows:
(i) Base Rate advances - On the last day of
each month, in arrears.
(ii) LIBOR advances - At the expiration of each
Interest Period, and with respect to loans
made for an Interest Period longer than
three months, on the last day of each
three-month period prior to the expiration
of the Interest Period.
- -------------------------------------------------------------------------------
Confidential 2 SunTrust Equitable Securities
<PAGE> 12
Conso International Corporation
- -------------------------------------------------------------------------------
DEFAULT RATE: If any event of default has occurred and is
continuing, the otherwise then applicable rates
shall be increased by 2% per annum; provided
that, for any LIBOR advances, at the end of the
applicable Interest Period, interest shall
accrue at the Base Rate plus the Applicable
Margin plus 2% per annum. Default interest shall
be payable on demand.
COMMITMENT FEE: Commencing at closing and for the first six
months thereafter, a commitment fee of 0.50% per
annum on the unused portion of the Revolver
shall be payable quarterly in arrears.
Thereafter, a commitment fee on the unused
portion of the Revolver shall be payable
quarterly in arrears based on the percentage per
annum designated in Exhibit B based on the
Borrower's ratio of Total Funded Debt to
Adjusted EBITDA for the preceding four fiscal
quarter period then ending, measured quarterly.
Such Applicable Margin will be effective as of
the second business day following the date that
the Agent receives the Borrower's applicable
financial statements. Outstanding letters of
credit under the Revolver and swing line loans
will be deemed usage of the Revolver and
included in Total Funded Debt for this
calculation.
LETTER OF CREDIT FEE: A rate equal to the LIBOR Applicable Margin on
the average outstanding letters of credit issued
under the Revolver payable quarterly in arrears
plus any customary fronting bank fees for
issuance and administration. In addition, the
Borrower shall pay the applicable issuing bank
for its own account a per annum facing fee of
1/4% on the outstanding amount of all letters of
credit.
FUNDING: The Borrower shall provide prior notice (if by
telephone, promptly confirmed in writing) of
funding requests and interest rate conversions
to the Agent (i) prior to 1:00 p.m. on the date
of borrowing with respect to Base Rate advances
and (ii) at least three business days in advance
with respect to LIBOR advances. LIBOR advances
shall be in minimum amounts of $500,000 and in
integral multiples of $100,000. Each Senior
Lender shall make its funds available to the
Agent not later than 1:00 p.m. (Atlanta, Georgia
time) on the funding date. No more than a total
of six advances subject to LIBOR pricing may be
in effect at any time under the Senior Credit
Facilities.
VOLUNTARY PREPAYMENTS: Prepayments may be made without premium or
penalty, provided that LIBOR advances may be
prepaid only on the expiration of the current
Interest Period applicable thereto to avoid any
breakage costs. Otherwise, with respect to a
LIBOR or Base Rate advance, the Borrower must
give the Agent at least three business days
prior written notice of the amount and time of
any prepayment, and prepayments shall be in
minimum amounts of $500,000 and in integral
multiples of $100,000.
- -------------------------------------------------------------------------------
Confidential 3 SunTrust Equitable Securities
<PAGE> 13
Conso International Corporation
- -------------------------------------------------------------------------------
MANDATORY Borrower would be required to make mandatory
PREPAYMENTS: principal prepayments to be applied pro rata to
Term Loan A and to Term Loan B and pro rata to
all remaining scheduled principal payments, in
an amount calculated as 50% of Consolidated
Excess Cash Flow, beginning with the fiscal year
ended June 30, 2000. In addition, Senior Lenders
participating in the Term Loan B would have the
option not to participate in mandatory
prepayments, in which case, the mandatory
prepayments would only apply to the Term Loan A.
Other mandatory prepayments shall be as
customary for credit facilities of this nature
and shall include, but not be limited to, 50% of
net proceeds from asset dispositions (subject to
certain reinvestment options and allowances for
trade-ins, trade-ups and dispositions of
worn-out or obsolete assets) and issuance of
securities (other than the replacement of the
Revolver upon the Revolver Maturity). These
mandatory prepayments shall not include the
issuance of securities to fund management
options, any issuance for the purpose of capital
expenditures or additional common equity which
may be contributed to the Borrower by Citicorp
Venture Capital Limited or its affiliates.
PAYMENTS: All payments by the Borrower shall be made not
later than 1:00 p.m. (Atlanta, Georgia time) to
the Agent in immediately available funds, free
and clear of any defenses, set-offs,
counterclaims, or withholdings or deductions for
taxes. Any Senior Lender not organized under the
laws of the United States or any state thereof
must, prior to the time it becomes a Senior
Lender, furnish the Borrower with forms or
certificates as may be appropriate to verify
that such Senior Lender is exempt from U.S. tax
withholding requirements. Any Senior Lender not
organized under the laws of the United Kingdom
must, prior to the time it becomes a Senior
Lender, furnish the Borrower with forms or
certificates as may be appropriate to verify
that such Senior Lender is exempt from UK tax
withholding requirements.
PRICING/YIELD PROTECTION Customary provisions with respect to: payment
PROVISIONS: of withholding tax "gross-up" amounts;
suspension of LIBOR pricing options due to
illegality or inability to ascertain funding
costs; payment of reserve requirements,
increased funding costs and capital adequacy
compensation; and payment of breakage and
redeployment costs in connection with fundings
and repayments of LIBOR advances.
- -------------------------------------------------------------------------------
Confidential 4 SunTrust Equitable Securities
<PAGE> 14
Conso International Corporation
- -------------------------------------------------------------------------------
III. SECURITY FOR THE FACILITIES
COLLATERAL: All loans and reimbursement obligations under
the Senior Credit Facilities and all hedging
obligations (to be defined, which definition
will include interest rate swaps) of any Senior
Lender (collectively the "Obligations") shall be
secured by (i) a first priority security
interest in and/or pledge of 100% of the
existing and after acquired tangible and
intangible assets of the Borrower and its
domestic subsidiaries and, so long as no adverse
tax consequence would result therefrom, (ii) 66%
(or such greater percentage which would not
result in an adverse tax consequence) of the
existing and after acquired voting securities
and 100% of the non-voting securities of the
Borrower's foreign subsidiaries. All loans and
reimbursement obligations under the UK
Sub-Facility of any Senior Lender shall also be
secured by a first priority security interest in
and/or pledge of 100% of the existing and after
acquired tangible and intangible assets of the
Borrower's foreign subsidiaries and a pledge of
the remaining 34% of the voting securities of
the Borrower's foreign subsidiaries, in each
case so long as no adverse tax consequence would
result therefrom. This would include, but not be
limited to, cash, securities (whether or not
marketable and including all securities held by
the Borrower and issued by a subsidiary),
accounts receivable, inventory, equipment, real
estate, buildings and improvements, leaseholds,
general intangibles, patents, trademarks, trade
names, franchises and capital stock of the
Borrower (to the extent owned directly or
indirectly by CVC) and its subsidiaries, but
excluding all cash deposited with the Exchange
Agent ("Collateral"). The Borrower will agree to
execute and/or deliver to the Agent any and all
financing statements, assignments, instruments
or other agreements and will agree to take such
other actions as the Agent reasonably requests
in order to create, maintain, perfect and
enforce the Senior Lenders' security interest in
such Collateral. Each domestic subsidiary of the
Borrower shall guaranty the Obligations of the
Borrower and UK Borrower. So long as no adverse
tax consequence would result therefrom, the
Borrower and all foreign subsidiaries will also
guaranty the obligations of the UK Borrower.
COLLECTIONS: All payments from account debtors and any other
proceeds of the Collateral would be required to
be either directed to or deposited into one or
more blocked or pledged accounts with the
Borrower's cash management bank. These accounts
would be subject to a blocked or pledged account
agreement in a form and content reasonably
acceptable to SunTrust Bank (which agreements
shall provide for cash dominion upon a default
or event of default).
IV. CONDITIONS TO FUNDINGS
Funding will be subject to conditions customary in financings of this nature,
including, but not limited to, the following:
CONDITIONS TO (1) Execution and delivery of a credit
INITIAL FUNDING: agreement, promissory notes and other
customary loan and security documents.
(2) Delivery of certified copies of
organizational documents, including bylaws,
Receipt authorizing resolutions of the
Borrower's board of directors, and
incumbency of certificates for the Borrower
and all guarantors.
(3) Receipt and satisfactory review of all
requested appraisals, audits
- -------------------------------------------------------------------------------
Confidential 5 SunTrust Equitable Securities
<PAGE> 15
Conso International Corporation
- -------------------------------------------------------------------------------
(including a field audit and survey
conducted by the Agent, which will be
completed no later than 45 days after
SunTrust's receipt of the executed
Commitment Letter) and evaluations.
(4) Receipt of certified copies of all
consents, approvals, authorizations,
registrations, or filings required to be
made or obtained by the Borrower in
connection with the Senior Credit
Facilities.
(5) Receipt of favorable opinion of US and UK
counsel for the Borrower, including local
counsels when reasonably requested by the
Agent.
(6) Delivery of certificate of insurance issued
on behalf of insurers of the Borrower,
describing in reasonable detail the types
and amounts of insurance (property and
liability) maintained by the Borrower.
(7) Payment in full for the reasonable legal
fees charged and all reasonable costs
incurred in connection with all loan
documentation.
(8) Evidence that a minimum of $25,000,000 in
common and/or preferred equity has been
invested in the Borrower, to include a
minimum of $19,999,600 by Citicorp Venture
Capital Limited or an affiliate and
$4,800,400 by Mr. Cary Findlay under terms
and conditions satisfactory to SunTrust
Bank and SunTrust Equitable Securities.
(9) Evidence that a minimum of $15,000,000 in
subordinated debt has been invested in the
Borrower by SunTrust Banks, Inc.
(10) Evidence, satisfactory to SunTrust Bank and
SunTrust Equitable Securities, that the
Borrower's Adjusted EBITDA for the most
recently reported twelve-month period
ending no more than 60 days prior to
closing is greater than or equal to
$18,400,000.
(11) Unused Borrowing Base availability under
the Revolver at closing (Borrowing Base
less initial funding of Revolver at
closing) to be no less than $4,000,000.
(12) Receipt of all other documents and
information as Agent reasonably requests.
(13) Certified copies of all documents relating
to the reverse subsidiary merger of the
initial Borrower into Conso International
Corporation; evidence that all conditions
precedent to such transactions, other than
the funding of the Senior Credit Facilities
have been satisfied.
(14) The Borrower shall maintain and thereafter
keep in effect one or more interest rate
protection agreements, each in form and
substance mutually agreed upon by the
Borrower and SunTrust, for no less than 50%
of the Credit Facilities.
CONDITIONS TO (1) All representations and warranties shall
ALL FUNDINGS: continue to be true and correct in all
material respects on and as of the date of
such borrowing.
- -------------------------------------------------------------------------------
Confidential 6 SunTrust Equitable Securities
<PAGE> 16
Conso International Corporation
- -------------------------------------------------------------------------------
(2) Since the date of the most recent
financial statements, there shall have
been no change, which has had or could
be reasonably expected to have a
material adverse effect on the Borrower
and its subsidiaries taken as a whole,
or on the ability of the Borrower, the
UK Borrower or the guarantors taken as a
whole to perform their obligations under
the loan documentation.
(3) No default or event of default shall
have occurred and be continuing or would
result from such borrowing.
V. REPRESENTATIONS AND WARRANTIES
Representations and warranties as to the following matters, together with other
customary representations and warranties:
(1) Due organization, valid existence and
good standing of the Borrower and any
subsidiaries, and qualification to
conduct business in each jurisdiction in
which the failure to conduct business
would have a material adverse effect on
the Borrower.
(2) Credit agreement and notes are duly
authorized and do not violate any law,
rule, regulation, judgment, order,
ruling, or other instrument to which the
Borrower is bound.
(3) Credit agreement and notes are legal,
valid, and binding agreements of the
Borrower.
(4) Good standing with respect to all
governmental authorizations, consents,
approvals, orders, licenses, or any
other action required except where or
failure to do so would not have a
material adverse effect.
(5) Identification of all outstanding
Indebtedness for borrowed money with a
principal amount outstanding or
committed of $250,000 or more.
(6) Possession by the Borrower and any
subsidiaries of insurance of types and
in amounts customary in their industry.
(7) Possession by the Borrower and any
subsidiaries of good and marketable
title to and ownership of all the
material assets described in the
Borrower's most recent financial
statements, free and clear of all liens,
except permitted liens.
(8) Absence of notice of Borrower's or any
subsidiary's material violation of any
material law, statute, order, rule,
regulation, or judgment entered by any
court.
(9) Absence of material default with respect
to other material agreements or
obligations.
(10) Accuracy of the most recent annual
audited financial statements submitted
to the Senior Lenders and absence of any
material adverse change in the financial
condition of the Borrower as reflected
in such financial statements.
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Confidential 7 SunTrust Equitable Securities
<PAGE> 17
Conso International Corporation
- -------------------------------------------------------------------------------
(11) Absence of pending or threatened
litigation that could reasonably be
expected to have a material adverse
effect on the Borrower, other than that
which has been disclosed to the Agent.
(12) Filing of all tax returns and payment of
all taxes (except where being contested
in good faith by appropriate proceedings
and subject to maintenance of adequate
reserves and except with respect to
which extensions have been filed).
(13) Compliance with Regulations T, U, X, and
material compliance with all laws and
regulations relating to employee benefit
plans, and all environmental laws and
regulations.
(14) Identification of all subsidiaries of
the Borrower.
(15) No information or statement in the loan
documentation governing the Senior
Credit Facilities or otherwise made
available to SunTrust by the Borrower,
CVC or Conso in connection with the
Senior Credit Facilities contains any
untrue statement of a material fact or
omits to state a material fact necessary
to make the statement not misleading.
(16) Absence of pending complaints or
threatening claims, notices or requests
for information received by the
Borrower. Absence of conditions that
would give rise to any material
liabilities under any Environmental Law.
Absence of any hazardous materials,
underground tanks or other environmental
hazards except in compliance with
applicable laws.
(17) Absence of transactions that would
violate ERISA or that would give rise to
a material liability on behalf of the
Borrower. Good standing in all material
respects with respect to ERISA
compliance.
(18) Absence of strikes, labor disputes, slow
downs or work stoppages due to labor
disagreements which have had, or would
reasonably be expected to have, a
materially adverse effect in the
conditions (financial or otherwise),
operations, properties or prospects of
the Borrower, and, to the best knowledge
of the Borrower, there are no such
strikes, disputes, slow downs or work
stoppages threatened against any
subsidiary.
(19) Neither the Borrower nor any subsidiary
is an investment company or a company
controlled by an investment company
(Investment Company Act of 1940).
(20) Year 2000 compliance.
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Confidential 8 SunTrust Equitable Securities
<PAGE> 18
Conso International Corporation
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VI. COVENANTS
FINANCIAL COVENANTS: The following financial covenants shall be
measured quarterly on a consolidated basis
unless otherwise defined, including all
majority-owned subsidiaries:
TOTAL LEVERAGE RATIO
As of the end of each fiscal quarter, the
Borrower shall maintain a maximum ratio of Total
Funded Debt to Adjusted EBITDA at levels to be
determined.
INTEREST COVERAGE RATIO
As of the end of each fiscal quarter, the
Borrower shall maintain a minimum ratio of
Adjusted EBITDA to total interest expense at
levels to be determined.
FIXED CHARGE COVERAGE RATIO
As of the end of each fiscal quarter, the
Borrower shall maintain a minimum Fixed Charge
Coverage Ratio of at levels to be determined.
CAPITAL EXPENDITURE RESTRICTION
During any fiscal year, the Borrower shall not
make or incur, in the aggregate, capital
expenditures in excess of (A) $5,700,000 for the
fiscal year ending June 30, 2000 and (B)
$2,000,000 plus 50% of Consolidated Excess Cash
Flow, thereafter. Exceptions will be negotiated.
However, if capital expenditures in any fiscal
year are less than permitted in such year, the
excess permitted amount for such fiscal year may
be carried forward to the next succeeding fiscal
year.
REPORTING The Borrower shall deliver the following
REQUIREMENTS: financial statements: (i) its annual unqualified
audited financial statements within 120 days
after the end of each fiscal year, accompanied
by a certificate from its certified public
accountant along with a certificate from the
Borrower's chief financial officer or treasurer
stating that they have no knowledge of any
default or event of default with respect to the
financial covenants and that the financial
statements are true and correct in all material
respects to the best of their knowledge; (ii)
its monthly unaudited financial statements
within 45 days after the end of each fiscal
month that is not the end of a fiscal year,
along with a certificate from a senior officer
or treasurer stating that such officer has no
knowledge of any default or event of default and
that the financial statements are true and
correct in all material respects to the best of
his or her knowledge; and (iii) a certificate
from a senior officer stating that such officer
has no knowledge of any default or event of
default having occurred and still existing. In
each case, such financial statements shall
include a balance sheet, income statement, and
statement of cash flows for the Borrower on a
consolidated basis.
In addition, within 120 days after the end of
each fiscal year and 45 days after the end of
each fiscal quarter that is not the end of a
fiscal year, the Borrower shall provide the
calculations with supporting details of the
financial covenants. Furthermore, the Borrower
shall provide the Agent with such information
that the Agent may deem reasonably necessary
regarding the Borrowing Base no more than once
per month.
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Confidential 9 SunTrust Equitable Securities
<PAGE> 19
Conso International Corporation
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AFFIRMATIVE COVENANTS: Affirmative covenants as to the following
matters and other customary covenants
applicable to the Borrower:
(1) Maintenance of corporate existence, and
all material properties except where the
failure to do so would not have a
material adverse effect.
(2) Material compliance with all laws and
regulations, including environmental and
employee benefit/ERISA laws, except
where the failure to comply would not
have a material adverse effect on the
Borrower and its subsidiaries.
(3) Payment of all taxes, except where being
contested in good faith by appropriate
proceedings and subject to maintenance
of reasonable reserves and extensions
permitted by the relevant taxing
authorities.
(4) Maintenance of proper books and records.
(5) Maintenance of insurance of types and in
amounts customary in the Borrower's
industry.
(6) Satisfactory inspection of the books and
records of the Borrower or the
subsidiaries.
(7) Year 2000 compliance.
NEGATIVE COVENANTS: Negative covenants as to the following matters
and other customary covenants applicable to the
Borrower and its subsidiaries in each case,
subject to certain baskets and other exceptions:
(1) Without the prior consent of the Senior
Lenders, neither the Borrower nor any
subsidiary shall create, assume, or
suffer to exist any encumbrance, lien,
mortgage or security interest upon any
of its property or assets, whether now
owned or hereafter acquired, except for
permitted liens.
(2) Restrictions on assets sales,
assignments and transfers, outside the
normal course of business and in excess
of certain baskets to be permitted.
(3) Restrictions on investments in, or loans
to, any other person, except for
permitted investments.
(4) Restrictions on sale/leaseback
transactions.
(5) Restrictions on additional Indebtedness
but permitting the Revolver to be
replaced at the Revolver Maturity, so
long as (a) no default or event of
default has occurred and is continuing,
(b) Borrower is in pro forma compliance
with the Financial Covenants and has
delivered a certificate to the Lenders
evidencing such compliance, (c) the
replacement Revolver is on terms no more
restrictive than the loan documentation
for the Senior Credit Facilities and (d)
Borrower has requested that the lenders
extend the Revolver and the Required
Lenders have not approved such request.
(6) Restrictions on prepaying subordinated
debt.
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Confidential 10 SunTrust Equitable Securities
<PAGE> 20
Conso International Corporation
- -------------------------------------------------------------------------------
(7) Engage in any business other than the
business in which the Borrower and any
subsidiaries are primarily engaged as a
whole or any business reasonably related
or complementary thereto.
(8) Prohibitions on acquisition, unless
after giving effect to any acquisition,
(i) no default or event of default shall
have occurred and be continuing, (ii)
Borrower shall be in pro forma
compliance with the Financial Covenants
and shall have delivered to the Lenders
a compliance certificate demonstrating
such pro forma compliance and (iii) the
board of directors of the person being
acquired or selling its assets has
approved the transaction.
(9) Neither the Borrower nor any subsidiary
shall enter into any other agreement
that prohibits or limits the amount of
dividends or loans that may be paid or
made to the Borrower by any of its
subsidiaries, other than restrictions
under the subordinated debt.
(10) Neither the Borrower nor any related
entity will engage in any transaction in
connection with which the Borrower or a
related entity could be subject to a
material civil penalty assessed pursuant
to an ERISA violation.
VII. EVENTS OF DEFAULT
Customary in credit agreements of this nature including, but not limited to, the
following:
(1) Non-payment of any principal amounts of
the loans when due; and nonpayment of
any interest, fees or other amounts
within five days of the due date
thereof.
(2) Breach of any covenant requiring
maintenance of existence, covenant
regarding inspections, financial
covenant, negative covenant, or
reporting requirement.
(3) Breach of any other covenant or
obligation which remains uncured for 30
days after the earlier of (i) the
Borrower obtaining knowledge thereof, or
(ii) written notice thereof having been
given to the Borrower.
(4) Any representation, warranty, or
statement shall be untrue or incorrect
in any material respect.
(5) Failure of the Borrower or any
subsidiary to make payments on any debt
which individually or in the aggregate
exceeds $500,000, or breach of any
covenant contained in any agreement
relating to such Indebtedness causing or
permitting the acceleration of a
material portion of such Indebtedness.
(6) The Borrower or any subsidiary shall
file, or shall have filed against it and
not dismissed within 60 days, any
bankruptcy or other insolvency
proceeding.
(7) Any final, non-appealable judgment or
order in excess of $500,000, or
otherwise having a material adverse
effect, shall be rendered against
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Confidential 11 SunTrust Equitable Securities
<PAGE> 21
Conso International Corporation
- -------------------------------------------------------------------------------
the Borrower or any subsidiary, which
judgment stays in effect for 30 days
without being stayed or deferred.
PARTICIPATIONS AND Assignments to other banks and financial
ASSIGNMENTS: institutions of commitments in the Senior Credit
Facilities will be permitted by any Senior
Lender with the written approval of the Borrower
(absent an event of default) and the Agent (such
approval not to be unreasonably withheld or
delayed) in minimum increments of $5,000,000. An
administrative fee of $3,500 shall be due and
payable by such assigning Senior Lender to the
Agent upon the occurrence of any assignment.
Assignments to an affiliate will be allowed
without prior approval subject to executing a
tax-withholding certificate, if appropriate.
Participations to other banks and financial
institutions will be permitted without
restriction. Such participation will not release
the selling Senior Lender from its obligations
with respect to the Senior Credit Facilities,
and the Borrower and the Agent shall be promptly
notified in writing of any such participation.
REQUIRED LENDERS: Senior Lenders holding 51% of the outstanding
commitments for the Senior Credit Facilities.
INDEMNIFICATION: The Borrower shall pay all costs and expenses of
the Agent in connection with the Senior Credit
Facilities, including, without limitation, all
reasonable fees and expenses of special counsel
to the Agent. The Borrower shall indemnify the
Agent and each Senior Lender against all
reasonable costs, losses, liabilities, damages,
and expenses incurred by them in connection with
any investigation, litigation, or other
proceedings relating to the Senior Credit
Facilities, except for instances of gross
negligence or willful misconduct on the part of
the indemnified party or breach by a Senior
Lender or the Agent of its obligations under the
final loan documentation. This provision will be
contained in the credit agreement governing the
Senior Credit Facilities and does not modify the
indemnification sent forth in the Commitment
Letter.
GOVERNING LAW: State of New York.
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Confidential 12 SunTrust Equitable Securities
<PAGE> 22
Conso International Corporation
- -------------------------------------------------------------------------------
EXHIBIT A
SELECTED DEFINITIONS
APPLICABLE MARGIN shall mean the basis points to be added to the LIBOR
Rate to produce the LIBOR Loan Rate, designated in Exhibit B, attached hereto,
based on the Borrower's ratio of Total Funded Debt to LTM Adjusted EBITDA, as
measured on a consolidated basis.
ADJUSTED EBITDA shall mean, with respect to the Borrower on a
consolidated basis for any period, the Net Income for such period, (A) plus,
without duplication and to the extent deducted in computing Net Income for such
period, the sum of (i) income taxes, (ii) interest expense net of interest
income and (iii) depreciation and amortization expense, (B) plus or minus (i)
non-cash charges and non-cash gains and losses (including transaction expenses
and the amortization of debt discounts) and (ii) extraordinary/one-time gains or
losses; provided, however, that with respect to any person that became a
subsidiary of, or was merged with or consolidated into, the Borrower during such
period, "EBITDA" shall also include the EBITDA of such person during such period
and prior to the date of such acquisition, merger or consolidation.
BASE RATE shall mean the higher of (i) the rate which SunTrust Bank
announces from time to time as its prime lending rate, as in effect from time to
time, and (ii) the Federal Funds rate, as in effect from time to time, plus
one-half of one percent (1/2%) per annum (any changes in such rates to be
effective as of the date of any change in such rate). The SunTrust Bank prime
lending rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer. SunTrust Bank may make commercial
loans or other loans at rates of interest at, above, or below the SunTrust Bank
prime-lending rate.
CONSOLIDATED EXCESS CASH FLOW shall mean, for any fiscal year,
consolidated Adjusted EBITDA (A) minus the sum of (i) consolidated cash interest
expense, (ii) consolidated scheduled principal payments on Total Funded Debt
(including voluntary and mandatory prepayments of Total Funded Debt), (iii)
consolidated cash tax payments and (iv) consolidated capital expenditures up to
$2,000,000, (B) plus or minus (i) extraordinary gains and/or losses and (ii)
changes in consolidated working capital.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the Borrower's accounts
receivable less the portion of uninsured accounts receivable applicable to
customers located outside of the United States and general ineligibles as
determined, from time to time, by the Agent upon notification to the Borrower as
a result of periodic field audits to be conducted no more than two times per
annum, unless an event of default exists.
ELIGIBLE INVENTORY shall mean the Borrower's inventory less the portion
of inventory located outside of the United States or on consignment with a
customer of the Borrower and general ineligibles to include "work-in-process"
and as determined, from time to time, by the Agent upon notification to the
Borrower as a result of periodic field audits to be conducted no more than two
times per annum, unless an event of default exists.
FIXED CHARGE COVERAGE RATIO shall mean, with respect to the Borrower
and the Borrower's subsidiaries on a consolidated basis for any period, the
ratio of (a) the greater of (i) the difference between (x) Adjusted EBITDA and
(y) the sum of (A) consolidated capital expenditures made during such period,
(B) cash tax payments made during such period (C) and management fees (to be
excluded to the extent deducted in determining Adjusted EBITDA) or (ii) zero, to
(b) the sum of (i) scheduled payments of principal made with respect to Total
Funded Debt during such period and (ii) interest expense during such period.
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Confidential 13 SunTrust Equitable Securities
<PAGE> 23
Conso International Corporation
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INDEBTEDNESS shall mean, with respect to the Borrower and the
Borrower's subsidiaries, without duplication, (a) any obligation for borrowed
money; (b) any obligation evidenced by bonds, debentures, notes or other similar
instruments; (c) any obligation to pay the deferred purchase price of property
or for services (other than trade accounts payable less than 90 days past due
and other obligations accrued in the ordinary course of business and earn-outs
or similar arrangements); (d) any capitalized lease obligation; (e) any
obligation or liability of others of the type described in (a) through (d)
secured by a lien on property owned by the Borrower or such subsidiary, whether
or not such obligation or liability is assumed; (f) any obligation under any
interest hedge agreement or foreign exchange agreement; (g) any letter of credit
issued for the account of the Borrower or such subsidiary; and (h) any guaranty
(except items of shareholders' equity or capital stock or surplus or general
contingency or deferred tax reserves).
INTEREST PERIOD shall mean with respect to LIBOR loans, the period of
1, 2, 3 or 6 months selected by the Borrower pursuant to the terms of the Senior
Credit Facilities and subject to customary adjustments in duration.
LIBOR shall mean, for any Interest Period, the offered rates for
deposits in U.S. dollars for a period comparable to the Interest Period
appearing on Telerate Screen Page 3750, as of 11:00 a.m. London time, on the day
that is two business days prior to the Interest Period. Such rates may be
adjusted for any applicable reserve requirements.
TOTAL FUNDED DEBT shall mean, with respect to the Borrower and the
Borrower's subsidiaries on a consolidated basis, all then currently outstanding
obligations, liabilities and indebtedness of the types described in subsections
(a) through (e) of the definition of Indebtedness set forth herein, including,
but not limited to, all obligations under the loan documents subject to agreed
upon exceptions.
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Confidential 14 SunTrust Equitable Securities
<PAGE> 24
Conso International Corporation
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EXHIBIT B
APPLICABLE MARGIN GRID
<TABLE>
<CAPTION>
LIBOR Margin Base Rate Commitment Fee
------------------------ -------------------------- --------------
Total Funded Debt/ Revolver & Revolver &
Adjusted EBITDA Term Loan A Term Loan B Term Loan A Term Loan B Revolver
- ------------------ ----------- ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
> 4.75 3.500% 4.000% 2.000% 2.500% 0.500%
-
>4.00 but <4.25 3.000% 3.500% 1.500% 2.000% 0.500%
-
>3.75 but <4.00 2.750% 3.250% 1.250% 1.750% 0.500%
-
>3.50 but <3.75 2.500% 3.000% 1.000% 1.500% 0.375%
-
>3.25 but <3.50 2.250% 3.000% 0.750% 1.500% 0.375%
-
<3.25 2.000% 3.000% 0.500% 1.500% 0.375%
</TABLE>
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Confidential 15 SunTrust Equitable Securities
<PAGE> 25
Conso International Corporation
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EXHIBIT C
AMORTIZATION SCHEDULE
<TABLE>
<CAPTION>
Quarter Ended Term Loan A Term Loan B
- ------------- ----------- -----------
<S> <C> <C>
12/31/1999 $ -- $ --
03/31/2000 $ -- $ --
06/30/2000 $ 250,000 $ 75,000
09/30/2000 $ 500,000 $ 75,000
12/31/2000 $ 750,000 $ 75,000
03/31/2001 $ 1,000,000 $ 75,000
06/30/2001 $ 1,000,000 $ 75,000
09/30/2001 $ 1,250,000 $ 75,000
12/31/2001 $ 1,250,000 $ 75,000
03/31/2002 $ 1,500,000 $ 75,000
06/30/2002 $ 1,500,000 $ 75,000
09/30/2002 $ 1,500,000 $ 75,000
12/31/2002 $ 1,500,000 $ 75,000
03/31/2003 $ 1,500,000 $ 75,000
06/30/2003 $ 1,500,000 $ 75,000
09/30/2003 $ 1,500,000 $ 75,000
12/31/2003 $ 1,500,000 $ 75,000
03/31/2004 $ 1,750,000 $ 75,000
06/30/2004 $ 1,750,000 $ 75,000
09/30/2004 $ 1,750,000 $ 75,000
12/31/2004 $ 1,750,000 $ 75,000
03/31/2005 $ -- $ 2,250,000
06/30/2005 $ -- $ 2,250,000
09/30/2005 $ -- $ 2,250,000
12/31/2005 $ -- $ 2,250,000
03/31/2006 $ -- $ 4,393,750
06/30/2006 $ -- $ 4,393,750
09/30/2006 $ -- $ 4,393,750
12/31/2006 $ -- $ 4,393,750
----------- -----------
Total $25,000,000 $28,000,000
</TABLE>
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Confidential 16 SunTrust Equitable Securities
<PAGE> 26
Conso International Corporation
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ANNEX B
SUMMARY OF TERMS AND CONDITIONS OF
$15,000,000 SUBORDINATED DEBT FACILITY
ISSUER: Initially, a wholly owned subsidiary of CIC
Acquisition Corporation, and upon consummation of the
merger of such subsidiary into Conso International
Corporation immediately following the
Recapitalization, Conso International Corporation
("Conso" or the "Company"),who shall expressly assume
all obligations with respect to the Notes and
Warrants referred to below.
ARRANGER: SunTrust Equitable Securities Corporation
PURCHASER(S): SunTrust Banks, Inc. (or one of its wholly owned
subsidiaries) and other financial institutions
acceptable to the Company.
AMOUNT: $15,000,000
ISSUE: $15,000,000 subordinated debt due 2006 with
detachable warrants (the "Subordinated Debt").
INTEREST: 12% per annum payable quarterly, in arrears.
PRINCIPAL
REPAYMENT: Principal amount due eight (8) years from the
closing.
CONVERSION: Purchasers may convert after 15 months its warrants
(par value $0.0001) into the amount of shares
representing 10% of the common stock and preferred
stock on a fully diluted basis as of the closing.
Warrants are subject to a 50% recapture if the
Subordinated Debt is repaid in full in the first 15
months after closing.
SPECIAL DIVIDENDS: Distributions in cash, marketable securities, or
other assets made as a special dividend or special
distribution to common stockholders shall require an
equivalent pro rata special distribution to
Purchasers of the Subordinated Debt to the extent the
Purchasers hold the warrants.
USE OF PROCEEDS: The proceeds will be used for the recapitalization
of Conso and for general corporate purposes.
OTHER REDEMPTION: The Company may redeem the Subordinated Debt at par
plus a premium over par equal to 3% during the first
24 months from closing, reducing to 2% at 25 months,
1% at 37 months, and 0% at 49 months. The Purchasers
shall surrender 50% of the warrants if the
Subordinated Debt is repaid within 15 months of the
closing.
VOTING RIGHTS: Warrants will be non-voting until converted into
common stock or preferred stock. In no event shall
SunTrust Banks, Inc.'s voting rights exceed 4.95% of
the total voting rights. Nonetheless, upon sale or
transfer to a third party all voting rights of common
stock and preferred stock will be fully restored.
LIQUIDATION: The Subordinated Debt will be subordinate to Senior
Debt upon involuntary liquidation, dissolution, or
winding-up. Upon involuntary liquidation,
dissolution, or winding-up, no distributions to
holders of common stock or preferred stock or other
securities junior to the Subordinated Debt shall be
made unless, prior thereto, Purchasers of
Subordinated Debt receive an amount equal to par
value
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Confidential 1 SunTrust Equitable Securities
<PAGE> 27
Conso International Corporation
- --------------------------------------------------------------------------------
plus all accrued and unpaid interest thereon to the
date of payment, and no distributions shall be made
to holders of debt ranking on parity with the
Subordinated Debt except distributions made ratably
to the Purchasers of the Subordinated Debt and such
parity debt. Voluntary liquidation will be
considered comparable to optional redemption.
REGISTRATION RIGHTS:
PIGGYBACK: After the initial public offering of the Company's
common stock or preferred stock, if the Company
proposes to register any of its common stock or
preferred stock or securities convertible into its
common stock in connection with a public distribution
for itself or its shareholders, it will notify
Purchasers of Registrable Securities and, if so
requested by any of such Purchasers, will use its
best efforts to register such Purchasers' Registrable
Securities. The number or kind of Registrable
Securities to be so registered may be limited if, in
the opinion of the managing underwriter, registration
of all shares requested would have a material adverse
effect upon the proposed distribution provided,
however any such limitation shall apply ratable to
any other shareholders who have the right to register
Registrable Securities in connection with such public
distribution pursuant to piggyback rights.
Purchasers' piggyback rights will rank equally with
existing piggyback rights and the Company will not
create new piggyback rights superior to those of
Purchasers.
DEMAND: Twelve months after the Company has effected an IPO,
Purchasers holding at least 7.5% of the fully diluted
stock outstanding will have one demand right to
register their shares.
EXPENSES: The Company shall bear all expenses of each of the
registrations (except for any underwriting
commissions or discounts) and will pay for one
counsel for the Purchasers of Registrable Securities.
The Company will provide customary indemnification to
the underwriters (if an underwritten registered
offering) and the selling Purchasers, Purchasers to
provide customary indemnification to Company and
underwriters. The Company will be responsible for all
"Blue Sky" fees and filings.
REPRESENTATIONS
AND WARRANTIES: Customary for transactions of this type.
COVENANTS: Customary, including:
Maximum ratio of Total Funded Debt to Adjusted
EBITDA, as of the end of each fiscal quarter at
levels to be negotiated.
Transactions with affiliates on arms length basis.
EVENTS OF DEFAULT Customary for transactions of this type including
AND REMEDIES: payment defaults, breach of covenants, and
bankruptcy events.
CHANGE OF CONTROL: Change of Control, to include, among other things,
the acquisition by a person or "group" (other than
Citicorp Venture Capital and its affiliates) of more
than 50% of Company voting securities without the
approval in advance of the Company's board of
directors; approval by the Company stockholders of a
merger, reorganization, or other transaction which
results in more than 50% but less than all of the
voting power of the Company changing hands; sale of
all or substantially all of the Company's assets; and
any transaction not approved by the board of
directors of the Company resulting in the Company's
stock, if after
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Confidential 2 SunTrust Equitable Securities
<PAGE> 28
Conso International Corporation
- --------------------------------------------------------------------------------
having been public, no longer being required to be
registered under Section 12 of the Exchange Act.
MODIFICATIONS AND Modifications and amendments of the Subordinated
AMENDMENTS: Debt may be made by the Company with the consent of
Purchasers holding at least 51% of the Subordinated
Debt then outstanding, and at least two Purchasers if
more than one Purchaser holds the Subordinated Debt.
INFORMATION AND The Company will provide to Purchasers, so long as
CONSULTATION: Subordinated Debt is outstanding and subject to
confidentiality agreements mutually acceptable to the
Purchasers and the Company and SEC compliance, all
SEC filings, other information available to
shareholders and to each Purchaser individually any
other information that such Purchaser may reasonably
request including budgets, projections, presentations
to banks and/or investor groups.
With respect to each Purchaser individually, the
Company will agree, so long as such Purchaser owns at
least $2.5 million of Subordinated Debt (or
equivalent number of shares of common stock or
preferred stock, subject to normal adjustments), to:
1. Provide such Purchaser with financial
statements that are made available to
shareholders generally plus management's
regularly prepared: quarterly and annual
financial statements including statements of
revenue, expense and cash flow by business
unit and annual budgets, financial
projections, appraisals, bank presentations,
information on derivatives, hedging and
interest rate exposure, debt terms, etc.
2. Provide such Purchaser with the right to
inspect and copy the books and records of the
Company and to inspect properties.
3. Make appropriate officers of the Company
available periodically, upon reasonable
notice and at reasonable times unless an
event of default has occurred, for
consultation with representatives of such
Purchaser with respect to matters relating to
the business and affairs of the Company,
including, without limitation, significant
changes in management personnel and
compensation of employees, business ventures,
important acquisitions or dispositions, and
significant litigation.
4. Allow such Purchaser to attend as an observer
all Board and Advisory Board meetings.
(Company shall give such Purchaser three (3)
business days notice of meetings.)
RESTRICTION ON For a period ending on the earlier of (i) two years
TRANSFERS: from the issue date; (ii) the date any Purchaser
ceases to own at least 5% of the Company's shares
issued or issuable upon conversion of the warrants
("Company Securities"); (iii) the occurrence of a
Change of Control; (iv) an Initial Public Offering by
the Company; and (v) the occurrence of a breach of a
material covenant (the "Transfer Restriction
Period"), the Purchasers will not transfer or sell
any Company Securities except (a) pursuant to the
exercise of demand or piggyback registration rights,
(b) pursuant to Rule 144 and/or Rule 144A, (c) in
private placements, and (d) distribution by any
Purchaser to any of its subsidiaries or affiliates,
provided in each case purchasers of the Company
Securities agree to be bound by agreement. Purchasers
also agree to provide the Company and CVC with first
look on any sale of warrants, common stock or
preferred stock prior to an IPO.
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Confidential 3 SunTrust Equitable Securities
<PAGE> 29
Conso International Corporation
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TAG-ALONG: If Citicorp Venture Capital sells 5% or more of its
shares (other than to its affiliates), or Mr. Cary
Findlay individually sells 25% or more of his shares,
the Purchasers shall have the right to require pro
rata inclusion of Company Securities owned by the
Purchasers and to be sold at the same price and on
the same terms and conditions as the purchase, taking
into account the substitutions.
CONDITIONS Amendment of any agreements currently prohibiting
TO CLOSING: payment of interest to Subordinated Debt except if
in default; negotiation and execution of a mutually
satisfactory Purchase Agreement, Registration Rights
Agreement and related documentation; an aggregate
minimum equity investment of $19,999,960 in the
Company by Citicorp Venture Capital Limited or an
affiliate and $4,800,400 in the Company by Mr. Cary
Findlay under terms reasonable acceptable to
Purchasers (such terms to include a maximum of
$23,000,000 of preferred stock with a 12% PIK
dividend rate and conversion rights acceptable to
Purchasers); no material adverse change; due
diligence process including evidence of a minimum
adjusted, trailing EBITDA for the most recent
reported twelve-month period ending prior to closing
(but no more than 60 days before closing) of at least
$18,400,000; Intercreditor Agreement with Senior
Lender(s); evidence that all conditions precedent to
the reverse subsidiary merger of Issuer into Conso
International , other than the funding of the Credit
Facilities have been satisfied; and other customary
closing conditions.
RESTRICTIONS: Anti-dilution
Common Dividends
Other Debt
OTHER ISSUES: Non-Compete Agreement with Mr. Cary Findlay.
GOVERNING LAW: State of New York
INDEMNITY: Full indemnification of the Purchasers and their
subsidiaries, affiliates and officers, and directors,
except for losses arising from gross negligence,
willful misconduct or breach by a Purchaser of its
obligations under the final documentation; This
indemnification provision will be contained in the
final documentation and does not modify in any way
the indemnification provisions set forth in the
Commitment Letter.
EXPENSES: Reimbursement to SunTrust Banks, Inc. of reasonable
fees and expenses of counsel and special industry
consultants, if any, in connection with the proposed
transaction.
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Confidential 4 SunTrust Equitable Securities
<PAGE> 1
EXECUTION COPY
SUPPORT AGREEMENT
This SUPPORT AGREEMENT, is entered into as of October 5, 1999, among
CIC Acquisition Sub, Inc., a South Carolina corporation ("Acquisition Sub"), and
J. Cary Findlay (the "Shareholder").
WHEREAS, CIC Acquisition Co. ("Parent"), Acquisition Sub and Conso
International Corporation, a South Carolina corporation (the "Company"), have,
simultaneously with the execution and delivery of this Agreement, entered into a
Merger Agreement (as the same may be amended or supplemented, the "Merger
Agreement") providing for the merger of Acquisition Sub with and into the
Company (the "Merger");
WHEREAS, Shareholder is the record and beneficial owner of 2,865,725
shares of Common Stock, no par value per share, of the Company (the "Company
Common Stock") (such shares of the Company Common Stock, as they may be adjusted
by stock dividends, stock splits, recapitalization, combination or exchange of
shares, merger, consolidation, reorganization or other changes or transactions
of or by the Company, together with shares of the Company Common Stock that may
be acquired after the date hereof by the Shareholder, including shares of the
Company Common Stock issuable upon the exercise of options or warrants to
purchase or other securities exchangeable for or convertible into the Company
Common Stock (as the same may be adjusted as aforesaid), being collectively
referred to herein as the "Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Acquisition Sub has requested that the Shareholder enter
into this Agreement;
NOW, THEREFORE, to induce Parent and Acquisition Sub to enter into, and
in consideration of it entering into, the Merger Agreement, and in consideration
of the promises and the representations, warranties and agreements contained
herein, the parties hereto agree as follows:
1. Option.
(a) Option. The Shareholder hereby agrees to sell to
Acquisition Sub, upon written notice from Acquisition Sub prior to termination
of this Agreement pursuant to Section 12 (the "Notice"), all of the
Shareholder's Shares at a price per Share equal to nine dollars ($9.00);
provided, that (i) one of the following shall have occurred: (A) a third party
shall have made a TakeOver Proposal (as defined in the Merger Agreement), (B)
the Company materially breaches its obligations under the Merger Agreement, (C)
the board of directors of the Company shall have
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withdrawn or modified its approval or recommendation of the Merger, (D) the
Shareholder shall have materially breached any of the terms of this Agreement,
or (E) the approval of the Merger by the Company's shareholders shall not have
been obtained at a meeting duly convened therefor or at any adjournment thereof
and (ii) any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") shall have expired or been terminated.
(b) Closing. Subject to Section l(a) hereof, the closing of
the purchase and sale of the Shareholder's Shares shall take place at the place,
time and date for the closing of the purchase by Acquisition Sub specified in
the Notice (which shall not be more than 30 days after the date the Notice is
given). At the closing, the Shareholder shall deliver certificates representing
the Shareholder's Shares, in proper form for transfer, accompanied by stock
powers duly executed in blank against delivery of nine dollars per Share. Such
delivery shall vest in Acquisition Sub, and the Shareholder will take any
additional actions reasonably requested by Acquisition Sub to perfect in
Acquisition Sub, good and marketable title to the Shares, free and clear of any
tax, lien, claim, charge, encumbrance or other restriction (collectively, a
"Lien") or voting agreement of any kind, other than as created by this
Agreement.
(c) Dividends and Split-Ups. In event of any change in the
number of issued and outstanding Shares by reason of any stock dividend,
split-up, recapitalization, merger, combination, conversion, exchange of shares,
rights plan or other change in the corporate or capital structure of the Company
which would have the effect of diluting the rights of Acquisition Sub hereunder
or of reducing the aggregate Per Share Price (as defined in the Plan of Merger
attached as an exhibit to the Merger Agreement) payable with respect to the
Shares hereunder, the number and kind of Shares subject to this Agreement and
the per share price payable hereunder shall be appropriately adjusted.
2. Representations and Warranties of the Shareholder. The Shareholder
hereby represents and warrants to Acquisition Sub as follows:
(a) Authority. The Shareholder has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Shareholder and, assuming this Agreement constitutes a valid
and binding obligation of Acquisition Sub, constitutes a valid and binding
obligation of the Shareholder enforceable against the Shareholder in accordance
with its terms. Except for the expiration or termination of the waiting periods
under the HSR Act (if applicable) and informational filings with the Securities
and Exchange Commission, neither the execution, delivery or performance of this
Agreement by the Shareholder nor the consummation by the Shareholder of the
transactions contemplated hereby will (i) require on the part of the Shareholder
any filing with, or permit, authorization, consent or approval of, any federal,
state, local, municipal or foreign or other government or subdivision, branch,
department or agency thereof or any governmental or
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quasi-governmental authority of any nature, including any court or other
tribunal (a "Governmental Entity"), (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
under, or give rise to any right of termination, amendment, cancellation or
acceleration under, or result in the creation of any Lien upon any of the
properties or assets of the Shareholder under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, permit,
concession, franchise, contract, agreement or other instrument or obligation (a
"Contract") to which the Shareholder is a party or by which the Shareholder or
any of the Shareholder's properties or assets, including the Shareholder's
Shares, may be bound or (iii) violate any judgment, order, writ, preliminary or
permanent injunction or decree (an "Order") or any statute, law, ordinance, rule
or regulation of any Governmental Entity (a "Law") applicable to the Shareholder
or any of the Shareholder's properties or assets, including the Shareholder's
Shares.
(b) The Shares. The Shareholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by the Shareholder, or by a nominee or custodian for the benefit of the
Shareholder, and the Shareholder has good and marketable title to such Shares,
free and clear of any Liens, proxies, voting trusts or agreements,
understandings or arrangements, except for any such Liens or proxies arising
hereunder. Except as set forth on Schedule B, the Shareholder owns of record or
beneficially no shares of the Company Common Stock and has no other rights to
purchase or acquire any such shares (whether by exercise, conversion, exchange
or otherwise) other than the Shareholder's Shares as set forth on Schedule A
hereto.
(c) Brokers. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the
Shareholder.
(d) Other Agreements. Neither the Shareholder (nor any of his
affiliates, representatives or agents) is a party to or bound by any agreement
with respect to a Potential Transaction (as defined below) other than this
Agreement and the Merger Agreement.
(e) Merger Agreement. The Shareholder understands and
acknowledges that Parent and Acquisition Sub are entering into the Merger
Agreement in reliance upon the Shareholder's execution and delivery of this
Agreement.
(f) Neither the provisions of Article 1 "Control Share
Acquisitions," of Chapter 2, Title 35, of the 1976 South Carolina Code (S.C.
Code Sections 35-2-101 et seq.) and Article 2, "Business Combinations," of
Chapter 2, Title 35, of the 1976 South Caroline Code (S.C. Code
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Sections 35-2-201 et seq.) nor any other similar anti-takeover provisions under
South Carolina law are applicable to or would otherwise be triggered by the
transactions contemplated hereby.
3. Representations and Warranties of Acquisition Sub. Acquisition Sub
hereby represents and warrants to the Shareholder as follows:
(a) Authority. Acquisition Sub has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Acquisition Sub and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Acquisition Sub. This Agreement has been duly executed and
delivered by Acquisition Sub and, assuming this Agreement constitutes a valid
and binding obligation of the Shareholder, constitutes a valid and binding
obligation of Acquisition Sub enforceable in accordance with its terms.
(b) Securities Act. The Shares will be acquired in compliance
with, and Acquisition Sub will not offer to sell or otherwise dispose of any
Shares so acquired by it in violation of the registration requirements of the
Securities Act of 1933, as amended.
4. [INTENTIONALLY OMITTED]
5. Covenants of the Shareholder. The Shareholder agrees as follows:
(a) The Shareholder shall not, except as contemplated by the
terms of this Agreement, (i) sell, transfer, pledge, assign or otherwise dispose
of, or enter into any Contract, option or other arrangement (including any
profit sharing arrangement) or understanding with respect to the sale, transfer,
pledge, assignment or other disposition of the Shares to any person other than
Acquisition Sub or Acquisition Sub's designee, (ii) enter into any voting
arrangement, whether by proxy, voting agreement, voting trust, power-of-attorney
or otherwise, with respect to the Shares or (iii) take any other action that
would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby.
(b) At any meeting of shareholders of the Company called to
vote upon the Merger and the Merger Agreement or at any adjournment thereof or
in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the Merger
Agreement is sought, the Shareholder shall as requested by Parent or Acquisition
Sub (including, without limitation, by cooperating with Acquisition Sub with
respect to the irrevocable proxy granted to Acquisition Sub pursuant to Section
9 below), vote (or cause to be voted) the Shareholder's Shares in favor of the
Merger, the adoption by the Company of the Merger
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Agreement and the approval of the other transactions contemplated by the Merger
Agreement. At any meeting of shareholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Shareholder's vote, consent
or other approval is sought, the Shareholder shall as requested by Parent or
Acquisition Sub as provided above vote (or cause to be voted) the Shareholder's
Shares against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantial
assets, reorganization, recapitalization, dissolution, liquidation or winding up
of or by the Company or any other Takeover Proposal (collectively, "Alternative
Transactions") or (ii) any amendment of the Company's Articles of Incorporation
or by-laws or other proposal or transaction involving the Company or any of its
subsidiaries, which amendment or other proposal or transaction would in any
manner impede, frustrate, prevent or nullify, the Merger, the Merger Agreement
or any of the other transactions contemplated by the Merger Agreement
(collectively, "Frustrating Transactions").
6. Waiver of Appraisal Rights. The Shareholder hereby waives any rights
of appraisal or rights to dissent from the Merger that he may have.
7. Notice of Acquisition of Additional Shares. The Shareholder hereby
agrees, while this Agreement is in effect, to promptly notify Acquisition Sub of
the number of any new Shares acquired by the Shareholder, if any, after the date
hereof.
8. Non-Solicitation. The Shareholder, whether acting as an individual
or in his capacity as an agent of the Company, shall not (and shall cause each
affiliate, agent, trustee or other person acting on (or purporting to act on)
the Shareholder's behalf not to), directly or indirectly, other than with
Acquisition Sub, and its representatives and agents, (a) initiate, solicit,
encourage, entertain, accept, discuss or negotiate any inquiries, proposals or
offers (whether initiated by the Shareholder or otherwise) with respect to (i)
the acquisition or sale of any Shares or other capital stock or capital stock
equivalents of the Company, any of its subsidiaries or any interests therein,
(ii) the acquisition of all or a material portion of the assets and properties
of the Company, its subsidiaries or any interests therein, (iii) the merger,
share exchange, consolidation or business combination of the Company or any of
its subsidiaries, (iv) the refinancing of the Company, (v) the liquidation,
dissolution or reorganization of the Company or any of its subsidiaries or (vi)
the acquisition, directly or indirectly, by the Company or any of its
subsidiaries or affiliates of capital stock or assets and properties of any
other person or persons in excess of $20 million in the aggregate (each a
"Potential Transaction") from any party, (b) provide information to any party,
or review information of any other party, in connection with a Potential
Transaction or (c) enter into any contract, agreement or arrangement with any
party, concerning or relating to a Potential Transaction or require the
Shareholder to abandon, terminate or fail to consummate or vote against the
Merger or the other transactions with Acquisition Sub contemplated hereby;
provided, however, that nothing in this
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Section 8 shall prohibit Shareholder from taking any action as a director or
officer of the Company in compliance with Section 4.1 of the Merger Agreement.
9. Grant of Irrevocable Proxy Coupled with an Interest; Appointment of
Proxy.
(a) The Shareholder hereby irrevocably grants to, and
appoints, Michael M. Bradley, and any other individual who shall hereafter be
designated by Acquisition Sub, the Shareholder's proxy and attorney-in-fact
(with full power of substitution), for and in the name, place and stead of the
Shareholder, to vote the Shareholder's Shares, or grant a consent or approval in
respect of such Shares, at any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote, consent
or other approval is sought, (i) in favor of the Merger, the adoption by the
Company of the Merger Agreement and the approval of the other transactions
contemplated by the Merger Agreement and (ii) against any Alternative
Transaction or Frustrating Transaction.
(b) The Shareholder represents that any proxies heretofore
given in respect of the Shareholder's Shares are not irrevocable, and that any
such proxies are hereby revoked.
(c) The Shareholder hereby affirms that the proxy set forth in
this Section 9 is coupled with an interest and is irrevocable until such time as
this Agreement terminates in accordance with its terms. The Shareholder hereby
further affirms that the irrevocable proxy is given in connection with the
execution of the Merger Agreement, and that such irrevocable proxy is given to
secure the performance of the duties of the Shareholder under this Agreement.
The Shareholder hereby ratifies and confirms all that such irrevocable proxy may
lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 55-7-22(d) of the South Carolina Business Corporation Act. Such
irrevocable proxy shall be valid until the termination of this Agreement
pursuant to Section 12.
10. Further Assurances. The Shareholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Acquisition Sub may reasonably request for the purpose of effectively carrying
out the transactions contemplated by this Agreement and to vest the power to
vote the Shareholder's Shares as contemplated by Section 9. Acquisition Sub
agrees to use reasonable efforts to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements that may be imposed
with respect to the transactions contemplated by this Agreement (including legal
requirements of the HSR Act, if any).
11. Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law
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or otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the parties hereto and their respective
successors and assigns. Notwithstanding the foregoing, Acquisition Sub shall
have the right to assign its rights, interests and obligations hereunder to any
of its affiliates or financing sources and any of their respective affiliates at
its sole option and without the prior written consent of the other parties
hereto. Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective heirs, successors,
executors, administrators and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
12. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the date that is 30 business days after
the date the Merger Agreement is terminated; provided, however, that if the
Merger Agreement is terminated pursuant to Section 5.3(b), (f), (g), (h) or (i)
thereof, this Agreement shall survive the termination of the Merger Agreement
and shall terminate on the later of (i) the date that is six months after the
date of termination of the Merger Agreement, and (ii) the consummation of any
Subsequent Transaction (as defined in the Merger Agreement) which has been
publicly announced or with respect to which the Company or Shareholder has
entered into any agreement on or before the expiration of the time period
contemplated by the immediately preceding clause (i). Nothing in this Section 12
shall relieve any party from liability for willful breach of this Agreement.
Notwithstanding the foregoing, if Acquisition Sub shall purchase Shares pursuant
to Section 1 hereof, Sections 2, 3, 11, 12, and 14-18 shall survive any
termination of this Agreement.
13. Conditions Precedent. The obligations of the Shareholder under
Section 5 and Section 9 hereof are subject to and conditional upon structuring
the transactions contemplated by the Merger Agreement as set forth in that
certain letter agreement between Citicorp Venture Capital, Ltd. and J. Cary
Findlay dated October 5, 1999. Each of the Shareholder and Parent shall
negotiate in good faith and use commercially reasonable effort to cause
definitive documents to be prepared reflecting the terms contained in such
letter agreement prior to the date the definitive proxy statement is mailed to
the Company's shareholders.
14. General Provisions.
(a) Payments. All payments required to be made to any party to
this Agreement shall be made by wire transfer to an account designated by such
party at least one trading day prior to such payment.
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(b) Expenses. Subject to the terms of the Merger Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder
shall be in writing and shall be deemed given upon receipt to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to Acquisition Sub, to
Citicorp Venture Capital, Ltd.
399 Park Avenue
New York, NY 10043
Attention: M. Saleem Muqaddam
Facsimile: (212) 888-2940
with a copy (which shall not constitute
notice to Acquisition Sub) to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Kirk A. Radke
Facsimile: (212) 446-4900
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and
(ii) if to the Shareholder, to
J. Cary Findlay
50 Lighthouse Point
Longboat Key, Florida 34228
Facsimile: (941) 387-9258
with a copy (which shall not constitute notice to the
Shareholder) to:
Kennedy Covington Lobdell & Hickman, L.L.P.
Bank of America Corporate Center, Suite 4200
100 North Tryon Street
Charlotte, North Carolina 28202-4006
Attention: J. Norfleet Pruden, III
Facsimile: (704) 331-7598
(e) Interpretation. When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Wherever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
(f) Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
(g) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
ANY APPLICABLE CONFLICTS OF LAW. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF
THE STATE OF NEW YORK OR THE UNITED STATES OF AMERICA
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FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY HERETO HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
(i) Publicity. Except as otherwise required by law, court
process or the rules of a national securities exchange or the NASDAQ National
Market or as contemplated or provided in the Merger Agreement, for so long as
this Agreement is in effect, neither any Shareholder nor Acquisition Sub shall
issue or cause the publication of any press release or other public announcement
with respect to the transactions contemplated by this Agreement or the Merger
Agreement without the consent of the other parties, which consent shall not be
unreasonably withheld; provided, that in the case of any consensual disclosure,
the Shareholder will not use the name of Acquisition Sub or any affiliate
thereof without Acquisition Sub's written permission and, in each case, will
discuss the term and contents of any such release with Acquisition Sub prior to
dissemination; further provided, that nothing contained herein shall preclude
Acquisition Sub from making any announcement or disclosing any information to
its financing sources.
15. Shareholder Capacity. Except as provided in Section 8 above, the
Shareholder makes no agreement or understanding herein in his capacity as a
director or officer of the Company. The Shareholder signs solely in his capacity
as a record holder and beneficial owner of the Shareholder's Shares and nothing
herein shall limit or affect any actions taken by the Shareholder in his
capacity as an officer or director of the Company to the extent specifically
permitted by the Merger Agreement.
16. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in a court of the United States
(without posting of bond or other security). This being in addition to any other
remedy to which they are entitled at law or in equity.
17. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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18. Waiver of Jury Trial. Each party to this Agreement hereby waives,
to the extent permitted by applicable law, trial by jury in any litigation in
any court with respect to, in connection with, or arising out of this Agreement
or any ancillary agreement or the validity, protection, interpretation,
collection or enforcement thereof.
* * * * *
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IN WITNESS WHEREOF, Acquisition Sub has caused this Agreement
to be signed by its officer hereunto duly authorized and the Shareholder has
signed this Agreement, all as of the date first written above.
CIC ACQUISITION SUB, INC.
By: /s/ Michael T. Bradley
-------------------------------------
Name: Michael T. Bradley
Title: Vice President
SHAREHOLDER:
/s/ J. Cary Findlay
----------------------------------------
J. Cary Findlay
<PAGE> 13
SCHEDULE A
SHARE HOLDINGS OF J. CARY FINDLAY
2,865,725 shares of Company Common Stock
<PAGE> 14
SCHEDULE B
EXCLUDED SHARES
1,940 shares of Company Common Stock owned by Konstance J.K. Findlay
Options to purchase an aggregate of 10,200 shares of Company Common Stock owned
by Ms. Findlay
78,788 shares of Company Common Stock owned jointly by Mr. and Ms. Findlay
An aggregate of 131,520 shares of Company Common Stock owned by charitable
foundations of which Mr. and Ms. Findlay are directors
<PAGE> 1
EXHIBIT (C)(3)
THE ROBINSON-HUMPHREY COMPANY, LLC
CONFIDENTIAL
May 5, 1999
Mr. Michael Bradley
Vice President
Citicorp Venture Capital, Ltd.
399 Park Avenue
14th Floor
New York, NY 10043
Dear Mr. Bradley:
In connection with your consideration of a possible transaction with
Conso International Corporation (the "Company"), the Company is prepared to make
available to you certain information concerning the business, financial
condition, operations, assets and liabilities of the Company. As a condition to
such information being furnished to you and your directors, officers, employees,
agents or advisors (including, without limitation, attorneys, accountants,
consultants, bankers and financial advisors) (collectively, "Representatives"),
you agree to treat any information concerning the Company (whether prepared by
the Company, its advisors or otherwise and irrespective of the form of
communication provided) which has been or will be furnished to you or to your
Representatives by or on behalf of the Company (herein collectively referred to
as the "Evaluation Material") in accordance with the provisions of this letter
agreement, and to take or abstain from taking certain other actions hereinafter
set forth.
The term "Evaluation Material" shall be deemed to include all notes,
analyses, compilations, studies, interpretations or other documents prepared by
you or your Representatives which contain, reflect or are based upon, in whole
or in part, the information furnished to you or your Representatives pursuant
hereto. The term "Evaluation Material" does not include information which (i) is
or becomes generally available to the public other than as a result of a
disclosure by you or your Representatives, (ii) was within your possession prior
to its being furnished to you by or on behalf of the Company pursuant hereto, as
evidenced by written documentation, provided that the source of such information
was not known by you to be bound by a confidentiality agreement with, or other
contractual, legal or fiduciary obligation of confidentiality to, the Company or
any other party with respect to such information, (iii) becomes available to you
on a non-confidential basis from a source other than the Company or any of its
Representatives, as evidenced by written documentation, provided that such
source is not bound by a confidentiality agreement with, or other contractual,
legal or fiduciary obligation of confidentiality to, the Company or any other
party with respect to such information, (iv) is independently developed by you,
as evidenced by written documentation, or (v) is disclosed by you to others in
accordance with the terms of prior written authorization of the Company.
ATLANTA FINANCIAL CENTER
3333 PEACHTREE ROAD, NE -- ATLANTA, GEORGIA 30328
(404) 358-6000
<PAGE> 2
May 5, 1999
Page 2
- ----------------
You hereby agree that you and your Representatives shall use the
Evaluation Material solely for the purpose of evaluating a possible transaction
between the Company and you, that the Evaluation Material will be kept strictly
confidential and that you and your Representatives will not disclose any of the
Evaluation Material in any manner whatsoever; provided, however, that (i) you
may make any disclosure of such information to which the Company gives its prior
written consent, and (ii) any of such information may be disclosed to your
Representatives who need to know such information for the sole purpose of
evaluating a possible transaction with the Company, who agree to keep such
information confidential and who are provided with a copy of this letter
agreement and agree to be bound by the terms hereof to the same extent as if
they were parties hereto. In any event, you shall be responsible for any breach
of this letter agreement by any of your Representatives and you agree, at your
sole expense, to take all reasonable measures (including but not limited to
court proceedings) to restrain your Representatives from prohibited or
unauthorized disclosure or use of the Evaluation Material.
In addition, you agree that you and your Representatives will not
disclose to any other person the fact that the Evaluation Material has been made
available to you, that discussions or negotiations are taking place concerning a
possible transaction involving the Company or any of the terms, conditions or
other facts with respect thereto (including the status thereof), unless in the
written opinion of your counsel such disclosure is required by law, and then
only with as much prior written notice to the Company as is practical under the
circumstances. The term "person" as used in this letter agreement shall be
broadly interpreted to include the media and any corporation, partnership,
group, individual or other entity. You also agree (i) not to directly contact
the Company without the expressed consent of Robinson-Humphrey or the Company,
and (ii) to communicate through Robinson-Humphrey with respect to any additional
information needs unless the Company otherwise agrees.
In the event that you or any of your Representatives are requested or
required (by deposition, interrogatories, requests for information or documents
in legal proceedings, subpoena, civil investigative demand or other similar
process) to disclose any of the Evaluation Material, you shall provide the
Company with prompt written notice of any such request or requirement so that
the Company may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this letter agreement. If, in the absence of a
protective order or other remedy or the receipt of a waiver by the Company, you
or any of your Representatives are nonetheless, in the written opinion of your
counsel, legally compelled to disclose Evaluation Material to any tribunal or
else stand liable for contempt or suffer other censure or penalty, you or your
Representative may, without liability hereunder, disclose to such tribunal only
that portion of the Evaluation Material which such counsel advises you is
legally required to be disclosed, provided that you exercise your best efforts
to preserve the confidentiality of the Evaluation Material, including, without
limitation, by cooperating with the Company to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be accorded
the Evaluation Material by such tribunal.
If you decide that you do not wish to proceed with a transaction with
the Company, you will promptly inform the Company of that decision. In that
case, or at any time upon the request of the Company for any reason, you will
promptly deliver to the Company all documents (and all copies thereof) furnished
to you or your Representatives by or on behalf of the Company pursuant hereto.
<PAGE> 3
May 5, 1999
Page 3
- ----------------
Within ten (10) days after such a decision or request, you will also certify in
writing to the Company that all other Evaluation Material prepared by you or
your Representatives has been destroyed and that no copy thereof has been
retained. Notwithstanding the return or destruction of the Evaluation Material,
you and your Representatives will continue to be bound by your obligations of
confidentiality and other obligations hereunder.
You understand and acknowledge that neither the Company nor any of its
Representatives (including without limitation The Robinson-Humphrey Company,
LLC) make any representation or warranty, express or implied, as to the accuracy
or completeness of the Evaluation Material. You agree that neither the Company
nor any of its Representatives (including without limitation The
Robinson-Humphrey Company, LLC) shall have any liability to you or to any of
your Representatives relating to or resulting from the use of the Evaluation
Material. Only those representations or warranties which are made in a final
definitive agreement regarding the transactions contemplated hereby, when, as
and if executed, and subject to such limitations and restrictions as may be
specified therein, will have any legal effect.
You understand and acknowledge that the Evaluation Material furnished
to you and your Representatives may include material nonpublic information about
the Company, and that any transactions by you or your Representatives in the
securities of the Company while in possession of such material nonpublic
information may be unlawful. You therefore agree that, without the prior written
approval of the Company, you will not, directly or indirectly, purchase, sell or
otherwise trade in any securities of the Company (whether for your own account
or for the account of others), or enter into any agreement to do so, or induce
or assist any other person or entity in doing so, for a period of one year after
the date of this letter agreement, and for so long thereafter as you are in
possession of any Evaluation Material hereunder that then constitutes material
nonpublic information if trading while in possession of such material nonpublic
information without disclosure thereof would then be in violation of applicable
federal or state securities laws. You further agree that you will advise each of
your Representatives who is given access to Evaluation Material of this
restriction, will cause each such Representative to refrain from trading to the
same extent as you are bound hereunder, and will be responsible to the Company
for any prohibited trading by any such Representative.
In consideration of the Evaluation Material being furnished to you, and
insamuch as during the course of making your evaluation of the Company you may
have access to employees of the Company, you agree that, for a period of one
year after the date of this letter agreement, you will not, without the prior
written consent of the Company, knowingly take any action, or cause or permit
any other person or entity controlled by you to take any action, to induce any
employee of the Company to leave his or her employment with the Company.
You agree that unless and until a final definitive agreement regarding
a transaction between the Company and you has been executed and delivered,
neither the Company nor you will be under any legal obligation of any kind
whatsoever with respect to such a transaction by virtue of this letter agreement
except for the matters specifically agreed to herein. You further acknowledge
and agree that the Company reserves the right, in its sole discretion, to reject
any and all proposals made by you or any of your Representatives with regard to
a transaction between the Company and you, and to terminate discussions and
negotiations with you at any time.
<PAGE> 4
May 5, 1999
Page 4
- ----------------
The Company reserves the right to assign all of its rights, powers and
privileges under this letter agreement (including, without limitation, the right
to enforce all of the terms of this letter agreement) to any person who enters
into the transactions contemplated by this letter agreement.
It is understood and agreed that no failure or delay by the Company in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.
It is further understood and agreed that money damages would not be a
sufficient remedy for any breach of this letter agreement by you or any of your
Representatives and that the Company shall be entitled to equitable relief,
including injunction and specific performance, as a remedy for any such breach.
Such remedies shall not be deemed to be the exclusive remedies for a breach by
you of this letter agreement but shall be in addition to all other remedies
available at law or equity to the Company. In the event you breach this letter
agreement, you will pay reasonable attorneys' fees incurred by the Company. You
further agree to submit to the non-exclusive jurisdiction of the federal or
state courts for the judicial district that includes Union, South Carolina in
any action brought by the Company to enforce your obligations under this
Agreement, and consent to personal jurisdiction and venue in such courts;
provided, that nothing herein shall preclude the Company from bringing any such
action in any other court having jurisdiction over you.
This letter agreement shall be governed by and construed and enforced
in accordance with the laws of the State of South Carolina.
Please confirm your agreement with the foregoing by signing and
returning one copy of this letter to the undersigned, whereupon this letter
agreement shall become a binding agreement between you and the Company.
Very truly yours,
THE ROBINSON-HUMPHREY COMPANY, LLC
/s/ Gordon R. Watt
-------------------------------------------------
By: Gordon R. Watt
Senior Vice President
as financial advisor to, and on behalf of
the Company
Accepted and agreed to as of the date first written above:
COMPANY NAME
/s/ Michael Bradley
- ------------------------------------
By: Michael Bradley
