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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3/A
(AMENDMENT NO. 2)
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:
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)
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: [ ]
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
(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 Amendment No. 2 amends and supplements the Transaction Statement
on Schedule 13E-3 (the "Schedule 13E-3") originally filed on October 20, 1999
and amended on December 8, 1999 relating 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 (the
"Merger Agreement") 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 Common and Preferred Stock of the surviving
corporation.
Capitalized terms not separately defined herein have the meanings
assigned to such terms in the Schedule 13E-3.
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The items of the Schedule 13E-3 set forth below are hereby amended and
supplemented as follows:
ITEM 4. TERMS OF THE TRANSACTION.
Item 4 is hereby amended and supplemented by adding the following:
On January 18, 2000, the Company, Parent and Acquisition Sub entered
into a letter agreement pursuant to which (a) the Company and Parent each agreed
to waive any right they may have to terminate the Merger Agreement pursuant to
Section 5.3(b) thereof until February 29, 2000 and (b) Parent and Acquisition
Sub consented to the adjournment of the Company's Special Meeting of
Shareholders at which the Merger Agreement and the related Plan of Merger are to
be considered until February 24, 2000.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 6 is hereby amended and supplemented by adding the following:
Pursuant to a commitment letter dated as of January 21, 2000,
Acquisition Sub obtained extended and revised commitments to provide financing
for the Merger and for the surviving corporation's operations after the Merger.
The commitment letter provides for credit facilities totaling $90.0 million and
consisting of a $15.0 million revolving credit facility, a $25.0 million term
loan facility, a $30.0 million term loan facility and $20.0 million in
subordinated debt. The revolving credit and term loan facilities have been
committed by SunTrust Bank (formerly known as SunTrust Banks, Atlanta) and the
subordinated debt has been committed by SunTrust Banks, Inc. The funding
deadline under these revised financing commitments was extended from January 31,
2000 to March 31, 2000. Except for a reduction in the overall financing
commitments from $93.0 million to $90.0 million and the extension of the funding
deadline to March 31, 2000, the terms and conditions of the revised and extended
financing commitments are substantially similar to the senior and subordinated
financing commitments previously obtained by Acquisition Sub from SunTrust Bank
and SunTrust Banks, Inc.
ITEM 16. ADDITIONAL INFORMATION
Item 16 is hereby amended and supplemented by adding the following:
On January 18, 2000, the Company's Special Meeting of Shareholders
called to consider and vote upon a proposal to approve and adopt the Merger
Agreement and the related Plan of Merger was convened and adjourned to February
24, 2000 to allow Acquisition Sub additional time to obtain the debt financing
necessary to complete the Merger. At the time the Special Meeting was adjourned,
proxies to be voted in favor of the Merger had been received from the holders of
approximately 87% of the outstanding shares of Conso Common Stock. The adjourned
meeting will be held on February 24, 2000 beginning at 10:00 a.m., local time,
at the offices of Kennedy Covington Lobdell &
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Hickman, L.L.P., Bank of America Corporate Center, Suite 4200, 100 North Tryon
Street, Charlotte, North Carolina.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS
Item 17 is hereby amended and supplemented by adding the following
exhibits:
(a)(2) Commitment Letter dated January 21, 2000 by and among SunTrust
Equitable Securities Corporation, SunTrust Bank, SunTrust Banks, Inc. and
Acquisition Sub (filed herewith).
(c)(4) Letter Agreement dated January 18, 2000 by and among Parent,
Acquisition Sub and the Company (filed herewith)
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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: February 3, 2000
CONSO INTERNATIONAL CORPORATION
By /s/ J. Cary Findlay
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Name: J. Cary Findlay
Title: Chairman, President and Chief Executive
Officer
CIC ACQUISITION CO.
By /s/ Michael T. Bradley
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Name: Michael T. Bradley
Title: Vice President
CIC ACQUISITION SUB, INC.
By /s/ Michael T. Bradley
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Name: Michael T. Bradley
Title: Vice President
/s/ J. Cary Findlay
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J. Cary Findlay
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
(a)(2) Commitment Letter dated January 21, 2000, by and among SunTrust
Equitable Securities Corporation, SunTrust Bank, SunTrust Banks,
Inc. and Acquisition Sub (filed herewith)
(c)(4) Letter Agreement dated January 18, 2000 by and among Parent,
Acquisition Sub and the Company (filed herewith)
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EXHIBIT A.2
January 21, 2000
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 $90,000,000 (the "Credit Facilities") arranged
by SunTrust Equitable Securities Corporation ("SunTrust Equitable
Securities") to include senior secured credit facilities totaling
$70,000,000 (the "Senior Credit Facilities") committed by SunTrust Bank and
subordinated debt totaling $20,000,000 (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.
The Senior Lenders invited by SunTrust Equitable Securities to participate
in this
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Conso International Corporation
January 21, 2000
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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 Equitable
Securities may reasonably request; (ii) using your existing lending
relationships, and
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Conso International Corporation
January 21, 2000
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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 May 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 October 2,
1999 and (b) any material change after the date hereof in loan syndication,
financial or capital market conditions that, in
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Conso International Corporation
January 21, 2000
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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 March 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 March 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
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Conso International Corporation
January 21, 2000
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 Tuesday, January 25, 2000, 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 March 31, 2000 or a date otherwise mutually agreed
upon in writing (the "Expiration Date"). In addition to the foregoing, this
Commitment
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Conso International Corporation
January 21, 2000
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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.
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Conso International Corporation
January 21, 2000
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
CORPORATION
By: /s/ Gregory N. Waters By: /s/ Palmer Henson
------------------------- ---------------------
Name: Gregory N. Waters Name: Palmer Henson
Title: Managing Director Title: Director
SUNTRUST BANKS, INC.
By: /s/ Bradley J. Staples
-------------------------
Name: Bradley J. Staples
Title: Director
ACCEPTED AND AGREED:
Date: January 21, 2000
CIC ACQUISITION CO.
By: /s/ Michael T. Bradley
-------------------------
Name: Michael T. Bradley
Title: Vice President
[CVC TO PROVIDE SEPARATE LETTER CONFIRMING OWNERSHIP, OFFICERS AND DIRECTORS OF
CIC ACQUISITION CORPORATION]
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ANNEX A
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS OF
$70,000,000 SENIOR SECURED CREDIT FACILITIES
I. DESCRIPTION OF THE SENIOR SECURED CREDIT FACILITIES
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SENIOR CREDIT FACILITIES: $15,000,000 Revolving Credit Facility ("Revolver") with a $2,000,000 Swing
Line, and a $3,000,000 Letter of Credit sub-facility.
$ 25,000,000 Term Loan A Facility ("Term Loan A")
$ 30,000,000 Term Loan B Facility ("Term Loan B")
------------
$ 70,000,000 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.
AGENT: SunTrust Bank
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, 2005 ("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, 2005 ("Term Loan A Maturity").
Term Loan B: December 31, 2007 ("Term Loan B Maturity").
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CONSO INTERNATIONAL CORPORATION
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NOTE: ITALICIZED TERMS WILL HAVE SUBSTANTIALLY THE MEANINGS SET FORTH IN
THE ATTACHED EXHIBIT A ("SELECTED DEFINITIONS").
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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; (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 Maturity.
PRINCIPAL PAYMENTS:
Term Loan A: Payable in quarterly installments based on the amortization schedule outlined in
Exhibit C, with the first principal payment due June 30, 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 June 30, 2000, and the final
principal payment due at Term Loan B Maturity.
</TABLE>
II. PRICING AND PAYMENT TERMS FOR THE FACILITIES
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
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Confidential 2 SunTrustEquitable Securities
<PAGE> 10
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
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Confidential 3 SunTrustEquitable Securities
<PAGE> 11
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
MANDATORY Borrower would be required to make mandatory principal prepayments to be applied pro
PREPAYMENTS: 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 of withholding tax "gross-up" amounts;
PROVISIONS: 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.
</TABLE>
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Confidential 4 SunTrustEquitable Securities
<PAGE> 12
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
III. SECURITY FOR THE FACILITIES
<TABLE>
<CAPTION>
<S> <C>
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).
</TABLE>
IV. CONDITIONS TO FUNDINGS
Funding will be subject to conditions customary in financings of this nature,
including, but not limited to, the following:
<TABLE>
<CAPTION>
<S> <C> <C>
CONDITIONS TO (1) Execution and delivery of a credit agreement, promissory notes and other
INITIAL FUNDING: 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
</TABLE>
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Confidential 5 SunTrustEquitable Securities
<PAGE> 13
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
(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 $20,000,000 in subordinated debt has been invested in the
Borrower by investors acceptable to SunTrust, to include STBI.
(10) Evidence, satisfactory to SunTrust, 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 $19,000,000.
(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 continue to be true and correct in
ALL FUNDINGS: all material respects on and as of the date of such borrowing.
</TABLE>
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Confidential 6 SunTrustEquitable Securities
<PAGE> 14
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
(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.
</TABLE>
V. REPRESENTATIONS AND WARRANTIES
Representations and warranties as to the following matters, together with other
customary representations and warranties:
<TABLE>
<CAPTION>
<S> <C> <C>
(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.
</TABLE>
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Confidential 7 SunTrustEquitable Securities
<PAGE> 15
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
(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.
</TABLE>
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Confidential 8 SunTrustEquitable Securities
<PAGE> 16
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
VI. COVENANTS
<TABLE>
<CAPTION>
<S> <C>
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 REQUIREMENTS: The Borrower shall deliver the following 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.
</TABLE>
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Confidential 9 SunTrustEquitable Securities
<PAGE> 17
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
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.
</TABLE>
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Confidential 10 SunTrustEquitable Securities
<PAGE> 18
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
(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.
</TABLE>
VII. EVENTS OF DEFAULT
Customary in credit agreements of this nature including, but not limited to, the
following:
<TABLE>
<CAPTION>
<S> <C> <C>
(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
</TABLE>
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Confidential 11 SunTrustEquitable Securities
<PAGE> 19
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
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 institutions of commitments in the Senior
ASSIGNMENTS: 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 $2,000,000. 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.
</TABLE>
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Confidential 12 SunTrustEquitable Securities
<PAGE> 20
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 SunTrustEquitable Securities
<PAGE> 21
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 SunTrustEquitable Securities
<PAGE> 22
CONSO INTERNATIONAL CORPORATION
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EXHIBIT B
APPLICABLE MARGIN GRID
TBD
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Confidential 15 SunTrustEquitable Securities
<PAGE> 23
CONSO INTERNATIONAL CORPORATION
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EXHIBIT C
AMORTIZATION SCHEDULE
QUARTER ENDED TERM LOAN A TERM LOAN B
- ------------- ------------ -----------
12/31/99 -- --
03/31/00 -- --
06/30/00 $ 250,000 $ 75,000
09/30/00 $ 500,000 $ 75,000
12/31/00 $ 750,000 $ 75,000
03/31/01 $ 1,000,000 $ 75,000
06/31/01 $ 1,000,000 $ 75,000
09/30/01 $ 1,250,000 $ 75,000
12/31/01 $ 1,250,000 $ 75,000
03/31/02 $ 1,500,000 $ 75,000
06/30/02 $ 1,500,000 $ 75,000
09/30/02 $ 1,500,000 $ 75,000
12/31/02 $ 1,500,000 $ 75,000
03/31/03 $ 1,500,000 $ 75,000
06/30/03 $ 1,500,000 $ 75,000
09/30/03 $ 1,500,000 $ 75,000
12/31/03 $ 1,500,000 $ 75,000
03/31/04 $ 1,750,000 $ 75,000
06/30/04 $ 1,750,000 $ 75,000
09/30/04 $ 1,750,000 $ 75,000
12/31/04 $ 1,750,000 $ 75,000
03/31/05 -- $ 2,400,000
06/30/05 -- $ 2,400,000
09/30/05 -- $ 2,400,000
12/31/05 -- $ 2,400,000
03/31/06 -- $ 4,743,750
06/30/06 -- $ 4,743,750
09/30/06 -- $ 4,743,750
12/31/06 -- $ 4,743,750
------------ -----------
TOTAL $25,000,000 $30,000,000
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Confidential 16 SunTrustEquitable Securities
<PAGE> 24
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
ANNEX B
SUMMARY OF TERMS AND CONDITIONS OF
$20,000,000 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: $20,000,000
ISSUE: $20,000,000 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 12% 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 plus all accrued and unpaid interest thereon to
the date of payment, and no distributions shall be
made to holders of debt ranking on
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Confidential 1 SunTrust Equitable Securities
<PAGE> 25
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
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 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 Debt
AMENDMENTS: 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
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Confidential 2 SunTrust Equitable Securities
<PAGE> 26
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
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.
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
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Confidential 3 SunTrust Equitable Securities
<PAGE> 27
CONSO INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
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
$19,000,000; 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
EXHIBIT C.4
CONSO INTERNATIONAL CORPORATION
P.O. BOX 326
513 N. DUNCAN BYPASS
UNION, SOUTH CAROLINA 29379
January 18, 2000
CIC Acquisition Co.
CIC Acquisition Sub, Inc.
c/o CitiCorp Venture Capital, Ltd.
399 Park Avenue
New York, New York 10043
Attn: M. Saleem Muqaddam
Re: Merger Agreement dated as of October 5, 1999 (the "Merger
Agreement") by and among Conso International Corporation
("Conso"), CIC Acquisition Co. ("Parent") and CIC Acquisition
Sub, Inc. ("Acquisition Sub")
Dear Gentlemen:
In connection with the above referenced Merger Agreement, Conso and
Parent each agree to waive any right they have to terminate the Merger Agreement
pursuant to Section 5.3(b) thereof until February 29, 2000, at which time the
right to terminate under Section 5.3(b) shall only arise if the Effective Time
(as defined in the Merger Agreement) has not occurred on or before such date.
Parent and Acquisition Sub also consent to the adjournment of Conso's special
meeting of shareholders at which the Merger Agreement and the related Plan of
Merger are to be considered until February 24, 2000.
Please acknowledge your agreement and consent to the foregoing by
signing in the space provided on the next page.
Very truly yours,
CONSO INTERNATIONAL CORPORATION
By: /s/ J. CARY FINDLAY
-----------------------------------------
Name: J. Cary Findlay
Title: Chairman, Chief Executive Officer
and President
<PAGE> 2
CIC Acquisition Co.
CIC Acquisition Sub, Inc.
January 18, 2000
Page 2
Agreed and consented to:
CIC ACQUISITION CO.
By: /s/ SALEEM MUQADDAM
---------------------------
Name: Saleem Muqaddam
Title: President
CIC ACQUISITION SUB, INC.
By: /s/ SALEEM MUQADDAM
---------------------------
Name: Saleem Muqaddam
Title: President
