- -------------------------------- -------------------------
CUSIP No. 83427A 10 8 13D Page 1 of 23 Pages
- -------------------------------- -------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
THE SOLOMON-PAGE GROUP LTD.
- --------------------------------------------------------------------------------
(Name of issuer)
Common Stock, $.001 par value
- --------------------------------------------------------------------------------
(Title of class of securities)
83427A 10 8
- --------------------------------------------------------------------------------
(CUSIP Number)
Lloyd Solomon
c/o The Solomon-Page Group Ltd.
1140 Avenue of the Americas, 9th Floor
New York, New York 10036
(212) 403-6100
- --------------------------------------------------------------------------------
(Name, address and telephone number of person
authorized to receive notices and communications)
March 31, 2000
- --------------------------------------------------------------------------------
(Date of event which requires filing
of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
(Continued on following page(s))
Page 1 of 23 Pages
- -----------------------
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosure provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934, as amended (the "Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 2 of 23 pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
LLOYD SOLOMON
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF/BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 985,000
OWNED BY EACH
REPORTING
PERSON WITH
------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
985,000
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
985,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 3 of 23 pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SCOTT PAGE
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF/BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 801,900
OWNED BY EACH
REPORTING
PERSON WITH
------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
801,900
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
801,900
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.4%
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14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 4 of 23 pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
HERBERT SOLOMON
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
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3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF/BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 707,600
OWNED BY EACH
REPORTING
PERSON WITH -------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
-------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
707,600
-------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
707,600
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.3%
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14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 5 of 23 pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
TSPGL MERGER CORP.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY EACH
REPORTING
PERSON WITH
-------------------------------------------------------------
8 SHARED VOTING POWER
-0-
-------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
-0-
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 6 of 23 pages
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SCHEDULE 13D
(AMENDMENT NO. 2)
RELATING TO THE
COMMON STOCK, $.001 PAR VALUE
OF
THE SOLOMON-PAGE GROUP LTD.
This Amendment No. 2 amends the Schedule 13D dated November 18, 1994
(the "Schedule 13D"), jointly filed by Lloyd Solomon, Herbert Solomon, and Scott
Page (collectively, the "Reporting Persons") relating to the beneficial
ownership of the Common Stock, par value $.001 per share (the "Common Stock"),
of The Solomon-Page Group Ltd. (the "Company"). All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Schedule 13D.
ITEM 2. IDENTITY AND BACKGROUND
Item 2 of Schedule 13D is hereby amended and supplemented by the
following:
TSPGL Merger Corp., a Delaware corporation ("TSPGL"), was formed by the
Reporting Persons in connection with the transactions contemplated by the Merger
Agreement (as defined below). The Reporting Persons own 100% of the issued and
outstanding capital stock of TSPGL, which has no operations. The business
address of TSPGL is 1140 Avenue of the Americas, 9th Floor, New York, New York
10036. TSPGL has not, during the last five years, been party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 of Schedule 13D is hereby amended and supplemented by the
following:
No purchases of Common Stock have been made in connection with the
event with respect to which this Amendment No. 2 is being filed.
On March 31, 2000, the Company and TSPGL entered into a Merger
Agreement (the "Merger Agreement") pursuant to which the Company will merge with
and into TSPGL (the "Merger"). (See Item 4. Purpose of Transaction.)
On March 28, 2000, the Company (on behalf of the Reporting Persons)
received a commitment letter (the "Commitment Letter") from The Bank of New York
(the "Bank") pursuant to which the Bank confirmed its willingness to extend a
$16.5 million senior secured revolving credit ($9.0 million) and term loan ($7.5
million) facility (the "Facility") to enable TSPGL to consummate the Merger. The
availability of borrowings under the Facility is subject to the negotiation and
execution of a credit agreement and related documents, the absence of any
material adverse change with respect to the Company, verification of information
and the Bank's satisfaction with its due diligence concerning the Company. It is
anticipated that an aggregate of $12,314,999 will be required to consummate the
Merger in accordance with the terms of the Merger Agreement and that such sum
will be borrowed from the Bank under the Facility.
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 7 of 23 pages
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ITEM 4. PURPOSE OF TRANSACTION
Item 4 of Schedule 13D is hereby amended and supplemented by the
following:
The purpose of the transaction is for the Reporting Persons to acquire
all of the outstanding Common Stock of the Company. The Merger Agreement
provides that each issued and outstanding share of Common Stock (other than (i)
shares held by the Reporting Persons, (ii) shares held by the Company as
treasury stock, and (iii) shares held by stockholders who have exercised their
statutory right under the laws of the State of Delaware to have such shares
appraised and be paid the fair value thereof) will be automatically changed into
the right to receive $4.25 in cash. Each outstanding option to purchase Common
Stock would be cancelled and the former holder thereof (which for this purpose
excludes the Reporting Persons) would be entitled to receive an amount in cash
equal to the product of (i) the number of shares of Common Stock subject to such
option (whether or not then vested or exercisable) and (ii) the excess, if any,
of $4.25 over the exercise price per share subject to such option.
The Merger is subject to various conditions, including (i) the receipt
by the Reporting Persons of the financing to consummate the transaction, (ii)
the affirmative vote of the holders of a majority of the outstanding shares of
Common Stock, (iii) the receipt by the Company of a fairness opinion, and (iv)
other customary conditions.
As a result of the Merger, (i) the certificate of incorporation and
by-laws of TSPGL would become the certificate of incorporation and by-laws,
respectively, of the surviving corporation, (ii) the Common Stock would cease to
be authorized to be quoted on any national securities exchange or inter-dealer
quotation system, (iii) the registration of the Common Stock under the Act would
be terminated, and (iv) the directors and the officers of TSPGL would become the
directors and officers, respectively, of the surviving corporation.
The description contained herein of the Merger Agreement is qualified
in its entirety by reference to the complete text thereof, which is incorporated
herein by reference.
The information set forth in Items 3 and 6 of this Schedule 13D is
incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Item 5 of Schedule 13D is hereby amended and supplemented by the
following:
There are outstanding 4,153,948 shares of Common Stock. As of the date
hereof, the Reporting Persons beneficially own an aggregate of 2,494,500 shares
of Common Stock, or approximately 52.5% of the Common Stock outstanding. This
includes an aggregate of 600,000 shares of Common Stock subject to options that
would be cancelled in the Merger.
The filing of this Schedule 13D shall not be construed as an admission
that any of the Reporting Persons is, for purposes of Section 13(d) or 13(g) of
the Act, the beneficial owner of any securities held by any other member of the
Reporting Group.
LLOYD SOLOMON
(a) Mr. Solomon beneficially owns 985,000 shares of Common Stock
(including 200,000 shares issuable upon the exercise of presently exercisable
options), constituting approximately 22.6% of the Common Stock outstanding.
(b) Mr. Solomon has sole voting power and sole investment power with
respect to all of the shares of Common Stock referred to in paragraph (a) above.
(c) Except as set forth in Item 4 above, no transactions in the Common
Stock were effected by Mr. Solomon during the past 60 days.
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 8 of 23 pages
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(d) No other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the securities.
(e) Not applicable.
SCOTT PAGE
(a) Mr. Page beneficially owns 801,900 shares of Common Stock
(including 200,000 shares issuable upon the exercise of presently exercisable
options), constituting approximately 18.4% of the Common Stock outstanding.
(b) Mr. Page has sole voting power and sole investment power with
respect to all of the shares of Common Stock referred to in paragraph (a) above.
(c) Except as set forth in Item 4 above, no transactions in the Common
Stock were effected by Mr. Page during the past 60 days.
(d) No other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the securities.
(e) Not applicable.
HERBERT SOLOMON
(a) Mr. Solomon beneficially owns 707,600 shares of Common Stock
(including 200,000 shares issuable upon the exercise of presently exercisable
options), constituting approximately 16.3% of the Common Stock outstanding.
(b) Mr. Solomon has sole voting power and sole investment power with
respect to all of the shares of Common Stock referred to in paragraph (a) above.
(c) Except as set forth in Item 4 above, no transactions in the Common
Stock were effected by Mr. Solomon during the past 60 days.
(d) No other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the securities.
(e) Not applicable.
TSPGL MERGER CORP.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 9 of 23 pages
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Item 7 of the Schedule 13D is hereby amended and supplemented by the
following:
1. Agreement and Plan of Merger, dated March 31, 2000, by and
between The Solomon-Page Group Ltd. and TSPGL Merger Corp.,
incorporated by reference to Exhibit 2.1 to the Company's
Current Report on Form 8-K dated April 3, 2000.
2. Commitment Letter, dated March 28, 2000, by and between The
Bank of New York and The Solomon-Page Group Ltd.
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 10 of 23 pages
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SIGNATURES
After reasonable inquiry and to the best of my knowledge, I certify
that the information set forth in this statement is true, complete and correct.
DATED: April 6, 2000
/s/ Lloyd Solomon
-----------------------------
Lloyd Solomon
/s/ Scott Page
-----------------------------
Scott Page
/s/ Herbert Solomon
-----------------------------
Herbert Solomon
TPSGL MERGER CORP.
By: /s/ Lloyd Solomon
--------------------------
Name: Lloyd Solomon
Title: Chief Executive Officer
-10-
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 11 of 23 pages
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Exhibit 2 Commitment Letter
THE BANK OF NEW YORK
1290 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10104
March 28, 2000
Solomon-Page Group Ltd.
1140 Avenue of the Americas
New York, New York 10036
Attention: Lloyd Solomon
Chief Executive Officer
Gentlemen/Ladies:
Based upon recent discussions between The Bank of New York (the "Bank")
and you, and relying upon the information which you have previously provided to
the Bank, the Bank is pleased to confirm its willingness to extend a $16.5
million senior secured revolving credit ($9.0 million) and term loan ($7.5
million) facility (the "Facilities") for Solomon-Page Group Ltd. (the "Company")
subject to the conditions set forth in this letter. The Facilities would be (a)
provided pursuant to a credit agreement that would contain terms, conditions of
lending, funding and yield protections, representations and warranties,
covenants, events of default and other provisions customary for facilities of
this size, type and purpose, including, without limitation, the terms and
conditions set forth in the Summary of Principal Terms and Conditions attached
hereto (the "Term Sheet"), and (b) subject to (i) the negotiation and execution
of the credit agreement (as described above) and related documents that are
satisfactory in form and substance to the Bank, the Company and their respective
counsel, (ii) the absence of any material adverse change in the condition
(financial or otherwise), business, assets, properties, prospects, operations,
performance or current capital structure of the Company or of Information
Technology Partners, Inc. ("ITP") from that described to the Bank in the
information previously delivered to the Bank, (iii) verification by the Bank of
the information you have previously provided to the Bank, and (iv) the Bank's
satisfaction with its due diligence concerning the Company and ITP as provided
in the Summary of Principal Terms and Conditions. This Letter and the Term Sheet
are collectively referred to herein as the "Commitment Documents."
By executing this letter, you agree to indemnify and hold harmless the
Bank and each of its officers, directors, employees, affiliates, agents and
controlling persons (each, an "Indemnified Party") from and against any and all
losses, claims, damages and liabilities to which any such Indemnified Party may
become subject arising out of or in connection with any claim, litigation,
investigation or proceeding relating to this letter, the Facilities (including
the use of the proceeds thereof), or any related transaction, whether or not any
Indemnified Party is a party thereto, and to reimburse each
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 12 of 23 pages
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Indemnified Party upon demand for all reasonable legal and other expenses
incurred in connection with investigating or defending any of the foregoing;
provided that the foregoing indemnity will not, as to any Indemnified Party,
apply to losses, claims, damages, liabilities or related expenses to the extent
arising from the willful misconduct, gross negligence or bad faith of such
Indemnified Party.
By executing this letter you (a) agree that you will not make any claim
against any Indemnified Party for any special indirect or consequential damages
in respect of any breach or wrongful conduct (whether the claim therefor is
based on contract, tort or duty imposed by law) in connection with, arising out
of or in any way related to the transactions contemplated and the relationship
established by this letter, or any act, omission or event occurring in
connection therewith, and (b) waive, release and agree not to sue upon any such
claim for any such damages, whether or not accrued and whether or not known or
suspected, to exist in your favor.
By executing this letter (a) you also agree to pay the Facility Fee
described in the Term Sheet and (b) you and the Bank agree that:
(i) in the event the Transaction does not occur during the period in
which the Commitment Documents are effective and for a period of six months
thereafter, the Facility Fee will not be earned and the Bank will refund the
$25,000 deposit made by the Company pursuant to this letter less only the
reasonable fees and expenses the Bank has incurred pursuant to the Commitment
Documents; and
(ii) in the event the Transaction occurs for a price per share of $4.25
or less (the "Target Price") and the Company obtains financing for the
Transaction from a source other than the Bank, the Facility Fee shall be earned
by, and be due and payable to, the Bank upon the closing of the Transaction,
whether or not the Facilities close; and
(iii) in the event the Transaction occurs for a price per share greater
than the Target Price, and the Company obtains financing for the Transaction
from a source other than the Bank:
(1) the Facility Fee shall be earned by, and be due and
payable to, the Bank upon the closing of the Transaction whether or not the
Facilities close, if the Bank had agreed to provide, but the Company would not
agree to accept, an amendment to the Commitment Documents that would have
permitted the closing of the Facilities for a price per share greater than the
Target Price and would not have contained any material substantive changes in
the other terms and conditions of the Commitment Documents; or
(2) the Facility Fee shall not be earned and the Bank will
refund the $25,000 deposit made by the Company pursuant to this letter less only
the reasonable fees and expenses the Bank has incurred pursuant to the
Commitment Documents, if the Bank
2
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 13 of 23 pages
- -------------------------------- -------------------------
was not willing to amend the Commitment Documents to permit a closing of the
Facilities for a price per share greater than the Target Price.
You agree that this letter and the Term Sheet are for your confidential
use only and will not, without the prior consent of the Bank, be disclosed by
you or any of your representatives to any person other than your accountants,
attorneys and other advisors, and to your board of directors (and the Special
Committee thereof) and their respective advisors and then only in connection
with the transactions contemplated hereby and only on a confidential basis,
except that, following your acceptance hereof, you may make such disclosures of
the terms and conditions hereof as you are required by law to make.
This letter and the provisions contained herein shall not be assignable
by you and may not be amended or any provision hereof waived or modified except
by a document in writing signed by you and the Bank.
You hereby knowingly, voluntarily and intentionally waive any right you
may have to a trial by jury in respect of any litigation arising out of, under
or in connection with this letter or the transactions contemplated hereby.
This letter and the annexed Term Sheet set forth the entire
understanding of the parties hereto as to the scope of the obligations of the
parties hereto and supersede all prior agreements, representations and
understandings, if any, relating to the subject matter hereof.
This letter shall be governed by, and construed in accordance with, the
laws of the State of New York.
This letter shall automatically expire if not accepted by you on or
before 5:00 P.M. (New York City time) on March 29, 2000. Please indicate your
acceptance of this letter and your agreement to the terms hereof by signing the
enclosed copy of this letter and returning it to the Bank, together with your
check in the amount of $25,000 which amount will be refundable only under the
circumstances set forth in this letter and will be applied to the Facility Fee
described in the Term Sheet when and if earned under the terms of this letter.
By executing this letter, you will be deemed to have agreed as follows:
You shall and the Bank shall, subject to the terms and conditions set
forth herein, be bound by the terms of this letter;
You will pay on demand all reasonable fees and expenses incurred by the
Bank in connection with the negotiation and preparation of the loan
documentation relating to the Facilities (including, without limitation, third
party costs and expenses in connection with the Bank's due diligence
investigations and reasonable fees and expenses of the Bank's counsel) whether
or not the loan documentation is finalized and whether or not the
3
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 14 of 23 pages
- -------------------------------- -------------------------
Facilities are closed and extended or other financial accommodations are made,
and regardless of the reasons for which such documentation is not finalized or
the Facilities are not closed and extended or other financial accommodations are
not made; and
You will fully cooperate with the Bank in connection with the
transactions contemplated hereby.
Even if accepted in accordance with the provisions of the previous
paragraph, the obligations of the Bank under this letter shall expire and
terminate automatically, without further act or condition and regardless of
cause or circumstance, if loan documentation satisfactory in form and substance
to the Bank, the Company and their respective counsel is not executed on or
before July 14, 2000.
Very truly yours,
THE BANK OF NEW YORK
By: /s/ Gregg Scheuing
----------------------------
Name: Gregg Scheuing
--------------------------
Title:Vice President
-------------------------
Accepted and agreed:
SOLOMON-PAGE GROUP LTD.
By: /s/ Lloyd Solomon
-------------------------------
Name: Lloyd Solomon
-----------------------------
Title:Chief Executive Officer
----------------------------
Date: March 28, 2000
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 15 of 23 pages
- -------------------------------- -------------------------
THE SOLOMON-PAGE GROUP LTD.
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS
$16,500,000 SENIOR SECURED FACILITIES
MARCH 28, 2000
This Summary of Principal Terms and Conditions is a confidential proposal. It
sets forth some but not all of the terms on which The Bank of New York (the
"Bank") would consider extending credit pursuant to the annexed Commitment
Letter.
THE TRANSACTION: It is our understanding that a corporation
to be formed by Herbert Solomon, Lloyd
Solomon and Scott Page (the "Management
Group") will be merged into The Solomon-Page
Group Ltd. and that the holders of all
outstanding shares of common stock other
than the Management Group would receive a
price per share not to exceed $4.25 for
their shares. Holders, other than the
Management Group, of options to purchase
common stock would be entitled to receive an
amount per share subject to options equal to
the excess of an amount not to exceed $4.25
over the exercise price of the related
option.
BORROWER: Solomon-Page Group Ltd. ("SPG" or the
"Borrower")
GUARANTOR: Information Technology Partners, Inc.
("ITP")
FACILITIES: $16,500,000 of senior secured credit
facilities (the "Facilities") comprised of:
(i) an $9,000,000 five year revolving
credit facility (the "R/C") which will
be available to finance the Transaction
(including fees and expenses) and for
general corporate purposes including
working capital, and
(ii) a $7,500,000 five year term loan (the
"Term Loan") which will be used to
finance the Transaction (including fees
and expenses).
AVAILABILITY: Advances under the R/C will be made subject
to a Borrowing Base to be provided to the
Bank monthly. The Borrowing Base is proposed
to be defined as 75% of eligible accounts
receivable of the Borrower's Executive
Search/Full Time Contingency Recruitment
division plus 85% of eligible accounts
receivable of the Borrower's Temporary
Staffing and Consulting division.
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 16 of 23 pages
- -------------------------------- -------------------------
Notwithstanding the foregoing, the final
advance rate will be set subject to
completion by the Bank of its due diligence
into accounts receivable.
Availability will be determined monthly for
the following month and will be equal to the
lesser of the R/C amount or the Borrowing
Base.
FINAL MATURITY: Five years from the closing date of the
Facilities
TERM LOAN
AMORTIZATION: The Term Loan will amortize according to the
amounts and on the dates indicated below:
Year Amortization
---- ------------
1 $1,000,000
2 $1,250,000
3 $1,500,000
4 $1,750,000
5 $2,000,000
$7,500,000
SECURITY: The Facilities will be secured by a first
priority perfected security interest in (i)
substantially all of the assets of the
Borrower and the Guarantor, (ii) insurance
policies maintained by the Borrower, and
(iii) the stock of the Borrower owned by the
Management Group.
MANDATORY COMMITMENT
REDUCTIONS aND R/C AND
TERM LOAN PREPAYMENT: The Term Loan, and after the principal
amount of the Term Loan is reduced to $0,
the principal amount outstanding under the
R/C will be repaid, and the R/C commitments
permanently reduced, in amounts equal to (i)
100% of the net proceeds from any asset
sale, subject to reinvestment provisions to
be negotiated and incorporated in the loan
documents; (ii) 100% of the net proceeds
from any equity issuance, subject to an
exception to be negotiated and incorporated
in the loan documents for the issuance of
stock to employees pursuant to employee
plans, agreements and arrangements; (iii)
100% of the net proceeds from any debt
issuance; (iv) 50% of net income plus
depreciation and amortization minus capital
expenditures, changes in Working Capital [to
be defined] and scheduled principal
repayments ("Excess Cash Flow"), provided
that this clause
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CUSIP No. 83427A 10 8 13D Page 17 of 23 pages
- -------------------------------- -------------------------
will not apply in the fiscal year ending
9/30/00, or when the Leverage Ratio is less
than 2.00X and (v) 100% of the net proceeds
of any insurance reimbursement after giving
effect to any reinvestment of such proceeds
on terms to be agreed upon.
OPTIONAL PREPAYMENT: Permitted at any time in whole or in part,
without premium or penalty (but subject to
payment of break funding costs) upon proper
notice to the Bank, in minimum amounts to be
determined.
APPLICABLE MARGINS: The Applicable Margins and Commitment Fees
(where applicable) for the R/C and the Term
Loan will be determined based upon the
Borrower's ratio of Funded Debt as of any
date to EBITDA for the last four reported
fiscal quarters (the "Leverage Ratio") as
described in the Pricing Table below:
PRICING TABLE:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
LEVERAGE RATIO R/C R/C ABR TERM LOAN LIBOR TERM LOAN ABR COMMITMENT FEE ON
LIBOR MARGIN MARGIN MARGIN MARGIN UNDRAWN PORTION OF R/C
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
X greater than or equal to 3.0 2.625% 1.000% 3.000% 1.250% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
2.5 less than or equal to X less than 3.0 2.375% 0.750% 2.750% 1.000% 0.40%
- ------------------------------------------------------------------------------------------------------------------------------------
2.0 less than or equal to X less than 2.5 2.125% 0.500% 2.500% 0.750% 0.35%
- ------------------------------------------------------------------------------------------------------------------------------------
1.5 less than or equal to X less than 2.0 1.875% 0.250% 2.250% 0.500% 0.30%
- ------------------------------------------------------------------------------------------------------------------------------------
1.0 less than or equal to X less than 1.5 1.625% 0.000% 2.000% 0.250% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
X less than or equal to 1.0 1.375% 0.000% 1.750% 0.000% 0.20%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COMMITMENT FEE: The Borrower shall pay to the Bank a per
annum fee on the average amount of the R/C
commitment which is unused. Such fee will be
payable quarterly in arrears at the rate
established in the Pricing Table above.
FACILITY FEE: A facility fee equal to 1.50% on the total
principal amount of the Facilities will be
payable to the Bank at closing, subject to
the terms and conditions set forth in the
Commitment Letter.
DEFAULT RATE OF INTEREST: An additional 2% per annum above the
Applicable Margin.
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<PAGE>
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CUSIP No. 83427A 10 8 13D Page 18 of 23 pages
- -------------------------------- -------------------------
COMPUTATION OF INTEREST
AND FUNDING AND YIELD
PROTECTIONS: Usual and customary provisions for
facilities of this size, type and purpose.
REPRESENTATIONS AND
WARRANTIES: Usual and customary provisions for
facilities of this size, type and purpose.
CONDITIONS PRECEDENT
TO CLOSING: Such conditions precedent as are customary
for facilities of this size, type and
purpose with respect to the Borrower and its
subsidiaries including, without limitation,
(i) no default or event of default
immediately before or after giving effect to
the Term Loan or loan under the R/C and (ii)
accuracy of representations and warranties
in all material respects. Such conditions
precedent shall also include, without
limitation, the following:
(1) (a) The simultaneous consummation of
the Transaction on terms and
conditions which are substantially
identical to the terms and conditions
described herein; (b) the proceeds of
the Facilities shall be sufficient to
effect the Transaction and to pay all
fees and expenses associated
therewith; and (c) the resulting
capital structure and equity ownership
of the Borrower and Guarantor shall be
satisfactory to the Bank;
(2) Satisfactory completion by the Bank of
its due diligence, including without
limitation, receipt and satisfactory
review of (a) the certified
consolidated and consolidating
financial statements of the Borrower
for the fiscal year ending September
30, 1999, (b) the consolidated and
consolidating financial statements of
the Borrower for the quarter ending
December 31, 1999, (c) a pro forma
consolidated and consolidating balance
sheet of the Borrower as of the
closing date of the Transaction, (c)
projections covering the period in
which the Facilities will be
outstanding, (d) a field audit of the
books and records of the Borrower by a
representative of the Bank, the
reasonable costs of which will be paid
by the Borrower, (e) any
-4-
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 19 of 23 pages
- -------------------------------- -------------------------
information the Bank may require
regarding the assets of the Borrower
and Guarantor (f) the employment
contracts of the Management Group;
(3) Unused Borrowing Base availability
under the R/C at closing shall not be
less than $1,000,000;
(4) Cash and marketable securities of the
Borrower and the Guarantor at closing
shall not be less than $1,000,000.
(5) The Bank will have obtained a
perfected first priority security
interest in the Collateral;
(6) No material adverse change in the
business of the Borrower or the
Guarantor and the Bank shall be
reasonably satisfied that (i) there
shall be no litigation or
administrative proceeding arising out
of or relating to the Transaction (a)
in which the Bank is named a party
that the Bank, after due diligence and
advice of counsel of its own
selection, in its sole, reasonable
discretion determines would
materially, adversely affect the Bank
or (b) which would challenge the
validity or enforceability of, or the
obligation of the Borrower and the
Guarantor to pay the indebtedness and
perform their agreements under, the
loan documents, and (ii) there shall
be no other litigation or
administrative proceeding (i.e., not
arising out of or relating to the
Transaction), or regulatory changes
since the date of the Commitment
Documents that would reasonably be
expected to have a material adverse
effect on the condition (financial or
otherwise), business, assets,
prospects, operations, or performance
of the Borrower or the Guarantor or
the Capital Structure of the Borrower;
(7) The Bank will have received a solvency
certificate from the Borrower's
certified public accountants, in form
and substance satisfactory to the Bank
and an opinion from the Borrower's
counsel that the Transaction complies
with applicable laws;
(8) A ratio of Funded Debt at closing to
the last four quarters of EBITDA would
not exceed 3.50X; and
-5-
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 20 of 23 pages
- -------------------------------- -------------------------
(9) The payment of all fees due to the
Bank.
CONDITION PRECEDENT
TO EACH BORROWING: Usual and customary provisions for
facilities of this size, type and purpose.
NEGATIVE COVENANTS: Usual and customary for facilities of this
size, type and purpose including, without
limitation:
(1) Limitations (to be negotiated and
incorporated in the loan documents) on
additional indebtedness,
sale-leaseback transactions and the
issuance of capital stock which is
subject to mandatory redemption or
redemption at the option of the holder
thereof. Limitations (to be negotiated
and incorporated in the loan
documents) on amendments to permitted
indebtedness and other material
instruments.
(2) Prohibitions on liens other than (i)
liens associated with the Facilities,
(ii) liens permitted to exist at
closing and (iii) other specified
permitted liens.
(3) Limitations on (i) mergers or
consolidations, (ii) acquisitions and
other investments and (iii)
dispositions of assets.
(4) Limitations on compensation paid to
the Management Group.
(5) No cash dividends can be paid.
(6) Limitations on other restricted
payments and prepayments of certain
other indebtedness. Notwithstanding
the foregoing if (a) the share and
option repurchase as contemplated
under the Transaction occurs at an
average purchase price of $4.00 per
share or less, (b) the total net cost
of the repurchased shares and options
does not exceed $11,349,000, (c) no
litigation is pending with respect to
the Transaction, and (d) no events of
default exist or would be caused to
exist from the repurchase, then the
Borrower will be allowed to repurchase
common stock from the Management
-6-
<PAGE>
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CUSIP No. 83427A 10 8 13D Page 21 of 23 pages
- -------------------------------- -------------------------
Group at any time within one year of
the closing date of the Facilities in
an amount not to exceed the lesser of
(i) $1,000,000 and (ii) $11,349,000
minus the actual cost of the
repurchased shares and options (the
"Initial Management Repurchase"). In
the event that the conditions allowing
for the Initial Management Repurchase
are met, then an additional repurchase
of common stock from the Management
Group shall be allowed subsequent to
receipt by the Bank of the audited
consolidated and consolidating
statement for the fiscal year ending
9/30/00, in an amount not to exceed
the Excess Cash Flow for the fiscal
year (the "Secondary Management
Repurchase"), provided that (a) no
events of default exist or would be
caused to exist from the Secondary
Management Repurchase, (b) no
litigation is pending with respect to
the Transaction and (c) the sum of the
Initial Management Repurchase and the
Secondary Management Repurchase shall
not exceed $1,000,000.
(7) Limitations on transactions with
affiliates and the formation of
subsidiaries, including that any new
subsidiaries become Guarantors and
pledge all of their assets as security
for the Facilities.
FINANCIAL REPORTING: Customary for a transaction of this type,
but to include quarterly compliance
certificates and annual audited consolidated
and unaudited consolidating financial
statements by a Certified Public Accountant
satisfactory to the Bank.
FINANCIAL COVENANTS: (1) Leverage Ratio - The Borrower will be
required to maintain a ratio of total Funded
Debt to the last four quarters of EBITDA of
not greater than (a) from the closing date
through 09-29-00, the greater of (i) 3.00X
or (ii) the lesser of (A) the actual
Leverage Ratio at closing plus 0.25 or (B)
3.50X and (b)
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CUSIP No. 83427A 10 8 13D Page 22 of 23 pages
- -------------------------------- -------------------------
DATE: RATIO
-------------------------------------------
From 09-30-00 to 09-29-01 3.00X
From 09-30-01 to 09-29-02 2.75X
From 09-30-02 to 09-29-03 2.25X
Thereafter 2.00X
(2) Fixed Charge Coverage Ratio - The
Borrower will be required to maintain a
ratio of (i) EBITDA less capital
expenditures to (ii) interest expense plus
taxes plus required Term Loan principal
payments of not less than
YEAR RATIO
-------------------------------------------
1 1.15X
2 1.20X
Thereafter 1.25X
(3) Interest Coverage Ratio - The Borrower
will be required to maintain a ratio of
EBITDA to interest expense of not less than
DATE: RATIO
-------------------------------------------
Closing through 09-29-01 3.00X
From 09-30-01 to 09-29-02 3.50X
From 09-30-02 to 09-29-03 3.75X
Thereafter 4.00X
(4) Capital expenditures are not to exceed
$250,000 per annum. Notwithstanding the
foregoing, the Borrower may incur $100,000
in additional capital expenditures over the
term of the facilities, which shall not be
subject to this limitation.
(5) Net income for any four consecutive
fiscal quarter periods shall not be less
than $1.00.
(6) Other reasonable and/or customary
covenants which the Bank, in its sole
discretion, deems appropriate.
AFFIRMATIVE COVENANTS: Usual and customary covenants for facilities
of this size, type and purpose including,
without limitation, a post-closing
requirement for interest rate protection on
a portion of the Facilities on terms which
are satisfactory to the Bank, as well as a
covenant addressing Year 2000 computer
systems compliance efforts.
-8-
<PAGE>
- -------------------------------- -------------------------
CUSIP No. 83427A 10 8 13D Page 23 of 23 pages
- -------------------------------- -------------------------
EVENTS OF DEFAULT: Usual and customary events of default for
facilities of this size, type and purpose,
including without limitation changes of
control and management.
COST AND
YIELD PROTECTION: Standard provisions for illegality,
inability to determine rate, indemnification
for break funding and increased costs or
reduced return, including those arising from
reserve requirements, taxes and capital
adequacy.
EXPENSES AND
INDEMNIFICATION: The Borrower will pay the Bank's reasonable
legal and out-of-pocket expenses incurred in
connection with the negotiation, preparation
and execution of the legal documentation of
the Facilities, regardless of whether the
transaction is consummated and whether or
not the Facilities close. Documentation
shall contain expense and indemnification
provisions for the benefit of the Bank
customary for transactions of this type.
GOVERNING LAW: New York
CONSENT TO NEW YORK
JURISDICTION: Required.
WAIVER OF TRIAL
BY JURY: Required.
-9-
