EXHIBIT 7.08
------------
EXECUTION COPY
The Woodbridge Company Limited
00 Xxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
Xxxxxx, X0X0X0
Xxxxx 00, 0000
Xxxxx Holdings Corp.
c/o Centerbridge Capital Partners, L.P.
31 West 52nd Street, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx
00000 X.X.X.
Attention: Xxxx Xxxxxxxx
c/o Xxxxx Xxxxx
00000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx
00000
COMMITMENT LETTER
-----------------
Ladies and Gentlemen:
Each of Centerbridge Capital Partners, L.P. (together with
certain of its affiliated funds, "Centerbridge"), The Woodbridge Company
Limited, in its capacity as an equity investor (together with certain of its
affiliates, "Woodbridge Sponsor") and Xxxxx Xxxxx (together with certain members
of management of the Target referred to below and co-investors selected by him,
"Crane" and, together with Centerbridge and Woodbridge Sponsor, the "Sponsors")
has advised The Woodbridge Company Limited ("Woodbridge", "we" or "us") that a
Delaware corporation to be formed and controlled by the Sponsors ("Holdings")
and a wholly-owned subsidiary of Holdings to be formed by Holdings (the
"Buyer"), intend to enter into an agreement and plan of merger (together with
the schedules and exhibits thereto, the "Merger Agreement") pursuant to which
the Buyer will merge (the "Merger") with and into a public company previously
identified to us (the "Target"). The surviving corporation of the Merger shall
be "SurvivingCo." All references to "dollars" or "$" in this agreement and the
attachments hereto (collectively, this "Commitment Letter") are references to
United States dollars.
We understand that the sources of funds required to fund the
Merger consideration, to repay certain existing indebtedness of the Target and
its subsidiaries (the "Refinancing"), to pay fees, commissions and expenses in
connection with the Transactions (as defined below) and to provide ongoing
working capital requirements and funds for other general corporate purposes of
Holdings and its subsidiaries following the Transactions will include equity,
funded indebtedness and other sources as follows:
|X| senior secured credit facilities consisting of (i) a senior
secured term loan facility to SurvivingCo of up to $810
million (the "Senior Secured Term Loan Facility"), and (ii) a
senior secured revolving credit facility to SurvivingCo of up
to $150 million (the "Revolving Credit Facility" and, together
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with the Senior Secured Term Loan Facility, the "Senior
Secured Facilities"), up to an amount to be agreed of which
may be drawn on the Closing Date;
|X| a senior unsecured term loan credit facility to Holdings of
$300 million (the "Unsecured Term Loan Facility"), as
described in the Summary of Principal Terms and Conditions
attached hereto as Annex I (the "Term Sheet"); and
|X| equity investments in Holdings (which will be invested by
Holdings in SurvivingCo) (the "Equity Financing") sufficient
to consummate the Transactions, consisting of (i) an equity
investment in Holdings by Centerbridge and Woodbridge
comprising approximately 49% of such Equity Financing and (ii)
an equity investment by Crane in Holdings comprising
approximately 51% of such Equity Financing.
Immediately following the Transactions, neither Holdings nor any of its
subsidiaries will have any material indebtedness other than the Senior Secured
Facilities and the Unsecured Term Loan Facility, and other indebtedness of
approximately $33 million to be mutually agreed. As used herein (i) the term
"Facilities" means the Senior Secured Term Loan Facility, the Revolving Credit
Facility and the Unsecured Term Loan Facility; and (ii) the term "Transactions"
means the Merger, the Refinancing, the initial borrowings under the Facilities,
the Equity Financing, certain rollover equity and the payments of fees,
commissions and expenses in connection with each of the foregoing.
Commitments.
------------
We are pleased to advise you of our commitment to provide to
Holdings the entire principal amount of the Unsecured Term Loan Facility, upon
the terms and subject to the conditions set forth in this Commitment Letter, the
Term Sheet and the Conditions Annex referred to below (the "Commitments").
You agree that the closing and initial funding of the
Unsecured Term Loan Facility (the "Closing Date") shall not occur until the
conditions set forth below and in the Conditions to Closing set forth in Annex
II hereto (the "Conditions Annex") (including the conditions to initial funding)
have been satisfied or waived by us.
We do not intend, prior to or after execution of the Loan
Documentation (as defined in the Conditions Annex), to syndicate any portion of
our Commitment in respect of the Unsecured Term Loan Facility and agree that any
such syndication shall occur only with your prior written consent (which consent
may be withheld in your sole and absolute discretion). In no event will
syndication be a condition to our commitment hereunder.
Conditions.
-----------
Our obligation to fund the Unsecured Term Loan Facility is
subject to the following conditions: (i) there shall not have occurred, since
the date hereof, any event, circumstance or development, that has had a "Company
Material Adverse Effect" (as defined in the Merger Agreement) (as in effect on
the Closing Date and with such changes as are not prohibited by paragraph 1 of
Annex II hereto); and (ii) the other conditions set forth in the Conditions
Annex shall have been satisfied or waived by us. Notwithstanding anything in
this Commitment Letter, the Term Sheet, the Loan Documentation, or any other
letter agreement or other undertaking concerning the financing of the
Transactions to the contrary, (i) the only representations relating to the
Target, its subsidiaries and their businesses the making of which shall be a
condition to availability of the Unsecured Term Loan Facility on the Closing
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Date shall be (A) the representations made by the Target in the Merger
Agreement, but only to the extent that you have the right to terminate your
obligations under the Merger Agreement and (B) the Specified Representations (as
defined below) and (ii) the terms of the Loan Documentation shall be in a form
such that they do not impair availability of the Unsecured Term Loan Facility on
the Closing Date if the terms and conditions set forth in this Commitment
Letter, the Term Sheet and the Conditions Annex are satisfied. For purposes
hereof, "Specified Representations" means the representations and warranties of
Holdings set forth in this Commitment Letter and the Term Sheet relating to
corporate power and authority, due authorization, the enforceability of the Loan
Documentation, Federal Reserve margin regulations, the Investment Company Act
and the status of the Unsecured Term Loan Facility as senior debt.
Information.
------------
You hereby represent and covenant that to your knowledge (a)
all written information, other than the Projections (as defined below), or other
forward-looking information and information of a general economic or industry
specific nature (the "Information"), that has been or will be made available to
us by you or any of your representatives in connection with the Transactions,
when taken as a whole, is or will be, correct in all material respects and does
not or will not, taken as a whole, 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 are made (after giving effect to all updates from time to
time) and (b) the financial projections (the "Projections") that have been or
will be made available to us by you or any of your representatives in connection
with the Transactions have been or will be prepared in good faith based upon
assumptions believed by you to be reasonable at the time prepared (it being
recognized by us that such Projections are not to be viewed as facts and that
actual results during the period or periods covered by any such Projections may
differ from the projected results, and such differences may be material). You
agree that if, at any time on or prior to the Closing Date, any of the
representations in the preceding sentence would be incorrect, in any material
respect, if the Information and Projections were being furnished, and such
representations were being made, at such time, then you will promptly supplement
the Information and the Projections so that such representations will be
correct, in all material respects, under those circumstances. You understand
that in providing the Unsecured Term Loan Facility, we may use and rely on the
Information and Projections without independent verification thereof.
Indemnification.
----------------
You agree (a) to indemnify and hold harmless us, our
affiliates and our and their respective directors, employees, advisors, and
agents (each, an "indemnified person") from and against any and all losses,
claims, damages and liabilities to which any such indemnified person may become
subject arising out of or in connection with this Commitment Letter, the
Unsecured Term Loan Facility, the use of the proceeds thereof and the
Transactions or any claim, litigation, investigation or proceeding relating to
any of the foregoing (a "Proceeding"), regardless of whether any indemnified
person is a party thereto or whether such proceeding is brought by any third
party, and to reimburse each indemnified person within 30 days of a written
demand therefor for any reasonable legal or other out-of-pocket expenses
incurred in connection with investigating or defending any of the foregoing by
one counsel to such indemnified persons taken as a whole and, solely in the case
of a conflict of interest, one additional counsel to the affected indemnified
persons taken as a whole (and, if reasonably necessary, of one local counsel in
any jurisdiction); provided that the foregoing indemnity will not, as to any
indemnified person, apply to losses, claims, damages, liabilities or related
expenses to the extent they arise from the willful misconduct, bad faith or
gross negligence of, or breach of this Commitment Letter or the Loan
Documentation by, such indemnified person (or any of its related persons) or to
any disputes solely among indemnified persons (or their related persons) and not
arising out of any act or omission of you or any of your affiliates, and (b) if
3
the Closing Date occurs, to reimburse each Commitment Party and its affiliates
on the Closing Date for all reasonable and documented out-of-pocket expenses
that have been invoiced a reasonable period of time prior to the Closing Date
(including due diligence expenses, travel expenses, and reasonable fees, charges
and disbursements of one counsel to us (and, if reasonably necessary, of one
local counsel in any relevant jurisdiction) incurred in connection with the
Unsecured Term Loan Facility and any related documentation (including this
Commitment Letter and the Loan Documentation) or the administration, amendment,
modification or waiver thereof. No indemnified person shall be liable for any
damages arising from the use by others of Information or other materials
obtained through electronic, telecommunications or other information
transmission systems or for any special, indirect, consequential or punitive
damages in connection with the Unsecured Term Loan Facility, except to the
extent any such damages arise from the gross negligence, bad faith or willful
misconduct of, or breach of this Commitment Letter, the Loan Documentation by,
such indemnified person (or any of its related persons). You shall not be liable
for any settlement of any Proceeding effected without your consent (which
consent shall not be unreasonably withheld or delayed), but if settled with your
written consent, or if there is a final judgment against an indemnified person
in any such Proceeding, you agree to indemnify and hold harmless each
indemnified person in the manner set forth above. You shall not, without the
prior written consent of an indemnified person (which consent shall not be
unreasonably withheld or delayed), effect any settlement of any pending or
threatened Proceeding against an indemnified person in respect of which
indemnity has been sought hereunder by such indemnified person unless (i) such
settlement includes an unconditional release of such indemnified person from all
liability or claims that are the subject matter of such Proceeding and (ii) does
not include any statement as to any admission.
Governing Law, Etc.
-------------------
This Commitment Letter and our commitment shall not be
assignable by you (except to any of your affiliates that is controlled by you
and newly formed solely in connection with the Merger or the transactions
contemplated hereby) without our prior written consent, and any purported
assignment without such consent shall be void. This Commitment Letter may not be
amended or any provision hereof waived or modified except by an instrument in
writing signed by us and you. This Commitment Letter may be executed in any
number of counterparts, each of which shall be an original and all of which,
when taken together, shall constitute one agreement. Delivery of an executed
counterpart of a signature page of this Commitment Letter by facsimile or other
electronic transmission shall be effective as delivery of a manually executed
counterpart of this Commitment Letter. Headings are for convenience only. This
Commitment Letter is intended to be for the benefit of the parties hereto and is
not intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto. THIS COMMITMENT LETTER SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Any right to trial
by jury with respect to any claim or action arising out of this Commitment
Letter is hereby waived. The parties hereto hereby submit to the non-exclusive
jurisdiction of the federal and New York State courts located in The City of New
York (and appellate courts thereof) in connection with any dispute related to
this Commitment Letter or any of the matters contemplated hereby, and agree that
service of any process, summons, notice or document by registered mail addressed
to you shall be effective service of process against you for any suit, action or
proceeding relating to any such dispute. The parties hereto irrevocably and
unconditionally waive any objection to the laying of such 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 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 you are or may be subject by
suit upon judgment.
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Please indicate your acceptance of the terms hereof and of the
Term Sheet and the Conditions Annex by returning to us (electronically or
otherwise) executed counterparts of this Commitment Letter not later than 5:00
p.m., New York City time, on March 21, 2007. This Commitment Letter and our
agreement to provide the services described herein are also conditioned upon
your acceptance hereof as set forth above. Upon the earlier to occur of (A) the
execution and delivery of the Financing Documentation by all of the parties
thereto or (B) the date which is 15 days after the End Date (as defined in the
Merger Agreement), unless the End Date is extended pursuant to Section 7.1(b)(i)
of the Merger Agreement, in which case, the date which is the End Date, if the
Financing Documentation shall not have been executed and delivered by all such
parties prior to that date, this Commitment Letter and our agreement to provide
the services described herein shall automatically terminate unless we agree to
an extension.
We are pleased to have been given the opportunity to assist
you in connection with the financing for the Transactions.
Very truly yours,
THE WOODBRIDGE COMPANY LIMITED
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Counsel
Accepted and agreed to as of the date first written above:
TALON HOLDINGS CORP.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
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ANNEX I
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS
-----------------------------------------
Unsecured Term Loan Facility(1)
-------------------------------
Borrower: Talon Holdings Corp.
--------
Lender: The Woodbridge Company Limited, or one of
------ its affiliates (the "Lender"), subject to
the Borrower's satisfaction that such
affiliate acting as a lender does not create
any material adverse tax consequences to the
Borrower.
Type and Amount of Facility: A senior unsecured term loan facility (the
--------------------------- "Unsecured Term Loan Facility") in an
aggregate principal amount of $300 million
(the loans thereunder, the "Unsecured Term
Loans").
Purpose: Proceeds of the Unsecured Term Loan Facility
------- will be used on the Closing Date to finance
a portion of the Merger consideration and
the Refinancing and to pay fees, commissions
and expenses in connection therewith.
Closing Date: The date of consummation of the Merger and
------------ the initial funding of the Unsecured Term
Loan Facility.
Definitive Documentation: The definitive documentation shall be agreed
------------------------ between the Lender and Holdings and shall be
consistent with the terms hereof.
Maturity Date: Seven and one-half (7.5) years from the
------------- Closing Date.
Availability: A single drawing may be made on the Closing
------------ Date of the full amount of the Unsecured
Term Loan Facility.
Amortization: None.
------------
Interest: Loans will bear interest at the fixed rate
-------- of 11% per annum.
Default Interest: Upon the occurrence and during the
---------------- continuance of a payment default, interest
will accrue on any overdue amount of a loan
or other overdue amount payable at a rate of
2.0% per annum in excess of the rate
otherwise applicable to such loan or other
overdue amount.
Interest Election: Until the fifth anniversary of the loan,
-----------------
-------------------
(1) All capitalized terms used but not defined herein shall have the
meanings provided in the Commitment Letter to which this summary is
attached.
-2-
interest will be paid, at the option of
Holdings, in cash (a "Cash Election") or by
adding such interest to the principal amount
of the outstanding Unsecured Term Loans (a
"PIK Election" and, together with a Cash
Election, an "Election"), in each case,
quarterly in arrears. After the fifth
anniversary of the loan, interest will be
paid in cash, quarterly in arrears. On or
before the fifth anniversary of the loan,
Holdings shall be required to satisfy, by
means of a cash payment, a portion of the
accrued and unpaid interest so that the
Unsecured Term Loans will not qualify as an
"applicable high yield discount obligation"
for federal tax purposes.
Holdings shall make an Election with respect
to each Interest Period by providing at
least 3 days' notice to Woodbridge prior to
the beginning of such Interest Period. If an
Election is not made by Holdings in a timely
fashion or at all with respect to the method
of payment of interest for an Interest
Period, Holdings shall be deemed to have
made a PIK Election with respect to the
entire amount of the applicable interest
payment for such interest period.
Mandatory Prepayments: None.
---------------------
Optional Prepayments: Permitted in whole or in part, with prior
-------------------- notice at any time after the third
anniversary of the Closing Date but without
premium or penalty and including accrued and
unpaid interest, subject to limitations as
to minimum amounts of prepayments to be
agreed.
Application of Prepayments: Prepayments shall be applied in the manner
-------------------------- directed by Holdings.
Guarantees: None.
----------
Security: None.
--------
Conditions to Borrowing: Conditions precedent to borrowing will be
----------------------- solely those set forth in the Commitment
Letter and in the Conditions Annex.
Representations and Warranties: Substantially similar to those governing the
------------------------------ Senior Secured Facilities, with such baskets
and exceptions to be agreed, and, in any
event, such representations and warranties
shall be less restrictive than those set
forth in the documentation for the Senior
Secured Facilities.
Affirmative Covenants: Substantially similar to those governing the
--------------------- Senior Secured Facilities, with baskets and
exceptions to be agreed, provided that such
affirmative covenants shall be less
restrictive than those set forth in the
documentation for the Senior Secured
Facilities.
-3-
Negative Covenants: Negative covenants similar to those for
------------------ high-yield securities and covering the
following (with baskets and exceptions to be
agreed, and, in any event, less restrictive
than those set forth in the documentation
for the Senior Secured Facilities): (a)
incurrence-based covenants for the
incurrence of indebtedness (with exceptions
for, among other things, indebtedness
incurred under the Facilities and
indebtedness incurred to refinance
indebtedness outstanding on the Closing
Date), the payment of dividends, and the
making of certain investments; and (b)
negative covenants for the sale of assets,
entering into affiliate transactions,
entering into mergers, consolidations, and
sales of substantially all assets and
distributions.
Events of Default: Limited to the following (which shall be
----------------- subject to materiality thresholds, grace
periods and exceptions to be agreed, and, in
any event, more favorable to Holdings than
those set forth in the documentation for the
Senior Secured Facilities): nonpayment,
breach of representations and covenants,
cross acceleration to material indebtedness
for borrowed money, bankruptcy and
insolvency events, ERISA events, material
judgments and Change of Control (to be
defined in the definition documentation).
Assignments: It is contemplated that the Lender will hold
----------- the entire principal amount of the Unsecured
Term Loan Facility to maturity. Any
assignment of the Unsecured Term Loans will
require the prior written consent of
Holdings, which consent may be withheld in
Holdings' sole and absolute discretion.
Yield Protection: Substantially similar to those contained in
---------------- other senior unsecured fixed rate facilities
provided by the Lender and relating to
increased costs arising from a change of
law.
Expenses and Indemnification: All reasonable and documented out-of-pocket
---------------------------- expenses (including but not limited to
reasonable legal fees and expenses of not
more than one counsel plus, if necessary,
one local counsel per jurisdiction and
reasonable expenses incurred in connection
with due diligence and travel, courier,
reproduction, printing and delivery
expenses) of Lender associated with the
preparation, execution and delivery,
administration, amendment, waiver or
modification (including proposed amendments,
waivers or modifications) of the
documentation contemplated hereby are to be
paid by Holdings on and after Closing Date,
if it occurs. In addition, all reasonable
and documented out-of-pocket expenses
-4-
(including but not limited to reasonable
legal fees and expenses of not more than one
counsel plus, if necessary, one local
counsel per jurisdiction) of the Lender for
workout proceedings, enforcement costs and
documentary taxes associated with the
Unsecured Term Loan Facility are to be paid
by Holdings.
Holdings will indemnify the Lender, and its
affiliates, and hold them harmless from and
against all reasonable and documented
out-of-pocket costs, expenses (including but
not limited to reasonable legal fees and
expenses of not more than one counsel plus,
if necessary, one local counsel per
jurisdiction) and liabilities arising out of
or relating to any action, investigation,
suit or proceeding relating to or arising
out of the Transactions and any actual or
proposed use of the proceeds of any loans
made under the Unsecured Term Loan Facility;
provided, however, that no such person will
be indemnified for costs, expenses or
liabilities to the extent determined to have
been incurred by reason of the gross
negligence, bad faith or willful misconduct
of, or breach of the Loan Documentation by,
such person or any of its affiliates, or the
directors, officers, employees, advisors or
agents or any of them.
Requisite Lenders: Lenders holding more than 50% of the
----------------- aggregate amount of the Unsecured Term Loan
Facility with the consent of each lender
directly and adversely affected thereby to
be required with respect to (a) reductions
in the unpaid principal amount or extensions
of the date for any payment of any loan, (b)
reductions in interest rates or fees or
extensions of the dates for payment thereof,
(c) increases in the amounts or extensions
of the expiry date of any commitments, and
(d) modifications to any of the voting
requirements. The consent of the Lender will
be required with respect to any amendment
adversely affecting the rights or
obligations thereof. It is hereby understood
and agreed that amendments to financial
definitions will require the consent of
lenders holding no more than a majority of
total loans and commitments. In the event
Holdings permits an assignment of a portion
of the Unsecured Term Loans, Holdings will
have the right to replace or prepay any
lender who does not consent to any amendment
or waiver requiring the consent of such
lender but approved by the Requisite
Lenders; provided that Holdings has
satisfied all of the outstanding obligations
owing to such lender under the Unsecured
Term Loan Facility.
-5-
Governing Law and Forum: The laws of the State of New York. Each
----------------------- party to the Loan Documentation will waive
the right to trial by jury and will consent
to the non-exclusive jurisdiction of the
state and federal courts located in The City
of New York.
Counsel to the Lender: Goodmans LLP
---------------------
ANNEX II
CONDITIONS TO CLOSING(2)
------------------------
The obligations of the Lender to fund the Unsecured Term Loan
Facility are subject only to the conditions set forth in the Commitment Letter
and satisfaction of each of the conditions precedent set forth below.
1. The Merger and the Refinancing shall be consummated
concurrently with the initial funding of the Unsecured Term Loan Facility (i) in
accordance with a definitive Merger Agreement reasonably satisfactory to us (it
being acknowledged that the "Execution Copy" of the Merger Agreement dated March
15, 2007 delivered to the Lender on the date hereof is satisfactory to the
Lender) and the related disclosure schedules and exhibits thereto, without
waiver or amendment thereof (other than any such waivers or amendments
(including, without limitation, with respect to any representations and
warranties in the Merger Agreement) as are not materially adverse to the Lender)
unless consented to by the Lender or (ii) on such other terms and conditions as
are reasonably satisfactory to the Lender.
2. Holdings shall have received Equity Financing from
Centerbridge and Woodbridge (comprising not less than approximately 49% of such
Equity Financing) and from Crane (comprising not less than approximately 51% of
such Equity Financing) and SurvivingCo shall have received such Equity
Financing.
3. SurvivingCo shall have received concurrently the
proceeds of the First Loan Facilities.
4. Definitive documentation for the Unsecured Term Loan
Facility (the "Loan Documentation") reflecting and consistent with the terms and
conditions set forth herein and in the term sheet and otherwise reasonably
satisfactory to Holdings and the Lender, shall have been executed and delivered,
and the Lender shall have received such customary legal opinions (including
opinions (i) from counsel to Holdings and its subsidiaries, (ii) if reasonably
available, delivered pursuant to the Merger Agreement, accompanied by reliance
letters in favor of the Lender and (iii) from such special and local counsel as
may be required by the Lender and consented to by Holdings (such consent not to
be unreasonably withheld)), documents and other instruments as are customary for
transactions of this type or as it may reasonably request.
-------------------
(2) All capitalized terms used but not defined herein shall have the
meanings provided in the Commitment Letter to which this Annex II is
attached.
