EXHIBIT B(1)
BANKERS TRUST COMPANY
ONE BANKERS TRUST PLAZA
NEW YORK, NEW YORK 10006
February 18, 2000
Quad-C Management, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Re: Pulaski Furniture Corporation Acquisition Financing
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COMMITMENT LETTER
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Ladies and Gentlemen:
You have advised Bankers Trust Company ("BTCo") that you intend to
consummate a friendly transaction (the "Transaction") pursuant to which you will
form a company ("Holdings") which will acquire (the "Acquisition"), through a
newly-formed wholly-owned subsidiary of Holdings ("Acquisition Subsidiary"), all
of the stock of Pulaski Furniture Corporation (the "Acquired Business"). The
Acquisition will be structured as a tender offer ("Tender Offer") by Acquisition
Subsidiary for 100% (but in any event not less than a sufficient number of
shares to enable Acquisition Subsidiary, voting without any other shareholders
of the Acquired Business, to approve a merger of Acquisition Subsidiary with
the Acquired Business) of the issued and outstanding common shares (along with
associated rights) of Pulaski Furniture Corporation, followed as soon as
possible thereafter by a merger (the "Merger") of Acquisition Subsidiary with
and into Pulaski Furniture Corporation.
BTCo understands that the funding required to effect the Transaction
(including the repayment of indebtedness required thereunder) and to pay related
fees and expenses in connection therewith shall be in an amount not to exceed
$125 million and shall be provided solely from (i) at least $20 million in cash
from the issuance by Holdings of equity or membership interests (the "Equity
Issuance") to Quad-C Management, Inc. ("Quad-C") and management of Pulaski
Furniture Corporation, (ii) $20 million from the issuance by Holdings to Quad-C,
affiliates of Quad-C and/or other investors satisfactory to BTCo of subordinated
notes which will pay interest in kind for a period of time acceptable to BTCo
(except that, unless a default or event of default exists under the Senior Bank
Financing (as defined below), (a) cash
interest may be paid in an amount sufficient to allow the subordinated lender
to pay cash taxes in respect of the subordinated notes and (b) cash interest may
be paid if the senior leverage ratio of the Borrower and its Subsidiaries is
less than 2.5 times) and otherwise be on terms acceptable to BTCo (the "Subordi-
nated Notes"), and (iii) the incurrence by the Borrower (as defined in the
attached term sheet) of the senior secured bank financing described below.
Quad-C may assign its rights (but not its obligations) under this commitment
letter to Acquisition Subsidiary.
BTCo further understands that the senior secured bank financing will
be in the form of (i) a term loan facility (the "Term Loan Facility") in the
aggregate amount of $35 million and (ii) a revolving credit facility (the
"Revolving Credit Facility," and together with the Term Loan Facility, the
"Senior Bank Financing") in the amount of $85 million (it being understood that
not more than $47.5 million of the Revolving Credit Facility may be utilized on
the Closing Date referred to in the Summary of Terms referred to below). A
summary of certain terms and conditions of the Senior Bank Financing is attached
as Exhibit A to this Letter (the "Summary of Terms").
BTCo is pleased to confirm that subject to and upon the terms and
conditions set forth herein and in the Summary of Terms, it (i) commits to
provide the Senior Bank Financing on the terms and conditions set forth herein
and in the Summary of Terms, (ii) will act as Agent for the syndicate of
financial institutions (the "Lenders") party to the Senior Bank Financing, (iii)
will act as the sole Lead Arranger and Book Manager in connection with the
Senior Bank Financing, and (iv) will act as Financial Advisor to you.
BTCo reserves the right, prior to or after execution of the definitive
credit documentation, to syndicate all or part of its commitments to one or more
financial institutions that will become parties to such definitive credit
documentation for the Senior Bank Financing pursuant to a syndication to be
managed by BTCo. BTCo shall commence syndication efforts promptly after the
execution of this letter, and you agree actively to assist BTCo in achieving a
syndication that is satisfactory to BTCo and you. Such syndication will be
accomplished by a variety of means, including direct contact during the
syndication between senior management and advisors of Holdings, the Borrower,
Quad-C, the Acquired Business and the proposed syndicate members. To assist
BTCo in its syndication efforts, you hereby agree both before and after the
Closing Date (as defined in the Summary of Terms) (a) to provide and cause your
advisors to provide BTCo and other syndicate members upon request with all
reasonable information deemed necessary by us to complete syndication, including
but not limited to, information and evaluations prepared by Holdings, the
Borrower, the Acquired Business, Quad-C and their respective advisors or on
their behalf relating to the transactions contemplated
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hereby and (b) to assist BTCo upon request in the preparation of a Confidential
Information Memorandum to be used in connection with the syndication of the
Senior Bank Financing, including making available officers of Holdings, Quad-C,
the Acquired Business and the Borrower from time to time and to attend and make
presentations regarding the business and prospects of Holdings and the Borrower,
as appropriate, at a meeting or meetings of Lenders or prospective Lenders.
To induce BTCo to issue this letter, you hereby agree that all fees
and expenses (including the reasonable fees and expenses of counsel) of BTCo and
its affiliates (collectively "BT") arising in connection with this letter (and
our due diligence in connection herewith) and in connection with the
transactions described herein shall be for your account, whether or not the
Transaction is consummated, the Senior Bank Financing is made available or
definitive credit documents are executed. You further agree to indemnify and
hold harmless BT and each director, officer, employee and affiliate thereof
(each an "indemnified person") from and against any and all actions, suits,
proceedings (including any investigations or inquiries), claims, losses,
damages, liabilities or expenses of any kind or nature whatsoever which may be
incurred by or asserted against or involve BT or any such indemnified person as
a result of or arising out of or in any way related to or resulting from this
letter and, upon demand, to pay and reimburse BT and each indemnified person for
any reasonable legal or other out-of-pocket expenses incurred in connection with
investigating, defending or preparing to defend any such action, suit,
proceeding (including any inquiry or investigation) or claim (whether or not BT
or any such indemnified person is a party to any action or proceeding out of
which any such expenses arise, and whether any such action, suit or proceeding
is between Quad-C, Holdings, the Acquired Business, the Borrower, and BT or an
indemnified person or between BT or an indemnified person and a third person or
otherwise); provided, however, that you shall not have to indemnify any
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indemnified person against any loss, claim, damage, expense or liability which
resulted from the gross negligence or willful misconduct of any indemnified
person. This letter is issued for your benefit only and no person or entity
other than Quad-C may rely thereon.
The provisions of the immediately preceding paragraph shall survive
any termination of this letter, provided that if and when definitive credit
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documentation in respect of the Senior Bank Financing is executed and the
Transaction is consummated, such paragraph shall be superseded and replaced by
such definitive credit documentation.
BTCo reserves the right to employ the services of its affiliates
(including Deutsche Bank Securities Inc. ("DBSI")) in providing services contem-
plated by this letter and to allocate in whole or in part, to DBSI certain fees
payable
3
to BTCo in such manner as BTCo and DBSI may agree in their sole discretion. You
acknowledge that BTCo may share with any of its affiliates (including DBSI) any
information related to the Transaction or any of the matters contemplated
hereby. BTCo agrees to treat, and cause any such affiliate to treat, all
non-public information provided to it by Quad-C, Holdings, the Acquired Business
or the Borrower as confidential information in accordance with customary banking
industry practices.
BTCo's willingness to provide the Senior Bank Financing as set forth
above will terminate on June 29, 2000, if a definitive credit agreement
evidencing the Senior Bank Financing, satisfactory in form and substance to BTCo
(the "Credit Agreement"), shall not have been entered into prior to such date.
BTCo shall not be responsible or liable for any consequential damages which may
be alleged as a result of its failure to provide the Senior Bank Financing.
Except as otherwise required by law or unless BTCo has otherwise
consented, you are not authorized to show or circulate this letter to any other
person or entity (other than your legal or financial advisors in connection with
your evaluation hereof and, after you execute this and the related fee letter
and return a fully executed copy of same to the undersigned, the Acquired
Business, its board of directors and their legal and financial advisors). BTCo
will be given reasonable opportunity to review and consent to any communications
with the Acquired Business' stockholders regarding this commitment letter,
including, without limitation, an offer to purchase shares from the Acquired
Business' stockholders and a proxy statement, and BTCo will not unreasonably
withhold its consent thereto. If this letter is not accepted by you as provided
in the immediately succeeding paragraph, you are to immediately return this
letter (and any copies hereof) to the undersigned.
If you are in agreement with the foregoing, please sign and return to
BTCo (including by way of facsimile transmission) the enclosed copy of this
letter no later than 5:00 p.m., New York time, on February 18, 2000. This
letter may be executed in any number of counterparts, and by the different
parties hereto on separate counterparts, each of which when executed and
delivered, shall be an original, but all of which shall together constitute one
and the same instrument.
* * *
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THIS LETTER AND THE RELATED FEE LETTER SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND ANY RIGHT TO TRIAL BY
JURY WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
CONTEMPLATED BY THIS COMMITMENT LETTER AND/OR THE RELATED FEE LETTER IS HEREBY
WAIVED. YOU HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND
NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY
DISPUTE RELATED TO THIS COMMITMENT LETTER AND/OR THE RELATED FEE LETTER OR ANY
MATTERS CONTEMPLATED HEREBY OR THEREBY.
Very truly yours,
BANKERS TRUST COMPANY
By: /s/ X.X. Xxxxxx
-------------------------
Name:
Title: Managing Director
Agreed to and Accepted this
___ day of February, 2000
QUAD-C MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
Title:
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EXHIBIT A
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SUMMARY OF CERTAIN TERMS AND CONDITIONS
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I. Description of Facilities Comprising the Senior Bank Financing
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A. Term Loan Facilities
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Term Loan: $35 million.
Maturity: The date occurring six years after the initial
borrowing under the Senior Bank Financing (the "Closing
Date").
Amortization: The Term Loan shall amortize quarterly in a
manner to be mutually agreed by the parties.
Use of Proceeds: The Term Loan shall only be utilized (x)
to finance the Transaction, (y) to pay fees and
expenses incurred in connection with the Transaction,
and (z) to refinance the indebtedness of the Acquired
Business.
Availability: The Term Loan may only be borrowed on the
Closing Date and on the date the Merger consideration
is required to be paid (the "Merger Closing Date"),
which shall not be later than June 29, 2000. No amount
of Term Loans once repaid may be reborrowed.
B. Revolving Credit Facility
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Revolving Credit Facility: Revolving Credit Facility of up
to the lesser of (i) $85 million and (ii) 85% of
eligible receivables and 60% of eligible inventory
(including LIFO reserves), which may be utilized
through the incurrence of loans and/or the issuance of
letters of credit (subject to a sublimit for letters of
credit to be agreed upon).
Maturity: The date occurring six years after the Closing
Date. Loans made pursuant to the Revolving Credit
Facility (the "Revolving Loans") shall be repaid in
full on such date.
Use of Proceeds: The proceeds of all Revolving Loans may be
incurred on or after the Closing Date and may be
utilized (w) on and after the date of the Merger, for
the Borrower's
EXHIBIT A
Page 2
working capital requirements, other general corporate
purposes and letters of credit, (x) to finance the
Transaction, (y) to pay fees and expenses incurred in
connection with the Transaction, and (z) to refinance
the indebtedness of the Acquired Business.
Availability: Revolving Loans may be borrowed, repaid and
reborrowed on and after the Closing Date, provided,
that not more than $47.5 million of Revolving Loans may
be outstanding on the Closing Date and/or the date of
the Merger.
II. Terms Applicable to the Entire Senior Bank Financing
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Borrower: On the Closing Date, Acquisition Subsidiary; on
and after the date of the Merger, the survivor of the
Merger.
Agent: Bankers Trust Company ("BTCo").
Sole Lead
Arranger and
Book Manager: BTCo.
Lenders: BTCo and/or a syndicate of lenders formed by BTCo
(the "Lenders").
Guaranty: All obligations under the Senior Bank Financing
shall be unconditionally guaranteed by Holdings and
each of its domestic (and, to the extent no adverse
tax consequences result therefrom, U.S. Virgin Islands)
subsidiaries other than the Borrower (the
"Guarantors"), subject to customary exceptions for
transactions of this type.
Security: The obligations of the Borrower and the Guarantors
shall be secured by a first priority perfected security
interest in (x) all stock of each direct and indirect
subsidiary of Holdings (including the Borrower, but
limited to 65% in the case of foreign and, if necessary
to avoid adverse tax consequences, U.S. Virgin Islands,
subsidiaries) and (y) all other tangible and intangible
assets of the Guarantors and the Borrower, subject to
customary exceptions for transactions of this type.
EXHIBIT A
Page 3
Interest Rates: At the option of the Borrower, Loans under
the Senior Bank Financing may be maintained from time
to time as (x) Base Rate Loans which shall bear
interest at the Applicable Margin in excess of the Base
Rate in effect from time to time or (y) Reserve
Adjusted Eurodollar Loans which shall bear interest at
the Applicable Margin (as defined in the Fee Letter) in
excess of the Eurodollar Rate (adjusted for maximum re-
serves) as determined by the Agent for the respective
interest period, provided that until the earlier to
occur of (x) the 60th day following the Closing Date
and (y) that date upon which the Agent has determined
(and notifies the Borrower) that the primary
syndication of the Senior Bank Financing (and the
resultant addition of institutions as Lenders) has been
com pleted, only one month interest periods shall be
available for Reserve Adjusted Eurodollar Loans and all
such interest periods must end on the same day.
Applicable Margins for Revolving Credit Loans and Term
Loans shall be subject to a stepdown to be agreed upon
based on performance.
"Base Rate" shall mean the higher of (x) 1/2 of 1% in excess of
the Federal Reserve reported certificate of deposit rate and (y)
the rate that BTCo announces from time to time as its prime
lending rate, as in effect from time to time.
Interest periods of 1, 2, 3 and 6 months shall be available in
the case of Reserve Adjusted Eurodollar Loans.
The Senior Bank Financing shall include BTCo's standard
protective provisions for such matters as defaulting banks,
capital adequacy, increased costs, actual reserves, funding
losses, illegality and withholding taxes.
Interest in respect of Base Rate Loans shall be payable quar-
terly in arrears on the last business day of each fiscal quarter.
Interest in respect of Reserve Adjusted Eurodollar Loans shall be
payable in arrears at the end of the applicable interest period
and every three months in the case of interest periods in excess
of three months. Interest will also be payable at the time of
repayment of any Loans and at maturity. All interest and
commitment fee and other fee calculations shall be based on a
360-day year and actual days elapsed.
EXHIBIT A
Page 4
Overdue principal and interest shall bear interest at a rate
per annum equal to the greater of (i) the rate which is 2%
in excess of the rate otherwise applicable to Base Rate
Loans from time to time and (ii) the rate which is 2% in
excess of the rate then borne by such borrowings. Such
interest shall be payable on demand.
Voluntary Prepayments: Voluntary prepayments may be made at
any time without premium or penalty, but subject to the
payment of breakage costs (if any) in the case of
voluntary prepayments of Reserve Adjusted Eurodollar
Loans on a date which is not the last day on an
interest period applicable thereto. All voluntary
prepayments of Term Loan Facilities will be applied to
reduce future scheduled amortization payments in direct
order to the extent of scheduled payments in the year
following any such prepayment and, if in excess
thereof, on a pro rata basis.
Mandatory Prepayments: Mandatory prepayments (and, in the
case of the Revolving Credit Facility, commitment
reductions) shall be required in the amounts equal to
(a) 100% of the net proceeds from asset sales, with
customary exceptions to be agreed upon, (b) 100% of the
net proceeds from issuances of debt, with customary
exceptions to be agreed upon, (c) 100% (subject to
reduction to be agreed upon based on leverage) of the
net proceeds from equity issuances or capital
contributions, with customary exceptions to be agreed
upon, and (d) 75% of annual excess cash flow (the
definition of which will be mutually agreed upon). In
addition, (i) Loans shall be required to be repaid in
full, and all commitments under the Senior Bank
Financing shall terminate, upon the occurrence of a
change of control (the definition of which will be
mutually agreed upon) and (ii) Revolving Loans shall be
required to be prepaid (and letters of credit cash
collateralized) if at any time the aggregate principal
amount thereof exceeds the total Revolving Credit
Facility commitments or the borrowing base, with such
prepayment (and/or cash collateralization) to be in an
amount equal to such excess. All mandatory prepayments
shall be applied first, to the future scheduled
amortization payments on the Term Loan Facilities on a
EXHIBIT A
Page 5
pro rata basis, second, to the outstanding Revolving
Credit Facility and third, to the cash
collateralization of letters of credit.
Voluntary Commitment Reductions: Voluntary reductions of
the total commitments may be made on a permanent basis,
subject to minimum amounts and notice.
Agent/Lender Fees: The Agent and the Lenders shall receive
such fees as have been separately agreed upon with the
Agent.
Commitment Fees: 1/2 of 1% per annum of the unutilized total
commitments under the Senior Bank Financing (including
any undrawn portion of the Term Loan), as in effect
from time to time, commencing on the Closing Date and
continuing to and including the termination of the
Senior Bank Financing, payable in arrears quarterly
and upon the termination of the Senior Bank Financing.
Letter of Credit Fees: Applicable Margin for Revolving Loans
maintained as Reserve Adjusted Eurodollar Loans on the
aggregate outstanding stated amounts of letters of
credit plus an additional 1/4 of 1% on the aggregate
outstanding stated amounts of letters of credit to be
paid as a fronting fee to the issuing Lender.
Documentation: The Lenders' commitments will be subject to
the negotiation, execution and delivery of definitive
financing agreements (and related security
documentation, guaranties, etc.) consistent with the
terms of this letter, in each case prepared by counsel
to the Agent. All documentation other than real estate
mortgages shall be governed by New York law.
Conditions Precedent: In addition to conditions precedent
typical for these types of facilities and any other
conditions reasonably appropriate in the context of the
proposed transaction, the following conditions apply:
A. Conditions To the Initial Loans
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EXHIBIT A
Page 6
(i) The structure and all terms of, and the documentation for, the
Transaction shall be reasonably satisfactory to the Agent and the
Required Lenders. All conditions precedent to the consummation
of the Tender Offer as set forth in the documentation relating
thereto shall have been satisfied, and not waived except with the
consent of the Agent and the Required Lenders, to the reasonable
satisfaction of the Agent and the Required Lenders. The Tender
Offer shall have been consummated in all material respects in
accordance with such documentation and all applicable laws.
(ii) Holdings shall have received gross cash proceeds from the Equity
Issuance of at least $20 million. All terms and conditions
(and the documentation) in connection with the Equity Issuance
shall be reasonably satisfactory to the Agent and the Required
Lenders. Management of the Acquired Business shall have rolled
over its equity in an amount and on terms reasonably satisfactory
to the Agent and the Required Lenders.
(iii) Holdings shall have received gross cash proceeds from the
issuance of the Subordinated Notes of at least $20 million, and
Holdings shall have either loaned such proceeds to the Borrower
or contributed them as equity to the Borrower. Interest on the
Subordinated Notes shall be payable in kind for a period of time
acceptable to the Agent and the Required Lenders (except that,
unless a default or event of default exists under the Senior Bank
Financing (as defined below), (a) cash interest may be paid in an
amount to allow the subordinated lender to pay cash taxes in
respect of the subordinated notes and (b) cash interest may be
paid if the senior leverage ratio of the Borrower and its
Subsidiaries is less than 2.5 times). All terms and conditions
(and the documentation entered into in connection with the
issuance) of the Subordinated Notes (including, without
limitation, interest rate, mandatory redemptions, covenants,
defaults, remedies, subordination provisions and other terms)
shall be satisfactory to the Agent and the Required Lenders.
(iv) The Borrower shall have used the aggregate amount received from
the Equity Issuance and the Subordinated Notes to make payments
owing in connection with the Tender Offer before utilizing any
proceeds of Loans pursuant to the Senior Bank Financing for such
purpose.
EXHIBIT A
Page 7
(v) All necessary government and third party approvals in connection
with the Transaction (other than any shareholder approval of the
Merger) and the other transactions contemplated by the Senior
Bank Financing and otherwise referred to herein (including
without limitation any consents required under the Acquired
Business' debt agreements) shall have been obtained and remain in
effect, and all applicable waiting periods shall have expired
without any action being taken by any competent authority which
restrains, prevents, or imposes materially adverse conditions
upon, the consummation of the Transaction or the other
transactions contemplated by the Senior Bank Financing and
otherwise referred to herein.
(vi) The Lenders shall have become aware of no facts or conditions not
previously known, and since October 31, 1999 nothing shall have
occurred which the Agent or the Required Lenders shall
reasonably determine could reasonably be expected to have a
material adverse effect on the rights or remedies of the Lenders
or the Agent, or on the ability of Holdings, the Bor rower, the
Acquired Business and their respective subsidiaries to perform
their obligations to the Lenders or which could reasonably be
expected to have a materially adverse effect on the business,
property, assets, nature of assets, liabilities, condition
(financial or otherwise), results of operations or prospects of
Holdings, the Borrower, the Acquired Business and their
subsidiaries taken as a whole after giving effect to the
Transaction.
(vii) No litigation by any entity (private or governmental) shall be
pending or threatened with respect to the Transaction, the Senior
Bank Financing or any documentation executed in connection
therewith (which could be reasonably expected to have a material
adverse effect on the Transaction) or which the Agent or the
Required Lenders shall reasonably determine could reasonably be
expected to have a materially adverse effect on the business,
property, assets, nature of assets, liabilities, condition
(financial or otherwise) or prospects of Holdings, the Borrower,
the Acquired Business and their subsidiaries taken as a whole.
(viii) The Lenders shall have received legal opinions from counsel, and
covering matters, reasonably acceptable to the Agent and the
Required Lenders.
(ix) The corporate and capital structure (and all agreements related
thereto, including any rights plans) of Holdings, the Borrower,
EXHIBIT A
Page 8
the Acquired Business and their respective subsidiaries, and all
organizational documents of such entities shall be reasonably
satisfactory to the Agent and the Required Lenders.
(x) All Loans and other financings to Holdings and the Borrower shall
be in full compliance with all applicable requirements of the
margin regulations and the Borrower shall have delivered an
appropriately completed Form U-1 for each Lender.
(xi) All costs, fees, expenses (including, without limitation,
reasonable legal fees and expenses) and other compensation
contemplated hereby payable to the Lenders or the Agent shall
have been paid to the extent due.
(xii) The Lenders shall have received opinions of value and other
appropriate factual information and expert advice (including
without limitation, (i) a report of the value of the inventory
and receivables of the Borrower and its Subsidiaries, (ii)
insurance analyses in scope, and in form and substance,
reasonably acceptable to the Agent and the Required Lenders, and
(iii) a solvency opinion with respect to the Borrower and its
subsidiaries reasonably acceptable to the Agent and the Required
Lenders.
(xiii) All labor and related employee agreements and liabilities, and
all pension and other employee benefit plans and liabilities
(including, without limitation, with respect to retiree health
benefits), and all insurance policies of Holdings, the Borrower
and the Acquired Business and their respective subsidiaries shall
be in force and shall be reasonably satisfactory to the Agent and
the Required Lenders.
(xiv) Holdings, the Borrower and their respective subsidiaries shall
have no other indebtedness for borrowed money or liens except
such indebtedness and liens which shall be permitted under the
Senior Bank Financing.
(xv) (a) Trading in securities generally on the New York or American
Stock Exchange shall not have been suspended; minimum or maximum
prices shall not have been established on any such exchange; (b)
a banking moratorium shall not have been declared by New York or
United States authorities and any foreign power; and (c) there
shall not have been (x) an out break or escalation of hostilities
between the United States and any foreign power, or (y) an
outbreak or escalation of any other insurrection
EXHIBIT A
Page 9
or armed conflict involving the United States or any other
national or international calamity or emergency, or (z) any
material change in the general financial markets of the United
States which, in each case, in the reasonable judgment of the
Agent or the Required Lenders, would materially and adversely
affect the ability to sell or syndicate loans of a nature similar
to the Senior Bank Financing.
(xvi) The Agent and the Lenders shall have received, and shall be
satisfied with, an opening pro forma balance sheet of Holdings
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and its subsidiaries, in each case after giving effect to the
Transaction, and a related funds flow statement.
(xvii) The Agent and the Lenders shall have received and completed their
review of Uniform Commercial Code, judgment and tax lien searches
for Holdings, the Borrower, the Acquired Business and their
respective subsidiaries and after such completion, the Agent and
the Required Lenders shall be satisfied in their reasonable
discretion with the results thereof.
EXHIBIT A
Page 10
(xviii) The Lenders shall have a perfected first priority security inter
est in all shares of the Acquired Business owned by Holdings and
the Borrower, whether acquired through the Tender Offer or
otherwise.
B. Conditions to the Term Loan made on the Merger Closing Date
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(i) All conditions precedent to the consummation of the Merger as set
forth in the documentation relating thereto shall have been
satisfied, and not waived except with the consent of the Agent
and the Required Lenders, to the reasonable satisfaction of the
Agent and the Required Lenders. The Merger shall have been
consummated in all material respects in accordance with such
documents and all applicable laws.
(ii) All Loans and other financings to Holdings and the Borrower shall
be in full compliance with all applicable requirements of the
margin regulations.
(iii) All costs, fees and expenses (including, without limitation,
reasonable legal fees and expenses) and other compensation
contemplated hereby payable to the Lenders or the Agent shall
have been paid to the extent due.
(iv) Holdings, the Borrower and their respective subsidiaries shall
have no other indebtedness for borrowed money or liens except
such indebtedness and liens which shall be permitted under the
Senior Bank Financing.
(v) The Lenders shall have a perfected first priority security
interest in the assets of Holdings, the Borrower and the Acquired
Business and their respective subsidiaries as required above.
(vi) Simultaneously with the Merger, Pulaski Furniture Corporation's
debt for borrowed money shall be repaid in a manner satisfactory
to the Agent.
EXHIBIT A
Page 11
C. Conditions to all Loans
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Absence of material adverse change, absence of material
litigation, absence of default or unmatured default under the
Senior Bank Financing and continued accuracy of representations
and warranties.
Representationsand Warranties: The Senior Bank Financing and related
documentation shall contain representations and warranties
typical for these types of facilities, as well as any additional
ones appropriate in the context of the proposed transaction.
Covenants: Those typical for these types of facilities and any
additional covenants appropriate in the context of the proposed
transaction (with such covenants having such exceptions or
baskets as may be mutually agreed upon). "Special Purpose
Corporation" covenants shall be applicable at all times to
Holdings and any intermediate holding companies. Although the
covenants have not yet been specifically determined, we
anticipate that the covenants shall in any event include:
(i) Restrictions on other indebtedness.
(ii) Restrictions on mergers, acquisitions, joint ventures,
partnerships and acquisitions and dispositions of assets.
(iii) Restrictions on sale-leaseback transactions and lease payments.
(iv) Restrictions on dividends, stock repurchases and amendments of
organizational, corporate and other documents.
(v) Restrictions on voluntary prepayments of other indebtedness
(including the Subordinated Notes) and amendments thereto.
(vi) Restrictions on transactions with affiliates and formation of
subsidiaries.
(vii) Restrictions on investments.
(viii) Maintenance of existence and properties.
(ix) Restrictions on liens.
EXHIBIT A
Page 12
(x) Various financial covenants customary for a transaction of this
type (including without limitation minimum interest coverage and
maximum leverage).
(xi) Adequate insurance coverage.
(xii) ERISA covenants.
(xiii) The obtaining of interest rate protection in amounts and for
periods to be determined.
(xiv) Limitations on capital expenditures.
(xv) Financial reporting.
(xvi) Compliance with laws.
Events of Default: Those typical for these types of facilities and any
additional ones appropriate in the context of the proposed
transaction including, without limitation, a change of control of
Holdings or the Borrower.
Assignments and Participations: The Borrower may not assign its rights
or obligations under the Senior Bank Financing without the prior
written consent of the Lenders. Any Lenders may assign, and may
sell participations in, its rights and obligations under the
Senior Bank Financing, subject (x) in the case of participations,
to customary restrictions on the voting rights of the
participants and (y) in the case of assignments, to such
limitations as may be established by the Agent. The Senior Bank
Financing shall provide for a mechanism which will allow for each
assignee to become a direct signatory to the Senior Bank
Financing and will relieve the assigning Lender of its
obligations with respect to the assigned portion of its
commitment, subject to the consent of the Borrower, which consent
shall not be unreasonably withheld. Any assignments and
participations shall be in amounts of at least $5 million.
Required Lenders: Majority, except for customary matters requiring
unanimous action.
