EXHIBIT 99(a)
XXXXXX COMMERCIAL PAPER INC. XXXXXX BROTHERS INC.
3 WORLD FINANCIAL CENTER 3 WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10285 XXX XXXX, XXX XXXX 00000
April 30, 1999
COMMITMENT LETTER
Bruckmann, Xxxxxx, Xxxxxxxx & Co., Inc.
000 Xxxx 00xx Xxxxxx
00xx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
OSI Acquisition Inc.
000 Xxxx 00xx Xxxxxx
00xx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This commitment letter agreement (together with all exhibits and
schedules hereto, the "COMMITMENT LETTER") will confirm the understanding and
agreement among Xxxxxx Commercial Paper Inc., as Administrative Agent under both
the Credit Facilities and the Interim Loan Agreement referred to below, ("LCPI"
or the "ADMINISTRATIVE AGENT"), Xxxxxx Brothers Inc., as exclusive advisor,
bookmanager and lead arranger ("XXXXXX BROTHERS"), Bruckmann, Xxxxxx, Xxxxxxxx &
Co., Inc. (collectively with certain of its employees, directors and their
affiliates, the "SPONSOR") and OSI Acquisition Inc., a newly formed wholly owned
subsidiary of the Sponsor (the "Company") in connection with the proposed
financing for
Page 1
the acquisition of all of the issued and outstanding common stock (except for
that portion of common stock retained by members of the management or their
designees) of X'Xxxxxxxx Industries Holdings, Inc., a Delaware corporation
(together with each of its subsidiaries, the "ACQUIRED BUSINESS"). We understand
that the Company proposes to sign an agreement with the Acquired Business (the
"ACQUISITION AGREEMENT") whereby the Company will acquire all of the issued and
outstanding common stock (except for that portion of common stock retained by
members of the management or their designees) of the Acquired Business through a
merger with and into the Acquired Business (the "ACQUISITION"). As used below,
the defined term "Company" shall mean both the Company prior to the Acquisition
and the Company together with the Acquired Business, after giving effect to the
Acquisition.
You have advised us that the total funds needed to finance the
Acquisition (including fees and expenses (which will not exceed $23.0 million)
and the refinancing of approximately $28.2 million of existing debt of the
Acquired Business) will be approximately $339.3 million and that such funds will
be provided as follows: (i) $165.0 million of borrowings by the Company under a
Senior Term Loan Facility, with an additional $60.0 million Revolving Credit
Facility which the Sponsor anticipates will not be drawn at closing
(collectively, the "CREDIT FACILITIES") among the Company, LCPI and the
financial institutions party thereto, (ii) the issuance by the Company of $115.0
million in aggregate principal amount of Senior Subordinated Notes due 2009 (the
"NOTES") and (iii) up to $47.2 million of equity securities (the "EQUITY
FINANCING")
Page 2
to be contributed to the Company in cash by the Sponsor or its
affiliates or retained by members of the management of the Acquired Business.
Following the Acquisition, the Company and its respective subsidiaries will not
have any debt or equity outstanding except as described in this paragraph and
$30.8 million of senior preferred stock issued as part of the merger
consideration.
1. The Commitments.
---------------
(a) You have requested (i) that LCPI (collectively with each other
financial institution that becomes a lender under the Credit Facilities, "SENIOR
LENDERS") commit to provide the entire amount of the Credit Facilities upon the
terms and subject to the conditions set forth or referred to in this Commitment
Letter and in the Summary of Terms of Credit Facilities attached hereto as
Exhibit A (the "CREDIT FACILITIES TERM SHEET") and (ii) that LCPI, (collectively
with each other investor that becomes a lender under the Interim Loans (as
defined below), the "Interim LENDERS"; the Interim Lenders and the Senior
Lenders being referred to herein collectively as the "LENDERS" commit to provide
the Company $115.0 million in senior subordinated interim loans (the "INTERIM
LOANS"), upon the terms and subject to the conditions set forth or referred to
in this Commitment Letter and in the Summary of Terms of Interim Loans attached
hereto as Exhibit B (the "INTERIM LOANS TERM SHEET").
(b) Based on the foregoing, LCP1 is pleased to confirm by this
Commitment Letter its commitment to you (the "SENIOR LOAN COMMITMENT") to
Page 3
provide or cause one of its affiliates to provide the entire amount of the
Credit Facilities.
(c) Based on the foregoing, LCPI is pleased to confirm by this
Commitment Letter its commitment to you (the "INTERIM LOAN COMMITMENT"), to
provide or cause one of its affiliates to provide the entire amount of the
Interim Loans, You further agree that if LCPI determines in its sole discretion
that it would be advisable to structure the Interim Loans as securities to
facilitate syndication of the Interim Loan Commitments or for any other reason,
that the documentation contemplated by this Commitment Letter will be
appropriately modified to provide for an issuance of senior subordinated interim
notes having terms as nearly identical as practicable to those of the Interim
Loans.
(d) Pursuant to an Engagement Letter, dated as of April 30, 1999 (the
"ENGAGEMENT LETTER"); among you and Xxxxxx Brothers, as further consideration
for the Interim Loan Commitments, you have engaged Xxxxxx Brothers to act as
your exclusive underwriter, exclusive initial purchaser and/or exclusive
placement agent in connection with the sale of the Permanent Securities (as
defined in the Engagement Letter) and in connection with certain other matters.
(e) It is agreed that Xxxxxx Brothers will act as the sole and
exclusive advisor, bookmanager and lead arranger for the Credit Facilities and
the Interim Loans and that LCPI will act as the sole and exclusive
Administrative Agent for the Credit Facilities and the Interim Loans. Each of
Xxxxxx Brothers and LCPI will perform the duties and exercise
Page 4
the authority customarily performed and exercised by it in its respective role.
You agree that no other agents, co-agents, arrangers or bookmanager will be
appointed, no other titles will be awarded and no compensation (other than that
expressly contemplated by the Credit Facilities Term Sheet or the Fee Letters
referred to below) will be paid in connection with the Credit Facilities or the
Interim Loans unless you and we shall so agree.
(f) The commitments and agreements of the Lenders described herein are
subject to the negotiation, execution and delivery on or before November 30,
1999 of definitive documentation with respect to the Credit Facilities and the
Interim Loans, satisfactory to the Lenders and their respective counsel and to
the other conditions set forth or referred to in the Credit Facilities Term
Sheet, the Interim Loan Term Sheet and the Funding Conditions attached hereto as
Exhibit C. Those matters that are not covered by the provisions hereof or of the
Credit Facilities Term Sheet or the Interim Loan Term Sheet are subject to the
approval and agreement of the applicable Lenders, the Sponsor and the Company.
2. Fees and Expenses. In consideration of the execution and delivery of
this Commitment Letter by LCPI as a Senior Lender, you agree jointly and
severally to pay the fees and expenses set forth in Annex A-1 to the Credit
Facilities Term Sheet and in the Credit Facilities Fee Letter, dated the date
hereof, in each case, as provided therein and subject to paragraph 9 hereof. In
consideration of the execution and delivery of this Commitment Letter by each of
the Interim Lenders, you agree jointly and severally, but subject to paragraph 9
hereof, to pay the fees and expenses contemplated by
Page 5
the Interim Loan Fee Letter, dated the date hereof (each of the Interim Loan Fee
Letter and the Credit Facilities Fee Letter being referred to as a "FEE LETTER"
and collectively as the "FEE LETTERS").
3. Indemnification.
---------------
(a) The Sponsor and the Company hereby jointly and severally agree to
indemnify and hold harmless each of LCPI, Xxxxxx Brothers, the other Interim
Lenders and each of their respective affiliates and each of their respective
officers, directors, employees, affiliates, 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 Credit Facilities, the
Interim Loans, the Term Loans, the Exchange Notes, the use of the proceeds
therefrom, the Acquisition, any of the other transactions, or securities
contemplated by this Commitment Letter or the Engagement Letter, any other
transaction related thereto or any claim, litigation, investigation or
proceeding relating to any of the foregoing, regardless of whether any
indemnified person is a party thereto, and to reimburse each indemnified person
upon demand for all legal and other expenses incurred by it in connection with
investigating, preparing to defend or defending, or providing evidence in or
preparing to serve or serving as a witness with respect to, any lawsuit,
investigation, claim or other proceeding relating to any of the foregoing
(including, without limitation, in connection with the enforcement of the
indemnification obligations set forth herein); PROVIDED, HOWEVER, that no
indemnified
Page 6
person shall be entitled to indemnity hereunder in respect of any loss claim,
damage, liability or expense to the extent that it is found by a final,
non-appealable judgment of a court of competent jurisdiction that such loss,
claim, damage, liability or expense resulted directly from the gross negligence
or willful misconduct of such indemnified person. In no event will any
indemnified person be liable for consequential damages as a result of any
failure to fund any of the Credit Facilities or the Interim Loans contemplated
hereby or otherwise in connection with the Credit Facilities or Interim Loans.
(b) The Sponsor and the Company further agree that, without the prior
written consent of LCPI as Senior Lender and each of the interim LENDERS, which
consent will not be unreasonably withheld, none of them will enter into any
settlement of a lawsuit, claim or other proceeding arising out of this
Commitment Letter or the transactions contemplated by this Commitment Letter
unless such settlement includes an explicit and unconditional release from the
party bringing such lawsuit, claim or other proceeding of all indemnified
persons.
(c) The Sponsor, the Company and the Lenders agree that if any
indemnification or reimbursement sought pursuant to this Section 3 is judicially
determined to be unavailable for a reason other than the gross negligence or
willful misconduct of such indemnified person, then, whether or not a Senior
Lender or an Interim Lender is the indemnified person, the Sponsor and the
Company, on the one hand, and the Senior Lenders or the Interim Lenders, as the
case may be, on the other hand (pro rata
Page 7
in accordance with their respective Commitments), shall contribute to the
losses, claims, damages, liabilities and expenses for which such indemnification
or reimbursement is held unavailable (i) in such proportion as is appropriate to
reflect the relative benefits to the Sponsor and the Company, on the one hand,
and the Senior Lenders or the Interim Lenders, as the case may be, on the other
hand, in connection with the transactions to which such indemnification or
reimbursement relates, or (ii) if the allocation provided by clause (i) above is
judicially determined not to be permitted, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) but also the
relative faults of the Sponsor and the Company, on the one hand, and the Senior
Lenders or the Interim Lenders, on the other hand, as well as any other
equitable considerations; PROVIDED, HOWEVER, that in no event shall the amount
to be contributed by a Senior Lender or an Interim Lender pursuant to this
paragraph exceed the amount of the fees actually received by such Senior Lender
or Interim Lender under this Commitment Letter or the applicable Fee Letter.
4. Expiration of Commitment. The Senior Loan Commitments and the Interim
Loan Commitments shall expire at 5:00 p.m., New York City time, on May 21, 1999
unless you shall have executed and returned a copy of this Commitment Letter,
each of the Fee Letters and the Engagement Letter to the Lenders prior to the
expiration of the Commitments, in which event each Lender agrees to hold its
respective Commitment available for you until the earlier of (i) the termination
of the Acquisition Agreement, (ii)
Page 8
the consummation of the Acquisition without the funding of the Credit Facilities
or Interim Loans, as the case may be, and (iii) 5:00 p.m,, New York City time,
on November 30, 1999. The date and time of expiration of the Senior Loan
Commitment and the Interim Loan Commitment is sometimes referred to herein as
the "COMMITMENT EXPIRATION DATE."
5. Confidentiality.
---------------
(a) This Commitment Letter and the Engagement Letter and the terms and
conditions contained herein and therein shall not be disclosed by the Sponsor to
any person or entity (other than the Acquired Business or such of your and their
agents and advisers as need to know and agree to be bound by the provisions of
this paragraph and as required by law) without the prior written consent of the
applicable Lenders. The Fee Letters and the terms and conditions contained
therein shall not be disclosed by the Sponsor to any person or entity (other
than such of your agents and advisers as need to know and agree to be bound by
the provisions of this paragraph and as required by law) without the prior
written consent of the applicable Lenders.
(b) You acknowledge that Xxxxxx Brothers and its affiliates (the term
"Xxxxxx Brothers" being understood to refer hereinafter in this paragraph to
include such affiliates, including LCPI) may be providing debt financing, equity
capital or other services (including financial advisory services) to other
companies in respect of which you may have conflicting interests regarding the
transactions described herein and otherwise. Xxxxxx
Page 9
Brothers will not use confidential information obtained from you by virtue of
the transactions contemplated by this Commitment Letter or their other
relationships with you in connection with the performance by Xxxxxx Brothers of
services for other companies, and Xxxxxx Brothers will not furnish any such
information to other companies. You also acknowledge that Xxxxxx Brothers has no
obligation to use in connection with the transactions contemplated by this
Commitment Letter, or to furnish to you, confidential information obtained from
other companies,
6. Assignment and Syndication.
--------------------------
(a) The parties hereto agree that LCPI and Xxxxxx Brothers shall have
the right to syndicate the Credit Facilities, the Interim Loans and/or the
Senior Loan Commitments and the Interim Loan Commitments (collectively, the
"COMMITMENTS") to a group of financial institutions or other investors
identified by us in consultation with you. Xxxxxx Brothers will manage all
aspects of any such syndication, including decisions as to the selection of
institutions to be approached and when they will be approached, the acceptance
of commitments, the amounts offered, the amounts allocated and the compensation
provided. The Sponsor and the Company agree to use all commercially reasonable
efforts to assist Xxxxxx Brothers and LCPI in any such syndication process,
including, without limitation, (i) ensuring that the syndication efforts benefit
materially from the existing lending relationships of the Sponsor and the
Company, (ii) direct contact between senior management and advisors of the
Sponsor and the Company and the proposed Lenders, (iii) assistance in the
preparation of Confidential
Page 10
Information Memoranda and other marketing materials to be used in connection
with any syndication, including causing such Confidential Information Memoranda
to conform to market standards as reasonably determined by Xxxxxx Brothers and
LCPI and (iv) the hosting, with Xxxxxx Brothers, of one or more meetings of
prospective Lenders, and, in connection with any such Lender meeting, your
consultation with Xxxxxx Brothers and LCPI with respect to the presentations to
be made at such meeting, and your making available appropriate officers and
representatives to rehearse such presentations prior to such meetings, as
reasonably requested by Xxxxxx Brothers and LCPI. You also agree that, at your
expense, you will work with Xxxxxx Brothers and LCPI to procure a rating for the
Credit Facilities and/or the Interim Loans by Xxxxx'x Investors Service, Inc.
and Standard & Poor's Ratings Group.
(b) To assist Xxxxxx Brothers and LCPI in their syndication efforts,
you agree promptly to prepare and provide to Xxxxxx Brothers and LCPI all
information with respect to the Company, the Acquired Business, the Acquisition
and the other transactions contemplated hereby, including all financial
information and projections (the "PROJECTIONS", as they may reasonably request.
You hereby represent and covenant that (i) all information other than the
Projections (the "INFORMATION") that has been or will be made available to
Xxxxxx Brothers and LCPI by you or any of your representatives is or will be
when furnished, complete and correct in all material respects and does not or
will not, when furnished, contain any untrue statement of a material fact or
omit to state a material
Page 11
fact necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements are made
and (ii) the Projections that have been or will be made available to Xxxxxx
Brothers and LCPI by you or any of your representatives have been or will be
prepared in good faith based upon reasonable assumptions. You understand that in
arranging and syndicating the Credit Facilities and the Interim Loans we may use
and rely on the information and projections without independent verification
thereof.
(c) To ensure an orderly and effective syndication of the Senior Loans
and the Interim Loans, you agree that, from the date hereof until the later of
the termination of the syndication as determined by Xxxxxx Brothers and 90 days
following the date of initial funding under the Senior Loans and the Interim
Loans, you will not, and will not permit any of your affiliates to, syndicate or
issue, attempt to syndicate or issue, announce or authorize the announcement of
the syndication or issuance of, or engage in discussions concerning the
syndication or issuance of, any debt facility or debt or preferred equity
security of the Company or any of its subsidiaries (other than the indebtedness
contemplated hereby), including any renewals or refinancings of any existing
debt facility, without the prior written consent of Xxxxxx Brothers. Upon the
Closing Date, any assignment or syndication of the Credit Facilities and the
Interim Loans shall be governed by the provisions of the definitive
documentation relating thereto.
(d) Xxxxxx Brothers and LCPI shall be entitled,
Page 12
after consultation with the Company, to change the pricing, terms and structure
of the Credit Facilities and/or the Interim Loans if Xxxxxx Brothers and LCPI
determine that such changes are advisable to ensure a successful syndication of
the Credit Facilities and/or the Interim Loans; provided, that with respect to
the Credit Facilities in no event will the Applicable Margin be increased or
decreased by more than 50 basis points without the consent of the Company.
Xxxxxx Brothers and LCPI shall also be entitled to reduce the total principal
amount of either the Credit Facilities or the Interim Loans; provided that any
reduction in any such total principal amount is offset by a corresponding
increase in the amount of the Credit Facilities or the Interim Loans, as the
case may be. The provisions of this Section 6(d) shall survive the closing of
the Credit Facilities and the Interim Loans until the termination of syndication
as determined by Xxxxxx Brothers, and the Company agrees to enter into, and to
cause, such amendments to the final documentation as may be necessary or
reasonably requested by Xxxxxx Brothers to document any changes to the Credit
Facilities and the Interim Loans made pursuant to this Section 6(d).
7. Survival. The provisions of this Commitment Letter relating to the
payment of fees and expenses, indemnification and contribution, and
confidentiality, and the provisions of Section 8 below will survive the
expiration or termination of any commitment hereunder or this Commitment Letter
(including any extensions) and the execution and delivery of definitive
financing documentation.
8. Choice of Law, Jurisdiction, Waivers.
------------------------------------
Page 13
(a) This Commitment Letter shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof. To the fullest extent permitted by
applicable law, the Sponsor and the Company hereby irrevocably submit to the
jurisdiction of any New York State court or Federal court sitting in the County
of New York in respect of any suit, action or proceeding arising out of or
relating to the provisions of this Commitment Letter or either of the Fee
Letters and irrevocably agree that all claims in respect of any such suit,
action or proceeding may be heard and determined in any such court. The Sponsor
and the Company, hereby waive, to the fullest extent permitted by applicable
law, any objection that they may now or hereafter have to the laying of venue of
any such suit, action or proceeding brought in any such court, and any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. The parties hereto hereby waive, to the
fullest extent permitted by applicable law, any right to trial by jury with
respect to any action or proceeding arising out of or relating to this
Commitment Letter or either of the Fee Letters.
(b) No Senior Lender or interim Lender shall be liable in any respect
for any of the obligations or liabilities of any the other Senior Lender or
Interim Lender under this letter or arising from or relating to the transactions
contemplated hereby.
9. Acquired Business to Become a Party; Termination of Certain Sponsor
Page 14
Obligations. The Sponsor and the Company hereby agree to cause the Acquired
Business (including each of the Guarantors) to become jointly and severally
liable, effective upon the closing of the Acquisition, for any and all
liabilities and obligations of the Sponsor or the Company relating to or arising
out of any of the Sponsor's or the Company's duties, responsibilities and
obligations hereunder. The obligations of the Sponsor under Sections 2 and 3 of
this Agreement shall terminate once this Agreement has become a legal, valid and
binding agreement of the Acquired Business and such Guarantors.
10. Miscellaneous.
-------------
(a) This Commitment Letter may be executed in one or more
counterparts, each of which will be deemed an original, but all of which taken
together will constitute one and the same instrument. Delivery of an executed
signature page of this Commitment Letter by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
(b) Neither the Company nor the Sponsor may assign any of their
respective rights, or be relieved of any of their respective obligations,
without the prior written consent of each of the Lenders. In connection with any
syndication of all or a portion of the Senior Loan Commitments and/or the
Interim Loan Commitments, the rights and obligations of each of the Lenders
hereunder may be assigned, in whole or in part, as provided above, and upon such
assignment, such Lender shall be relieved and novated hereunder from the
obligations of such Lender with respect to any portion
Page 15
of its Senior Loan Commitment or Interim Loan Commitment that has been assigned
as provided above.
(c) This Commitment Letter and the attached Exhibits and Schedules set
forth the entire understanding of the parties hereto as to the scope of the
Commitment and the obligations of the Lenders hereunder. This Commitment Letter
shall supersede all prior understandings and proposals, whether written or oral,
between any of the Lenders and you relating to any financing or the transactions
contemplated hereby. This Commitment Letter shall be in addition to the
agreements of the parties contained in the Engagement Letter.
(d) This Commitment Letter has been and is made solely for the benefit
of the Sponsor, the Company, the Lenders, the indemnified persons, and their
respective successors and assigns, and nothing in this Commitment Letter,
expressed or implied, is intended to confer or does confer on any other person
or entity any rights or remedies under or by reason of this Commitment Letter or
the agreements of the parties contained herein.
(e) As you know, the Lenders, including Xxxxxx Brothers, may be full
service financial firms and as such from time to time may effect transactions
for their own account or the account of customers, and hold long or short
positions in debt or equity securities or loans of companies that may be the
subject of the transactions contemplated by this Commitment Letter.
(f) Xxxxxx Brothers also will provide financial advisory services to
the Company with respect to the transaction to which this Commitment
Page 16
Letter relates. The Company agrees that Xxxxxx Brothers has the right to place
advertisements in financial and other newspapers and journals at its own expense
describing its services to the Company, provided that Xxxxxx Brothers will
submit a copy of any such advertisements to the Company for its approval, which
approval shall not be unreasonably withheld,
If you are in agreement with the foregoing, kindly sign and return to
us the enclosed copy of this Commitment Letter.
Very truly yours,
XXXXXX COMMERCIAL PAPER INC.
By:/s/ Xxxxxxx Xxxxxxxxx
-----------------------------
Name:
Title: Authorized Signatory
XXXXXX BROTHERS INC.
By:/s/ Xxxxxxx Xxxxxxxxx
-----------------------------
Name:
Title: Authorized Signatory
Page 17
Accepted and agreed to as of the
date first above written:
BRUCKMANN, XXXXXX, XXXXXXXX & CO., INC.
By:/s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name:
Title: Authorized Signatory
OSI ACQUISITION INC.
By:/s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name:
Title: Authorized Signatory
EXHIBIT A TO COMMITMENT LETTER
------------------------------
SUMMARY OF TERMS OF CREDIT FACILITIES
-------------------------------------
Set forth below is a summary of certain of the terms of the Senior
Term Loan Facilities, the Revolving Credit Facility and the documentation
related thereto. Capitalized terms used and not otherwise defined herein have
the meanings set forth in the Commitment Letter to which this Summary of Terms
is attached and of which it forms apart.
I. PARTIES
-------
COMPANY........................... The Company.
GUARANTORS........................ Each of the Company's direct and
indirect subsidiaries (other than
certain foreign subsidiaries (the
"GUARANTORS"; the Company and the
Guarantors, collectively, the "CREDIT
PARTIES").
ADVISOR, LEAD ARRANGER
AND BOOK MANAGER................ Xxxxxx Brothers Inc. (in such capacity,
the "ARRANGER").
Page 18
ADMINISTRATIVE AGENT.............. Xxxxxx Commercial Paper Inc. (in such
capacity, the "ADMINISTRATIVE AGENT").
SENIOR LENDERS.................... A syndicate of banks, financial
institutions and other entities arranged
by the Administrative Agent after
consultation with the Company
(collectively, the "SENIOR LENDERS").
II. TYPES AND AMOUNTS OF CREDIT FACILITIES
--------------------------------------
SENIOR TERM LOAN FACILITIES....... Senior Term Loan Facilities (the "SENIOR
TERM LOAN FACILITIES" in an aggregate
amount equal to $165.0 million (the
loans thereunder, the "SENIOR TERM
LOANS") as follows:
Tranche A Term Loan Facility.... A 6-year term loan facility (the
"TRANCHE A TERM LOAN FACILITY") in an
aggregate principal amount equal to
$40.0 million (the loans thereunder, the
"TRANCHE A TERM LOANS"). the Tranche A
Term Loans shall be repayable in
quarterly installments in amounts to be
Page 19
agreed upon until the date that is 6
years after the Closing Date (as defined
below).
Tranche B Term Loan Facility... A 7 1/2-year term loan facility (the
"TRANCHE B TERM LOAN FACILITY") in an
aggregate principal amount equal to
$125.0 million (the loans thereunder,
the "TRANCHE B TERM LOANS". The Tranche
B Term Loans shall be repayable in 30
consecutive quarterly installments in
amounts to be agreed.
Availability................... The Senior Term Loans shall be made in a
single drawing on the Closing Date (as
defined below).
Purpose........................ The proceeds of the Senior Term Loans
shall be used to finance the Acquisition
and to pay related fees and expenses.
REVOLVING CREDIT FACILITY......... 6-year revolving credit facility (the
"REVOLVING CREDIT FACILITY");
Facility....................... together with the Senior Term
Page 20
Loan Facilities, (the "CREDIT
FACILITIES") in an aggregate principal
amount equal to $60.0 million (the loans
thereunder, the "REVOLVING CREDIT
LOANS").
Availability................... The Revolving Credit Facility shall be
available on a revolving basis during
the period commencing on the Closing
Date and ending on the sixth anniversary
thereof (the "REVOLVING CREDIT
TERMINATION DATE").
Letters of Credit.............. A portion of the Revolving Credit
Facility not in excess of $20.0 million
shall be available for the issuance of
letters of credit (the "LETTERS OF
CREDIT") by a Senior Lender to be
selected in the syndication process (in
such capacity, the "ISSUING SENIOR
LENDER). No Letter of Credit shall have
an expiration date after the earlier of
(i) one year after the date of issuance
and (ii)
Page 21
five business days prior to the
Revolving Credit Termination Date;
provided that any Letter of Credit with
a one-year tenor may provide for the
renewal thereof for additional one year
periods (which shall in no event extend
beyond the date referred to in clause
(ii) above).
Drawings under any Letter of Credit
shall be reimbursed by the Company
(whether with its own funds or with the
proceeds of Revolving Credit Loans) on
the same business day. To the extent
that the Company does not so reimburse
the Issuing Senior Lender, the Senior
Lenders under the Revolving Credit
Facility shall be irrevocably and
unconditionally obligated to reimburse
the Issuing Senior Lender on a pro rata
basis.
Swing Line Loans............... A portion of the Revolving Credit
Facility not in excess of
Page 22
$10.0 million shall be available for
swing line loans (the "SWING LINE
LOANS") from a Senior Lender to be
selected in the syndication process (in
such capacity, the "SWING LINE SENIOR
LENDER") on same-day notice. Any such
Swing Line Loans will reduce
availability under the Revolving Credit
Facility on a dollar-for-dollar basis.
Each Senior Lender under the Revolving
Credit Facility shall acquire, under
certain circumstances, an irrevocable
and unconditional pro rata participation
in each Swing Line Loan.
Maturity....................... The Revolving Credit Termination Date.
Purpose........................ The proceeds of the Revolving Credit
Loans shall be used to finance the
working capital needs of the Company and
its subsidiaries in the ordinary course
of business.
Page 23
III. CERTAIN PAYMENT PROVISIONS
--------------------------
FEES AND INTEREST RATES........... As set forth on Annex A-I.
OPTIONAL PREPAYMENTS AND
COMMITMENT REDUCTIONS........... Loans may be prepaid in minimum amounts
to be agreed upon. Optional prepayments
of the Senior Term Loans shall be
applied to the Tranche A Term Loans and
the Tranche B Term Loans ratably and to
the installments thereof ratably in
accordance with the then outstanding
amounts thereof and may not be
reborrowed. Notwithstanding the
foregoing, so long as any Tranche A Term
Loans are outstanding, each holder of
Tranche B Term Loans shall have the
right to refuse up to 100% of such
prepayment allocable to its Tranche B
Term Loans and the amount so refused
will be applied to prepay the Tranche A
Term Loans.
MANDATORY PREPAYMENTS AND
COMMITMENT REDUCTIONS........ The following amounts shall be applied
to prepay the Senior
Page 24
Term Loans and reduce the Revolving
Credit Facility:
(a) 100% of the net proceeds of any
sale, issuance or incurrence of
certain indebtedness after the
Closing Date by the Company or any
of its subsidiaries (subject to
certain carve outs to be agreed
on); provided, however, that such
net proceeds shall first be applied
to any outstanding amounts owed to
the Interim Lenders under the
Interim Loans or the Term Loans;
(b) 100% of the net proceeds of any
sale or other disposition
(including as a result of casualty
or condemnation) by the Company or
any of its subsidiaries of any
assets (except for the sale of
inventory in the ordinary
Page 25
course of business and certain
other dispositions to be agreed
on); and
(c) 75% of excess cash flow (to be
defined in a mutually satisfactory
manner) for each fiscal year of the
Company (commencing with the fiscal
year in which the Closing Date
occurs); provided, however that
such amount shall be reduced to 50%
during such time that the Maximum
Leverage (to be defined) is less
than 3.0 to 1.0.
All such amounts shall be applied,
first, to the prepayment of the Senior
Term Loans and, second, to the permanent
reduction of the Revolving Credit
Facility. Each such prepayment of the
Senior Term Loans shall be applied to
the Tranche A Term Loans and the Tranche
B Term Loans and
Page 26
to the installments thereof ratably in
accordance with the then outstanding
amounts thereof and may not be
reborrowed. Notwithstanding the
foregoing, so long as any Tranche A Term
Loans are outstanding, each holder of
Tranche B Term Loans shall have the
right to refuse up to 100% of such
prepayment allocable to its Tranche B
Term Loans and the amount so refused
will be applied to prepay the Tranche A
Term Loans.
IV. COLLATERAL
---------- The obligations of each Credit Party in
respect of the Credit Facilities shall
be secured by a perfected first priority
security interest in all of its tangible
and intangible assets (including,
without limitation, intellectual
property, real property and all of the
capital stock of the Company and each of
its direct and indirect domestic
subsidiaries, and 2/3
Page 27
of the capital stock of certain of its
first tier foreign subsidiaries) except
(i) with respect to those assets subject
to liens in connection with Industrial
Revenue Refunding Bonds issued to refund
and redeem the bonds used to finance the
cost of the acquisition and construction
of the Company's Virginia manufacturing
facility, which shall be secured by a
perfected second priority security
interest and (ii) for those assets as to
which the Administrative Agent shall
determine in its sole discretion that
the costs of obtaining such a security
interest are excessive in relation to
the value of the security to be afforded
thereby,
V. CERTAIN CONDITIONS
------------------
INITIAL CONDITIONS................ The availability of the Credit
Facilities is subject to the
Page 28
conditions set forth on Exhibit C to the
Commitment Letter.
ON-GOING CONDITIONS............... The making of each extension of credit
shall be conditioned upon (i) the
accuracy of all representations and
warranties in the definitive financing
documentation with respect to the Credit
Facility (the "CREDIT DOCUMENTATION")
(including, without limitation, the
material adverse change and litigation
representations) and (ii) there being no
default or event of default in existence
at the time of, or after giving effect
to the making of, such extension of
Credit.
V1. CERTAIN DOCUMENTATION MATTERS..... The Credit Documentation shall contain
representations, warranties, covenants
and events of default customary for
financings of this type and other terms
deemed appropriate by the Senior
Lenders,
Page 29
including, without limitation:
REPRESENTATIONS AND
WARRANTIES................... Financial statements (including pro
forma financial statements); absence of
undisclosed liabilities; no material
adverse change; corporate existence;
compliance with law; corporate power and
authority; enforceability of Credit
Documentation; no conflict with law or
contractual obligations; no material
litigation; no default; ownership of
property; liens; intellectual property;
taxes; Federal Reserve regulations;
ERISA; Investment Company Act;
subsidiaries; environmental matters;
solvency; labor matters; accuracy of
disclosure; creation and perfection of
security interests; and Year 2000
Matters.
AFFIRMATIVE COVENANTS.......... Delivery of financial statements,
reports, accountants' letters,
projections, officers' certificates
Page 30
and other information requested by the
Senior Lenders; payment of other
obligations; continuation of business
and maintenance of existence and
material rights and privileges;
compliance with laws and material
contractual obligations; maintenance of
property and insurance; maintenance of
books and records; right of the Senior
Lenders to inspect property and books
and records; notices of defaults,
litigation and other material events;
compliance with environmental laws;
further assurances (including, without
limitation, with respect to security
interests in after acquired property);
and agreement to obtain within 90 days
after the Closing Date interest rate
protection in amount and upon terms to
be agreed.
FINANCIAL COVENANTS............ Financial covenants (including,
Page 31
without limitation, minimum interest and
fixed charge coverage and tangible net
worth and maximum leverage).
NEGATIVE COVENANTS............. Limitations on: indebtedness (including
preferred stock of subsidiaries); liens;
guarantee obligations; mergers,
consolidations, liquidations and
dissolutions; sales of assets; leases;
dividends and other payments in respect
of capital stock; capital expenditures;
investments, loans and advances;
optional payments and modifications of
subordinated and other debt instruments;
transactions with affiliates; sale and
leasebacks; changes in fiscal year;
negative pledge clauses; changes in
lines of business.
EVENTS OF DEFAULT.............. Nonpayment of principal when due;
nonpayment of interest, fees or other
amounts after a grace period
Page 32
to be agreed upon; material inaccuracy
of representations and warranties;
violation of covenants (subject, in the
case of certain affirmative covenants,
to a grace period to be agreed upon);
cross-default; bankruptcy events;
certain ERISA events; material
judgments; actual or asserted invalidity
of any guarantee or security document,
subordination provisions or security
interest; and a change of control (the
definition of which is to be agreed).
VOTING......................... Amendments and waivers with respect to
the Credit Documentation shall require
the approval of Senior Lenders holding
not less than a majority of the
aggregate amount of the Senior Term
Loans, Revolving Credit Loans
participations in Letters of Credit and
Swingline Loans and unused commitments
under
Page 33
the Credit Facilities, except that (i)
the consent of each Senior Lender
affected thereby shall be required with
respect to (a) reductions in the amount
or extensions of the scheduled date of
amortization or final maturity of any
Loan, (b) reductions in the rate of
interest or any fee or extensions of any
due date thereof, (c) increases in the
amount or extensions of the expiry date
of any Senior Lender's commitment and
(d) modifications to the pro rata
provisions of the Credit Documentation
and (ii) the consent of 100% of the
Senior Lenders shall be required with
respect to (a) modifications to any of
the voting percentages and (b) releases
of all or substantially all of the
Guarantors or all or substantially all
of the collateral. In addition, the
consent of Senior Lenders
Page 34
holding a majority of the aggregate
amount of the Tranche A Term Loans or
the Tranche B Term Loans, as the case
may be, shall be required with respect
to certain modifications affecting the
Senior Term Loan Facility.
ASSIGNMENTS AND
PARTICIPATIONS............... The Senior Lenders shall be permitted to
assign and sell participations in their
Loans and commitments, subject, in the
case of assignments (other than
assignments (i) by the Administrative
Agent, (ii) to another Senior Lender or
to an affiliate of a Senior Lender or
(iii) of funded Senior Term Loans), to
the consent of the Administrative Agent
and the Company (which consent in each
case shall not be unreasonably
withheld). Non-pro rata assignments
shall be permitted. In the case of
partial assignments (other than
Page 35
to another Senior Lender or to an
affiliate of a Senior Lender), the
minimum assignment amount shall be $5.0
million, and, after giving effect
thereto, the assigning Senior Lender
shall have commitments and Loans
aggregating at least $2.5 million, in
each case unless otherwise agreed by the
Company, and the Administrative Agent.
Participants shall have the same
benefits as the Senior Lenders with
respect to yield protection and
increased cost provisions. Voting rights
of participants shall be limited to
those matters with respect to which the
affirmative vote of the Senior Lender
from which it purchased its
participation would be required as
described under "Voting" above. Pledges
of Loans in accordance with applicable
law shall be permitted without
restriction. Promissory
Page 36
notes shall be issued under the Credit
Facilities only necessary to upon
request.
YIELD PROTECTION............... The Credit Documentation shall contain
customary provisions (i) protecting the
Senior Lenders against increased costs
or loss of yield resulting from changes
in reserve, tax, capital adequacy and
other requirements of law and from the
imposition of or changes in withholding
or other taxes and (ii) indemnifying the
Senior Lenders for "breakage costs"
incurred in connection with, among other
things, any prepayment of a Eurodollar
Loan (as defined in Annex A-I) on a day
other than the last day of an interest
period with respect thereto.
EXPENSES AND
INDEMNIFICATION.............. The Company shall pay (i) all
reasonable out-of pocket expenses
of the Administrative Agent and the
Page 37
Arranger associated with the
syndication of the Credit
Facilities and the preparation,
execution, delivery and
administration of the Credit
Documentation and any amendment or
waiver with respect thereto
(including the reasonable fees,
disbursements and other charges of
counsel) and (ii) all out-of-pocket
expenses of the Administrative
Agent and the Senior Lenders
(including the fees, disbursements
and other charges of counsel) in
connection with the enforcement of
the Credit Documentation.
The Administrative Agent, the Arranger
and the Senior Lenders (and their
affiliates and their respective
officers, directors, employees, advisors
and agents) will have no liability for,
and will be indemnified and held
harmless against, any loss,
Page 38
liability, cost or expense incurred
in respect of the financing
contemplated hereby or the use or the
proposed use of proceeds thereof
(except to the extent resulting from
the gross negligence or willful
misconduct of the indemnified party).
GOVERNING LAW AND FORUM........ State of New York.
SENIOR LENDERS' COUNSEL........ Xxxxxx & Xxxxxxx.
ANNEX A-I
---------
INTEREST AND CERTAIN FEES
-------------------------
INTEREST RATE OPTIONS.......... The Company may elect that the Loans
comprising each borrowing bear interest
at a rate per annum equal to:
(i) the Base Rate plus the
Applicable Margin; or
(ii) the Eurodollar Rate plus tile
Applicable Margin.
provided, that all Swing Line Loans
shall bear interest based upon
the Base Rate.
Page 39
As used herein:
"BASE RATE" means the highest of (i) the
rate of interest publicly announced by
Bankers Trust Company as its prime rate
in effect at its principal office in New
York City (the "PRIME RATE"), (ii) the
secondary market rate for three-month
certificates of deposit (adjusted for
statutory reserve requirements) plus 1%
and (iii) the federal funds effective
rate from time to time plus 0.5%.
"APPLICABLE MARGIN" means a
percentage determined in accordance
with the pricing grid attached
hereto as Annex A-II
"EURODOLLAR RATE" means the rate
(adjusted for statutory reserve
requirements for eurocurrency
liabilities) at which eurodollar
deposits for one, two, three or six
months (as selected by the Company)
Page 40
are offered in the interbank eurodollar
market,
INTEREST PAYMENT DATES......... In the case of Loans bearing interest
based upon the Base Rate ("BASE RATE
LOANS"), quarterly in arrears.
In the case of Loans bearing interest
based upon the Eurodollar Rate
("EURODOLLAR LOANS"), on the last day of
each relevant interest period and, in
the case of any interest period longer
than three months, on each successive
date three months after the first day of
such interest period.
COMMITMENT FEES................ The Company shall pay a commitment fee
calculated at the applicable rate per
annum set forth in Annex A-II on the
average daily unused portion of the
Revolving Credit Facility, payable
quarterly in arrears. Swing Line Loans
shall, for purposes of the commitment
fee calculations only, not be deemed to
Page 41
be a utilization of the Revolving Credit
Facility.
LETTER OF CREDIT FEES.......... The Company shall pay a commission on
all outstanding Letters of Credit at a
per annum rate equal to the Applicable
Margin then in effect with respect to
Eurodollar Loans on the face amount of
each such Letter of Credit. Such
commission shall be shared ratably among
the Senior Lenders participating in the
Revolving Credit Facility and shall be
payable quarterly in arrears.
In addition to letter of credit
commission, a fronting fee calculated at
a rate per annum to be agreed upon by
the Company and the Issuing Bank on the
face amount of each Letter of Credit
shall be payable quarterly in arrears to
the Issuing Senior Lender for its own
account. In addition, customary
administrative,
Page 42
issuance, amendment, payment and
negotiation charges shall be payable to
the Issuing Senior Lender for its own
account.
DEFAULT RATE................... At any time when the Company is in
default in the payment of any amount of
principal due under the Credit
Facilities, such amount shall bear
interest at 2% above the rate otherwise
applicable thereto. Overdue interest,
fees and other amount shall bear
interest at 2% above the rate applicable
to Base Rate Loans.
RATE AND FEE BASIS............. All per annum rates shall be
calculated on the basis of a year
of 360 days (or 365 days, in the
case of Base Rate Loans the
interest rate payable on which is
then based on the Prime Rate) and
the actual number of days elapsed.
Page 43
ANNEX A-II
----------
PRICING GRID - SENIOR TERM LOANS AND REVOLVING CREDIT LOANS
-----------------------------------------------------------
-----------------------------------------------------------------------------------------------
Ratio of Applicable Margin- Commitment Applicable Margin- Base Rate
Total Eurodollar Loans[*] Fee[*] Loans[*]
Debt to
EBITDA
-----------------------------------------------------------------------------------------------
Tranche A Tranche B Tranche A & Tranche B
& Revolver Revolver
(Less than) 5.0: 1-0 2.75% 3.00% 0.50% 1.75% 2.00%
(Less than) 4.0: 1.0 2.50% 3.00% 0.50% 1.50% 2.00%
(Less than) 3.0: 1.0 2.25% 3.00% 0.375% 125% 2.00%
(Greater than) 3.0: 1.0 1.75% 3.00% 0.375% 0.75% 2.00%
*Notwithstanding the foregoing grid, the Applicable Margin and Commitment Fee
Rate for Tranche A Term Loans and the Revolving Credit Loans for the period from
the Closing Date until the date of delivery to the Administrative Agent of the
Company's financial statements for the first two fiscal quarters following the
Closing Date will be 2.75% (Eurodollar Rate Loans), 1.75% (Base Rate Loans) and
0.50% (Commitment Fee Rate) respectively.
Page 44
EXHIBIT B TO COMMITMENT LETTER
------------------------------
SUMMARY OF TERMS OF INTERIM LOANS
---------------------------------
Set forth below is a summary of certain of the terms of the Interim
Loans and the Interim Loan Agreement. Capital terms used and not otherwise
defined herein have the meanings set forth in the Commitment Letter to which
this Summary of Terms is attached and of which it forms a part.
COMPANY........................ The Company.
ARRANGER....................... Xxxxxx Brothers.
ADMINISTRATIVE AGENT AND
DOCUMENTATION AGENT.......... LCPI.
LOANS ......................... $115.0 million of Senior Subordinated
Increasing Rate Loans due 2000 (the
"INTERIM LOANS").
SUBORDINATION.................. The Interim Loans and all obligations
with respect thereto will be
subordinated in right of payment to the
payment in full of all obligations of
the Company under the Credit Facilities
and certain refinancings thereof on
terms satisfactory to the Lenders
Page 45
in their sole discretion. The Company
will not be permitted to incur any
indebtedness that is subordinated to any
borrowings under the Credit Facilities
and senior to any other indebtedness of
the Company. Nothing in the
subordination provisions will prevent
any holder of Interim Loans from
receiving and retaining any proceeds
originally received by the Company or
any subsidiary of the Company that were
used to repay Interim Loans to the
extent required under the "Mandatory
Repayment" provision described below,
and the same may be retained by such
holder free and clear of any claims by
holders of any debt, pursuant to these
subordination provisions or otherwise.
USE OF PROCEEDS................ Proceeds from the Interim Loans will be
used to fund, in part, the Acquisition.
Page 46
MATURITY....................... 365 days from the date of initial
funding (the "MATURITY DATE"), The
initial date of funding of the Interim
Loans is hereinafter referred to as the
"CLOSING DATE," which shall be no later
than November 30, 1999.
MANDATORY ROLLOVER............. If (i) the Interim Loans are not repaid
in full on or prior to the Maturity Date
and (ii) the conditions precedent set
forth in Exhibit B to the Commitment
Letter are satisfied, then the Interim
Loans will be automatically extended on
the Maturity Date into Term Loans due
2009 of the Company (the "TERM LOANS" in
an aggregate principal amount equal to
the aggregate principal amount of
Interim Loans so extended. The Term
Loans will have the terms set forth in
Annex B-I to the Commitment Letter.
Under certain circumstances, Term Loans
may be
Page 47
exchanged by the holders thereof for
Exchange Notes. The Exchange Notes will
have the Terms set forth in Annex B-I to
the Commitment Letter. The Exchange
Notes will be issued, undated, on the
Closing Date and placed in an escrow
account and held by a mutually agreeable
fiduciary pending such exchange.
INTEREST....................... The Interim Loans will bear interest at
a variable per annum rate equal to the
sum of (i) a base rate to be selected by
the Company on the date of funding equal
to either (a) the one- or three-month
London Interbank Offered Rate, reset
monthly or quarterly, as the case may be
(the "LIBOR RATE") or (b) the Base Rate
(as defined in the Credit facilities
Term Sheet), in each case calculated on
the basis of the actual number of days
elapsed in a year of 360 days, plus
Page 48
(ii) a spread (the "SPREAD") equal
to (a) 600 basis points in case of the
LIBOR Rate or (b) 500 basis points in
case of the Base Rate. The Spread will
increase by 50 basis points upon each
90-day anniversary of the date of
funding of the Interim Loans. The
interest rate on the Interim Loans (i)
will not at any time exceed 18% per
annum and (ii) will not at any time be
less than 11% per annum. To the extent
that the total interest payable on the
Interim Loans on any interest payment
date exceeds 14% per annum, the Company
shall have the option to pay such excess
interest by capitalizing such interest
as additional Interim Loans. Interest
will be payable quarterly, in arrears,
on the Maturity Date and on the date of
any prepayment of the Interim Loans.
Notwithstanding the
Page 49
limitations set forth in this paragraph,
interest will accrue on any overdue
amount (whether interest or principal,
including default interest), to the
extent lawful, at a rate per annum equal
to 200 basis points over the then
current interest rate on the Interim
Loans, until such amount (plus all
accrued and unpaid interest) is paid in
full. For Interim Loans outstanding
after the Maturity Date, interest will
be payable on demand at the default
rate.
GUARANTEES..................... The Interim Loans will be guaranteed on
a senior subordinated basis by each
affiliate of the Company that guarantees
all or a portion of the indebtedness
under the Credit facilities (the
"GUARANTORS". A subsidiary's guarantee
will be released upon the sale of such
subsidiary, subject to
Page 50
use of the proceeds therefrom to repay
Interim Loans and/or borrowings under
the Credit Facilities.
MANDATORY REPAYMENT............ The Company will repay Interim Loans
with the net proceeds from (i) any
direct or indirect public offering or
private placement of the Notes, the High
Yield Securities or any other debt
securities of the Company or any of the
Company's subsidiaries or any equity
securities of the Company or any direct
or indirect parent holding company of
the Company, (ii) the incurrence of any
other indebtedness by the Company or any
subsidiary of the Company or any direct
or indirect parent holding company of
the Company (other than under the Credit
Facilities and certain permitted
indebtedness as in effect on the Closing
Date) and (iii) any future issuances or
sales
Page 51
of stock of subsidiaries or sales of
assets (subject to customary ordinary
course exceptions) by the Company or any
subsidiary of the Company, subject, in
the case of clauses (ii) and (iii) only,
to the required prior repayment of any
amount outstanding under the Credit
Facilities, in each case at 100% of the
principal amount of the Interim Loans
repaid, plus accrued fees and all
accrued and unpaid interest and fees to
the date of the repayment.
CHANGE OF CONTROL..............Each holder of Interim Loans will be
entitled to require the Company, and the
Company must offer, to repay the Interim
Loans held by such holder at a price of
101% of principal amount, plus accrued
fees and all accrued and unpaid interest
to the date of repayment, upon the
occurrence of a Change of Control (as
defined in the Interim Loan Agreement).
Page 52
OPTIONAL REPAYMENT............. The Interim Loans may be repaid, in
whole or in part on a pro rata basis, at
the option of the Company at any time
upon five business days' prior written
notice at a price equal to 100% of the
principal amount thereof, plus accrued
fees and all accrued and unpaid interest
to the date of repayment.
PAYMENTS....................... Payments by the Company will be made by
wire transfer of immediately available
funds.
TRANSFERABILITY................ With the consent of the Administrative
Agent (which consent shall not be
unreasonably withheld) (other than in
the case of transfers or sales to
Permitted Assignees pursuant to which no
consent is required), each of the
Interim Lenders will be free to sell or
transfer all or any part of its Interim
Loans to any third party and to pledge
any or all
Page 53
of the Interim Loans to any commercial
bank or other institutional lender.
Participations will not require the
consent of the Company or the
Administrative Agent.
AMENDMENTS..................... Modifications to the terms of the
Interim Loan Agreement may be made with
the consent of the holders of a majority
in aggregate principal amount of the
Interim Loans then outstanding, except
that without the consent of each holder
of Interim Loans affected thereby, no
modification or change may (i) extend
the maturity or time of payment of
interest of any Interim Loans, (ii)
reduce the rate of interest or the
principal amount of any Interim Loans,
(iii) alter the repayment provisions of
the Interim Loans, (iv) change the
subordination provisions in a manner
that would adversely affect the holders
of the Interim Loans
Page 54
or (v) reduce the percentage of holders
necessary to modify or change the
Interim Loans.
COST AND YIELD PROTECTION...... The Interim Lenders shall receive cost
and yield protection customary for
facilities and transactions of this
type, including but not limited to
breakage costs incurred in connection
with any repayment of the Interim Loans
on a day other than the last day of an
interest period, compensation in respect
of prepayments, taxes (including but not
limited to gross-up provisions for
withholding taxes imposed by any
domestic or foreign governmental
authority, including taxes relating to
gross-up payments), changes in capital
requirements, guidelines or policies or
their interpretation or application,
illegality, change in circumstances,
reserves and other provisions deemed
necessary by
Page 55
the Interim Lenders to provide customary
protection for U.S. and non-U.S.
financial institutions.
REPRESENTATIONS AND
WARRANTIES................... The Interim Loan Agreement will contain
such representations and warranties of
the Company and the Guarantors as are
customary for financings of this kind or
deemed appropriate by the Interim
Lenders for this transaction in
particular (in their sole discretion).
COVENANTS...................... The Interim Loan Agreement will contain
such covenants of the Company and the
Guarantors as are usual and customary
for financings of this kind or as are
otherwise deemed appropriate by the
Interim Lenders for this transaction in
particular (in their sole discretion).
CONDITIONS PRECEDENT........... The obligation of each of the Interim
Lenders to provide or
Page 56
cause one of its affiliates to provide
the Interim Loans will be subject to the
conditions set forth on Annex C to the
Commitment Letter.
EVENTS OF DEFAULT; REMEDIES.... The Interim Loan Agreement will contain
such events of default as are customary
for financings of this kind or deemed
appropriate by the Interim Lenders for
this transaction in particular (in their
sole discretion), including, without
limitation, compliance with the Interim
Loan Fee Letter. If the Company or the
Sponsor fails to comply with the
provisions of the Interim Loan Fee
Letter in any material respect at any
time, then the Interim Lenders shall be
entitled to unilaterally amend the
provisions of the Interim Agreement (and
related documents) relating to interest
rate, optional redemption, maturity, the
issuance of warrants
Page 57
and registration rights so as to reflect
the terms of the High Yield Securities
and warrants that would have been issued
in accordance with the Interim Loan Fee
Letter had the Company and the Sponsor
complied therewith.
GOVERNING LAW.................. State of New York.
INTERIM LENDERS' COUNSEL....... Xxxxxx & Xxxxxxx.
ANNEX B-I
---------
SUMMARY OF TERMS OF TERM LOANS AND EXCHANGE NOTES
-------------------------------------------------
Capitalized terms used but not defined herein have the meanings assigned to
them in the Commitment Letter to which this Annex B-I is attached.
COMPANY........................ The Company.
TERM LOANS..................... On the Maturity Date, subject to
satisfaction of the conditions set forth
below, the outstanding Interim Loans
will be automatically extended into Term
Loans. The Term Loans will be governed
by the provisions of the Interim Loan
Page 58
Agreement and, except as expressly
set forth below, shall have the same
terms as the Interim Loans.
EXCHANGE NOTES................. At any time on or after the Maturity
Date, a holder of Term Loans may
exchange, in connection with the
transfer of a Term Loan to any person
other than a person who was an Interim
Lender on the Maturity Date and with the
consent of the Administrative Agent, all
or a portion of the Term Loans to be
transferred for Exchange Notes having a
principal amount equal to the principal
amount of the Term Loan for which it is
exchanged and having a fixed interest
rate equal to the interest rate on the
Term Loan at the time of transfer.
The Company will issue Exchange Notes
under an indenture that complies with
the Trust Indenture Act of 1939, as
amended (the "INDENTURE"). The Company
Page 59
will appoint a trustee reasonably
acceptable to the Administrative Agent.
The Exchange Notes and the Indenture
will be fully executed and deposited
into escrow on the Closing Date.
MATURITY....................... The Term Loans and the Exchange Notes
will mature on the ninth anniversary of
the Maturity Date (the "FINAL RISK
MATURITY DATE").
CONDITIONS PRECEDENT........... The obligation of each of the Interim
Lenders to convert the Interim Loans to
Term Loans will be subject to the
following conditions:
1. No Defaults. No event of default,
or event which with the giving of
notice or the lapse of time, or
both, would become an Event of
Default shall have occurred and be
continuing under the Interim Loan
Agreement, the Engagement
Page 60
Letter, the Fee Letter or any other document
executed in connection therewith
(collectively, the "INTERIM LOAN
DOCUMENTATION") and no payment default shall
have occurred and be continuing under the
Credit Facilities.
2. Payment of Fees and Accrued
Interest. The Company shall have
paid in immediately available funds
all accrued and unpaid interest
with respect to the Interim Loans
and all fees then due and owing,
in accordance with the terms of
the Interim Loan Documentation.
3. Shelf Registration. The Shelf
Registration Statement (as
defined under the heading
"Registration Rights" below)
with respect to the Exchange
Notes shall have been
Page 61
filed with the Securities and Exchange
Commission.
INTEREST RATE.................. The Term Loans will bear interest at an
increasing rate equal to the Initial
Rollover Rate plus the Rollover Spread
(as defined below). The interest rate on
the Term Loans in effect at any time
shall not exceed 18% per annum or be
less than 13.5% per annum. To the extent
interest payable on the Term Loans on
any quarterly interest payment date is
at a rate that exceeds 14% per annum,
the Company shall have the option to pay
such excess interest by capitalizing
such interest as additional Term Loans.
Notwithstanding the limitations set
forth in this paragraph, interest will
accrue on any overdue amount (whether
interest or principal, including
defaulted interest), to the extent
lawful, at a rate per annum equal to 200
basis points
Page 62
over the then current interest rate,
until such amount (plus all accrued and
unpaid interest) is paid in full.
"INITIAL ROLLOVER RATE" shall be
determined as of the Maturity Date of
the Interim Loans and shall equal the
interest rate borue by the Interim Loans
on the day immediately preceding the
Maturity Date.
"ROLLOVER SPREAD" shall be 50 basis
points during the 90-day period
commencing on the Maturity Date. The
Rollover Spread shall increase by 50
basis points upon each 90-day
anniversary of the Maturity Date.
Interest on the Term Loans and Exchange
Notes will be payable quarterly in
arrears on the first business day of
each fiscal quarter of the Company, on
the Maturity Date of the Term Loans and
Exchange
Page 63
Notes and on the date of any prepayment
thereof.
SUBORDINATION.................. Same as Interim Loans.
GUARANTEES..................... Same as Interim Loans.
MANDATORY REPAYMENT............ Same as Interim Loans.
CHANGE OF CONTROL.............. Same as Interim Loans.
OPTIONAL REPAYMENT............. Except as set forth below, the Term
Loans may be repaid or redeemed, in
whole or in part, at the option of
the Company at any time upon five
business days' prior written notice
at a price equal to 100% of the
principal amount thereof, plus
accrued fees and all accrued and
unpaid interest to the date of
repayment.
The Exchange Notes will be redeemable at
any time, in whole or in part, at the
option of the Company, subject to a
customary make-whole premium of
treasuries plus 50 basis points.
YIELD PROTECTION............... Same as Interim Loans.
PAYMENTS....................... Same as Interim Loans.
Page 64
COVENANTS...................... Same as Interim Loans, in the case of
the Term Loans. The Exchange Notes will
have covenants customary for an
indenture governing a high yield senior
subordinated note issue (but more
restrictive in certain respects, as
determined by the Administrative Agent
in its sole discretion).
EVENTS OF DEFAULT.............. Same as Interim Loans, in the case of
the Term Loans. The Exchange Notes will
have events of default that are
customary for an indenture governing a
high yield senior subordinated note
issue (but more restrictive in certain
respects, as determined by the
Administrative Agent in its sole
discretion).
TRANSFERABILITY................ Unlimited except as otherwise provided
by law.
DEFEASANCE PROVISIONS.......... None with respect to Term Loans. The
Exchange Notes will have defeasance
provisions customary for high yield
securities.
Page 65
AMENDMENTS..................... Same as Interim Loans.
REGISTRATION RIGHTS............ Prior to the Maturity Date, the Company
will be required to file a shelf
registration statement with respect to
the Exchange Notes (a "SHELF
REGISTRATION STATEMENT"). The filing of
the Shelf Registration Statement will be
a condition precedent to the extension
of Interim Loans to Term Loans. The
Company and the Guarantors, jointly and
severally, will pay liquidated damages
in the form of increased interest of 50
basis points on the principal amount of
Exchange Notes outstanding to holders of
Exchange Notes (i) if the Shelf
Registration Statement is not declared
effective by the SEC within 60 days of
the Maturity Date, until such Shelf
Registration Statement is declared
effective, and (ii) during any period of
time (subject to
Page 66
customary exceptions) following the
effectiveness of the Shelf Registration
Statement that such Shelf Registration
Statement is not available for sales
thereunder. After 12 weeks, the
liquidated damages shall increase by 50
basis points, and shall increase by 50
basis points for each 12 week period
thereafter to a maximum increase in
interest of 200 basis points (such
damages to be payable in the form of
additional Exchange Notes, if the
interest rate thereon exceeds 14% per
annum). In addition, unless and until
the Company has caused the Shelf
Registration Statement to become
effective, the holders of the Exchange
Notes will have the right to
"piggy-back" in the registration of any
debt or preferred equity securities
(subject to customary scale-back
provisions) that are
registered by the Company (other
than on a Form S-4) unless all the
Exchange Notes will be redeemed or
repaid from the proceeds of such
securities. The Company will be required
to effect an "A/B" exchange offer to all
holders of Exchange Notes within 60 days
of the issuance of the Exchange Notes if
the holders of a majority in principal
amount of the Exchange Notes then
outstanding so request.
Page 67
EXHIBIT C TO COMMITMENT LETTER
------------------------------
FUNDING CONDITIONS
------------------
Capitalized terms used but not defined herein have the meanings assigned to them
in the Commitment Letter to which this Exhibit C is attached and of which it
forms a part. The availability of the Interim Loans and the Credit Facilities is
conditioned upon satisfaction of, among other things, the conditions precedent
summarized below (the date upon which all such conditions precedent shall be
satisfied and the Interim Loans and Credit Facilities will be funded, the
"CLOSING DATE") on or before November 30, 1999.
(a) Each Credit Party shall have executed and delivered definitive
Page 68
financing documentation with respect to the Interim Loans and the Credit
Facilities in form and substance satisfactory to the Lenders containing the
terms and conditions described herein and other terms and conditions
customary for similar transactions and the conditions thereto shall have
been satisfied, including lien searches, solvency opinions, environmental
reports and legal opinions.
(b) There shall not exist (pro forma for the Acquisition and the financing
thereof) any default or event of default under the Credit Facilities, the
Interim Loan Agreement or under any other material indebtedness or
agreement of the Company or the Acquired Business.
(c) The Company shall have received (i) up to $47.2 million in cash or
contributed capital from the issuance or retention of its equity
securities to the Sponsor, its affiliates, or by members of the
management of the Acquired Business and (ii) and shall have issued
$28.0 million of its preferred stock, in each case, on terms
satisfactory to the Lenders it being understood that the terms and
conditions on Exhibit A to the Sponsor's bid letter dated April 30,
1999 are satisfactory. The capital structure of each Credit Party
after the Acquisition shall be as described in the Commitment Letter.
(d) The Acquisition shall have been consummated for an aggregate purchase price
not exceeding $372.0 million (including fees and expenses not exceeding
$23.0 million in the aggregate) pursuant to documentation satisfactory to
the Lenders, and no provision thereof shall have been
Page 69
waived, amended, supplemented or otherwise modified.
(e) The Sponsor and the Company shall have complied with all of their
obligations under and agreements in the Commitment Letter, the Engagement
Letter and the Fee Letters, including without limitation, their obligations
with respect to the marketing of High Yield Securities.
(f) There shall not have occurred or become known to the Lenders any
event, development or circumstance that has caused or could reasonably
be expected to cause a material adverse condition or material adverse
change in or affecting (i) the Acquisition, (ii) the condition
(financial or otherwise), results of operation, assets, liabilities,
management, prospects or value of the Company and its subsidiaries,
taken as a whole, or the Acquired Business and its subsidiaries, taken
as a whole, or that calls into question in any material respect the
projections previously supplied to the Lenders or any of the material
assumptions on which the projections were prepared or (iii) the
validity or enforceability of any of the Credit Documentation or the
documents relating to the Interim Loans or the rights and remedies of
the Administrative Agent and the Lenders thereunder.
(g) There shall not have occurred any material adverse change, as
determined by the Lenders in their sole discretion, in the financial
or capital markets generally, or in the markets for bank loan or
bridge loan syndication, or high yield debt in particular or affecting
the syndication or funding of bank loans or bridge loans (or the
Page 70
refinancing thereof) that may have a material adverse impact on the
ability to sell or place the Notes or the High Yield Securities or to
syndicate the Credit Facilities or the Interim Loans.
(h) All governmental and third party approvals (including landlords' and
other consents) necessary or, in the discretion of the Administrative
Agent, advisable in connection with the Acquisition, the financing
contemplated hereby and the continuing operations of the Company and
its subsidiaries shall have been obtained and be in full force and
effect, and all applicable waiting periods shall have expired without
any action being taken or threatened by any competent authority that
would restrain, prevent or otherwise impose adverse conditions on the
Acquisition or the financing thereof.
(i) The Lenders shall have received audited and unaudited financial
statements of the Company, the Guarantors and the Acquired Business
and all other completed or probable acquisitions (including pro forma
financial statements) meeting the requirements of Regulation S-X for a
form S-1 registration statement under the Securities Act of 1933, as
amended, including an audit of the twelve months ended June 30, 1999
of the Acquired Business, and all such financial statements shall be
satisfactory in form to the Lenders.
Page 71
