June 17, 2009 Haights Cross Operating Company Haights Cross Communications, Inc.
Exhibit
10.30
June 17,
2009
Haights
Cross Operating Company
Haights
Cross Communications, Inc.
00 Xxx
Xxxx Xxxxxx
Xxxxx
Xxxxxx, XX 00000
Attn: Xx.
Xxxx Xxxxxx
President
and Chief Executive Officer
Dear Xx.
Xxxxxx:
Reference
is made (i) to the Credit Agreement dated as of August 15, 2008, as amended (the
“Existing Credit
Agreement”) among Haights Cross Operating Company (“you” or the “Company”), Haights
Cross Communications, Inc. (“Holdings”), the other
guarantors party thereto from time to time (collectively with Holdings, the
“Guarantors”),
the lenders party thereto from time to time, and DDJ Capital Management, LLC, as
administrative agent and collateral agent for such lenders (“DDJ” or the “Agent”), and (ii) to
the Fourth Forbearance Agreement and Amendment No. 1 to Credit Agreement dated
as of May 7, 2009, as amended, including, without limitation, as amended by that
certain Letter Agreement dated as of June 5, 2009, each by and among the
Company, the Guarantors, the Agent and the lenders party
thereto. Attached as Exhibit A hereto is a
term sheet dated the date hereof (the “Term Sheet”)
describing the terms of a proposed restructuring of certain obligations of the
Company, Holdings and the other Guarantors, including, without limitation, the
obligations of the Company, Holdings and the other Guarantors under the Existing
Credit Agreement (the “Restructuring”). This
letter is referred to herein as this “Commitment
Letter.” Each capitalized term used but not defined herein has
the meaning assigned to such term in the Term Sheet.
Subject
to the terms and conditions set forth below and in the Term Sheet, DDJ, on
behalf of certain funds and/or accounts managed and/or advised by it
(collectively, the “DDJ Lenders”), and
Regiment Capital Special Situations Fund IV, L.P. (“Regiment” and
together with the DDJ Lenders, each a “Lender” and
collectively, the “Lenders”), hereby
commit to enter into an Amended and Restated Credit Agreement with the Company,
Holdings and the other Guarantors providing for $55,862,000 aggregate principal
amount of first-out term A loans (the “Term A Loans”), and
$56,818,000 aggregate principal amount of last-out term B loans (the “Term B
Loans”). In connection therewith, in addition to all other
conditions precedent set forth herein and in the Term Sheet, the commitment of
the Agent and each Lender to enter into the Amended and Restated Credit
Agreement on the Effective Date is subject to the following conditions, each of
which shall be satisfied on or before the Effective Date: (i) the
Company shall have made the Term Loan Paydown (as set forth in the Term Sheet)
to the Paydown Lenders (as set forth in the Term Sheet), (ii) the Company shall
have repurchased from the Noteholder Lenders $27,475,000 principal amount of
Senior Notes (the “Repurchase”) for the
Repurchase Consideration described in the Term Sheet, and (iii) Holdings shall
have consummated the offer to exchange shares of common stock of Holdings for
Discount Notes (the “Exchange Offer”) in
accordance with the terms of Holdings’ Private Offer to Exchange and Consent
Solicitation dated June 8, 2009 and the related exchange and amendment documents
described therein (the “Exchange Offer
Documents”). In connection with the closing of the
Restructuring: (x) each Paydown Lender agrees to accept the portion
of the Term Loan Paydown allocated to such Paydown Lender as described in the
Term Sheet;
Haights
Cross Restructuring Commitment Letter
Haights
Cross Operating Company
June 17,
2009
Page
2
(y) the
Noteholder Lenders agree to sell to the Company $27,475,000 principal amount of
Senior Notes for the Repurchase Consideration described in the Term Sheet; and
(z) each Lender consents to the consummation by Holdings of the Exchange Offer
provided that (A) not less than 90% of the Discount Notes (or such lesser
percentage as may be approved in writing by the Agent and each Lender, in each
case, in its sole discretion) are tendered pursuant to the Exchange Offer and
(B) there are no amendments, modifications or waivers with respect to the terms
of the Exchange Offer as set forth in the Exchange Offer Documents, other than
such amendments, modifications or waivers as may be approved in writing by the
Agent and each Lender, in each case, in its reasonable
discretion. Notwithstanding anything to the contrary set forth
herein, Holdings, the Company and each Lender hereby acknowledges that each of
Crystal Capital Onshore Warehouse LLC and Crystal Capital Fund, L.P.
(collectively, the “Crystal Entities”)
are not committing to enter into the Amended and Restated Credit Agreement or
any of the other Definitive Restructuring Transaction Documents (as defined
below), and are each executing this Commitment Letter solely to evidence the
agreement of each such Crystal Entity to accept its respective allocation of the
Term Loan Paydown as set forth in the Term Sheet.
This
Commitment Letter and the Term Sheet are not meant to be, and shall not be
construed as, an attempt to define all of the terms and conditions of the
Restructuring Transactions (as defined below), which terms and conditions shall
be set forth in the definitive documents to be agreed upon by the Company, the
Agent and each Lender in accordance with the terms and conditions set forth in
this Commitment Letter and the Term Sheet (the “Definitive Restructuring
Transaction Documents”). The Restructuring, the establishment
of the Term A Loans and the Term B Loans, the Term Loan Paydown, the Repurchase,
the Exchange Offer and all related transactions are collectively referred to
herein as the “Restructuring
Transactions”. For the avoidance of doubt, the obligations of
each Lender and each Crystal Entity hereunder and under the Definitive
Restructuring Transaction Documents are several and not joint such that no
Lender, nor any Crystal Entity, shall be liable to you or any other Person for
the failure of the Agent, any Lender or any Crystal Entity to fulfill any of its
obligations under this Commitment Letter.
The
obligations of the Agent and each Lender to enter into the Definitive
Restructuring Transaction Documents and consummate the Restructuring
Transactions shall be subject to each of the conditions set forth in the Term
Sheet and in the Definitive Restructuring Transaction Documents (provided that
the conditions set forth in the Definitive Restructuring Transaction Documents
shall not be inconsistent with or materially more burdensome than the conditions
to closing contemplated herein and in the Term
Sheet). Notwithstanding anything to the contrary contained in this
Commitment Letter, it shall be a condition to the Company’s, Holdings’, each
Guarantor’s and each Lender’s entering into the Definitive Restructuring
Transaction Documents that the Company, Holdings, each Guarantor, Agent and each
Lender shall have entered into the Definitive Restructuring Transaction
Documents.
As
consideration for the commitments and agreements of the Lenders and the Crystal
Entities hereunder, you agree to cause to be paid the fees described in the Term
Sheet when due and payable in accordance with the Term Sheet. The Commitment Fee due any Lender or either Crystal Entity shall be
refundable in the event that such Lender
or such Crystal Entity shall breach its obligations under this Commitment
Letter in bad faith.
Haights
Cross Restructuring Commitment Letter
Haights
Cross Operating Company
June 17,
2009
Page
3
By
acceptance of this Commitment Letter, the Company agrees to reimburse and pay
all reasonable and documented out-of-pocket fees and expenses (including
reasonable fees, time charges and expenses of attorneys for each Lender, each
Crystal Entity and the Agent) incurred by each Lender, each Crystal Entity, the
Agent and their outside legal advisors before or after the date hereof in
connection with the Restructuring Transactions, whether or not the Restructuring
Transactions are consummated and irrespective of whether or not this Commitment
Letter expires in accordance with its terms (as set forth below), including
without limitation, those reasonable fees and expenses incurred in connection
with the preparation, negotiation, execution and enforcement of this Commitment
Letter, the Term Sheet, the Definitive Restructuring Transaction Documents and
any other documentation contemplated hereby or thereby. Fees and
expenses incurred after the date of execution and delivery of the Definitive
Restructuring Transaction Documents shall be reimbursable by the Company as set
forth in the Definitive Restructuring Transaction Documents.
The
Company agrees, whether or not the Restructuring Transactions are consummated
and irrespective of whether or not this letter expires in accordance with its
terms (as set forth below), to indemnify and hold harmless the Agent, each
Lender, each Crystal Entity and each of their respective affiliates (including
affiliated funds), directors, partners, members, officers, employees, advisers,
managers and agents (each an “Indemnified Party”)
from and against (and will reimburse each Indemnified Party upon demand
accompanied by an invoice) any and all losses, claims, damages, liabilities and
reasonable and documented out-of-pocket costs and expenses (including without
limitation, all reasonable and documented fees and expenses of counsel for such
Indemnified Party) that are actually incurred by or awarded against any
Indemnified Party (collectively, the “Claims”), in each
case arising out of or in connection with this Commitment Letter, the Term
Sheet, and the Restructuring Transactions or any related transaction, except
(i) for any Claims that are solely among
Indemnified Parties; and (ii) to the extent that, as to any Indemnified
Party, such Claims are found in a final judgment by a court of competent
jurisdiction to have resulted primarily from such Indemnified Party’s own gross
negligence or willful misconduct or bad faith. In the case of any
investigation, litigation or proceeding to which the indemnity in this paragraph
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by any Loan Party, its shareholders or its
creditors or an Indemnified Party and whether or not the Restructuring
Transactions are consummated. One or more of the Indemnified Parties
will promptly notify the Company upon receipt of written notice of any Claims or
threat to institute a Claim (provided, however, that the failure to so notify
the Company shall not relieve the Company from any obligation or liability
except to the extent the Company is actually materially prejudiced by such
failure). If and to the extent the foregoing obligations are
unenforceable for any reason or are insufficient to hold any Indemnified Party
fully indemnified, the Company agrees to make the maximum contribution to the
payment and satisfaction of such obligations that is permissible under
applicable law. The Company further agrees that no Indemnified Party
shall have any liability to it or any of its subsidiaries on any theory of
liability for any special, indirect, consequential or punitive damages arising
out of, or in any way related to, or in connection with the Commitment Letter,
the Term Sheet and the Restructuring Transactions.
Haights
Cross Restructuring Commitment Letter
Haights
Cross Operating Company
June 17,
2009
Page
4
This
Commitment Letter is issued solely to the Company and may not be assigned or
otherwise transferred to, or enforced by, any other person without the prior
written consent of the Agent and each Lender. This Commitment Letter
(including the Term Sheet) may not be disclosed by Company to any person other
than: (i) to Company’s officers, directors, shareholders, employees,
legal and financial advisors or affiliates, in each case, to whom Company deems
it reasonably necessary to disclose this Commitment Letter (and/or the Term
Sheet) for the purpose of evaluating and consummating the Restructuring
Transactions; (ii) to Monarch Alternative Capital, L.P. (“Monarch”) and its
legal advisors to the extent reasonably necessary to disclose this Commitment
Letter (and/or the Term Sheet) for the purpose of permitting Monarch to evaluate
the Restructuring Transactions; and/or (iii) as required for compliance with
applicable disclosure obligations pursuant to Company’s Securities and Exchange
Commission Filings or applicable law. Further, any party to whom this
Commitment Letter (and/or the Term Sheet) is disclosed (including, without
limitation, Monarch) must also agree to be bound by the disclosure limitations
described herein and shall be specifically prohibited from using this Commitment
Letter (and/or the Term Sheet) for soliciting or engaging in discussions
(unsolicited or otherwise) involving any alternative transaction of any kind
other than the transaction contemplated herein.
The
Agent, the Lenders and the Crystal Entities agree that this Commitment Letter
(including the Term Sheet) is for confidential use and may not be disclosed to
any other person without the prior written consent of the Company other than to
their respective members, officers, directors, shareholders, employees, legal
and financial advisors or affiliates, in each case, to whom the Agent, the
Lenders or the Crystal Entities deem it reasonably necessary to disclose this
Commitment Letter (and/or Term Sheet) or as required for compliance with
applicable law. Further, any party to whom this Commitment Letter
(and/or the Term Sheet) is disclosed by the Agent, the Lenders or the Crystal
Entities must also agree to be bound by the disclosure limitations described
herein.
The terms
of this Commitment Letter (including the Term Sheet) may not be modified or
otherwise changed except pursuant to a written agreement signed by the Agent,
each Lender, each Crystal Entity and the Company. This Commitment
Letter shall be governed by and construed in accordance with the internal laws
of the Commonwealth of Massachusetts. This Commitment Letter may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall constitute one instrument. This Commitment Letter
(including the Term Sheet) sets forth the entire agreement and understanding
between the Company, the Agent, the Lenders and the Crystal Entities and
supersedes all prior agreements and understandings relating to the subject
matter hereof.
The
preceding six paragraphs, and the compensation, reimbursement, indemnification
and confidentiality provisions contained in the Term Sheet and any other
provision herein or therein which by its terms expressly survives the
termination of this Commitment Letter shall remain in full force and effect
regardless of whether the Definitive Restructuring Transaction Documents shall
be executed and delivered and notwithstanding the termination of this Commitment
Letter or the commitments hereunder, provided that upon closing of the
Restructuring Transactions, the indemnification provisions contained herein
shall be superseded by any indemnification set forth in the Definitive
Restructuring Transaction Documents.
Haights
Cross Restructuring Commitment Letter
Haights
Cross Operating Company
June 17,
2009
Page
5
This
Commitment Letter shall expire at 6:00 p.m. eastern daylight time on June 17,
2009, unless on or prior to such time: (i) the Company has executed this
Commitment Letter and has returned it to the Agent (which may be by facsimile
transmission) and (ii) the Agent (or its designees) shall have received the
Retainer (as set forth in the Term Sheet). Thereafter, each Lender’s
commitment to enter into the Definitive Restructuring Transaction Documents, and
each Crystal Entity’s commitment to accept its allocation of the Term Loan
Paydown, in each case on the terms set forth in the Commitment Letter (including
those in the Term Sheet), will automatically expire at 6:00 p.m. eastern
daylight time on July 16, 2009, unless the Definitive Restructuring
Transaction Documents shall have been executed and delivered prior to such
date. In addition, in accordance with the Term Sheet, it is
acknowledged and agreed by the Company that the Company shall pay to the Lenders
and the Crystal Entities (or their designees) the Commitment Fee and the Closing
Fee (as set forth in the Term Sheet) on the dates and in the amounts set forth
in the Term Sheet.
EACH OF
THE COMPANY, THE AGENT, EACH LENDER AND EACH CRYSTAL ENTITY HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF
THIS COMMITMENT LETTER (AND/OR THE TERM SHEET) EXECUTED BY THE COMPANY IN
CONNECTION HEREWITH, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE PERFORMANCE OF
SERVICES HEREUNDER.
Haights
Cross Restructuring Commitment Letter
If this
letter accurately reflects your understanding with respect to the matters set
forth herein, please execute and return the enclosed copy hereof.
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AGENT
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DDJ
CAPITAL MANAGEMENT, LLC, as
administrative
and collateral agent
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By:
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/s/ Xxxxx X. Xxxx |
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Name: Xxxxx
X. Xxxx
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Title: Authorized
Signatory
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By:
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/s/ Xxxxxxxxx X. Xxxxxx |
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Name: Xxxxxxxxx
X. Xxxxxx
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Title: Authorized
Signatory
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Haights
Cross Restructuring Commitment Letter
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CRYSTAL
ENTITIES
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Crystal
Capital Onshore Warehouse LLC
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As
duly authorized: Crystal Capital Fund Management,
L.P.
as designated manager
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By:
Crystal Capital Fund Management GP, LLC, its
General
Partner
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By:
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/s/ Xxxxxxx X. Xxxxxx |
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Name: Xxxxxxx
X. Xxxxxx
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Title:
Managing Director
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Crystal
Capital Fund, L.P.
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By:
Crystal Capital GP, LLC, its General Partner
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By:
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/s/ Xxxxxxx X. Xxxxxx |
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Name: Xxxxxxx
X. Xxxxxx
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Title:
Managing
Director
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Haights
Cross Restructuring Commitment Letter
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LENDERS
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Regiment
Capital Special Situations Fund IV, L.P.
(“Fund”)
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By:
Regiment Capital IV GP, L.P. (“GPLP”),
the
Fund’s General Partner
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By: Regiment
Capital IV GP, LLC,
General
Partner of GPLP
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By:
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/s/ Xxxxxxx Xxxxxx |
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Name:
Xxxxxxx Xxxxxx
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Title:
Managing
Director
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Haights
Cross Restructuring Commitment Letter
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LENDERS
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GMAM
Investment Funds Trust II, for the
account
of the Promark Alternative High
Yield
Bond Fund (Account No. 7M2E)
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By: DDJ
Capital Management, LLC, on behalf
of
GMAM Investment Funds Trust II, for the
account
of the Promark Alternative High Yield
Bond
Fund, in its capacity as investment manager
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By:
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/s/ Xxxxx X. Xxxx |
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Name: Xxxxx
X. Xxxx
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Title: Authorized
Signatory
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By:
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/s/ Xxxxxxxxx X. Xxxxxx |
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Name:
Xxxxxxxxx X. Xxxxxx
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Title: Authorized
Signatory
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GMAM
Investment Funds Trust
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By:
DDJ Capital Management, LLC,
on
behalf of GMAM Investment Funds Trust,
in
its capacity as investment manager
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By:
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/s/ Xxxxx X. Xxxx |
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Name: Xxxxx
X. Xxxx
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Title: Authorized
Signatory
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By:
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/s/ Xxxxxxxxx X. Xxxxxx |
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Name:
Xxxxxxxxx X. Xxxxxx
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Title: Authorized
Signatory
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DDJ
Capital Management Group Trust
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By: DDJ
Capital Management, LLC, as attorney-in-fact
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By:
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/s/ Xxxxx X. Xxxx |
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Name: Xxxxx
X. Xxxx
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Title: Authorized
Signatory
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By:
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/s/ Xxxxxxxxx X. Xxxxxx |
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Name:
Xxxxxxxxx X. Xxxxxx
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Title:
Authorized
Signatory
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Haights
Cross Restructuring Commitment Letter
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LENDERS
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Stichting
Pensioenfonds Hoogovens
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By: DDJ
Capital Management, LLC, on
behalf
of Stichting Pensioenfonds Hoogovens,
in
its capacity as Manager
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By:
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/s/ Xxxxx X. Xxxx |
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Name: Xxxxx
X. Xxxx
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Title: Authorized
Signatory
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By:
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/s/ Xxxxxxxxx X. Xxxxxx |
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Name:
Xxxxxxxxx X. Xxxxxx
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Title: Authorized
Signatory
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DDJ
High Yield Fund
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By:
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DDJ
Capital Management, LLC,
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its
attorney-in-fact
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By:
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/s/ Xxxxx X. Xxxx |
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Name: Xxxxx
X. Xxxx
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Title: Authorized
Signatory
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By:
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/s/ Xxxxxxxxx X. Xxxxxx |
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Name:
Xxxxxxxxx X. Xxxxxx
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Title:
Authorized Signatory
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Caterpillar
Inc. Master Retirement Trust
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By: DDJ
Capital Management, LLC, on behalf
of
Caterpillar Inc. Master Retirement Trust, in
its
capacity as investment manager
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By:
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/s/ Xxxxx X. Xxxx |
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Name: Xxxxx
X. Xxxx
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Title: Authorized
Signatory
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By:
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/s/ Xxxxxxxxx X. Xxxxxx |
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Name:
Xxxxxxxxx X. Xxxxxx
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Title:
Authorized
Signatory
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Haights
Cross Restructuring Commitment Letter
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LENDERS
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X.X.
Xxxxxx Corporation, Inc. Pension Plan Trust
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By: DDJ
Capital Management, LLC, on behalf
of
X.X. Penney Corporation, Inc. Pension Plan
Trust,
in its capacity as investment manager
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By:
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/s/ Xxxxx X. Xxxx |
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Name: Xxxxx
X. Xxxx
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Title: Authorized
Signatory
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By:
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/s/ Xxxxxxxxx X. Xxxxxx |
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Name:
Xxxxxxxxx X. Xxxxxx
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Title: Authorized
Signatory
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Stichting
Bewaarder Interpolis Pensioenen Global High
Yield
Pool
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By: Syntrus
Achmea Asset Management, as asset
manager
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By: DDJ
Capital Management, LLC, as subadviser
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By:
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/s/ Xxxxx X. Xxxx |
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Name: Xxxxx
X. Xxxx
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Title: Authorized
Signatory
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By:
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/s/ Xxxxxxxxx X. Xxxxxx |
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Name:
Xxxxxxxxx X. Xxxxxx
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Title: Authorized
Signatory
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Stichting
Pensioenfonds Metaal en Techniek
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By: DDJ
Capital Management, LLC, in its capacity as
Manager
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By:
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/s/ Xxxxx X. Xxxx |
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Name: Xxxxx
X. Xxxx
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Title: Authorized
Signatory
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By:
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/s/ Xxxxxxxxx X. Xxxxxx |
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Name:
Xxxxxxxxx X. Xxxxxx
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Title: Authorized
Signatory
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Haights
Cross Restructuring Commitment Letter
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LENDERS
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DDJ
Total Return Loan Fund, L.P.
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By: GP
Total Return, LP, its General Partner
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By: GP
Total Return, LLC, its General Partner
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By: DDJ
Capital Management, LLC, Manager
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By:
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/s/ Xxxxx X. Xxxx |
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Name: Xxxxx
X. Xxxx
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Title: Authorized
Signatory
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By:
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/s/ Xxxxxxxxx X. Xxxxxx |
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Name:
Xxxxxxxxx X. Xxxxxx
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Title: Authorized
Signatory
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General
Motors Welfare Benefit Trust (VEBA)
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State
Street Bank and Trust Company, solely in its
capacity
as Trustee for General Motors Welfare Benefit
Trust
(VEBA) as directed by DDJ Capital Management,
LLC,
and not in its individual capacity
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By:
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/s/ Xxxxx X. Xxxxxx |
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Name:
Xxxxx X. Xxxxxx
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Title:
Vice President
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By:
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Name:
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Title:
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Haights
Cross Restructuring Commitment Letter
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ON
JUNE 17, 2009:
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HAIGHTS
CROSS COMMUNICATIONS, INC.
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By:
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/s/ Xxxx X. Xxxxxx |
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Name:
Xxxx X. Xxxxxx
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Title:
President and Chief Executive Officer
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HAIGHTS
CROSS OPERATING COMPANY
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By:
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/s/ Xxxx X. Xxxxxx |
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Name: Xxxx X. Xxxxxx
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Title:
President and Chief Executive
Officer
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Haights
Cross Restructuring Commitment Letter
EXHIBIT
A
See
attached Term Sheet
Haights
Cross Restructuring Commitment Letter
Haights
Cross Operating Company and Haights Cross Communications, Inc.
Restructuring
Transaction Term Sheet
Summary
of Indicative Terms and Conditions
June
17, 2009
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Existing
Debt:
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Credit
Agreement (as amended, the “Credit
Agreement”) dated as of August 15, 2008 by and among Haights Cross
Operating Company, as Borrower, the guarantors party thereto from time to
time, the lenders party thereto from time to time (the “Existing
Lenders”), and DDJ Capital Management, LLC, as Administrative Agent
(the “Agent”). Capitalized
terms used herein without definition shall have the meanings ascribed to
such terms in the Credit Agreement.
The
Indenture (the “Senior Notes
Indenture”) dated as of August 20, 2003 among Haights Cross
Operating Company, as issuer, each of the guarantors party thereto and
Xxxxx Fargo Bank Minnesota, N.A., as trustee (the “Trustee”), with
respect to the 11 ¾% Senior Notes due 2011 (the “Senior
Notes”).
The
Indenture (the “Discount Note
Indenture”) dated as of February 2, 2004 between Haights Cross
Communications, Inc., as issuer, and the Trustee, as trustee, with respect
to the 12 ½% senior discount notes (the “Discount
Notes”).
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Borrower:
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Haights
Cross Operating Company.
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Holdings:
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Haights
Cross Communications, Inc.
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Guarantors:
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Holdings
and all of its direct and indirect domestic
subsidiaries.
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Lenders:
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The
institutions party to the Restructured Loan Documentation (as defined
below) as the continuing lenders thereunder; provided that the “Lenders”
shall not include the Crystal Entities (as described
below).
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Effective
Date:
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The
date on which the Restructuring Transactions shall become
effective.
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Documentation
and
Other
Costs:
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Counsel
to the Agent will prepare all documentation and the Borrower will pay all
reasonable legal fees and other expenses of the Lenders, the Agent and the
Crystal Entities regardless of whether the restructuring transactions
contemplated hereby are consummated. Upon execution and delivery of the
Commitment Letter (as defined below), the Borrower will deposit an initial
$75,000 advance deposit (the “Retainer”) with
Agent or its designees to be applied to the fees and expenses payable
under the Commitment Letter. The Borrower shall be responsible
for any fees and expenses payable under the Commitment Letter not covered
by the Retainer; any unused Retainer amounts shall be refunded to the
Borrower. For the avoidance of doubt, the Borrower shall remain
responsible for any fees and expenses payable under the Credit Agreement
and, without duplication, the Restructured Loan
Documentation.
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Haights
Cross Operating Company and Haights Cross Communications, Inc.
Restructuring
Transaction Term Sheet
Summary
of Indicative Terms and Conditions
June
17, 2009
|
Restructuring
Transactions:
|
The
Restructuring Transactions shall include the following components (the
order of the steps to be finalized upon review of counsel to the Borrower
and the Lenders but it is intended that they shall be consummated
substantially simultaneously):
(i)
On the Effective Date, the Borrower shall make a $17,500,000 cash
principal payment (the “Term
Loan Paydown”)
in respect of the existing term loans; thereby reducing the aggregate
principal balance of the existing term loans from $108,200,000 to
$90,700,000. The Term Loan Paydown shall be allocated to
certain of the Existing Lenders (the “Paydown
Lenders”) as described below:
a.
$12,500,000 shall be remitted to Crystal Capital Onshore Warehouse LLC and
Crystal Capital Fund, L.P. (the “Crystal
Entities”), to fully repay the existing term loans held by the
Crystal Entities;
b.
$4,107,653.38 shall be remitted to Regiment Capital Special Situations
Fund IV, L.P. (“Regiment”),
to reduce the principal balance of the existing term loans held by
Regiment from $50,000,000 to $45,892,346.62; and
c.
$892,346.62 shall be remitted to certain Existing Lenders that are managed
and/or advised by DDJ Capital Management, LLC and that do not hold Senior
Notes (the “DDJ
Non-NoteholderEntities”),
to reduce the aggregate principal balance of the existing term loans held
by the DDJ Non-Noteholder Entities from $10,862,000 to
$9,969,653.38.
The
Paydown Lenders reserve the right to reallocate the Term Loan Paydown
among the Paydown Lenders in such manner as shall be agreed upon by each
Paydown Lender, in its discretion; provided that (x) the Borrower shall
not have the right to object to any reallocation of the Term Loan Paydown
among the Paydown Lenders, (y) the aggregate amount of the Term Loan
Paydown shall not exceed $17,500,000, and (z) each Paydown Lender agrees
that, in the event the Paydown Lender’s do not reach mutual agreement
regarding any proposed reallocation of the Term Loan Paydown, each Paydown
Lender shall accept its respective allocation of the Term Loan Paydown as
set forth above.
(ii)
In conjunction with the Term Loan Paydown, on the Effective Date, the
Borrower shall pay to the Existing Lenders all accrued and unpaid interest
on the existing term loans through the Effective Date; provided that the
Existing Lenders agree that upon the effectiveness of the Restructuring
Transactions, (a) the aggregate principal amount of the existing term
loans shall not include the aggregate amount of PIK Payments added to the
principal amount of the existing term loans during the period commencing
on the First Amendment Effective Date and ending on the Effective Date,
and (b) the aggregate amount of such PIK Payments shall be
forgiven.
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Haights
Cross Operating Company and Haights Cross Communications, Inc.
Restructuring
Transaction Term Sheet
Summary
of Indicative Terms and Conditions
June
17, 2009
|
(iii)
On the Effective Date, the Borrower shall repurchase (the “Repurchase”)
100% of the $27,475,000 principal amount of Senior Notes held by certain
of the Existing Lenders (the “Noteholder
Lenders”) at a 20% discount, for aggregate consideration (the
“Repurchase
Consideration”) consisting of interests in $21,980,000 principal
amount of the new Term B Loans described in clause (iv)
below. Immediately prior to the Repurchase, Borrower shall pay
to the Noteholder Lenders cash interest in respect of the Senior Notes
held by the Noteholder Lenders accrued through the date of the
Repurchase.
(iv)
After giving effect to the Term Loan Paydown (x) the $45,892,346.62 of
existing term loans held by Regiment and the $9,969,653.38 of existing
term loans held by the DDJ Non-Noteholder Entities shall be converted into
new first- out term A loans in the aggregate principal amount of
$55,862,000 (the “Term
A
Loans”),
and (y) the $34,838,000 aggregate principal amount of existing term loans
held by the Noteholder Lenders, together with the $21,980,000 of
Repurchase Consideration, shall be converted into new last-out term B
loans in the aggregate principal amount of $56,818,000 (the “Term
B Loans” and together with the Term A Loans, the “Restructured
Term
Loans”), on terms and conditions satisfactory to the Lenders
(including without limitation with respect to voting rights, payments and
prepayments, application of proceeds, purchase options and bankruptcy
rights). The aggregate principal amount of Restructured Term
Loans outstanding after giving effect to the transactions described in
clauses (i)-(iii) above and this clause (iv) shall equal
$112,680,000.
(v)
The Applicable Margin on the Term A Loans shall be equal to
(a) 10.75% per annum with respect to LIBOR Loans (8.75% per annum
cash pay and 2.00% per annum PIK) and (b) 9.50% per annum with respect to
Base Rate Loans (7.50% per annum cash pay and 2.00% per annum
PIK). The Applicable Margin on the Term B Loans shall be equal
to (a) 15.75% per annum with respect to LIBOR Loans (13.75% per annum cash
pay and 2.00% per annum PIK) and (b) 14.50% per annum with respect to Base
Rate Loans (12.50% per annum cash pay and 2.00% per annum
PIK). The LIBOR rate on all Restructured Term Loans shall have
a 3.00% floor and the Base Rate on all Restructured Term Loans shall have
a 5.25% floor, consistent with the existing Credit Agreement.
(vi)
Holdings and the Borrower shall consummate the offer to exchange shares of
common stock of Holdings for Discount Notes (the “Exchange
Offer”) in accordance with the terms of Holdings’ Private Offer to
Exchange and Consent Solicitation dated June 8, 2009 and the related
exchange and amendment documents described therein (collectively, the
“Exchange
Offer Documents”).
No
cash payments of any kind (including any premium or fee) shall be made in
connection with the Exchange Offer or any other restructuring transaction
to the
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Restructuring
Transaction Term Sheet
Summary
of Indicative Terms and Conditions
June
17, 2009
|
holders
of the Discount Notes or the holders of the Senior Notes (in such
capacity) (other than reasonable fees and out of pocket expenses of one
legal counsel to the holders of the Discount Notes).
|
|
|
Credit
Agreement Documentation:
|
The
Credit Agreement shall be amended and restated to reflect the
Restructuring Transactions contemplated hereby, including without
limitation:
●
additional representations, warranties and covenants appropriate to
the Restructuring Transactions;
●
revised financial covenants to be tested quarterly, commencing
September 30, 2009, which revised financial covenants are anticipated
to be substantially as described in Schedule
I hereto, to be calculated in substantially the same manner as in
the existing Credit Agreement, and to include substantially the same
addbacks to EBITDA as those set forth in the existing Credit Agreement,
except that (x) Holdings and its Subsidiaries shall be permitted to
include an additional addback to EBITDA for up to $10,000,000 of
nonrecurring, one time charges and expenses directly related to the
Restructuring Transactions and incurred prior to or within 90 days
following the closing of the Restructuring Transactions; (y) the addback
to EBITDA for nonrecurring, one-time GAAP (and non-GAAP) restructuring (or
restructuring-related) charges incurred during fiscal year 2009 shall be
increased to a total maximum permitted amount of $1,500,000; and (z) the
Secured Leverage Ratio shall be computed without taking into account the
“Cash-on-Hand Amount” and instead the “Secured Leverage Ratio” shall be
redefined to mean, at any date of determination thereof, the ratio of (a)
the aggregate amount of Secured Debt of Holdings and its Subsidiaries as
of such date to (b) Net EBITDA for the period of four consecutive fiscal
quarters ending on or most recently ended prior to such
date;
●
the Credit Parties, taken as a whole, shall be obligated to
maintain at all times a minimum balance of unrestricted cash (“Unrestricted
Cash”) of not less than $6.5 million in the aggregate in accounts
controlled by the Agent and if the aggregate amount of Unrestricted Cash
as of the last Business Day of any week falls below $10 million, the
Borrower shall, thereafter, provide weekly reports to the Lenders setting
forth the aggregate amount of Unrestricted Cash and the accounts in which
such Unrestricted Cash is maintained; and
●
in lieu of and not in addition to any prepayment fee set forth in
the existing Credit Agreement, in the event Borrower elects to prepay any
portion of the Restructured Term Loans prior to April 1, 2011, the
Borrower shall be obligated to pay to the Lenders a prepayment fee equal
in amount to: (a) if the prepayment occurs prior to the six
month anniversary of the Effective Date, 6.875% of the aggregate principal
prepayments made in respect of the Term A Loans and 9.375% of the
aggregate principal prepayments made in respect of the Term B Loans; (b)
if the prepayment occurs after the
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Haights
Cross Operating Company and Haights Cross Communications, Inc.
Restructuring
Transaction Term Sheet
Summary
of Indicative Terms and Conditions
June
17, 2009
|
six
month anniversary of the Effective Date but prior to twelfth month
anniversary of the Effective Date, 4.00% of the aggregate principal
prepayments made in respect of the Term A Loans and the Term B Loans; and
(c) if the prepayment occurs after the twelfth month anniversary of the
Effective Date but prior to April 1, 2011, 1.00% of the aggregate
principal prepayments made in respect of the Term A Loans and the Term B
Loans.
All
other Loan Documents (as defined in the Credit Agreement) shall be
modified as necessary and Borrower, Guarantors and other third parties
reasonably necessary to effectuate the Restructuring Transactions shall
enter into such other documents as are reasonably requested by the Lenders
in connection with the Restructuring Transactions. Except as otherwise
provided for herein, it is anticipated that the terms and provisions of
the Credit Agreement will remain in effect. The amended and restated
Credit Agreement, modified Loan Documents and any additional documents
entered into in connection with the Restructuring Transactions are
hereinafter referred to as the “Restructured Loan
Documentation.”
|
|
|
Commitment
Fee:
|
$550,000
(the “Commitment
Fee”) will be payable to the Existing Lenders pro-rata, based on
the outstanding amounts of the existing term loans prior to the Term Loan
Paydown, which Commitment Fee shall be earned upon co-signing of a binding
commitment letter (the “Commitment
Letter”) with respect to this term sheet, and shall be due and
payable on the earliest to occur of (x) the date on which 90% of the
Discount Notes shall have been tendered for exchange pursuant to the
Exchange Offer, (y) the date on which the Agent, the Lenders and the
Borrower shall have reached substantial agreement on the Restructured Loan
Documentation, or (z) the date on which (i) at least 60% of the Discount
Notes shall have been tendered for exchange pursuant to the Exchange
Offer, and (ii) the Company shall have consummated the exchange and
refinancing transactions either (A) with the consent of the Agent and the
Lenders in their discretion, or (B) with alternative
financing. Once paid, no part of the Commitment Fee shall be
refundable for any reason.
|
|
Closing
Fee:
|
$725,000
(the “Closing
Fee”) will be payable as follows: (i) $175,000 shall be
paid to the Paydown Lenders based on each Paydown Lender’s proportionate
share of the Term Loan Paydown; and (ii) $550,000 shall be paid to the
Lenders (other than to the Noteholder Lenders in respect of the Repurchase
Consideration) based on each such Lender’s proportionate share of the
Restructured Term Loans (other than that portion of the Term B Loans
constituting Repurchase Consideration). The Closing Fee shall
be earned and due and payable upon execution of the Restructured Loan
Documentation. Once earned, no part of the Closing Fee shall be
refundable for any reason.
|
|
Sub-Agent
Amendment Fee:
|
The
Borrower shall be responsible for any fees or expenses charged by the
Agent’s sub-servicer, The Bank of New York Mellon (including reasonable
legal fees) in connection with the transactions contemplated
hereby.
|
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Haights
Cross Operating Company and Haights Cross Communications, Inc.
Restructuring
Transaction Term Sheet
Summary
of Indicative Terms and Conditions
June
17, 2009
|
Restructuring
Transaction Milestone:
|
On
or before July 9, 2009 (the “Milestone
Achievement Date”), holders of not less than 90% of the outstanding
Discount Notes shall have tendered their Discount Notes pursuant to the
Exchange Offer. The Milestone Achievement Date may be modified
with the written consent of the Agent and each Lender.
|
|
Conditions
Precedent To Effectiveness:
|
Prior
to or concurrently with the effectiveness of the Restructuring
Transactions, the following conditions precedent shall have been
satisfied:
o
The Term Loan Paydown and the Repurchase shall have been
consummated (or shall be consummated substantially concurrent with the
effectiveness of the Restructuring Transactions).
o
The Restructured Loan Documentation shall be satisfactory to the
Lenders in their discretion (including specifically with respect to the
relative rights of the holders of Term A Loans and Term B Loans) and duly
executed copies of the Restructured Loan Documentation shall have been
delivered by the Credit Parties.
o
No default or event of default shall exist under the Restructured
Loan Documentation before and after giving effect to the Restructuring
Transactions, except for (i) the defaults or events of default that
constitute the Specified Forbearance Items under and as defined in that
certain Fourth Forbearance Agreement and Amendment No. 1 to Credit
Agreement dated as of May 7, 2009, as amended, including, without
limitation, as amended by that certain Letter Agreement dated as of June
5, 2009, in each case, by and among the Company, the Guarantors, the Agent
and the lenders party thereto, which shall be waived concurrently with the
execution of the Restructured Loan Documentation, and (ii) any other
default or event of default that is waived by the Lenders in writing in
their discretion concurrently with the execution of the Restructured Loan
Documentation.
o
The representations and warranties of each Credit Party under the
Restructured Loan Documentation shall be true and correct in all material
respects immediately prior to, and after giving effect to, the
effectiveness of the Restructuring Transactions, except (i) to the extent
any such representation or warranty is expressly stated to have been made
as of a specific date, in which case such representation or warranty shall
be true and correct in all material respects as of such date, and (ii)
that any representation or warranty that is qualified as to “materiality”
or “Material Adverse Effect” shall be true and correct in all respects,
subject to the materiality qualification contained therein.
o
No material adverse change since December 31, 2008 with respect to
(a) the business, assets, property, condition (financial or other),
results of operations or prospects of the Borrower or the Guarantors
(taken as a whole), (b) the validity or enforceability of any of the
Restructured Loan Documentation or the rights or remedies of the Agent,
the Lenders or the other secured parties thereunder, or (c) the
validity, perfection or priority of the liens upon the Collateral in favor
of the Agent for the benefit of the secured parties, shall have
occurred.
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Haights
Cross Operating Company and Haights Cross Communications, Inc.
Restructuring
Transaction Term Sheet
Summary
of Indicative Terms and Conditions
June
17, 2009
|
o
The effectiveness and consummation of the Restructuring
Transactions and execution and delivery of the Restructured Loan
Documentation will not violate any requirement of law applicable to any
Credit Party, any Lender or Agent or any agreement, indenture, instrument
or other document to which any Credit Party is party or to which its
assets are bound (including without limitation, the Senior Notes Indenture
and the Discount Notes Indenture), and the Restructuring Transactions will
not be enjoined, temporarily, preliminarily or permanently and all
consents and approvals necessary for the effectiveness of the Restructured
Loan Documentation, and the consummation of the transactions contemplated
therein will have been obtained.
o
The Agent and Lenders shall have received all fees and expenses
owed by the Credit Parties in connection with the transactions
contemplated herein that are payable pursuant to the terms of the
Commitment Letter, this Term Sheet or the Credit Agreement.
o
There shall not exist any action, investigation, litigation or
proceeding pending or threatened in writing in any court or before any
arbitrator or governmental authority seeking to enjoin or challenge the
Restructuring Transactions or that could reasonably be expected to have a
material adverse effect on the Credit Parties.
o
The Agent and Lenders shall have received (x) a legal opinion from
Xxxxx Xxxxxxx LLP, counsel to the Credit Parties, with respect to the
Restructuring Transactions and related matters in substantially the form
of the draft opinion dated June 5, 2009 distributed by Xxxxx Xxxxxxx LLP
to counsel for the Agent and the Lenders, and (y) certificates,
organizational documents and other instruments and documents customary for
this type of transaction, including an officer’s solvency certificate,
board resolutions, charter documents, good standing certificates and other
instruments as are necessary in the reasonable discretion of the Agent and
the Lenders.
o
Holdings shall have received a fairness opinion having customary
terms, conditions, assumptions and limitations from Houlihan, Lokey,
Xxxxxx & Xxxxx Financial Advisors, Inc., and the Agent and the Lenders
shall have received evidence reasonably satisfactory to them that the
Restructuring Transactions are fair to Holdings and the
Borrower.
o
The Exchange Offer shall have been completed and at least 90% of
the Discount Notes (or, such lesser percentage of the Discount Notes as
shall have been approved by the Agent and the Lenders in their discretion)
shall have been tendered for exchange pursuant thereto.
o
Such other conditions as are customary for the Restructuring
Transactions or deemed by the Agent or Lenders to be appropriate for this
specific transaction, not inconsistent with those set forth
herein.
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*****
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