Exhibit 99(a)(6)
XXXXXX X. XXX EQUITY FUND IV, L.P.
c/o Xxxxxx X. Xxx Company
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone 000-000-0000
Fax 000-000-0000
October 24, 1999
Big Flower Holdings, Inc.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
RE: XXXXXX XXXXXXXXX FINANCING COMMITMENT
-------------------------------------
Dear Sirs or Madams:
Xxxxxx X. Xxx Company, affiliates of Evercore Capital Partners LP and
certain other equity investors intend to consummate a recapitalization (the
"RECAPITALIZATION") of Big Flower Holdings, Inc. (the "COMPANY") through the
merger of BFH Merger Corp. ("BFH" or "YOU"), an affiliate of Xxxxxx X. Xxx
Company and of Evercore Capital Partners LP, with and into the Company.
You have requested that THL Equity Advisors IV, LLC on behalf of Xxxxxx
X. Xxx Equity Fund IV, L.P. and affiliates (the "THL FUND") commit to provide to
the Company, in connection with the Recapitalization, up to $147.5 million
(which amount will be reduced by up to $47.5 million if the sale of Columbine
JDS Systems, Inc. is consummated pursuant to Section 5.14 of the Amended and
Restated Agreement and Plan of Merger (the "AMENDED AND RESTATED MERGER
AGREEMENT") dated as of October 11, 1999 executed in the form attached hereto)
in mezzanine financing to be made available under the terms and conditions
described below (the "HOLDCO MEZZANINE FINANCING").
THL Fund has delivered to BFH a mezzanine financing commitment letter
dated the date hereof (together with the related fee letter, the "BFH MEZZANINE
LETTER") relating to a possible mezzanine financing (the "BFH MEZZANINE
FINANCING") for BFH. If prior to or simultaneous with the Recapitalization, (i)
BFH, Big Flower Press Holdings, Inc. ("BIG FLOWER PRESS") and/or the Company
shall have commenced a tender offer and consent solicitation (the "DEBT TENDER
OFFER") for the approximately $600 million of existing senior subordinated notes
of Big Flower Press (the "BIG FLOWER PRESS NOTES"), providing for a tender price
and a consent fee to eliminate the restrictive covenants contained therein on
terms reasonably satisfactory to THL Fund, (ii) tenders and consents of the
holders of at least 51% of the outstanding principal
BFH Merger Corp.
October 11, 1999
Page 2
amount of each of the series of the Big Flower Press Notes shall have been
received, and (iii) the Debt Tender offer shall have been consummated, then the
BFH Mezzanine Letter will no longer be of any force and effect. In such case,
this commitment letter will be operative. Under no circumstances, will THL Fund
have the obligation to fund both the BFH Mezzanine Financing and the Holdpco
Mezzanine Financing.
Accordingly, subject to terms and conditions set forth or incorporated
in this letter, THL Fund agree with you as follows.
SECTION 1. HOLDCO MEZZANINE FINANCING. THL Fund hereby commits, subject to the
terms and conditions hereof and in the Summary Term Sheet attached hereto as
Exhibit A (the "TERM SHEET"), to provide to the Company, in connection with the
Recapitalization, up to $147.5 million (which amount will be reduced by up to
$47.5 million if the sale of Columbine JDS Systems, Inc. is consummated pursuant
to Section 5.14 of the Amended and Restated Merger Agreement executed in the
form attached hereto) in mezzanine financing.
SECTION 2. CONDITIONS. The Holdco Mezzanine Financing shall be subject to:
(a) the execution of definitive documentation customary in
financings of this type;
(b) the execution of the Amended and Restated Merger Agreement, to
replace the Agreement and Plan of Merger, dated as of June 29,
1999, to be used to implement the Recapitalization in the form
attached to this commitment (including changes reasonably
acceptable to THL Fund) and satisfaction (and not waiver) of
all conditions set forth therein;
(c) the consummation of the Recapitalization simultaneously with
the making of any Holdco Mezzanine Financing;
(d) the commencement of the Debt Tender Offer prior to or
simultaneous with the Recapitalization;
(e) the receipt of tenders and consents of the holders of at least
51% of the outstanding principal amount of each of the series
of the Big Flower Press Notes;
(f) the consummation of the Debt Tender Offer prior to or
simultaneous with the Recapitalization; and
(g) the simultaneous funding of the financings described in
Schedule 6.02(d) of the Amended and Restated Merger Agreement
in amounts sufficient to
BFH Merger Corp.
October 11, 1999
Page 3
effect the Recapitalization, the other matters described in
ss.6.02(a) of the Amended and Restated Merger Agreement and to
consummate the Debt Tender Offer.
SECTION 3. EXPENSES. If the transactions contemplated by this letter shall be
consummated, the Company shall pay and save THL Fund harmless against any
liability for all reasonable out-of-pocket expenses of THL Fund for attorneys,
accountants and other professional services required in conjunction with (i) the
preparation of this letter, (ii) the "due diligence" process involved in
evaluating the status of the affairs of the Company, (iii) the negotiation,
documenta tion and closing of the transactions contemplated hereby, and (iv) all
related printing, reproduc tion, or similar transactional costs, provided,
however, that the Company shall not be required to pay for such expenses if THL
Fund fails to close this transaction for reasons which are unrelated to the
satisfaction of any of the conditions of this commitment letter in accordance
with the terms hereof.
SECTION 4. INDEMNIFICATION. The Company agrees to indemnify and to hold harmless
THL Fund from and against any and all actions, suits, proceedings (including any
investigations or inquiries), losses, claims, damages, liabilities or expenses
of any kind or nature whatsoever which may be incurred by or asserted against or
involve THL Fund or any of its partners, officers, agents or employees as a
result of or arising out of or in any way related to the transac tions described
in this letter, provided, however, that THL Fund shall not have the right to be
indemnified hereunder for their own gross negligence or willful misconduct as
determined by a court of competent jurisdiction. The Company further agrees to
pay or reimburse to THL Fund upon demand any legal or other expenses incurred by
THL Fund in connection with investigat ing, defending or preparing to defend any
such action, writ, claim or proceeding (including any inquiry or investigation).
The provisions of this Section 4 and the immediately preceding Section 3 are
independent of all other obligations of the Company hereunder and shall survive
termination or expiration of the commitment embodied in this letter.
SECTION 5. TERMINATION DATE. THL Fund's commitment hereunder to provide the
Holdco Mezzanine Financing shall terminate, unless expressly agreed to by THL
Fund in its sole discretion to be extended to another date, on the earlier of
(i) December 31, 1999 if the Recapital ization is not consummated by that date,
(ii) the termination of the Amended and Restated Merger Agreement or (iii) the
replacement of this commitment with other mezzanine financing on terms and
conditions reasonably satisfactory to you from an affiliate of THL Fund. No such
termination of such commitment shall affect your obligations under Sections 3
and 4 hereof or this Section 6, which shall survive any such termination.
SECTION 6. ASSIGNMENT; SYNDICATION. The commitment evidenced by this letter
shall not be assignable by you without THL Fund's prior written consent, and the
granting of such consent in a given instance shall be solely in the discretion
of THL Fund and, if granted, shall not constitute a waiver of this requirement
as to any subsequent assignment. THL Fund may, in its sole
BFH Merger Corp.
October 11, 1999
Page 4
discretion, syndicate the Holdco Mezzanine Financing and its commitment with
respect thereto among its affiliates pursuant to the definitive documentation or
otherwise and to sell, transfer or assign all or any portion of, or interests or
participations in, the Mezzanine Financing and its commitment with respect
thereto to such affiliates.
SECTION 7. MISCELLANEOUS. THIS LETTER SHALL BE GOVERNED BY, AND CON STRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITH OUT REGARD TO THE
PRINCIPLES GOVERNING CONFLICTS OF LAWS, AND ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED
BY THIS COMMITMENT LETTER IS XXXXXX XXXXXX. YOU HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED IN
THE CITY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THIS COMMITMENT
LETTER OR ANY MATTERS CONTEMPLATED HEREBY. This letter (including the provisions
of the Fee Letter dated the date hereof and specifically incorporated herein)
embodies the entire agreement and understanding between you and THL Fund and
supersedes and replaces all prior agreements and understandings.
If this letter is agreeable to you, please so indicate by signing in
the space indicated.
Very truly yours,
[SIGNATURE PAGE FOLLOWS]
XXXXXX X. XXX EQUITY FUND IV, L.P.
By: THL Equity Advisors IV, LLC
eneral Partner
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Managing Director
Accepted and agreed as of October 11, 1999:
BFH MERGER CORP.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
EXHIBIT A
Holdco Mezzanine Financing
Summary Term Sheet
Borrower: Big Flower Holdings, Inc.
Xxxxxx: Xxxxxx X. Xxx Equity Fund IV
Amount: Up to $147.5 million (which amount shall be reduced
by up to $47.5 million upon the consummation of a
sale of Columbine JDS Systems, Inc.)
Maturity: The commitment shall automatically terminate on
December 31, 1999 if no portion of the Holdco
Mezzanine Financing has been funded (other than as a
result of failure of THL Fund to fulfill its
obligations hereunder). Any outstanding amount under
the Holdco Mezzanine Financing will be required to be
repaid on the tenth anniversary of the initial
funding date of the Holdco Mezzanine Financing.
Fees: As provided in the Fee Letter.
Interest Rate: As provided in the Fee Letter.
Ranking: The obligations of the Borrower under the Holdco
Mezzanine Financing will be subordinate to the debt
financings identified on Schedule 6.02(d) of the
Amended and Restated Agreement and Plan of Merger.
Optional
Prepayment: Subject to the restrictions contained in the
documentation of the debt financings identified on
Schedule 6.02(d) of the Amended and Re stated
Agreement and Plan of Merger, the Borrower may repay
the Holdco Mezzanine Financing, in whole or in part,
at any time at a redemption price equal to 100% of
the principal amount thereof plus accrued interest
thereon.
Mandatory
Prepayment: To the extent provided in the documentation of the
debt financings identified on Schedule 6.02(d) of the
Amended and Restated Agree ment and Plan of Merger,
the Borrower shall repay the Holdco Mez zanine
Financing.
Covenants: The Holdco Mezzanine Financing documentation will
contain cus tomary affirmative and negative covenants
with customary and other agreed-upon carve-outs and
exceptions.
Representations and Customary for transactions of this type.
Warranties:
Conditions Precedent: Customary for transactions of this type as set forth
in Section 1 of the Holdco Mezzanine Financing
commitment letter.
Provisions Regarding As provided in the Fee Letter.
Failure to Take-Out
Holdco Mezzanine
Financing:
Events of Default: Customary for transactions of this type, including,
without limitation, payment defaults, covenant
defaults, bankruptcy and insolvency, judgments,
cross-acceleration of and failure to pay at final
maturity other indebtedness aggregating $5 million or
more, subject to, in certain cases, notice and grace
provisions.
Governing Law and The State of New York
Forum:
Assignment: The commitment shall not be assignable without THL
Fund's prior written consent, and the granting of
such consent in a given instance shall be solely in
the discretion of THL Fund and, if granted, shall not
constitute a waiver of this requirement as to any
subsequent assignment.
Syndication Transfer: THL Fund may, in its sole discretion, syndicate the
Holdco Mezza nine Financing and its commitment with
respect thereto among its affiliates pursuant to the
definitive documentation or otherwise and to sell,
transfer or assign all or any portion of, or
interests or participations in, the Holdco Mezzanine
Financing and its commit ment with respect thereto to
such affiliates.
Indemnification and Customary for transactions of this type.
Expense
Reimbursement:
