EXHIBIT 3
THE CHASE MANHATTAN BANK BANKBOSTON, X.X.
XXXXX SECURITIES INC. BANCBOSTON XXXXXXXXX
XXXXXXXX INC.
November 1, 1999
Autocam Corporation
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Senior Secured Credit Facilities
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Commitment Letter
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Aurora Capital Partners II, L.P.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Xxxx Xxxxx
Ladies and Gentlemen:
You have advised The Chase Manhattan Bank ("Chase"), Chase
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Securities Inc. ("CSI"), BancBoston Xxxxxxxxx Xxxxxxxx Inc. ("BRS") and
--- ---
BankBoston, N.A. ("BankBoston") that you intend to establish a company to
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acquire by merger all of the issued and outstanding capital stock (except
certain amounts that may be rolled over or purchased by management, certain
existing shareholders and employees) (the "Acquisition") of Autocam Corporation,
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a Michigan corporation (the "Borrower"). You have also advised us that you
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intend to refinance certain indebtedness of the Borrower (the "Refinancing";
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together with the Acquisition and the transactions related thereto, the
"Transaction"). In that connection, you have requested that (i) CSI agree to
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structure, arrange and syndicate senior secured credit facilities in an
aggregate amount of up to $165,000,000 (the "Facilities"), (ii) Chase severally
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commit to provide 60% and BankBoston severally commit to provide 40% of the
aggregate principal amount of the Facilities and (iii) Chase agree to serve as
administrative agent, BankBoston to serve as syndication agent and BRS to serve
as co-arranger for the Facilities.
CSI is pleased to advise you that it is willing to act as exclusive
advisor, lead arranger and sole book manager for the Facilities. BankBoston is
pleased to advise you that it is willing to act as sole syndication agent for
the Facilities. XXX is pleased to advise you that it is willing to act as co-
arranger for the Facilities.
Furthermore, Chase is pleased to advise you of its several
commitment to provide up to $99,000,000 of the Facilities, and BankBoston is
pleased to advise you of its several commitment to provide up to $66,000,000 of
the Facilities, upon the terms and subject to the conditions set forth or
referred to in this commitment letter (the "Commitment Letter") and in the
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Summary of Terms and Conditions attached hereto as Exhibit A (the "Term Sheet").
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It is agreed that Chase will act as the sole and exclusive
administrative agent, CSI will act as the sole and exclusive advisor, lead
arranger and sole book manager, BRS will act as co-arranger and BankBoston
will act as the sole and exclusive syndication agent, for the Facilities, and
each will, in such capacities, perform the duties and exercise the authority
customarily performed and exercised by them in such roles. You agree that no
other agents, co-agents arrangers, co-arrangers, or syndication agents will be
appointed, no other titles will be awarded and no compensation (other than that
expressly contemplated by the Term Sheet and the Fee Letters referred to below)
will be paid in connection with the Facilities unless you and we shall so agree.
CSI intends to syndicate the Facilities to a group of financial
institutions (together with BankBoston and Chase, the "Lenders") identified by
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CSI and Chase, in consultation with you, BRS and BankBoston. CSI intends to
commence syndication efforts promptly, and you agree actively to assist CSI in
completing a syndication satisfactory to it. Such assistance shall include (a)
your using commercially reasonable efforts to ensure that the syndication
efforts benefit materially from your and the Borrower's respective existing
lending relationships, (b) direct contact between senior management and advisors
of the Borrower and you and the proposed Lenders, (c) assistance in the
preparation of a Confidential Information Memorandum and other marketing
materials to be used in connection with the syndication and (d) the hosting,
with CSI, of one or more meetings of prospective Lenders.
CSI, in consultation with you, BRS and BankBoston, will manage all
aspects of the syndication, including decisions as to the selection of
institutions to be approached and when they will be approached, when their
commitments will be accepted, which institutions will participate, the
allocations of the commitments among the Lenders and the amount and distribution
of fees among the Lenders. To assist CSI in its syndication efforts, you agree
promptly to prepare and provide to CSI and Chase all information with respect to
the Borrower and its subsidiaries, the Acquisition, the Transaction and the
other transactions contemplated hereby, including all financial information and
projections (the "Projections"), as CSI and Chase may reasonably request in
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connection with the arrangement and syndication of the Facilities. You hereby
represent and covenant that (a) all written information other than the
Projections (the "Information") that has been or will be made available to
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Chase, CSI, BRS or BankBoston 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 fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made (taken as a whole) and (b) the Projections that
have been or will be made available to Chase, CSI, BRS or BankBoston 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 Facilities Chase, CSI, BRS and BankBoston may use and rely on the
Information and Projections without independent verification thereof.
As consideration for the commitments of Chase and BankBoston
hereunder and the agreement of CSI and BRS to perform the services described
herein, you agree to pay to Chase and BankBoston the nonrefundable fees set
forth in Annex I to the Term Sheet and in the
Fee Letter and the Administration Fee Letter dated the date hereof and delivered
herewith (the "Fee Letters").
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Chase and CSI shall be entitled, after consultation with you, BRS
and BankBoston, to change the pricing of, and/or reallocate amounts among, or
add or eliminate tranches as facilities under, the Facility if the syndication
has not been completed and if Chase and CSI determine that such changes are
advisable to insure a successful syndication of the Facility; provided the total
amount and Closing Date availability of the Facility remains unchanged. Chase
and BankBoston's commitment hereunder is subject to the agreements in this
paragraph.
The commitments of Chase and BankBoston hereunder and the agreement
of CSI and BRS to perform the services described herein are subject to (a) there
not occurring or becoming known to us any material adverse event, change,
condition or effect related to the financial condition, properties, assets
(including intangible assets), liabilities, business operations or results of
operations of the Borrower and its subsidiaries, taken as a whole, (b) our not
becoming aware after the date hereof of any information or other matter
affecting the Borrower the Transaction or the transactions contemplated hereby
which is inconsistent in a material and adverse manner with any such information
or other matter disclosed to us prior to the date hereof (including without
limitation the Confidential Information Memorandum as modified by the revised
set of financial projections received by Chase prior to the date of this
Commitment Letter), (c) there not having occurred a material disruption of or
material adverse change in financial, banking or capital market conditions that,
in our judgment, could materially impair the syndication of the Facilities, (d)
our satisfaction that prior to and during the syndication of the Facilities
there shall be no competing offering, placement or arrangement of any debt
securities or bank financing by or on behalf of the Borrower or any affiliate
thereof, (e) the negotiation, execution and delivery on or before March 29, 2000
of definitive documentation with respect to the Facilities satisfactory to Chase
and its counsel and (f) the other conditions set forth or referred to in the
Term Sheet. Those matters that are not covered by the provisions hereof and of
the Term Sheet are subject to the approval and agreement of each of Chase, CSI,
BRS, BankBoston and the Borrower.
You agree (a) to indemnify and hold harmless each of Chase, CSI,
BRS, BankBoston their respective affiliates and their respective officers,
directors, employees, advisors, and agents (each, an "indemnified person") from
------------------
and against any and all losses, claims, damages and liabilities to which any
such indemnified person may become subject arising out of or in connection with
this Commitment Letter, the Facilities, the use of the proceeds thereof, the
Transaction or any related transaction 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 any legal or other expenses incurred in connection with
investigating or defending any of the foregoing, provided that the foregoing
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indemnity will not, as to any indemnified person, apply to losses, claims,
damages, liabilities or related expenses to the extent they arise from the
willful misconduct or gross negligence of such indemnified person, and (b) to
reimburse Chase, CSI, BankBoston, BRS and their affiliates on demand for all
reasonable out-of-pocket expenses (including due diligence expenses, syndication
expenses, the fees and expenses of consultants identified to you prior to their
retention by Chase, CSI, BankBoston or BRS, travel expenses, and reasonable
fees, charges and disbursements of counsel) incurred in connection with the
Facilities and any related documentation (including this Commitment Letter, the
Term Sheet, the Fee Letters and the definitive financing documentation)
or the administration, amendment, modification or waiver thereof. No indemnified
person shall be liable for any damages arising from the use by others of
Information or other materials obtained through electronic, telecommunications
or other information transmission systems or for any special, indirect,
consequential or punitive damages in connection with the Facilities.
You acknowledge that each of Chase and BankBoston and their
respective affiliates (the terms "Chase" and "BankBoston" being understood to
refer hereinafter in this paragraph to include such affiliates) 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. Chase and
BankBoston 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 Chase or BankBoston
of services for other companies, and neither Chase nor BankBoston will furnish
any such information to other companies. You also acknowledge that Chase and
BankBoston have 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.
This Commitment Letter shall not be assignable by you without the
prior written consent of Chase, CSI, BRS and BankBoston (and any purported
assignment without such consent shall be null and void), is intended to be
solely for the benefit of the parties hereto and is not intended to confer any
benefits upon, or create any rights in favor of, any person other than the
parties hereto. This Commitment Letter may not be amended or waived except by
an instrument in writing signed by you, Chase, CSI, BRS and BankBoston. This
Commitment Letter may be executed in any number of counterparts, each of which
shall be an original, and all of which, when taken together, shall constitute
one agreement. Delivery of an executed signature page of this Commitment Letter
by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. This Commitment Letter and the Fee Letters are the only
agreements that have been entered into among us with respect to the Facilities
and set forth the entire understanding of the parties with respect thereto. The
terms and conditions of the commitments of Chase and BankBoston hereunder and of
the Facilities are not limited to those set forth herein and in the Term Sheet.
This Commitment Letter shall be governed by, and construed in accordance with,
the laws of the State of New York.
This Commitment Letter is delivered to you on the understanding
that neither this Commitment Letter, the Term Sheet or the Fee Letters nor any
of their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your affiliates, (b) to your officers, agents and
advisors (and those of your affiliates) who are directly involved in the
consideration of this matter, (c) to the Borrower and its majority shareholder
and those of their respective officers, directors, agents and advisors who are
directly involved in the consideration of this matter or (d) as may be compelled
in a judicial or administrative proceeding or as otherwise required by law (in
which case you agree to inform us promptly thereof), provided, that the
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foregoing restrictions shall cease to apply (except in respect of the Fee
Letters and its terms and substance) after this Commitment Letter has been
accepted by you. Chase, CSI, BRS and BankBoston shall hold all non-public
information furnished to them by you in connection with their evaluation of the
proposed Facilities in accordance with their customary procedures for handling
confidential information of this nature and in any event may make disclosures as
required
or requested by any governmental agency or representative thereof or pursuant to
legal process or to their attorneys or auditors.
The compensation, reimbursement, indemnification and
confidentiality provisions contained herein and in the Fee Letters shall remain
in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or the commitments of each of Chase and
BankBoston hereunder; provided, that your obligations under this Commitment
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Letter, other than those arising under the fourth, fifth, sixth and thirteenth
paragraphs hereof, shall automatically terminate and be superseded by the
provisions of the definitive documentation relating to the Facilities upon the
initial funding thereunder, and you shall automatically be released from all
liability in connection therewith at such time.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof and of the Term Sheet and the Fee
Letters by returning to Chase executed counterparts hereof and of the Fee
Letters not later than 5:00 p.m., New York City time, on November 5, 1999. The
commitments of each of Chase and BankBoston and the agreements of CSI and BRS
herein will expire at such time in the event Chase has not received such
executed counterparts in accordance with the immediately preceding sentence.
Chase, CSI, BRS and BankBoston are pleased to have been given the
opportunity to assist you in connection with this important financing.
Very truly yours,
THE CHASE MANHATTAN BANK
By:____________________________
Name:
Title:
CHASE SECURITIES INC.
By:____________________________
Name:
Title:
BANKBOSTON
By:____________________________
Name:
Title:
BANCBOSTON XXXXXXXXX XXXXXXXX INC.
By:_____________________________________
Name:
Title:
Accepted and agreed to
as of the date first
written above by:
AURORA CAPITAL PARTNERS II, L.P.
By:____________________________
Name:
Title:
Appendix A
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SOURCES AND USES
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Sources Uses
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Revolving
Credit Facility $ 500,000/1/ Purchase Price $131,447,700
Term Loan A $ 62,500,000 Refinance Existing Debt $115,060,320/1/
Term Loan B $ 62,500,000 Cash ($ 9,434,248)
Sponsor Preferred Equity $ 37,500,000 Option Proceeds ($ 7,077,723)
Management Preferred Equity $ 20,000,000 Cash to B/S $ 3,951/1/
Sponsor Common Equity $ 37,500,000 Fees and expenses $ 10,500,000
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Management Common Equity $ 20,000,000
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$240,500,000 $240,500,000
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/1/Figures are approximate.
1 Exhibit A
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SENIOR SECURED CREDIT FACILITIES
Summary of Terms and Conditions
November 1, 1999
Aurora Capital Partners II, L.P. ("Aurora") intends to establish a
company (the "Acquisition Corp.") to acquire by merger all of the issued and
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outstanding capital stock (except certain amounts that may be rolled over or
purchased by management, certain existing shareholders and employees) (the
"Acquisition") of Autocam Corporation, a Michigan corporation (the "Borrower").
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Aurora also intends to refinance certain indebtedness of the Borrower (the
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"Refinancing"; together with the Acquisition and the transactions related
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thereto, the "Transaction").
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Parties
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Borrower: Autocam Corporation, a Michigan corporation (the
"Borrower").
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Guarantors: The newly-formed holding company parent of the Borrower
and each of the Borrower's direct and indirect domestic and foreign (with
exceptions to be agreed relating to adverse tax consequences) subsidiaries
(the "Guarantors"; the Borrower and the Guarantors, collectively, the "Loan
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Parties").
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Advisor, Lead Arranger
and Book Manager: Chase Securities Inc. (in such capacity, the "Arranger").
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Administrative Agent: The Chase Manhattan Bank ("Chase" and, in such capacity,
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the "Administrative Agent").
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Collateral Agent: The Chase Manhattan Bank
Syndication Agent: BankBoston, N.A. ("BankBoston" in such capacity, the
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"Syndication Agent")
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Co-Arranger: BancBoston Xxxxxxxxx Xxxxxxxx Inc. ("BRS" in such
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capacity, the "Co-Arranger")
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Lenders: A syndicate of banks, financial institutions and other
entities arranged by the Arranger (collectively, the "Lenders").
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Types and Amounts of Credit Facilities
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2
Term Loan Facilities
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Type and Amount of
Facilities: Term loan facilities (the "Term Loan Facilities") in the
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aggregate principal amount of $125,000,000 (the loans thereunder, the "Term
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Loans") comprising two separate tranches (the Term Loans comprising one
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tranche in the aggregate principal amount of $62,500,000 with a final
maturity on the sixth anniversary of the Closing Date (as defined below), the
"Tranche A Term Loans", and the Term Loans comprising the other tranche in
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the aggregate principal amount of $62,500,000 with a final maturity on the
seventh anniversary of the Closing Date (as defined below), the "Tranche B
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Term Loans").
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Availability: The Term Loans shall be made in a single drawing on the
Closing Date (as defined below).
Amortization: The Tranche A Term Loans shall be repayable in
consecutive quarterly installments commencing with the third quarter-end
following the Closing Date, with final maturity on the date that is six years
after the Closing Date, in the principal amounts set forth below opposite the
quarter-ends following the Closing Date set forth opposite such amount:
Quarter-End Amount
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3 $ 750,000
4 750,000
5 1,250,000
6 1,250,000
7 1,250,000
8 1,250,000
9 2,250,000
10 2,250,000
11 2,500,000
12 2,500,000
13 3,000,000
14 3,000,000
15 3,000,000
16 3,000,000
17 4,250,000
18 4,250,000
19 4,250,000
20 4,250,000
21 4,375,000
22 4,375,000
23 4,375,000
Final Maturity 4,375,000
The Tranche B Term Loans shall be repayable in
consecutive quarterly installments commencing with the
third quarter-end
3
following the Closing Date, with final maturity on the
date that is seven years after the Closing Date, in the
principal amounts set forth below opposite the quarter-
ends following the Closing Date set forth opposite such
amount:
Quarter-ends Amount
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3 $ 250,000
4 250,000
5 250,000
6 250,000
7 250,000
8 250,000
9 250,000
10 250,000
11 250,000
12 250,000
13 250,000
14 250,000
15 250,000
16 250,000
17 250,000
18 250,000
19 250,000
20 250,000
21 6,875,000
22 6,875,000
23 6,875,000
24 6,875,000
25 7,625,000
26 7,625,000
27 7,625,000
Final Maturity 7,625,000
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Purpose: The proceeds of the Term Loans shall be used to
finance the Acquisition, to refinance existing indebtedness of the Borrower
and to pay fees and expenses related to the Transaction.
Working Capital Revolving Facility
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Type and Amount of
Facility: Six-year revolving credit facility (the
"Revolving Facility"; together with the Term Loan Facility, the "Credit
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Facilities") in the amount of $40,000,000 (the loans thereunder, the
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"Revolving Loans"; together with the Term Loans, the "Loans").
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Availability: The Revolving 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 Termination Date"). No
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extensions of credit under the Revolving Facility shall be outstanding on the
Closing Date (except immaterial amounts as contemplated by Appendix A
attached hereto).
Letters of Credit: A portion of the Revolving Facility not in excess
of an amount to be agreed shall be available for the issuance of letters of
credit (the "Letters of Credit") by Chase (in such capacity, the "Issuing
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Lender"). No Letter of Credit shall have an expiration date after the earlier
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of (a) one year after the date of issuance and (b) five business days prior
to the Revolving Termination Date, provided that any Letter of Credit with a
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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
(b) above).
Drawings under any Letter of Credit shall be
reimbursed by the Borrower (whether with its own
funds or with the proceeds of Revolving Loans) on
the same business day. To the extent that the
Borrower does not so reimburse the Issuing
Xxxxxx, the Lenders under the Revolving Facility
shall be irrevocably and unconditionally
obligated to reimburse the Issuing Lender on a
pro rata basis.
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Maturity: The Revolving Termination Date.
Purpose: The proceeds of the Revolving Loans shall be
used for general corporate purposes of the Borrower and its subsidiaries in
the ordinary course of business. The proceeds of the Credit Facilities shall
be used in a manner reasonably consistent with the sources and uses attached
as Appendix A hereto.
Certain Payment Provisions
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Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments and
Commitment Reductions: Loans may be prepaid and commitments may be
reduced by the Borrower in minimum amounts to be agreed upon. Optional
prepayments of the Term Loans
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shall be applied to the tranches and installments thereof ratably based on
the then outstanding amounts thereof and may not be reborrowed.
Mandatory Prepayments and
Commitment Reductions: The following amounts shall be applied to prepay
the Term Loans and permanently reduce the Revolving Facility:
() 50% of the net proceeds of any sale or
issuance of equity or 100% of the net proceeds of
incurrence of certain indebtedness after the
Closing Date by the Borrower or any of its
subsidiaries;
() 100% of the net proceeds of any sale or other
disposition (including as a result of casualty or
condemnation), subject to customary provisions
(including reinvestment period and dollar limit),
to be agreed for reinvestment in replacement
assets, by the Borrower or any of its
subsidiaries of any assets (except for the sale
of inventory in the ordinary course of business
and certain other dispositions to be agreed on);
and
() 75% of excess cash flow (to be defined in a
mutually satisfactory manner) for each fiscal
year of the Borrower (commencing with the fiscal
year in which the Closing Date occurs, for the
period from the Closing Date to the end of such
fiscal year), provided, that the foregoing
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percentage shall be reduced to 50% upon
achievement of a ratio of consolidated total debt
to rolling four-quarter EBITDA to be determined.
All such amounts shall be applied, first, to the
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prepayment of the Term Loans and, second, to the
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permanent reduction of the Revolving Facility.
Each such prepayment of the 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 all or any portion 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. The Revolving
Loans shall be prepaid and the Letters of Credit
shall be cash collateralized or replaced to the
extent such extensions of credit exceed the
amount of the Revolving Facility.
Collateral The obligations of each Loan Party in respect of
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the Credit Facilities, and of the Borrower in
respect of hedging arrangements with Lenders to
be agreed, shall be secured by a perfected first
priority security interest in all of its tangible
and
6
intangible assets (including, without
limitation, trademarks, tradenames and other
intellectual property, accounts receivable,
inventory, property, plant and equipment, cash,
material real property and all of the capital
stock of the Borrower and each of the Borrower's
direct and indirect domestic subsidiaries and 66%
of the capital stock of each of its first-tier
foreign subsidiaries), except 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.
Certain Conditions
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Initial Conditions: The availability of the Credit Facilities shall
be conditioned upon satisfaction of, among other
things, the following conditions precedent (the
date upon which all such conditions precedent
shall be satisfied, the "Closing Date") on or
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before March 29, 2000:
() Each Loan Party shall have executed and
delivered satisfactory definitive financing
documentation with respect to the Credit
Facilities (the "Credit Documentation").
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() The Borrower or Acquisition Corp. shall have
received at least $115,00,000 in cash from the
issuance of its capital stock to Aurora Capital
Group and its affiliates (including funds,
investors in such funds, management and Aurora
Capital Group employees) and in rollover stock
from management, provided that of the
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$115,000,000 in equity, $57,500,000 will be in
the form of PIK preferred stock, newly issued for
cash, with no required payment prior to a date
satisfactory to the Administrative Agent and
$57,500,000 of such equity to be common stock,
newly issued for cash, all on terms and
conditions satisfactory to the Administrative
Agent. The capital structure of each Loan Party
after the Transaction shall be satisfactory in
all respects.
() The Transaction shall have been consummated
for an aggregate consideration price of
approximately $230,000,000 in cash (of which
approximately $115,000,000 shall be the
refinancing of existing indebtedness of the
Borrower) with transaction fees and expenses not
in excess of approximately $10,500,000, pursuant
to documentation (including, without limitation,
the purchase documentation for the Acquisition)
satisfactory to the Administrative Agent, and no
material provision thereof shall have been
waived, amended,
7
supplemented or otherwise modified unless the
Administrative Agent has otherwise agreed, with
waiver of tender offer conditions subject to
Lender voting to be agreed. Any existing credit
facilities and any other indebtedness to be
repaid or refinanced in connection with the
Transaction shall have been fully repaid and
terminated on terms satisfactory to the
Administrative Agent.
() The Lenders, the Administrative Agent, the
Arranger and the Syndication Agent shall have
received all fees required to be paid, and all
expenses for which invoices have been presented,
on or before the Closing Date.
() 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 Transaction, the financing contemplated
hereby and the continuing operations of the
Borrower 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 Transaction or the financing thereof.
() The Lenders shall have received unaudited
interim consolidated financial statements of the
Borrower for each fiscal month and quarterly
period ended subsequent to the date of the latest
financial statements delivered prior to the date
hereof satisfactory in form and not materially
inconsistent with the information and projections
previously provided to the Lenders.
() The Administrative Agent shall have received
the results of a recent lien search in each
relevant jurisdiction with respect to the
Borrower and its subsidiaries, and such search
shall reveal no liens on any of the assets of the
Borrower or its subsidiaries except for liens
permitted by the Credit Documentation or liens to
be discharged on or prior to the Closing Date
pursuant to documentation satisfactory to the
Administrative Agent.
() The Lenders shall have received a solvency
certificate satisfactory to the Administrative
Agent that shall document the solvency of the
Borrower and its subsidiaries after giving effect
to the Transaction and the other transactions
contemplated hereby.
8
(i) The Lenders shall have received
environmental information with respect to the
real property owned or leased by the Borrower and
its subsidiaries previously provided to the
Administrative Agent, and such other appraisals
and/or audits reasonably requested by the
Administrative Agent.
(j) There shall be no pending or, to the
Borrower's knowledge, threatened litigation or
proceedings relating to the Facilities or that
could reasonably be expected to have a material
adverse effect on (a) the Transaction, (b) the
financial condition, properties, assets
(including intangible assets), liabilities,
business operations or results of operations of
the Borrower and its subsidiaries, taken as a
whole or (c) the validity or enforceability of
any of the Credit Documentation or the rights and
remedies of the Administrative Agent and the
Lenders thereunder.
(k) The Administrative Agent shall have received
evidence demonstrating satisfactory management
retention arrangements with respect to Xxxx X.
Xxxxxxx.
(l) The Lenders shall have received such legal
opinions (including opinions (i) from counsel to
the Borrower and its subsidiaries, (ii) delivered
to the purchaser in the Acquisition by counsel to
the Borrower pursuant to the Acquisition,
accompanied by reliance letters in favor of the
Lenders and (iii) from such special and local
counsel as may be required by the Administrative
Agent), documents and other instruments as are
customary for transactions of this type or as
they may reasonably request.
On-Going Conditions: The making of each extension of credit shall be
conditioned upon (a) the accuracy of all representations and warranties in
the Credit Documentation (including, without limitation, the material adverse
change and litigation representations) and (b) 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. As used herein and in the Credit
Documentation a "material adverse change" shall mean any event, change,
condition, or effect that has had or could reasonably be expected to have a
material adverse effect on (a) the Transaction, (b) the financial condition,
properties, assets (including intangible assets), liabilities, business
operations or results of operations of the Borrower and its subsidiaries,
taken as a whole or (c) the validity or enforceability of any of the Credit
Documentation or the rights and remedies of the Administrative Agent and the
Lenders thereunder.
Certain Documentation Matters
-----------------------------
The Credit Documentation shall contain
representations, warranties, covenants and events
of default customary for
9
financings of this type and other terms deemed
appropriate by the Lenders, 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; no burdensome restrictions; taxes;
Federal Reserve regulations; ERISA;
Investment Company Act; subsidiaries;
environmental matters; solvency (as of the
Closing Date); labor matters; year 2000 matters;
accuracy of disclosure; and creation and
perfection of security interests.
Affirmative Covenants: Delivery of financial statements, reports,
accountants' letters, projections, officers' certificates and other
information requested by the 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 Lenders to inspect property and books and records; notices of
defaults, litigation and other material events; compliance with environmental
laws; interest rate hedging; customary covenants related to completion of the
merger; and further assurances (including, without limitation, with respect
to security interests in after-acquired property).
Financial Covenants: Financial covenants to include, without
limitation, a maximum ratio of consolidated total debt to EBITDA, a minimum
ratio of EBITDA to total interest expense and a minimum ratio of EBITDA to
fixed charges (with definitions to be agreed upon).
Negative Covenants: Limitations on: indebtedness; 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 (with an exception to
be agreed providing for a change of fiscal year-end to December 31); negative
pledge clauses; restricting subsidiary agreements; amendments of Acquisition
documentation; and changes in lines of business. Intercompany loans to
certain non-guarantors will be permitted up to an amount and subject to other
limitations to be agreed, so long as any such subsidiary's obligations
thereunder are secured by its assets and such loan is pledged under the
Credit Facility, all on terms satisfactory to the Lenders.
Events of Default: Nonpayment of principal when due; nonpayment of
interest, fees or other amounts after a grace period 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;
10
material judgments; actual or asserted invalidity
of any guarantee or security document 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 Lenders holding not less than a
majority of the aggregate amount of the Term Loans, Revolving Loans,
participations in Letters of Credit and unused commitments under the Credit
Facilities ("Majority Lenders"), except that (a) the consent of each Lender
----------------
directly affected thereby shall be required with respect to (i) reductions in
the amount or extensions of the scheduled date of amortization or final
maturity of any Loan, (ii) reductions in the rate of interest or any fee or
extensions of any due date thereof and (iii) increases in the amount or
extensions of the expiry date of any Lender's commitment and (b) the consent
of 100% of the Lenders shall be required with respect to (i) modifications to
any of the voting percentages and (ii) releases of all or substantially all
of the Guarantors or all or substantially all of the collateral. In
addition, "class" voting requirements will apply to modifications affecting
certain payment matters. Increases in the amount of senior secured credit
facilities will require the consent of the Administrative Agent, the Majority
Lenders, and each Lender agreeing, in its sole discretion, to participate in
the additional amount of facilities.
Assignments
and Participations: The Lenders shall be permitted to assign and sell
participations in their Loans and commitments, subject, in the case of
assignments (other than to another Lender or to an affiliate of a Lender), to
the consent of the Administrative Agent and the Borrower (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 to
another Lender or to an affiliate of a Lender), the minimum assignment amount
shall be $1,000,000, and, after giving effect thereto, the assigning Lender
shall have commitments and Loans aggregating at least $1,000,000, in each
case unless otherwise agreed by the Borrower and the Administrative Agent.
Participants shall have the same benefits as the
applicable selling 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 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 notes shall be
issued under the Credit Facilities only upon
request.
Yield Protection: The Credit Documentation shall contain customary
provisions (a) protecting the 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 (b) indemnifying the Lenders for "breakage costs" incurred in
connection with, among other things, any prepayment of a Eurodollar Loan (as
defined in Annex I) on a day other than the last day of an interest period
with respect thereto.
Expenses and
11
Indemnification: The Borrower shall pay (a) all reasonable out-of-
pocket expenses of the Administrative Agent, the Arranger, the Co-Arranger
and the Syndication Agent 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 (b) all reasonable out-of-pocket expenses of the Administrative Agent,
the Arranger, the Co-Arranger, the Syndication Agent and the 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
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 losses, claims, damages, liabilities
or expenses incurred in respect of the financing
contemplated hereby or the use or the proposed
use of proceeds thereof, except to the extent
they arise from the gross negligence or willful
misconduct of the indemnified party.
Governing Law and Forum: State of New York.
Counsel to the
Administrative Agent
and the Arranger: Xxxxxxx Xxxxxxx & Xxxxxxxx.
12
Xxxxx X
-------
Interest and Certain Fees
-------------------------
Interest Rate Options: The Borrower may elect that the Loans comprising
each borrowing bear interest at a rate per annum equal to:
the ABR plus the Applicable Margin; or
the Eurodollar Rate plus the Applicable Margin
(it being understood that Loans in currencies
other than Dollars, if any, will bear interest
based on the appropriate base rate to be mutually
agreed).
As used herein:
"ABR" means the highest of (i) the rate of
---
interest publicly announced by Chase 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, initially, (a) for
-----------------
Revolving Loans and Tranche A Term Loans, (i)
2.00%, in the case of ABR Loans (as defined
below) and (ii) 3.00%, in the case of Eurodollar
Loans (as defined below), and (b) for Tranche B
Term Loans, (i) 2.50%, in the case of ABR Loans
and (ii) 3.50%, in the case of Eurodollar Loans.
The foregoing margins for Revolving Loans and
Tranche A Term Loans shall be subject to
adjustment pursuant to a grid based on total
leverage ratios to be determined, after a date to
be agreed, by increments to be determined.
"Eurodollar Rate" means the rate (adjusted for
---------------
statutory reserve requirements for eurocurrency
liabilities) for Eurodollar deposits for a period
equal to one, two, three or six months (as
selected by the Borrower) appearing on Page 3750
of the Dow Xxxxx Markets screen.
Interest Payment Dates: In the case of Loans bearing interest based upon
the ABR ("ABR 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
13
than three months, on each successive date three
months after the first day of such interest
period.
Commitment Fees: The Borrower shall pay a commitment fee
calculated at the rate of 1/2 of 1% per annum on any undrawn Term Loans and
on the average daily unused portion of the Revolving Facility, payable
quarterly in arrears from and after the Closing Date. The commitment fee rate
shall be subject to adjustment based on total leverage ratios to be
determined, after a date to be agreed, by increments to be determined.
Letter of Credit Fees: The Borrower shall pay a fee 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 fee shall be shared ratably among the Lenders
participating in the Revolving Facility and shall be payable quarterly in
arrears.
A fronting fee equal to 1/4% per annum on the
face amount of each Letter of Credit shall be
payable quarterly in arrears to the Issuing
Lender for its own account. In addition,
customary administrative, issuance, amendment,
payment and negotiation charges shall be payable
to the Issuing Lender for its own account.
Default Rate: At any time when the Borrower 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 amounts shall bear interest at 2% above the
rate applicable to ABR Loans.
Rate and Fee Basis: All per annum rates shall be calculated on the
basis of a year of 360 days (or 365/366 days, in the case of ABR Loans the
interest rate payable on which is then based on the Prime Rate) for actual
days elapsed.
Appendix A
----------
SOURCES AND USES
----------------
Sources Uses
------- ----
Revolving
Credit Facility $ 500,000/1/ Purchase Price $131,447,700
Term Loan A $ 62,500,000 Refinance Existing Debt $115,060,320/1/
Term Loan B $ 62,500,000 Cash ($ 9,434,248)
Sponsor Preferred Equity $ 37,500,000 Option Proceeds ($ 7,077,723)
Management Preferred Equity $ 20,000,000 Cash to B/S $ 3,951/1/
Sponsor Common Equity $ 37,500,000 Fees and expenses $ 10,500,000
------------
Management Common Equity $ 20,000,000
------------
$240,500,000 $240,500,000
============ ============
--------------------------------------
/1/ Figures are approximate.
