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EXHIBIT 7(b)
CERBERUS CAPITAL MANAGEMENT, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
November __(1), 2002
SBI Holdings Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000 Xxxx
Xxxx Xxxx, Xxxx 00000
Re: Financing Commitment
Ladies and Gentlemen:
SBI Holdings Inc. (the "Borrower") has requested that Cerberus Capital
Management, L.P. ("CCM") arrange for one or more funds and managed accounts to
be designated by it (the "Lenders") to provide an unsecured loan facility of up
to $12 million (with multiple delayed drawdowns permitted thereunder) (the
"Financing") to the Borrower so that the Borrower may acquire all of the
outstanding shares of common stock of Razorfish, Inc., a Delaware corporation
(the "Razorfish Acquisition"), pursuant to the terms and conditions set forth in
the Acquisition Agreement and Agreement and Plan of Merger dated as of November
, 2002 (the "Merger Agreement"), which Merger Agreement contemplates a cash
tender offer to purchase all of outstanding shares of Razorfish common stock at
a purchase price of $1.70 per share in cash (the "Tender Offer"). CCM is pleased
to advise you that CCM commits that the Lenders will provide the Financing to
consummate the Razorfish Acquisition, substantially on the terms and conditions
set forth in this Commitment Letter and in the term sheet attached hereto as
Exhibit A (the "Term Sheet"). CCM's commitment to provide the Financing is
subject to the satisfaction of the terms and conditions contained in this
Commitment Letter and in the Term Sheet.
This Commitment Letter and the Term Sheet set forth only the material
terms and conditions of the Financing. The Financing shall be subject to
definitive legal documentation in form and substance reasonably satisfactory to
CCM, which, in addition to the material terms set forth in this Commitment
Letter and the Term Sheet, shall contain other provisions that are customary or
typical for the type of financing transactions contemplated hereby and thereby.
CCM's commitment to provide the Financing is also subject to (i) the
negotiation, execution and delivery of definitive financing documents in form
and substance reasonably satisfactory to CCM, the Borrower and their respective
counsel, (ii) the condition that there shall not have occurred or become known
to CCM or the Borrower any event or condition set forth in the Merger Agreement,
including Annex 1 thereto, whereby the Borrower (or its subsidiary) would not be
required to accept and pay for any tendered shares of common stock of Razorfish
including, without limitation, (A) any general suspension of, or limitation on
prices for, trading in securities on the New York Stock Exchange or on the
Nasdaq National Market, (B) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the SBI Holdings Inc, United
States, (C) a commencement of or material acceleration or worsening of a war,
armed hostilities, acts of terrorism or other national or international crisis
involving the United State, that individually or in the aggregate, has a
Material Adverse Effect (as defined in the Merger Agreement) with respect to
Razorfish ("Company Material Adverse Effect"), or (D) a material limitation
(whether or
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not mandatory) by any Governmental Entity (as defined in the Merger Agreement)
that materially and adversely affects the extension of credit by banks or other
lending institutions in the United States (a "Financial Markets Disruption"),
and (iii) the conditions set forth on the Term Sheet. If at any time the
Borrower is or becomes unable to fulfill any condition set forth in this
Commitment Letter or in the Term Sheet, CCM may terminate this Commitment Letter
by giving notice thereof to the Borrower (subject to the obligation of the
Borrower to pay all fees, costs, expenses and other payment obligations
expressly assumed by the Borrower hereunder, which shall survive the termination
of this Commitment Letter).
The Borrower agrees to reimburse CCM for all reasonable costs, fees and
expenses (the "Expenses") incurred by or on behalf of CCM in connection with the
negotiation, preparation, execution and delivery of this Commitment Letter, the
Term Sheet and any and all definitive documentation relating hereto or thereto,
including, but not limited to, the reasonable fees and expenses of counsel to
CCM. The obligations of the Borrower under this paragraph shall remain effective
whether or not any definitive documentation is executed and notwithstanding any
termination of this Commitment Letter.
On the date of execution hereof, the Borrower shall pay to CCM in
immediately available funds a non-refundable commitment fee equal to $125,000
(the "Commitment Fee"), which fee shall be earned in full on the date the
Borrower accepts this Commitment Letter and the Term Sheet. In addition, upon
the closing of the transactions contemplated hereby, the Borrower shall pay to
CCM in immediately available funds a non-refundable closing fee equal to
$125,000, which fee shall be earned in full on the closing date of the
transactions contemplated hereby.
The Borrower agrees to indemnify and hold harmless CCM and its affiliates,
directors, officers, employees, agents and assignees (including affiliates
thereof) (each an "Indemnified Party") from and against any and all losses,
claims, damages, liabilities or other expenses to which such Indemnified Party
may become subject, insofar as such losses, claims, damages, liabilities (or
actions or other proceedings commenced or threatened in respect thereof) or
other expenses arise out of or in any way relate to or result from, the Tender
Offer and the transactions contemplated in connection therewith, the Merger
Agreement and the transactions contemplated thereby, this Commitment Letter, the
Term Sheet or the commitment made herein, or in any way arise from any use or
intended use of this Commitment Letter, the Term Sheet or the proceeds of the
Financing, and the Borrower agrees to reimburse each Indemnified Party for any
legal or other expenses incurred in connection with investigating, defending or
participating in any such loss, claim, damage, liability or action or other
proceeding (whether or not such Indemnified Party is a party to any action or
proceeding out of which indemnified expenses arise), but excluding therefrom all
expenses, losses, claims, damages and liabilities that are finally determined in
a non-appealable decision of a court of competent jurisdiction to have resulted
solely from the gross negligence or willful misconduct of such Indemnified
Party. In the event of any litigation or dispute involving this Commitment
Letter, the Term Sheet, the Financing, the Tender Offer, or any transaction
contemplated hereby or thereby or in connection therewith, CCM shall not be
responsible or liable to the Borrower or any other person or entity for any
special, indirect, consequential, incidental or punitive damages. The
obligations of the Borrower under this paragraph shall remain effective whether
or not any of the transactions contemplated in this Commitment Letter are
consummated, any definitive legal documentation is executed and notwithstanding
any termination of this Commitment Letter.
The Borrower agrees that it will (i) consult with CCM prior to the making
of any filing in which reference is made to CCM or this Commitment Letter, and
(ii) obtain the prior approval of CCM before releasing any public announcement
in which reference is made to CCM or this Commitment Letter. The Borrower
acknowledges that CCM and its affiliates may in the future provide financing
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or obtain other interests in other companies in respect of which the Borrower or
its affiliates may be business competitors, and that CCM and its affiliates will
have no obligation to provide to the Borrower or any of its affiliates any
confidential information obtained from such other companies.
The offer made by CCM in this Commitment Letter shall remain in effect
until 12:00 p.m. (New York City time) on November , 2002, at which time it will
expire unless prior thereto CCM has received a copy of this letter signed by the
Borrower.
This Commitment Letter and the Term Sheet (i) supersede all prior
discussions, agreements, commitments, arrangements, negotiations or
understandings, whether oral or written, of the parties with respect thereto and
(ii) shall be governed by the laws of the State of New York, without giving
effect to the conflict of laws provisions thereof.
Should the terms and conditions of the commitment contained herein meet
with your approval, please indicate your acceptance by signing and returning a
copy of this Commitment Letter to Cerberus Capital Management, L.P.
Very truly yours,
CERBERUS CAPITAL MANAGEMENT, L.P.
By: /s/ Xxx Xxxxxxxxx
-------------------------------------
Name: Xxx Xxxxxxxxx
Title: Managing Director
Xxxxxx and accepted on this
____ day of November , 2002:
SBI HOLDINGS INC.
By: /s/ X. Xxx Xxxxxx
-------------------------------------
Name: X. Xxx Xxxxxx
Title: EVP
EXHIBIT A
Term Sheet
This Term Sheet is part of the Commitment Letter dated November , 2002
(the "Commitment Letter"), addressed to SBI Holdings Inc. by Cerberus Capital
Management, L.P. and is subject to the terms and conditions of the Commitment
Letter. Capitalized terms used herein shall have the meanings set forth in the
Commitment Letter unless otherwise defined herein.
BORROWER: SBI Holdings Inc.
LENDERS: One or more funds or managed accounts to be designated by
Cerberus Capital Management, L.P.
AMOUNT: Up to $12 million unsecured term loan credit facility (the
"Facility"). The initial drawdown shall be in an amount necessary to consummate
the Offer (as defined under the Merger Agreement).
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RANKING: The obligations of the Borrower and its subsidiaries under the
Financing will rank pari passu with the obligations of the Borrower's Senior
Notes pursuant to the terms and conditions set forth in the Amended and Restated
Securities Purchase Agreement among the Borrower and the other parties named
therein dated as of September 30, 1999 (the "SPA").
FINAL MATURITY: June 16, 2008.
WARRANTS: On the Closing Date, the Borrower shall cause to be issued to the
Lenders warrants to purchase shares of the common stock of the Borrower
("Warrants") for 13,182,023 shares of Borrower common stock (Borrower Common
Stock issued pursuant to the exercise of the Warrants shall hereinafter be
referred to as the "Warrant Stock"). The Warrants shall be exercisable at any
time and from time to time prior to the 8th anniversary of the date of issuance
at the then Warrant exercise price. The Warrant exercise price shall initially
be $1.00 per share. The Warrant exercise price may be paid in cash or via
cashless exercise. Warrantholders shall receive weighted average anti-dilution
protection for issuances below the greater of fair market value or the exercise
price and other customary anti-dilution protection, capitalization and change of
control protections and demand and piggyback registration rights with respect to
the Warrant Stock satisfactory to the Lenders.
USE OF PROCEEDS: The proceeds of the Financing shall be used to fund the
Razorfish Acquisition, including the purchase of shares of Razorfish common
stock pursuant to the Offer and the Merger (as defined in the Merger Agreement),
and the payment of fees and expenses incurred by the Borrower in connection
therewith.
OPTIONAL PREPAYMENT: The Borrower may prepay, in full or in part, the Financing
without penalty; provided, however, that each partial prepayment shall be in an
amount of $500,000 or an integral multiple of $500,000 in excess thereof. Any
amount prepaid or repaid under the Facility may not be reborrowed under the
Facility.
INTEREST: 16% per annum, payable monthly in arrears.
FEES: Commitment Fee: $125,000, non-refundable and earned in full and payable on
the date of the Borrower's acceptance of the Commitment Letter.
Funding Fee: $125,000 earned in full, non-refundable and payable on the
date of initial drawdown of the Financing.
CONDITIONS PRECEDENT: The obligations of CCM to provide the Financing and to
finance any drawdown under the Facility will be subject to customary conditions
precedent. The material conditions are that there shall not have occurred or
become known to CCM or the Borrower any event or condition set forth in the
Merger Agreement, including Annex 1 thereto, whereby the Borrower (or its
subsidiary) would not be required to accept and pay for any tendered shares of
common stock of Razorfish including, without limitation, (A) any general
suspension of, or limitation on prices for, trading in securities on the New
York Stock Exchange or on the Nasdaq National Market, (B) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (C) a commencement of or material acceleration or worsening of a
war, armed hostilities, acts of terrorism or other national or international
crisis involving the United States, that individually or in the aggregate, has a
Company Material Adverse Effect, or (D) a material limitation (whether or not
mandatory) by any Governmental Entity (as defined in the Merger Agreement) that
materially and adversely affects the extension of credit by banks or other
lending institutions in the United States (a "Financial Markets Disruption"). In
addition, the following conditions precedent shall have been satisfied, unless
waived in writing by the Lenders:
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(a) the Merger Agreement shall not have been amended, modified or
terminated without the consent of CCM;
(b) execution and delivery of appropriate legal documentation (including,
without limitation, the Warrants and related documents) the material terms of
which are set forth herein and that are otherwise in form and substance
satisfactory to CCM and the satisfaction of the conditions precedent contained
therein; and
(c) all necessary governmental and third party approvals, waivers and/or
consents in connection with the consummation of the Offer, the Merger (as
defined in the Merger Agreement) and the Financing shall have been obtained and
remain in full force and effect.
REPRESENTATIONS AND WARRANTIES: Those customarily found in credit agreements for
similar financings and others appropriate in the judgment of CCM for the
transaction contemplated hereby, equivalent, to the extent determined to be
appropriate by CCM, to those set forth in the SPA.
COVENANTS: Those negative, affirmative and financial covenants (applicable to
the Borrower and its subsidiaries) customarily found in credit agreements for
similar financings and others appropriate in the judgment of the CCM for the
transaction contemplated hereby, equivalent, to the extent determined to be
appropriate by CCM, to those set forth in the SPA.
EVENTS OF DEFAULT: Those customarily found in credit agreements for similar
financings and others appropriate in the judgment of CCM for the transactions
contemplated hereby, equivalent, to the extent determined to be appropriate by
CCM, to those set forth in the SPA.
EXPENSES: The Borrower shall pay all out-of-pocket expenses incurred by the
Lenders (including the fees and expenses of counsel) in connection with the
execution, delivery, administration and enforcement of the loan documentation.
FUNDING DATES: Simultaneously with the date of consummation of the Offer, and
thereafter, as required to fund purchases of shares of Razorfish common stock
pursuant to the Offer and the Merger.
COUNSEL TO THE Xxxxxxx Xxxx & Xxxxx LLP
LENDERS:
GOVERNING LAW: New York.
ASSIGNMENT AND PARTICIPATION: Each Lender may assign, or grant participation
contracts in, any and all of its rights and obligations without the consent of
the Borrower.
(1) To be same date as Acquisition Agreement and Agreement and Plan of Merger.
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