Exhibit (a)
CREDIT SUISSE FIRST BOSTON
Xxxxxx Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
January 18, 1999
Xxxx Capital, Inc.
Two Xxxxxx Place
Boston, Massachusetts 02116
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Integrated Circuit Systems, Inc.
---------------------------------
Senior Secured Credit Facilities and Mezzanine Facility Loan Commitment Letter
------------------------------------------------------------------------------
Ladies and Gentlemen:
You have advised Credit Suisse First Boston ("CSFB") that Xxxx
Capital, Inc. and Bear, Xxxxxxx & Co. Inc. (the "Investors"), propose to
create a newly formed entity reasonably satisfactory to CSFB, which will merge
(the "Merger") into Integrated Circuit Systems, Inc. (the "Company") in a
transaction (the "Recapitalization") that will provide for recapitalization
accounting treatment. We understand that the Recapitalization will be
accomplished through the Merger, the redemption of certain capital of Company
from existing shareholders for an aggregate redemption price of $259.2 million,
adjusted for cash on hand, and the "rollover" of certain capital stock of
Company by certain existing shareholders of Company. You have further advised us
that in connection with the Recapitalization (i) the Investors and certain
management investors and existing shareholders will make or cause to be made an
equity contribution of approximately $50.0 million (the "Equity Contribution")
to the Company (with up to approximately $10 million of such Equity Contribution
to be made by such management investors and such existing shareholders), (ii)
the Company will obtain senior secured credit facilities (the "Senior
Facilities") in an aggregate principal amount of up to $145 million (as more
fully described in the Summary of Principal Terms and Conditions attached hereto
as Exhibit A (the "Senior Term Sheet"), and (iii) the Company will obtain senior
subordinated mezzanine loan
financing (the "Mezzanine Facility") of $47.5 million, (the Recapitalization,
the Merger and the transactions referred to in the immediately preceding clauses
(i) through (iii) are collectively referred to herein as the "Transactions").
The approximate sources and uses of the funds necessary to consummate the
Transactions are set forth on Xxxxx XX to the Senior Term Sheet.
You have requested that CSFB (i) agree to structure, arrange and
syndicate the Senior Facilities, (ii) commit to provide the Senior Facilities
and to serve as advisor, arranger, administrative agent and collateral agent
therefor, (iii) agree to structure, arrange and syndicate the Mezzanine Facility
(together with the Senior Facilities, the "Facilities") and (iv) commit to
provide the Mezzanine Facility and to serve as advisor, arranger and
administrative agent therefor. CSFB is pleased to advise you of (i) its
willingness to act as exclusive advisor, arranger, administrative agent and
collateral agent for the Senior Facilities, (ii) its commitment to provide the
entire amount of the Senior Facilities upon the terms and subject to the
conditions set forth or referred to in this commitment letter and the exhibits
hereto (the "Commitment Letter") (including, without limitation, the conditions
set forth in Exhibit C attached hereto) and in the Senior Term Sheet, (iii) its
willingness to act as exclusive advisor, arranger and administrative agent for
the Mezzanine Facility and (iv) its commitment to provide the entire amount of
the Mezzanine Facility upon the terms and subject to the conditions set forth or
referred to herein (including, without limitation, the conditions set forth in
Exhibit C attached hereto) and in the Summary of Principal Terms and Conditions
attached as Exhibit B hereto (the "Mezzanine Term Street"; together with the
Senior Term Sheet, the "Term Sheets").
CSFB reserves the right and intends, prior to or after the execution
of the definitive documentation with respect to the Facilities (the "Facilities
Documents"), to syndicate all or a portion of its commitments to one or more
financial institutions (such financial institutions, together with CSFB, the
"Lenders") identified by CSFB in consultation with, and reasonably acceptable
to, you, which Lenders will become parties to the Facilities Documents. It is
agreed that CSFB will act as the sole administrative agent and advisor for, and
sole arranger and syndication manager of, the Facilities and that no additional
agents or co-agents or co-arrangers will be appointed without the prior written
consent of CSFB.
CSFB also reserves the right to require Company to issue, in lieu of
the Mezzanine Facility (and, at the option of CSFB in lieu of all or a portion
of the Senior Facilities) high-yield debt securities (the "Alternative
Securities"); provided that such issuances shall be made in consultation with,
--------
and with the consent of, the Investors and Company, not to be unreasonably
withheld.
2
In addition, CSFB also reserves the right to employ the services of
Credit Suisse First Boston Corporation ("CSFBC") in providing services
incidental to the provision of the Mezzanine Facility or the Alternative
Securities and any resale or refinancing of the Mezzanine Loans (as defined in
the Mezzanine Term Sheet), and you agree that, solely in connection with the
provision of such services, CSFB and CSFBC may share with each other any
confidential or other information relating to the Investors and the Company and
its subsidiaries and their respective affiliates as from time to time they may
possess.
CSFB 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
identified by us in consultation with, and reasonably acceptable to, you, will
participate in the allocations of the commitments among the Lenders and the
amount and distribution of fees among the Lenders. The Investors understand
that the Senior Facilities and the Mezzanine Facility will be separately
syndicated. You agree to assist CSFB in forming any such syndicate and to
provide the potential Lenders, promptly upon request, with all information
reasonably requested by them to complete successfully the syndication, including
but not limited to (a) an information package, including a Confidential
Information Memorandum for each of the Facilities and other marketing materials
for delivery to potential Lenders and participants, and (b) all information and
projections prepared by you or your advisors relating to the Transactions. You
also agree to participate in, and to make appropriate senior officers and
representatives of the Investors, available (and to use commercially reasonable
efforts to make senior officers and representatives of Company available) to
participate in, informational meetings for potential Lenders and participants at
such times and places as CSFB may reasonably request and to use commercially
reasonable efforts to ensure that CSFB's syndication efforts materially benefit
from the Investors and the Company's existing lending relationships.
The Investors represent and warrant and covenant that, to the best of
their knowledge:
(a) all written information (other than financial projections) which
has been or is hereafter furnished to CSFB by you or any of your
representatives in connection with the Transactions is complete and correct
as of the date thereof in all material respects and does not 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 misleading
in light of the circumstances under which such statements were or are made;
and
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(b) all financial projections that have been or are hereafter prepared
by you or on your behalf and made available to CSFB have been or will be
prepared in good faith based upon what you believe to be reasonable assump
tions (it being understood that such projections are subject to significant
uncertainties and contingencies, many of which are beyond your, or the
Company's, control and that no assurance can be given that the projections
will be realized).
The Investors agree to supplement the information and projections referred to in
clauses (a) and (b) above from time to time until completion of the syndication
so that the representations and warranties in the preceding sentence remain
correct without regard to when such information and projections were furnished.
In arranging and syndicating the Facilities, CSFB will be entitled to use and
rely on such information and projections without independent verification
thereof.
In connection with the syndication of the Facilities, CSFB may, in its
discretion, allocate to other Lenders portions of any fees payable to CSFB in
connection with the Facilities. You agree that neither you nor the Company nor
any of your or its affiliates will pay to any Lender any compensation or titles
of any kind for its participation in the Facilities except as expressly provided
for in this letter or in the fee letter dated the date hereof between you and
CSFB (the "Fee Letter").
The Investors agree, jointly and severally, to (or to cause Company
to) reimburse CSFB and its affiliates, upon request made from time to time, for
their reasonable out-of-pocket fees and expenses incurred in connection with the
preparation, execution and delivery of this letter, the Fee Letter, the Warrant
Letter (as defined below) and the Facilities Documents and the activities
thereunder or contemplated thereby, including without limitation syndication
expenses (other than fees allocated in accordance with the preceding paragraph)
and the reasonable fees and expenses of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
and such other outside counsel and advisors to CSFB and its affiliates approved
by you (such approval not to be unreason ably withheld) payable on the earlier
of (i) the date the commitment of CSFB hereunder is terminated or (ii) the
Closing Date.
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The Investors also agree, jointly and severally, to (or to cause the
Company to) indemnify and hold harmless CSFB and each other Lender, their
respective affiliates and each of their respective directors, officers,
employees, agents and advisors (each, an "Indemnified Party"), from and against
any and all claims, damages, liabilities (including securities law liabilities),
losses and expenses, including reasonable fees, expenses and disbursements of
counsel, which may be incurred by or asserted against an Indemnified Party in
connection with CSFB's or any Lender's commitment or participation in the
transactions contemplated by this letter, the Facilities or any related matter
or any investigation, litigation or proceeding in connection therewith and
whether or not the Recapitalization is consummated or the Facilities are drawn
upon, except to the extent such claim, damage, loss, liability or expense is
found to have resulted from such Indemnified Party's own bad faith, gross
negligence or willful misconduct; provided, however, that in connection with any
-------- -------
such third party claim, you shall not be responsible for, or required to hold
harmless any Indemnified Party from and against, the reasonable fees, expenses
and disbursements of more than one counsel for all of the Indemnified Parties
taken together, except to the extent any such Indemnified Party requires its own
counsel in order to be adequately represented in the reasonable judgment of such
Indemnified Party. No Indemnified Party shall be responsible or liable to any
other party hereto or any other person for consequential damages that may be
alleged as a result of this letter or the breach of any party's obligations
hereunder.
The Investors also hereby agree, in accordance with the terms of a
separate letter dated the date hereof between you and CSFB (the "Warrant
Letter"), to make available to CSFB and the holders of Mezzanine Loans,
Exchange Notes or Alternative Securities, as the case may be, warrants to
acquire equity in the Company to assist in the syndication of the Mezzanine
Loans, Exchange Notes or Alternative Securities.
This letter is delivered to you on the understanding that neither this
letter nor any other agreement between us related to this letter or the
Transactions, including the Term Sheets, the other exhibits hereto, the Fee
Letter, the Warrant Letter and the letter of even date herewith regarding the
engagement of CSFBC and Bear, Xxxxxxx & Co. Inc. with respect to the financing
and structure of the Transactions (the "Engagement Letter"), nor any of their
terms or substance shall be disclosed, directly or indirectly, to any other
person except (a) to your officers, directors, agents and advisors who are
directly involved in the consideration of this matter (and then only on a
confidential basis) or (b) 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, however, that you may disclose (and then only on a
-------- -------
confidential basis) this letter, the term sheets and the other exhibits hereto
and their
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terms and substance (but not the Fee Letter, the Warrant Letter or the
Engagement Letter or their respective terms and substance) to the Company and
its officers, directors agents and advisors who are directly involved in this
matter so long as they agree to the confidentiality requirements of this letter,
upon your acceptance of this letter.
Our offer to provide the Facilities will terminate at 5:00 P.M., New
York time, (i) on January 18, 1999, unless on or before that time you accept
this letter by signing and returning an enclosed counterpart of this letter, the
Fee Letter, the Warrant Letter and the Engagement Letter and (ii) if so accepted
by you on or prior to such time, on June 30, 1999. Subject to the immediately
succeeding sentence, your obligations with respect to indemnification and
confidentiality shall remain in full force and effect, regardless of any
termination of the commitment of CSFB made hereunder. You agree to cause the
Company to become a party to this letter, the Fee Letter, the Warrant Letter and
the Engagement Letter as soon as practicable and thereby assume your obligations
thereunder, at which time the Investors shall be released from such obligations.
This letter 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 letter and CSFB's
commitments hereunder may not be assigned by you without the prior written
consent of CSFB, and any attempted assignment without such consent shall be
void. CSFB's commitments hereunder may be assigned by CSFB to any of its
affiliates or any Lender. Any such assignment to an affiliate shall not relieve
CSFB from any of its obligations hereunder unless and until the Facilities
Documents with respect to such assigned commitment shall have been executed and
delivered by the parties thereto, but any assignment to a Lender shall be by
novation and shall release CSFB from its commitment hereunder pro tanto. This
--- -----
letter may not be amended or modified or any provision hereof waived except in
writing signed by you and CSFB. This letter shall be governed by and construed
in accordance with the internal laws of the State of New York without giving
effect to the conflicts of laws principles thereof. This letter may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original and all of which together shall constitute one and
the same instrument. Delivery of an executed counterpart of a signature page of
this letter by facsimile transmission shall be effective as delivery of a
manually signed counterpart hereof.
[Remainder of this page intentionally left blank]
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We appreciate the opportunity to assist you in this very important
transaction.
Very truly yours,
CREDIT SUISSE FIRST BOSTON
By: /s/ Xxxxxx Xxxx
------------------------------
Name: Xxxxxx Xxxx
Title: Vice President
By: /s/ Xxxxx Xxxxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Director
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST WRITTEN ABOVE,
XXXX CAPITAL, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxxxx Xxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
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EXHIBIT A
Integrated Circuit Systems, Inc.
--------------------------------
Senior Secured Credit Facilities
--------------------------------
Summary of Principal Terms and Conditions/1/
-----------------------------------------
Borrower: Integrated Circuit Systems, Inc. (the "Company").
---------
Recapitalization: Pursuant to an Agreement and Plan of Merger (the
------------------ "Recapitalization Agreement"), a corporation to be
established by the Investors will merge (the "Merger")
into the Company in a transaction (the "Recapitaliza-
tion") that will provide for recapitalization accounting
treatment, and in connection therewith, the issued and
outstanding share capital (the "Shares")of the Company
will be redeemed, for aggregate cash consideration of
approximately $259.2 million (the "Purchase Price"). In
connection with the Recapitalization, (a) the Company
will obtain the senior secured credit facilities (the
"Senior Facilities") as described below under the
caption "Senior Facilities" in an aggregate principal
amount of $145 million; (b) an equity contribution of
approximately $50.0 million (the "Equity Contribution")
will be made to the Company by the Investors and certain
management investors and existing shareholders; (c) the
Company will obtain mezzanine financing structured,
arranged and syndicated by CSFB (the "Mezzanine
Facility") of $47.5 million; and (d) the Company will
pay reasonable fees and expenses (including, without
limitation, reasonable fees of outside counsel) in
connection with the foregoing in an amount
---------------------------
/1/ All capitalized terms used but not defined herein have the meanings
given to them in the Commitment Letter to which this term sheet is attached.
A-1
not to exceed approximately $17.5 million (the
Recapitalization, the Merger and the foregoing
transactions are collectively referred to herein as
the "Transactions").
Sources and Uses: The approximate sources and uses of funds necessary to
----------------- consummate the Transactions are set forth on Annex II
attached hereto.
Agent: CSFB will act as administrative agent (the "Agent") for
------ a syndicate of financial institutions identified by CSFB
in consultation with, and reasonably acceptable to, the
Company (the "Lenders"), and will perform the duties
customarily associated with such role.
Advisor and Arranger: CSFB will act as advisor and arranger for the Senior
--------------------- Facilities (the "Arranger"), and will perform the duties
customarily associated with such roles.
Senior Facilities: (A) Senior Secured Term Loan Facilities in an aggre
------------------ gate principal amount of up to $120 million (the
"Term Facility"), of which (i) $50 million
("Term Loan A") will mature in five years and
(ii) $70 million ("Term Loan B") will mature in
seven years.
CSFB shall be entitled, with the consent of
Company and the Investors, not to be unreason-
ably withheld, to reallocate amounts among Term
Loan A and Term Loan B to the extent CSFB
reasonably determines that such reallocation is
advisable in order to facilitate the syndications
of the Senior Facilities, provided that the
aggregate amount of the Term Facility remains
unchanged.
A-2
(B) Senior Secured Revolving Credit Facility (the
"Revolving Facility") in an amount equal to $25
million, of which up to an amount to be agreed
upon will be available in the form of letters of
credit.
Purpose: (A) The proceeds of the Term Facility will be used
-------- by the Company on the date of the initial funding
under the Senior Bank Facilities (the "Closing
Date"), together with the proceeds of the Mezza
nine Facility and the Equity Contribution solely
(i) to finance the Purchase Price, (ii) to repay
the Existing Indebtedness and (iii) to pay
related fees and expenses.
(B) The proceeds of loans under the Revolving
Facility in an amount not to exceed approxi-
mately $16 million may be used, together with
the proceeds of the Equity Contribution and the
Mezzanine Facility to finance the Recapitaliza-
tion, repay Existing Indebtedness and pay
related fees and expenses. The proceeds of any
subsequent borrowings under the Revolving
Facility will be used for general corporate
purposes.
(C) Letters of credit will be used by the Company
solely for general corporate purposes.
Availability (A) Loans under the Term Facility will be made
------------ available only on the Closing Date. Such loans,
once repaid may not be reborrowed.
(B) Loans under the Revolving Facility will be
available at any time prior to the final maturity
of the Revolving Facility. Amounts repaid under
the Revolving Facility may be reborrowed.
A-3
(C) Letters of Credit will be available at any time
before the fifth business day prior to the final
maturity of the Revolving Facility.
Default Rate: The applicable interest rate plus 2% per annum (charged
------------- only at the written election of the Lenders and only for
amounts in payment default).
Letters of Credit: Letters of credit under the Revolving Facility will be
------------------ issued by a New York-based Lender, as issuing bank (in
such capacity, the "Issuing Bank"), agreed upon by the
Company and the Agent. Each letter of credit shall
expire no later than the earlier of (a) 12 months after
its date of issuance (but may, under terms to be agreed
upon, be automatically renewed) and (b) the fifth
business day prior to the final maturity of the
Revolving Facility.
Drawings under any letter of credit shall be reimbursed
by the Company on the same business day. To the extent
that the Company does not reimburse the Issuing Bank on
the same business day, the Lenders shall be irrevoca xxx
obligated to reimburse the Issuing Bank pro rata based
--------
upon their respective Revolving Facility commit ments,
with the amount of such reimbursement payment being
deemed to be a drawing under the Revolving Facility.
The issuance of all letters of credit shall be subject
to the customary procedures of the Issuing Bank.
A-4
Final Maturity and (A) Term Facility
------------------ -------------
Commitment Term Loan A and Term Loan B will mature on
---------- the fifth and seventh anniversaries,
Reductions: respectively, of the Closing Date, and will
---------- amortize in equal quarterly installments in the
aggregate annual amounts as set forth below:
-----------------------
Year Term Term
Loan A Loan B
-----------------------
1 $ 1.0 $ .7
-----------------------
2 $ 7.0 $ .7
-----------------------
3 $10.0 $ .7
-----------------------
4 $14.0 $ .7
-----------------------
5 $18.0 $ .7
-----------------------
6 $28.0
-----------------------
7 $38.5
-----------------------
(amounts in millions)
(B) Revolving Facility
------------------
The Revolving Facility will mature on
the fifth anniversary of the Closing
Date.
Guarantees: All obligations of the Company under the Senior
----------- Facilities will be unconditionally guaranteed by
each existing and subsequently acquired or
organized domestic subsid iary of the Company.
Security: The Senior Facilities and the related
--------- guarantees will be secured by substantially all
the assets of the Company and each existing and
subsequently acquired or organized domestic
subsidiary of the Company (collectively, the
"Collateral"), including but not
A-5
limited to (a) a first priority pledge of all the
capital stock of each existing and subsequently
acquired or organized domestic subsid iary of the
Company (65% of material foreign subsidiar ies of
the Company) and (b) perfected first priority
(subject to customary exceptions) security
interests in, and mortgages on, substantially all
tangible and intangi ble assets of the Company
and each existing and subse quently acquired or
organized domestic subsidiary of the Company
(including but not limited to accounts receiv-
able, inventory, general intangibles,
intellectual property, real property, cash and
proceeds of the foregoing).
All the above-described pledges, security
interests and mortgages shall be created on
terms, and pursuant to documentation, reasonably
satisfactory to the Lenders and the Company, and,
subject to limited customary exceptions to be
agreed upon, none of the Collateral shall be
subject to any other pledges, security interests
or mortgages.
Interest Rates As set forth on Annex I hereto.
--------------
and Fees:
---------
Mandatory Loans under the Term Facility shall be prepaid
--------- with (a) 50% of Consolidated Excess Cash Flow (to
Prepayment: be defined) so long as the Leverage Ratio (as
----------- defined below) is greater than or equal to 2.5:1,
(b) 100% of the net cash proceeds of all non-
ordinary-course asset sales or other dispositions
of property by the Company and its subsid iaries
(including insurance and condemnation proceeds),
subject to exceptions to be agreed upon
(including the right to reinvest such proceeds in
the Company's business under certain
circumstances), (c) 100% of the net cash proceeds
of issuances of debt obligations of the Company
and its subsidiaries, subject to exceptions
A-6
(including the Mezzanine Facility) to
be agreed upon, and (d) 50% of the net cash
proceeds of issuances of equity securities of the
Company and its subsidiaries, subject to excep-
tions to be agreed upon, so long as the Leverage
Ratio is greater than or equal to 3.0:1.
In addition, the Term Loan Facility shall be
prepaid in an amount equal to any refunding of
deposits lodged with Chartered Semiconducter
Manufacturing Ltd. (the "Refunds").
Voluntary Voluntary prepayments will be permitted in whole
--------- or in part, at the option of the Company, in
Prepayment: minimum principal amounts to be agreed upon,
----------- without premium or penalty, other than payment of
breakage costs (excluding profits and Applicable
Margins) and reimbursement of the Lenders' actual
re-employment costs in the case of prepayment of
Adjusted LIBOR borrowings other than on the last
day of the relevant Interest Period (such
breakage costs and re-employment costs,
collectively "Breakage Costs").
Application of Voluntary and mandatory prepayments shall be
-------------- made, without premium or penalty (but with
Prepayments: Breakage Costs (as defined above), and shall be
------------ applied to the Term A and B Loans first, (except
with respect to prepayments made from Refunds) to
amortization payments on the Loans due during the
immediately succeeding twelve month period as
directed by the Company, and second, (including
------
prepayments made from Refunds) pro rata to the
Term A and B Loans, and further, pro rata to the
remain ing amortization payments of such loans;
provided that holders of Term Loan B may elect to
--------
have their portion of any mandatory prepayment
applied to any outstanding portion of Term
Loan A.
Representations Usual for facilities and transactions of this
--------------- type and others to be agreed upon by the Agent
and Warranties: and the Company (the Company's agreement not to
--------------- be unreasonably withheld), including but not
limited to accuracy of financial statements; no
material adverse change; absence of litigation;
no violation of agreements or instruments;
compliance with laws (including employee
benefits, margin regulations and environmental
laws); payment of taxes; ownership of properties;
solvency; effectiveness of regulatory approvals;
labor matters; environmental matters; accuracy of
information; and validity, priority and
perfection of security interests in the
Collateral.
A-7
Conditions Precedent The obligations of CSFB and the Lenders to make
-------------------- the Senior Facilities available on the Closing
to Initial Borrowing: Date are subject to the satisfaction or waiver of
--------------------- the conditions set forth in Exhibit C to the
Commitment Letter.
Subject to the foregoing, the Lenders shall make
the initial Loans available to the Company on the
Closing Date bearing interest at Adjusted LIBOR
(with an interest period of one month until
syndication of the Senior Facilities, as
determined by CSFB, has been substantially
completed) plus the then Applicable Margin so
long as, on or prior to the day that is three
days prior to the Closing Date, the Company shall
have delivered to CSFB, the other Lenders and the
Agent an executed indemnity for any Breakage
Costs with respect to such Loans that is in form
and substance reasonably satisfac tory to CSFB,
the other Lenders and the Agent.
Affirmative Usual for facilities and transactions of this
----------- type and others to be agreed upon by the Company
Covenants: and the Agent (the Company's agreement not to be
---------- unreasonably withheld) (to be applicable to the
Company and its subsidiaries), including, but not
limited to, maintenance of corporate existence
and rights; performance of obliga tions; delivery
of audited financial statements, other financial
information and notices of default and litiga-
tion; maintenance of properties in good working
order; maintenance of reasonably satisfactory
insurance; compliance with laws; inspection of
books and proper ties; further assurances; and
payment of taxes.
A-8
Negative Covenants: Usual for facilities and transactions of this
------------------ type and others to be agreed upon by the Company
and the Agent (the Company's agreement not to be
unreasonably withheld) (to be applicable to the
Company and its subsidiaries), including, but not
limited to, limitations on dividends on, and
redemptions and repurchases of, capital stock;
limitations on prepayments, redemptions and
repurchases of subordinated debt; limitations on
prepayments, redemptions and repurchases of
senior debt; limitations on liens and sale-
leaseback transactions; limitations on loans and
investments; limitations on debt; limitations on
mergers, acquisitions and asset sales;
limitations on transactions with affiliates;
limitations on changes in business conducted;
limitations on amend ment of debt and other
material agreements; and limita tions on capital
expenditures.
Selected Financial The credit agreement relating to the Senior
------------------ Facilities (the "Credit Agreement") will contain
Covenants: financial covenants determined on a consolidated
--------- basis with respect to the Company and its
subsidiaries (with definitions of financial
terms and levels to be agreed upon), including
but not limited to (a) maximum ratio of Total
Debt to EBITDA ("Leverage Ratio"), (b) minimum
ratio of EBITDA to Interest Expense, and (c)
minimum EBITDA.
Events of Usual for facilities and transactions of this
--------- type (with customary cure periods) and others to
Default: be agreed upon by the Company and the Agent (the
------- Company's agreement not to be unreasonably
withheld), including but not limited to
nonpayment of principal or interest, violation of
covenants, incorrectness of representations and
warranties in any material respect, cross default
and cross-acceleration, bankruptcy, material
judgments, employee benefits, actual or asserted
invalidity of the guarantees or the security
documents and Change in Control (the definition
of which will be agreed upon).
A-9
Voting: Amendments and waivers of the Credit Agreement
------ and the other definitive credit documentation
will require the approval of the Company and
Lenders holding more than 50% of the aggregate
amount of the loans and commitments under the
Senior Facilities (the "Required Lenders"),
except that the consent of each Lender adversely
affected thereby shall be required with respect
to (a) increases in such Lender's commitments,
(b) reductions of principal, interest or fees,
(c) extensions of scheduled amortization or final
maturity and (d) releases of all or substantially
all of the Collateral or certain guarantors
(except where the release of Collateral or a
guarantor is made pursuant to a transaction
approved by Required Lenders or otherwise
permitted by the Loan Documents).
Cost and Yield Usual for facilities and transactions of this
-------------- type on terms to be agreed upon. In addition, the
Protection: Company will obtain interest rate hedging on not
---------- less than 30% of outstandings under the Term
Facility for a period of at least two years, in
form and substance reasonably satisfactory to
Agent and Company.
Assignments The Lenders will be permitted to assign loans and
----------- commitments to other financial institutions in
and Participations: minimum amounts of $5.0 million without
------------------ restriction (other than with the approval of the
Company (not to be unreasonably withheld) in the
case of assignments occurring when no Event of
Default exists to any person other than a Lender
or an affiliate of the assignor). The Agent will
receive a processing and recordation fee of
A-10
$3,500, payable by the assignor and/or the
assignee, with each assignment. Assignments will
be by novation.
The Lenders will be permitted to participate
loans and commitments to other financial
institutions without restriction. Voting rights
of participants shall be limited to matters in
respect of (a) reductions of principal, interest
or fees, (b) extensions of scheduled amortization
or final maturity and (c) releases of all or
substantially all of the Collateral or certain
guarantors (except where the release of
collateral or a guarantor is made pursuant to a
transaction approved by the Required Lenders or
otherwise permitted by the Loan Documents).
Expenses and In addition to those reasonable out-of-pocket
------------ expenses reimbursable under the Commitment
Indemnification: Letter, all reasonable out-of-pocket costs of the
---------------- Agent (and, in the case of enforcement costs and
documentary taxes, the Lenders) associated with
the Senior Facilities are to be paid by the
Company.
The Company will indemnify the Arranger, the
Agent, the Lenders and their respective officers,
directors, employees, affiliates and agents
collectively ("indemnified persons") and hold
them harmless from and against all reasonable
costs, expenses (including reasonable fees,
disbursements and other charges of counsel) and
liabilities of any such indemnified person
arising out of or relating to those matters set
forth in the Commitment Letter, including,
without limitation, any claim or any litigation
or other proceedings (regardless of whether any
such indemnified person is a party thereto) that
relate to the Transactions or any transactions
connected therewith, provided that none of the
--------
indemnified persons will be indemnified for its
bad faith, gross negligence or willful
misconduct.
A-11
Counsel for the Arranger Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
-------------------------
and the Agent:
------------
Governing Law New York.
-------------
and Forum:
----------
A-12
ANNEX I
TO EXHIBIT A
Interest Rates and Fees
-----------------------
Interest Rates: The interest rates under the Senior Facilities will
--------------- be, at the Company's option, either the Base Rate or
the Adjusted LIBOR plus, in each case, the
Applicable Margin. The Applicable Margin shall be
initially as set forth in the following table, and
subsequently, as set forth below under the caption
"Changes in Commitment Fees and Interest Rates":
===============================================
-----------------------------------------------
Adjusted
Base Rate LIBOR
-----------------------------------------------
Revolving Facility 2.00% 3.00%
-----------------------------------------------
Term Loan A 2.00% 3.00%
-----------------------------------------------
Term Loan B 2.50% 3.50%
===============================================
The Company may elect interest periods of 1, 2, 3, 6
months (or, if generally made available by all
Lenders, 2 weeks or 9- or 12-months) for Adjusted
LIBOR borrowings.
Calculation of interest shall be on the basis of
actual days elapsed in a year of 360 days (or 365 or
366 days, as the case may be, in the case of Base
Rate loans based on the Prime Rate) and interest
shall be payable at the end of each interest period
and, for interest periods of six months or longer,
at least every 3 months.
A-I-2
The Base Rate will be defined as the higher of the
Agent's prime lending rate and the rate 2 of 1% in
excess of the Federal funds effective rate.
Adjusted LIBOR will at all times include statutory
reserves.
Letter of Credit Fee: A per annum participation fee equal to the spread
--------------------- over Adjusted LIBOR from time to time in effect for
loans under the Revolving Facility will accrue on
the aggregate face amount of outstanding letters of
credit under the Revolving Facility, payable in
arrears at the end of each quarter and upon the
termination of the Revolving Facility, in each case
for the actual number of days elapsed over a 360-day
year. Such fees shall be distributed to the Lenders
pro rata in accordance with the amount of each such
Xxxxxx's Revolving Facility commitment. In addition,
the Issuing Bank shall receive a fronting fee equal
to 0.25% per annum on all outstanding letters of
credit, payable quarterly in arrears.
Commitment Fees: 0.50% per annum of the undrawn portion of the
---------------- commitments in respect of the Revolving Facility
(subject to reduction as set forth below under the
caption "Changes in Commitment Fees and Interest
Rates"), commencing to accrue upon the execution
and delivery of the Credit Agreement and payable
quarterly in arrears and upon the termination of any
commitment.
Tax Gross Up: All payments shall be made without withholding or
------------- deduction for, or on account of, any present or
future taxes or duties imposed or levied by or on
behalf of any governmental taxing authority or, if
any such withholding or deductions are required to
be made by law, with the payment of such additional
amounts as will
A-I-3
result in holders receiving such amounts as they
would have received had no such withholding or
reduction been required. In connection with its
becoming a party to the Credit Agreement, each
Lender shall deliver such forms regarding the
applicability of U.S. withholding taxes to it as are
usual for facilities of this type. In addition, each
Lender, at the cost and expense of the Company,
shall agree, on customary terms, to take such
actions to mitigate withholdings taxes as are not
adverse to it in its sole judgment.
Changes in Commencing the date of delivery of the first
---------- quarterly financial statements after the Closing
Commitment Fees and Date, so long as no event of default shall have
------------------- occurred and be continuing, Applicable Margins in
Interest Rates: respect of Loans and commitment fees under the
--------------- Senior Facilities will be determined by reference to
the Leverage Ratio as set forth in the following
tables:
Applicable Margin
for Adjusted LIBOR Loans
------------------------
Term Loans A
and
Leverage Revolving
Ratio Facility Loans Term B Loans
-------- -------------- ------------
Less than or equal to 4.0 x 2.75% 3.25%
Less than 3.5 x 2.5% 3.00%
Less than 3.0 x 2.25% 3.00%
Less than 2.5 x 2.00% 3.00%
Less than 2.0 x 1.75% 3.00%
The Applicable Margin for any Base Rate Loan shall
be equal to (i) the Base Rate plus the then
Applicable Margin for that tranche of Adjusted LIBOR
Loan, minus (ii) 1.00%.
Commitment Fees
---------------
Leverage
Ratio Fee
-------- --------------
Less than or equal to 4.0 x .500%
Less than 3.5 x .500%
Less than 3.0 x .375%
Less than 2.5 x .375%
Less than 2.0 x .375%
The Leverage Ratio shall be determined as at the
last day of each fiscal quarter; changes in interest
rates and commitment fees resulting from changes in
such ratio shall become effective on the first day
on which the financial statements covering the
quarter-end date as of which such ratio is computed
are available.
A-I-4
ANNEX II
TO EXHIBIT A
Sources and Uses of Funds
-------------------------
(in millions)
(all figures are approximate)
Uses of Funds Sources of Funds
------------- -----------------
Purchase Price of Cash On Hand
Equity $259.2 $60.0
Options 16.7 Revolving Facility\1\ 15.9
Transaction Expenses 17.5 Term Facility 120.0
-----
Mezzanine Facility 47.5
Equity Contribution
(including management
rollover) 50.0
Total Uses $293.4 Total Sources $293.4
====== ======
------------------------
\1\ $25 million Revolving Facility of which approximately $15.9 million will be
drawn at Closing.
A-II-2
EXHIBIT B
Mezzanine Loan Facility
-----------------------
Summary of Principal Terms and Conditions\1\
-------------------------------------------
Arranger and Credit Suisse First Boston ("CSFB" or the "Agent").
------------
Administrative Agent:
---------------------
Lenders: A syndicate of lenders (the "Lenders") identified in
-------- consultation with and reasonably acceptable to the
Company. At the option of CSFB, the Mezzanine Loans
may be sold to "qualified institutional buyers" as
defined in Rule 144A of the Securities Act of 1933
and otherwise in compliance with Rule 144A. In such
event, Company shall fully cooperate with CSFB to
consummate such sale.
Borrower: Integrated Circuit Systems, Inc. (the "Company").
---------
Amount: Up to $47.5 million aggregate principal amount.
-------
Rank: The loans to be made hereunder by each of the
----- Lenders (the "Mezzanine Loans") will be senior
subordinated, unsecured debt of the Company,
subordinated in right of payment to the Senior
Facilities (as defined in the Commitment Letter) and
to all other existing and future senior indebtedness
of the Company.
Guarantees: The obligations of the Company under the Mezzanine
----------- Loans will be unconditionally guaranteed on a senior
subordinated basis by each existing and subsequently
organized domestic subsidiary of the Company that
guarantees the Senior Facilities.
\1\ All capitalized terms used but not defined herein have the meanings given
to them in the Commitment Letter to which this term sheet is attached.
B-1
Use of Proceeds: The proceeds of the Mezzanine Loans will be used by
---------------- the Company, together with up to $136.0 million of
the proceeds of the Senior Facilities and the
proceeds of the Equity Contribution and cash on hand
at the Company, solely (i) to finance the
Recapitalization, (ii) to repay the Existing
Indebtedness and (iii) to pay related fees and
expenses.
Funding: The Lenders will make the Mezzanine Loans available
-------- on a date simultaneous with the consummation of the
other Transactions (the "Closing Date").
Refinancing: The Company will use all reasonable best efforts to
------------ refinance the Mezzanine Loans as promptly as
practicable after the Closing Date, including,
without limitation, by taking the actions described
under "Affirmative Covenants".
B-2
Maturity: The Mezzanine Loans will mature on the date which
--------- is 364 days after the Closing Date (the
"Mezzanine Maturity Date"). If any Mezzanine
Loan is not repaid in full on or prior to the
Mezzanine Maturity Date, the Lender thereof will
have the option at any time or from time to time
to receive, in exchange for such Mezzanine Loan
or portion thereof, exchange notes of the Company
(the "Exchange Notes") ranking pari passu with
the Mezzanine Loans and having the terms set
forth in the term sheet attached as Annex I to
this Exhibit B. If any Lender does not exchange
its Mezzanine Loan for Exchange Notes on the
Mezzanine Maturity Date, such Lender shall be
required to extend the maturity of such loan to
another date selected by such Lender. If, on or
prior to such extended maturity, such Lender does
not exchange its Mezzanine Loan, such Lender
shall be required again to extend the maturity of
such Mezzanine Loan to another date selected by
such Lender (provided, however, that such Lender
--------- -------
shall not be required to extend the maturity of
its Mezzanine Loans beyond the tenth anniversary
of the Closing Date (the "Final Maturity
Date")) and this sentence shall apply to each
extended maturity of its Mezzanine Loan prior to
the Final Maturity Date (it being understood
that, except to the extent specifically set forth
herein, the substantive economic terms of the
Mezzanine Loans and the Exchange Notes are
intended to be the same). Lenders shall not be
required to exchange their respective Mezzanine
Loans for Exchange Notes only upon the
determination by such Lender that such exchange
is prohibited by law, rule, regulation or order
applicable to such Lender or that such exchange
would reasonably be expected to have an adverse
effect on such Lender or would otherwise be
inconsistent with such Xxxxxx's business
objectives.
B-3
Interest Rates: The Mezzanine Loans will bear interest at a rate of
--------------- 13.0% per annum; increasing by .50% at the end of
each quarter thereafter until the Mezzanine Maturity
Date, but in no event in excess of 15% per annum.
In no event shall the interest rate on the Mezzanine
Loans exceed the highest lawful rate permitted under
applicable law.
Following the Mezzanine Maturity Date, all
outstanding Mezzanine Loans will accrue interest at
the rate provided for the Exchange Notes in Annex I
hereto.
Calculation of interest shall be on the basis of
actual days elapsed in a year of 360.
Interest Payments: Interest will be payable quarterly in arrears.
------------------
Tax Gross Up: All payments shall be made without withholding or
------------- deduction for, or on account of, any present or
future taxes or duties imposed or levied by or on
behalf of any governmental taxing authority or, if
any such withholding or deductions are required to
be made by law, with the payment of such additional
amounts as will result in holders receiving such
amounts as they would have received had no such
withholding or reduction been required. In
connection with its making or acquisition of
Mezzanine Loans, each Lender shall deliver such
forms regarding the applicability of U.S.
withholding taxes to it as are usual for facilities
of this type. In addition, each Lender, at the
reasonable cost and expense of the Company, shall
agree, on customary terms, to take such actions to
mitigate withholding taxes as are not adverse to it
in its reasonable discretion.
Mandatory Subject to compliance with the Senior Facilities,
--------- the Mezzanine Loans will be required to be prepaid
Prepayments: (subject to exceptions to be agreed upon) with:
------------
B-4
(a) subject to exceptions to be agreed upon, 100%
of the net cash proceeds of the issuance or
incurrence of debt by the Company or its
subsidiaries;
(b) a percentage to be agreed on of the net cash
proceeds from any issuance of equity
securities of the Company or its subsidiaries
in any public offering or private placement or
from any capital contribution; and
(c) certain asset sales.
Optional Prepayments: Mezzanine Loans may be repaid upon five days' prior
--------------------- notice to the Agent, in whole or in part at the
option of the Company, in a minimum principal amount
and in multiples to be agreed upon, at any time on
or prior to the first anniversary of the Closing
Date, at the principal amount thereof, plus accrued
and unpaid interest, if any, to the repayment date,
and without premium or penalty at any time
thereafter.
Conditions to The obligations of CSFB and the Lenders to make the
------------- Mezzanine Loans on the Closing Date are subject to
Closing: the satisfaction or waiver of the conditions set
-------- forth in Exhibit C to the Commitment Letter.
Representations and Customary for loans similar to the Mezzanine Loans
------------------- and such additional representations and warranties
Warranties: as may be agreed upon by the Agent and the Company,
----------- including: no Default or Event of Default; absence
of material adverse change; financial statements;
absence of undisclosed material liabilities or
material contingent liabilities; compliance with
laws; solvency; no conflicts with laws, charter
documents or agreements; good standing; payment of
taxes: and ownership of properties;
B-5
Affirmative Customary for loans similar to the Mezzanine Loans
----------- and such others as may reasonably be required by the
Covenants: Agent, including: maintenance of corporate existence
---------- and rights; compliance with laws; performance of
obligations; maintenance of properties in good
repair; maintenance of appropriate and adequate
insurance; inspection of books and properties;
payment of taxes and other liabilities; notice of
defaults, litigation and other adverse action;
delivery of financial statements, financial
projections and compliance certificates; and further
assurances.
In addition, the Company will agree to file a
registration statement under the Securities Act or
prepare an offering memorandum covering senior notes
or other debt or equity securities of the Company
(the "Refinancing Securities") to be issued in a
public offering or private placement to refinance in
full the Mezzanine Facility (the "Loan Refinancing")
and to consummate such Loan Refinancing as soon as
reasonably possible after the Closing Date in an
amount sufficient to refinance all amounts
outstanding under the Mezzanine Facility and on such
terms and conditions (including interest rate,
yield, redemption prices and dates) as CSFB may in
its reasonable judgment determine to be appropriate
in light of prevailing circumstances and market
conditions and the financial condition and prospects
of the Company. The indenture for the Refinancing
Securities will be substantially in the form of
CSFB's standard indenture for high-yield senior
unsecured debt securities, modified as appropriate
to reflect the terms of this transaction and the
financial condition and prospects of the Company and
its subsidiaries, and in form and substance
reasonably satisfactory to CSFB and the Company. If
any Refinancing Securities are issued in a
transaction not
B-6
registered under the Securities Act to effect the
Loan Refinancing, all such Refinancing Securities
shall be entitled to the benefit of registration
rights agreements to be entered into by the Company
in customary form reasonably acceptable to CSFB.
Negative Covenants: Customary for loans similar to the Mezzanine Loans
------------------- and such others as may be agreed upon by the Agent
and the Company, including: limitations on
incurrence of indebtedness (including no senior
subordinated debt other than the Mezzanine Loans);
limitations on loans, liens, investments and joint
ventures; limitations on guarantees or other
contingent obligations; limitations on restricted
payments (including dividends, redemptions and
repurchases of capital stock); limitations on
fundamental changes (including limitations on
mergers, acquisitions and asset sales); limitations
on transactions with affiliates; limitations on
dividend and other payment restrictions affecting
subsidiaries; limitations on lines of business;
limitations on amendment of indebtedness and other
material documents; and limitations on prepayment or
repurchase of other indebtedness.
Events of Default: Customary for loans similar to the Mezzanine Loans
--------------------- and others to be agreed upon by the Agent and the
Company, including: nonpayment of principal,
interest, fees or other amounts when due; violation
of covenants; failure of any representation or
warranty to be true in all material respects;
cross-default and cross-acceleration; Change in
Control; bankruptcy events; material judgments;
ERISA; and actual or asserted invalidity of any
Mezzanine Loan Document.
B-7
Yield Protection and Customary for facilities of this type.
--------------------
Increased Costs:
----------------
Assignments and The Company may not assign its rights or obligations
--------------- in connection with the definite documentation
Participations: relating to the Mezzanine Loans (the "Mezzanine Loan
--------------- Documents") without the prior written consent of
all the Lenders.Lenders will have the right to
assign the Mezzanine Loans and their commitments
with the consent of the Company (such consent not to
be unreasonably withheld) and such assignments will
be by novation which will release the obligation of
the assigning Lender.
Lenders will be permitted to participate their
Mezzanine Loans to other financial institutions;
provided, however, that the Lenders granting
--------- -------
participations retain the voting rights to such
participated amounts. Participants will have the
same benefits as the selling Lenders would have with
regard to yield protection and increased costs, and
provision of information on the Company and its
subsidiaries.
Voting: Amendments and waivers of any provision of any
------- Mezzanine Loan Documents will require the approval
of the Company and Lenders holding commitments or
loans, as the case may be, representing a majority
of the aggregate amount of commitments or loans,
respectively, under the Mezzanine Loan Documents,
except that the consent of all affected Lenders
shall be required with respect to (a) increases in
commitments, (b) reductions of principal, interest
or fees, (c) extensions of the maturity date and (d)
releases of certain guarantors (except where the
release of a guarantor is made pursuant to a
transaction approved by requisite Lenders or
otherwise permitted by the Mezzanine Loans
Documents).
B-8
Expenses and In addition to those reasonable out-of-pocket
------------ expenses reimbursable under the Commitment Letter,
Indemnification: all reasonable out-of-pocket expenses of the Agent
---------------- (and the Lenders for enforcement costs and
documentary taxes) associated with the preparation,
execution and delivery of any waiver or modification
requested by or for the benefit of the Company
(whether or not effective) of, and the enforcement
of, any Mezzanine Loan Document or any document
relating to the refinancing of the Mezzanine Loans
(including the reasonable fees, disbursements and
other charges of counsel for the Agent) are to be
paid by the Company. The Company will indemnify the
Agent and the other Lenders and hold them harmless
from and against all reasonable costs, expenses
(including reasonable fees and disbursements of
counsel) and liabilities arising out of or relating
to those matters set forth in the Commitment Letter,
including, without limitation, any litigation or
other proceeding (regardless of whether the Agent or
any such other Lender is a party thereto) that
relate to the Transactions, the Mezzanine Loans or
refinancing thereof; provided, however, that neither
--------- -------
the Agent nor any such other Lender will be
indemnified for any costs, expense or liability to
the extent resulting from such person's bad faith,
gross negligence or willful misconduct.
Counsel for the Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
---------------
Arranger and the
----------------
Administrative Agent:
---------------------
Governing Law and New York.
-----------------
Forum:
------
B-9
ANNEX I
TO EXHIBIT B
Exchange Notes
--------------
Summary of Principal Terms and Conditions1
------------------------------------------
Issuer: The Company will issue Exchange Notes under an
------ indenture that complies with the Trust Indenture Act
(the "Indenture").
Principal Amount: The Exchange Notes will be available only in exchange
---------------- for the Mezzanine Loans. The face amount of any
Exchange Note will equal the aggregate principal amount
(including any accrued interest not required to be paid
in cash) of the Mezzanine Loan for which it is
exchanged.
Maturity: The Exchange Notes will mature on the tenth anniversary
-------- of the Closing Date.
Interest Rate: Exchange Notes will bear interest at a fixed rate of
------------- 15.0% per annum.
In no event shall the interest rate on the Exchange
Notes exceed the highest lawful rate permitted under
applicable law.
Tax Gross Up: Same as Mezzanine Loans.
------------
------------------------
\1\ All capitalized terms used but not defined herein have the meanings given
to them in the Commitment Letter to which this term sheet is attached.
B-I-2
Rank: Exchange Notes will rank pari passu with Mezzanine
----- ---- -----
Loans but will be subordinated in right of payment
to all existing and future senior indebtedness of
the Company.
Mandatory Redemption: Same as Mezzanine Loans.
---------------------
Optional Redemption: The Exchange Notes will be redeemable at the option
-------------------- of the Company, in whole or in part, at any time
after the fifth anniversary of the Closing Date at
par plus accrued and unpaid interest to the
----
redemption date and a call premium to be determined;
provided that a portion (to be determined) of the
--------
proceeds of a public offering of Common Stock by the
Company may be used to redeem the Exchange Notes
prior to the fifth anniversary of the Closing Date
on terms to be agreed upon.
Registration Rights: The Company will use its reasonable best efforts to
------------------- cause to become effective an exchange offer
registration statement or a shelf registration
statement no later than 120 days from the date of
issuance of the Exchange Notes, and the Company will
use its reasonable best efforts to keep such
registration statement effective and available
(subject to customary exceptions) until it is no
longer needed to permit unrestricted resales of such
Exchange Notes, but in no event longer than one year
from the date of issuance of any such Exchange
Notes. If the registration statement ceases to be
effective or ceases to be useable in connection with
resales of such Exchange Notes (subject to customary
exceptions), cash interest will accrue and be
payable (in addition to interest otherwise accruing
on the Exchange Notes) at a rate of 0.50% per annum
until such default shall be cured.
B-I-3
The Company agrees, at its expense, to assist CSFB
in connection with resales of any of the Exchange
Notes, including making its senior officers
available to CSFB, including making them available
to assist in the preparation of marketing materials
relating to any resales, to participate in due
diligence sessions and to participate in road shows
or other presentations to prospective purchasers of
such Exchange Notes.
Exchange Notes Escrowed: The Exchange Notes will be delivered on the Closing
------------------------ Date and held, undated, in escrow by a mutually
agreeable fiduciary.
Right to Transfer The holders of the Exchange Notes shall have the
----------------- absolute and unconditional right to transfer such
Exchange Notes: Exchange Notes to any third parties in compliance
--------------- with applicable law.
Covenants: Those typical for an indenture governing a high-
---------- yield senior subordinated note issue, including a
"change in control" put provision, and, to the
extent deemed reasonably necessary by CSFBC and
reasonably satisfactory to the Company, certain
covenants contained in the Mezzanine Loan
documentation.
Events of Default: Those typical for an indenture governing a high-
----------------- yield senior subordinated note issue.
Governing Law New York.
-------------
and Forum:
----------
B-I-4
EXHIBIT C
CONDITIONS\1\
--------------
CSFB has conducted its due diligence with respect to the Facilities
and the Transactions and is pleased to inform you that it is satisfied with the
results thereof; however, the commitments of CSFB pursuant to the Letter are
subject to the condition that after the date of the Letter nothing becomes known
to CSFB that is inconsistent in a material and adverse manner with anything
disclosed to CSFB prior to the date of the Letter or anything previously
obtained by CSFB during such due diligence.
In addition to the foregoing, the commitments of CSFB pursuant to the
Letter are also subject to the following conditions:
(1) the preparation, execution and delivery of definitive
documentation in connection with the Facilities reasonably satisfactory
to CSFB, and the satisfaction (as reasonably determined by CSFB) of
customary closing conditions for transactions similar to the Senior
Facilities and the Mezzanine Facility, as applicable;
(2) CSFB and the Lenders shall be reasonably satisfied as of the
Closing Date with the material terms and conditions of the
Recapitalization Agreement and each other agreement entered into in
connection with the Transactions and with all legal, tax and accounting
matters (it being understood that a failure to obtain recapitalization
accounting treatment with respect to the Transactions will not give
rise to rights on the part of CSFB hereunder) relating to the
Transactions that would reasonably be expected to have a Material
Adverse Effect, including without limitation, any such matters
pertaining to pending or potential litigation with respect to the
Transactions and requisite stockholder or governmental consents or
approvals; provided, however, that the failure of the Merger and
related transactions to be eligible for recapitalization accounting
shall not be considered a failure to satisfy any of the conditions to
the commitments of CSFB stated herein;
(3) after giving effect to the Transactions and the other transactions
contemplated by the Letter, neither any Loan Party nor any of their
subsidiaries
---------------------------
\1\ All capitalized terms used but not defined herein have the meanings given to
them in the Commitment Letter to which this Exhibit C is attached.
C-1
shall have outstanding any indebtedness or preferred stock other than (a) the
loans under the Senior Facilities, (b) the Alternative Securities or the loans
under the Mezzanine Facility, and (c) other indebtedness or preferred stock to
be agreed upon;
(4) there shall not have occurred and be continuing (a) any general
suspension of trading in securities on the New York or American Stock
Exchange or in the NASDAQ National Market System (other than circuit
breakers), (b) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, or (c) any other
material adverse change in banking or capital market conditions that has
had a material adverse effect on the syndication of leveraged bank credit
facilities or the consummation of high yield offerings, as the case may be,
that CSFB reasonably determines makes it impracticable to consummate the
Alternative Securities Offering or successfully syndicate the Senior
Facilities or the Mezzanine Facility;
(5) CSFB's satisfaction that, immediately prior to and during the
marketing period for either the syndication of (a) the Senior Facilities or
(b) the Mezzanine Facility, there shall be no competing issues of debt
securities or commercial bank facilities (other than the Senior Facilities
and the Mezzanine Facility, or other permitted indebtedness thereunder) of
any Loan Party or any of their affiliates;
(6) the receipt by CSFB and, if applicable, the Lenders, on or before the
closing of the Transactions, of financial statements of the Company
(including notes thereto), consisting of (a) audited and pro forma balance
sheets as of the end of each period in the 3 fiscal-year period most
recently ended, (b) audited and pro forma statements of operations and cash
flows for each period in the 3 fiscal-year period ending June 30, 1998, (c)
consolidated financial statements for each period in the 3 fiscal-year
period most recently ending and supporting documentation satisfactory to
CSFB, (d) comparable unaudited historical and pro forma interim financial
statements covering all quarterly or other appropriate periods subsequent
to the fiscal year most recently ended, and (e) such final projections in
respect of the Loan Parties and their respective subsidiaries as CSFB may
reasonably request; and all such financial statements, historical or pro
forma, delivered pursuant to this paragraph (vi) shall be in compliance
with the requirements of Regulation S-X for a public
C-2
offering registered under the Securities Act of 1933, and all financial
statements and projections referred to in this paragraph (vi) shall not be
materially inconsistent with financial statements, projections and
estimates previously provided to CSFB and, if applicable, the Lenders;
(7) payment of fees and expenses;
(8) since June 27, 1998, there shall not have occurred or become known to
CSFB any event or events, adverse condition or change that, individually or
in the aggregate, would reasonably be expected to have a Material Adverse
Effect; and
(9) the Closing Date shall occur on or before June 30, 1999.
In the event that anything arising under the first paragraph of this
Exhibit C comes to the attention of CSFB or that any of the other conditions set
forth above or in the Facilities Documents are not satisfied, CSFB reserves the
right, in its sole discretion, to either (x) suggest alternative financing
amounts or structures that ensure adequate protection for CSFB and the Lenders
(in consultation with, and as approved by, the Investors and the Company) or (y)
decline to participate in the proposed financings.
As used herein, a "Material Adverse Effect" shall mean the result of
one or more events, changes or effects which, individually or in the aggregate,
would reasonably be expected to have a material adverse effect on (i) the
business, results of operations, financial condition or prospects of the Company
and its subsidiaries, in each case, taken as a whole, or (ii) the validity or
enforceability of any of the documents entered into in connection with the
Transactions or the other transactions contemplated by the Letter or the rights,
remedies and benefits available to the parties thereunder.
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