Exhibit (b)
[LETTER HEAD OF BANC ONE CAPITAL MARKETS]
Banc One
Capital Markets, Inc.
July 6, 2001
Broder Bros., Co.
00000 Xxxx Xx.
Xxxxxxxx, XX 00000
Re: Commitment Letter
Gentlemen/Ladies:
Broder Bros., Co. (the "Borrower") has requested credit facilities (the
"Facilities") in the aggregate principal amount of $127,500,000 (the "Aggregate
Commitment", an increase from the existing $105,000,000 credit facilities), with
the possibility of increasing such amount to up to $165,000,000 under the terms
described in the Term Sheet referred to below, all on the terms in the summary
term sheet (the "Term Sheet") and subject to the conditions set forth herein.
The Facilities will be used by the Borrower to refinance, through an amended
credit agreement, the existing bank credit facility of the Borrower, to
consummate the proposed acquisition (the "Acquisition") of a company code named
Flipper (the "Target") and for working capital and general corporate purposes,
including acquisitions.
Bank One, Michigan is pleased to offer to act as administrative agent (the
"Agent") under the Facilities and to provide you with a financing commitment in
the amount of $25,000,000 as part of the Facilities (the "Bank One Commitment"),
and Banc One Capital Markets, Inc. ("BOCM") is pleased to offer to act as sole
book runner and lead arranger (the "Arranger") with respect to the Facilities,
in each case on the terms and subject to the conditions set forth. As of July 3,
2001, the Arranger has received commitment letters for the Facilities from a
group of lenders (collectively, including the Agent in its capacity as a lender,
the "Lenders") in an aggregate amount of $127,500,000 (including the Bank One
Commitment) on the terms set forth on the Term Sheet and subject to the
conditions set forth herein, which completes the Aggregate Commitment. Borrower
acknowledges that it has reviewed and approved the list of Lenders and the
allocation of the commitments among the Lenders. The Agent reserves the right to
allocate the Bank One Commitment among its affiliates, and may fund its advances
and provide the Bank One Commitment hereunder from any of its affiliates.
The obligation of the Agent and the other Lenders to make loans under the
Facilities is subject to, the following conditions:
1. Tender Offer shall have been consummated in accordance with the terms of the
Merger Agreement and any amendments or changes thereto shall be reasonably
satisfactory to the Agent and the Arranger and in accordance with all laws
and regulations.
2. Opening total debt to EBITDA ratio of not greater than 5.25:1.00 and senior
debt to EBITDA of not greater than 4.50:1.00.
3. After giving effect to the acquisition, opening unused availability of at
least $5,000,000.
[LOGO OF BANK ONE]
4. Compliance with all applicable requirements of Regulations U, T and X of
the board of governors of the Federal Reserve system.
5. Initial funding shall occur no later than the earlier of (a) August 31,
2001 (unless extended by the Lenders) or (b) the date the Acquisition is
closed.
6. No default or unmatured default shall exist on the funding date. No
material adverse change in the business, financial condition, operations or
properties of the Borrower and its subsidiaries taken as a whole or of the
Target and its subsidiaries taken as a whole since March 31, 2001.
7. Receipt of a copy of any fairness opinion from the Target's investment
banker relating to the terms of the Acquisition.
8. The Agent shall have received standard legal opinions, solvency
certificates (from the Borrower), proforma borrowing base certificates and
proforma covenant compliance certificates.
9. Liens creating a first priority security interest in all of the collateral,
subject to exclusions for assets not material and to be negotiated.
10. Preparation, execution and delivery of a credit agreement amending and
restating the existing bank credit agreement of the Borrower (the "Credit
Agreement") and other loan documents (collectively, together with the
Credit Agreement the "Loan Documents") mutually acceptable to the Borrower,
the Agent and the Lenders. The Loan Documents will be substantially similar
to the existing loan documents. Receipt of other customary closing
documentation and satisfaction of other closing conditions, including legal
opinions of the Borrower's counsel.
11. No materially adverse change prior to the simultaneous closing of the
Acquisition and the Credit Agreement in primary and secondary loan
syndication markets or capital markets generally that has a material
adverse effect on the ability of the Agent to syndicate the Facilities.
The Borrower acknowledges that neither the Agent, the Arranger nor any other
Lender is responsible for the funding required under any other Lender's
commitment.
Borrower hereby agrees to reimburse the Agent and the Arranger for all
reasonable out-of-pocket expenses (including the reasonable fees, time charges
and expenses of attorneys for the Agent and the Arranger) incurred in connection
with the preparation, negotiation, execution, syndication and enforcement of
this Commitment Letter, the Term Sheet, the Fee Letter of even date herewith
between Borrower, the Agent and the Arranger (the "Fee Letter"), the Loan
Documents and any other documentation contemplated hereby or thereby and for all
other reasonable fees and expenses of the Agent and the Arranger, including
without limitation travel expenses and other costs incurred in connection with
the Agent's and the Arranger's due diligence prior to the date hereof and in
connection with any due diligence in connection with any subsequent
acquisitions. Borrower hereby further agrees to indemnify and hold harmless the
Agent, the Arranger, the Lenders, and their respective officers, employees,
agents and directors (each an "indemnified party") against any and all losses,
claims, damages, costs, expenses (including the reasonable fees, time charges
and expenses of attorneys for the indemnified parties, which attorneys may be
employees of the indemnified parties) or liabilities of every kind whatsoever
and whenever arising (collectively, the "Indemnified Obligations") to which each
of the indemnified parties may become subject at any time in connection in any
way with the transactions (including without limitation the Acquisition and all
matters related thereto) which are the subject of, or related to, this
Commitment Letter, including, without limitation, expenses incurred in
connection with investigating or defending against any liability or action
(whether or not such indemnified party is a party thereto), except that Borrower
shall not be liable for any Indemnified Obligations of any indemnified party to
the extent any of the foregoing is found to have arisen solely from such
indemnified party's gross negligence or willful misconduct. Neither the
Arranger, the Agent nor any other Lender shall be liable under this commitment
letter or any Loan Document or in respect of any act, omission or event relating
to the transaction contemplated hereby or thereby, on any theory of liability,
for any special, indirect, consequential or punitive damages.
Borrower's obligations under the immediately preceding paragraph shall
continue and are and shall remain absolute obligations of Borrower, whether or
not Loan Documents are executed or any loan is made by the Lenders or any
conditions of lending are met.
This Commitment Letter, the Fee Letter and the Term Sheet are intended as
an outline only and do not purport to summarize all of the terms, conditions,
covenants, representations, warranties and other provisions which will be
contained in definitive legal documentation for the transaction which is the
subject of this Commitment Letter. This Commitment Letter, the Fee Letter, and
the Term Sheet are for Borrower's confidential use only and may not be disclosed
by Borrower to any person other than the Borrower's and the Target's officers,
agents, advisors, attorneys and accountants, in each case, only in connection
with the proposed transaction and only to whom it is necessary to disclose the
information (and whom, in each case, shall be made aware of and agree to be
bound by this promise not to disclose), except where disclosure is required by
law or regulation or where the Agent or the Arranger consents to the proposed
disclosure, provided that nothing herein shall limit the ability of the Agent or
Arranger to disclose the terms and conditions of the proposed financing to any
potential lender, assignee or participant after this commitment letter is
accepted by Borrower, but only in connection with the transactions contemplated
hereby and provided that such parties are given such information on a
confidential basis. Officers, directors, employees and agents of each of the
Arranger and the Agent shall at all times have the right to share information
received from Borrower and its affiliates and their respective officers,
directors, advisors, attorneys, accountants, employees and agents.
Please indicate Xxxxxxxx's acceptance of the terms herein contained in the
space indicated below and return a copy of this Commitment Letter so executed to
the Arranger. By its acceptance hereof, Xxxxxxxx agrees to pay, or cause the
Borrower to pay, the Agent and the Arranger the fees described in the Fee Letter
pursuant to the terms of the Fee Letter. This letter will expire at 5:00 p.m.
(Detroit time) on July 9, 2001 unless on or prior to such time the Arranger
shall have received a copy of this letter executed by Xxxxxxxx. Notwithstanding
timely acceptance of this Commitment Letter pursuant to the preceding sentence,
this Commitment Letter will automatically terminate unless definitive Loan
Documents are executed on or before August 31, 2001 (unless extended by the
Lenders). This Commitment Letter, the Fee Letter, and the Term Sheet supersede
any and all prior versions hereof or thereof. This Commitment Letter may only
be amended by a writing signed by all parties hereto.
IF THIS COMMITMENT LETTER, THE TERM SHEET, THE FEE LETTER, OR ANY ACT,
OMISSION OR EVENT HEREUNDER OR THEREUNDER BECOMES THE SUBJECT OF A DISPUTE, THE
BORROWER, THE AGENT AND THE ARRANGER EACH HEREBY WAIVE TRIAL BY JURY. THIS
COMMITMENT LETTER SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
MICHIGAN.
Sincerely,
BANK ONE, MICHIGAN, individually and as Agent
By: /s/ [ILLEGIBLE]
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Title: FIRST VICE PRESIDENT
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BANC ONE CAPITAL MARKETS, INC.,
as Arranger
By: /s/ [illegible]
-----------------------------------------
Title: DIRECTOR
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ACCEPTED AND AGREED TO:
BRODER BROS., CO.
By: /s/ XXXXXXX X. XXXX
--------------------------
Title: CEO
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Date: July 6, 2001
Confidential Broder Bros., Co.
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BRODER BROS., CO
SUMMARY TERM SHEET
July 2001
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This Term Sheet is intended as a proposal for discussion purposes and is not a
commitment. It is intended as an outline and does not purport to summarize all
the terms, conditions, representations, warranties and other provisions that
will be contained in definitive legal documentation.
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BORROWER: Broder Bros., Co. ("Broder" or the "Borrower").
GUARANTORS: All subsidiaries of the Borrower, provided that the
Target (as defined below) will become a guarantor upon
consummation of the Merger (as defined below).
ADMINISTRATIVE AGENT: Bank One, Michigan
LEAD ARRANGER AND SOLE Banc One Capital Markets, Inc. ("BOCM" or the
BOOK RUNNER: "Arranger").
FACILITIES:
REVOLVING CREDIT: Secured Revolving Credit Facility (the "Revolving
Credit Facility") to include the issuance of Letters of
Credit ("L/C's").
Amount: $127,500,000 Secured Revolving Credit Facility. The
Credit Agreement will provide that the Borrower may, at
its option but with the consent (not to be unreasonably
withheld) of the Agent and subject to customary
conditions, request to increase the Secured Revolving
Credit Facility by up to $30,000,000 without the
consent of the Lenders (provided that one or more
existing Lenders or other financial institutions
selected by the Arranger in consultation with the
Borrower agree to any such increased commitments).
L/C Sublimit: Up to $10,000,000 in Letters of Credit.
Purpose: Working capital and general corporate purposes,
including acquisitions. The initial borrowings will
refinance the existing bank credit facility (and will
amend the existing bank credit agreement), fund the
acquisition (the "Acquisition") of all of the
outstanding capital stock of Full Line Distributors
(the "Target"), refinance all of Target's existing
indebtedness and pay all of the fees and expenses of
the Acquisition (collectively, the "Acquisition
Costs"). The
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Banc One Capital Markets, Inc. 1 July 2001
Confidential Broder Bros., Co.
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Acquisition will be effected through on all cash tender
offer(the "Tender Offer") by a newly formed acquisition
subsidiary of Broder ("Merger Sub") followed by the
merger of Merger Sub with and into Target, with Target
being the surviving corporation (the "Merger"). The
Revolving Credit Facility will provide that Xxxxxx will
be entitled to borrow, upon the terms and conditions
outlined therein, at the time of the consummation of the
Tender Offer (the "Tender Offer Closing Date")
sufficient funds to pay the Acquisition Costs (assuming
consideration (comprised of acquisition of stock and
refinancing of indebtedness) does not exceed $28 million
and fees and expenses related to the Acquisition do not
exceed $2 million) and that Xxxxxx will be able to lend
to Target in the form of an intercompany loan (which
loan shall be on terms satisfactory to the Agent)
sufficient funds to refinance its outstanding
indebtedness as of the Tender Offer Closing Date. Any
amounts borrowed on the Tender Offer Closing Date and
not immediately used shall be held in escrow pending
such use.
Maturities: May 3, 2005.
SYNDICATION MANAGEMENT: The Arranger will, in consultation with the Borrower,
manage all aspects of the syndication including,
without limitation, the timing of offers to potential
Lenders, the amounts offered to potential Lenders, the
acceptance of commitments, and the compensation
provided.
ALLOCATION/RATABLE SHARE: The Arranger shall, in consultation with the Borrower,
allocate the commitments received from the Lenders.
The Agent reserves the right to allocate its commitment
among its affiliates
BORROWING OPTIONS: Adjusted LIBOR plus the Applicable Margin.
Bank One's Prime Rate plus the Applicable Margin.
LIBOR loans will be available for interest periods of
one, two, three or six months. All interest and fees
will be calculated on a 360-day basis, except prime
rate based loans will be calculated on a 365-day basis.
BORROWING OPTIONS (cont.): The Bank One "Prime Rate" means the greater of (i) the
prime rate of interest rate announced by Bank One from
time to time changing when and as said rate changes or
(ii) the federal funds rate + 1/2%.
"LIBOR" means the rate at which deposits in U.S.
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Banc One Capital Markets, Inc. 2 July 2001
Confidential Broder Bros., Co.
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Dollars are offered by Bank One in the London interbank
market two business days prior to the borrowing date,
adjusted for reserves.
INCREASED COSTS: Consistent with existing credit agreement, the
agreement will contain customary provisions regarding
availability, increased costs (including capital cost
increases imposed by regulatory authorities),
illegality and early payment of LIBOR loans prior to
the end of an interest period.
SWINGLINE FACILITY: Bank One will provide a $5,000,000 swingline to the
Borrower, cross-defaulted to the Revolving Credit
Facility and with pro rata risk participations from the
syndicate of Lenders. At all times, sufficient
availability under the Revolving Credit Facility must
be in place to take out outstandings under the
Swingline Facility. Any borrowings under this Facility
will be at Bank One's Prime Rate plus the Applicable
Margin. Swing loans will count as usage against the
facility amount and borrowing base, but will not count
as usage for purposes of the commitment fee calculation.
FEES:
Commitment Fee: A commitment fee, at a rate determined by the pricing
matrix below, on the average daily unborrowed portion
of the Revolving Credit Facility payable quarterly in
arrears to the Lenders (including the Agent as a
Lender) ratably from the closing date until termination
of Revolving Credit Facility Commitments
Fees to Lenders: Per separate fee letter.
Agent and other Fees: Such fees payable to the Arranger and Agent as are
specified in the fee letter between the Agent and the
Borrower.
L/C Fees:
Fronting Fee: A fronting fee of 0.25% of the face amount of each L/C
issued shall be payable to the Agent as L/C issuer,
together with any documentary and processing charges in
accordance with the Agent's standard schedule for such
charges with respect to the issuance, amendment,
cancellation, negotiation or transfer of each L/C and
each drawing made thereunder.
Letter of Credit Fee: A letter of credit fee, equal to the per annum
percentage identified as the Applicable Margin for
LIBOR loans, on the face amount of each L/C, payable
quarterly in arrears to the Lenders (including the
Agent as a Lender) ratably.
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Banc one Capital Markets, Inc. 3 July 2001
Confidential Broder Bros., Co
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Pricing Matrix
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(expressed in basis points)
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Leverage Ratio Applicable Margin for Applicable Margin For Commitment Fee
LIBOR Loans and Letters of Prime Rate Loans
Credit
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***** 5.00 325 150 62.5
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***** 4.50 300 125 50
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***** 4.00 275 100 50
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***** 3.50 250 75 50
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***** 3.00 225 50 50
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**** 3.00 200 25 37.5
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* Leverage Ratio to be defined as Total Debt to Adjusted EBITDA
** The Applicable Margin and the Commitment Fees will vary with the
Borrower's Leverage Ratio, adjusted 45 days after each fiscal quarter,
provided that the Applicable Margin will not be decreased in connection
with any adjustment prior to the adjustment for the fiscal quarter ending
December 29, 2001.
*** Initial Applicable Margin based on a Leverage Ratio of greater than or
equal to 4.50 but less than 5.00
**** Less than
***** Greater than/equal to
After an event of default at the election of the Required Lenders, the interest
rate or any letter of credit fee will be equal to the then highest rate (or fee)
under the Revolving Credit Facility plus 2% per annum.
DRAWDOWNS: Minimum amounts of $1,000,000 with additional
increments of $250,000 in the case of LIBOR advances
and in minimum amounts of $500,000 with additional
increments of $100,000 in the case of Prime Rate
advances. Drawdowns are at the Borrower's option with
same-day notice for Prime Rate loans and three business
days for LIBOR Loans.
STANDBY AND COMMERCIAL LETTERS OF CREDIT: Up to $10,000,000 of the Revolving Credit Facility may
be used to issue L/C's by the Agent, with pro rata
risk participations from the syndicate of Lenders.
Expiration of L/C's will be a maximum of 12 months from
date of issuance, subject to automatic annual renewals
with annual termination rights of the Agent, but not
later than the expiry of the Revolving Credit Facility.
Any L/C's outstanding will be considered usage for
purposes of the borrowing base and in calculating the
Commitment Fee.
PREPAYMENTS: Prime Rate loans may be prepaid at any time. LIBOR
loans may not be prepaid before the end of an Interest
Period unless break funding costs, if any, are paid.
SECURITY/ The Revolving Credit Facility will be initially
BORROWING BASE: collateralized through a first (subject to customary
exceptions) security interest in all of the Borrower's
and
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Banc One Capital Markets, Inc. 4 July 2001
Confidential Broder Bros., Co.
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its subsidiary's (other than Target) assets of any
kind (subject to agreed upon purchase money liens and
other customary exceptions) and a first priority
perfected security interest in all of the shares of
Target purchased in the Tender Offer. Following the
Merger, the Revolving Credit Facility will be
collateralized through a first (subject to customary
exceptions) security interest in all of the Borrower's
and its Subsidiaries' assets (including Target). The
Revolving Credit Facility will be governed by a
Borrowing Base of:
. 80% of Eligible Accounts Receivable, plus
. 60% of Eligible Inventory, plus
. A fixed asset reliance amount initially set at
$11,875,000 until May 3, 2002 (provided that if
the sale of a substantial portion of the Target's
manufacturing business occurs prior to May 3, 2002
then the fixed asset reliance will reduce to $8,875,000
upon such sale), $7,625,000 on May 3, 2002 until May 3,
2003, $4,500,000 on May 3, 2003 until May 3, 2004,
and $-0- thereafter, in each case minus for each of the
above amounts, (a) on cash proceeds from the sale of the
Target's manufacturing business in excess of $8,000,000,
provided that such amount may not be less than $-0-
(the foregoing amount defined as the "Fixed Asset
Reliance")
Eligible accounts receivable will not include accounts
owing more than 60 days after the due date, foreign
accounts in excess of $1,000,000 in aggregate amount
which are not supported by letters of credit, affiliate
accounts and other ineligible accounts consistent with
the existing credit agreement. Eligible inventory
shall not include work in process and other ineligible
inventory consistent with the existing credit agreement.
REPRESENTATIONS AND WARRANTIES: The Borrower will make usual representations and
warranties, including without limitation with respect
to its financial statements, litigation, ERISA and
absence of material adverse change consistent with
existing credit agreement.
COVENANTS: The Credit Agreement will contain customary affirmative
and negative covenants consistent with the existing
credit agreement except as specified by the following:
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Banc One Capital Markets, Inc. 5 July 2001
Confidential Broder Bros., Co.
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1. Fixed Charge Coverage Ratio not less than the following
amounts:
Period Ratio
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Closing date through December 30, 1.0:1.0
2002
For the period from and including 1.05:1.0
December 31, 2002 through and
Including December 30, 2003
For the period from and including 1.1:1.0
December 31, 2003 and as of the
End of each fiscal quarter thereafter
2. Interest Coverage Ratio of not less than the
following amounts:
Period Ratio
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Effective Date through December 30, 2.00:1.0
2001
For the period from and including 2.10:1.0
December 31, 2001 through and
Including December 30, 2002
For the period from and including 2.25:1.0
December 31, 2002 through and
Including December 30, 2003
For the period from and including 2.35:1.0
December 31, 2003 through and
Including December 30, 2004
For the period from and including 2.5:1.0
December 31, 2004 and as of the
End of each fiscal quarter thereafter
3. A Leverage Ratio of not more than the following
amounts:
Period Ratio
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Effective Date through June 29, 5.50:1.0
2002
For the period from and including 5.25:1.0
June 30, 2002 through and
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Banc One Capital Markets, Inc. 6 July 2001
Confidential Broder Bros., Co.
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Including June 29, 2003
For the period from and including 5.00:1.0
June 30, 2003 through and
Including June 29, 2004
For the period from and after 4.75:1.0
June 30, 2004
4. A Senior Leverage Ratio of not more than the
following amounts:
Period Ratio
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Effective Date through June 29, 4.75:1.0
2002
For the period from and including 4.50:1.0
June 30, 2002 through and
Including June 29, 2003
For the period from and including 4.25:1.0
June 30, 2003 through and
Including June 29, 2004
For the period from and after 4.00:1.0
June 30, 2004
5. Annual capital expenditures not to exceed $6,000,000,
with a carry forward from the unused amount from the
previous fiscal year without giving effect to any
previous carry forward.
6. Acquisitions subject to the following conditions: (a)
the aggregate consideration paid for any single
acquisition or series of related acquisitions (other
than the Acquisition completed at closing) shall not
exceed $30,000,000, (b) Borrower shall have unused
availability of at least $5,000,000 after giving effect
to the acquisition and the Leverage Ratio and Senior
Leverage Ratio each must be at least 0.25 below the
level required under the Credit Agreement, (c) such
acquisition shall not be hostile and the target of the
acquisition shall be in the same line of business or in
a line of business reasonably related thereto and
located in the United States, Canada, Germany or the
United Kingdom and (d) the satisfaction of other
conditions to such acquisition consistent with the
existing credit agreement.
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Banc One Capital Markets, Inc. 7 July 2001
Confidential Broder Bros., CO.
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7. Other affirmative and negative covenants consistent
with the existing bank credit agreement, including
without limitation, restrictions on debt, liens,
guarantees, mergers, sale of assets (except for the
sale of the Target's manufacturing business and of the
Target's St. Louis facility), dividends, transactions
with affiliates, sale and leaseback transactions,
negative pledge clauses, investments, loans and
advances, prepayment of other debt and modification of
other debt agreements.
REPORTING REQUIREMENTS: Customary in credit agreements of this nature,
including, but not limited to the following:
1. Annual audited financial statements within 90 days of
each fiscal year end.
2. Monthly financial statements within 45 days of each
month end.
3. Quarterly covenant compliance certificates signed by a
corporate officer.
4. Monthly borrowing base certificates signed by a
corporate officer, with supporting detail.
5. Annually prepared budget and forecasts.
6. Semi-annual collateral field audits at the Borrower's
expense.
7. Weekly summary borrowing base exhibits.
CONDITIONS TO CLOSING: The Credit Agreement will contain the conditions to
closing, set forth below:
. Tender Offer shall have been consummated in accordance
with the terms of the Merger Agreement and any
amendments or changes thereto shall be reasonably
satisfactory to the Agent and the Arranger and in
accordance with all laws and regulations.
. Opening financial covenant level and borrowing base
availability consistent with terms of this Term Sheet.
. Compliance with all applicable requirements of
Regulations U, T and X of the board of governors of the
Federal Reserve system.
. Initial funding shall occur no later than the earlier
of (a) August 31, 2001 or (b) the date the Acquisition
is closed.
. No default or unmatured default shall exist on the
funding date. No material adverse change in the
business, financial condition, operations or properties
of the Borrower and its subsidiaries taken as a whole
or of the Target since March 31, 2001.
. Receipt of a copy of any fairness opinion from the
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Banc One Capital Markets, Inc. 8 July 2001
Confidential Broder Bros., Co.
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Target's investment banker relating to the terms of the
Acquisition.
. The Agent shall have received such opinions and
certificates of value, solvency, financial statements
and projections and other appropriate factual
information and advice in form and substance
satisfactory to the Agent.
. Liens creating a first priority security interest in
all of the collateral, subject to exclusions for assets
not material and to be negotiated
Receipt of other customary closing documentation and
satisfaction of other closing conditions, including,
without limitation, satisfactory loan documents and
legal opinions of the Borrower's counsel.
PARTICIPATIONS/ ASSIGNMENTS The Banks may sell assignments with the consent of the
Borrower (such consent not to be unreasonably withheld,
and shall not be required during an event of default or
if such assignment is to an affiliate or another
existing lender) and the Agent or participations in
their notes and/or commitments, subject to certain
restrictions under the facility.
DEFAULTS: The Agreement will contain customary defaults (with
customary cure periods), including, without limitation,
nonpayment of principal and interest, cross default to
other indebtedness of the Borrower or any subsidiary,
and the failure to consummate the Merger within 120
days following the Tender Offer Closing Date.
GOVERNING LAW: State of Michigan
OTHER: Required Lenders means Lenders holding at least 51% of
the commitments or, if the commitments have been
terminated, of the outstanding advances. All reasonable
legal fees and expenses are for the Borrower's account.
This term sheet is intended as an outline only and does
not purport to summarize all the conditions, covenants,
representations, warranties and other provisions which
would be contained in definitive legal documentation
for the financing contemplated hereby. The commitment
of the Agent and the other Lenders is subject to, among
other conditions, the negotiation and execution of
definitive Loan Documents in form and substance
satisfactory to the Agent and the other Lenders and
their respective counsel.
DEFINITIONS:
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Banc One Capital Markets, Inc. 9 July 2001
Confidential Broder Bros., Co.
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Adjusted EBITDA: Shall mean earnings (subject to certain exclusions and
adjustments to be negotiated) before interest expense
and taxes, plus any depreciation and amortization
expense.
Fixed Charge Coverage Ratio: Shall mean Adjusted EBITDA plus rentals and leases and
minus all capital expenditures not financed by
permitted debt, divided by cash interest and similar
expense plus all principal payments, management,
consulting and similar fees, leases/rentals, reductions
in the Fixed Asset Reliance, taxes, dividends,
redemptions and other restricted payments.
Interest Coverage Ratio: Shall mean Adjusted EBITDA divided by cash interest and
similar expense.
Leverage Ratio Shall be defined as the Borrower's consolidated ratio
of Total Debt to Adjusted EBITDA calculated for the
trailing four fiscal quarters then ending on a pro
forma basis acceptable to the Agent.
Senior Leverage Ratio Shall be defined as the Borrower's consolidated ratio
of Senior Total Debt to Adjusted EBITDA calculated for
the trailing four fiscal quarters then ending on a pro
forma basis acceptable to the Agent.
Senior Total Debt: Shall mean Total Debt minus all subordinated debt.
Total Debt: Shall mean the sum of debt, guaranteed debt, and
similar obligations, including without limitation
capitalized lease obligations, letters of credit and
off-balance sheet financing.
All definitions will be consistent with existing credit agreement, provided that
the exclusions and adjustments to Adjusted EBITDA are to be negotiated and
satisfactory to the Borrower, Agent and Required Lenders.
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Banc One Capital Markets, Inc. 10 July 2001
