[American Financial Group letterhead]
August 7, 1997
Greenmarine Acquisition Corp.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Dear Xx. Xxxxxxxx:
American Financial Group, Inc. ("Lender") agrees to lend (i) to
Greenmarine Acquisition Corp. ("Borrower"), up to the sum of One Hundred Fifty
Million Dollars ($150,000,000) to be used toward the purchase by Borrower of the
outstanding shares of Outboard Marine Corporation ("OMC") in a tender offer and
for any required repurchase of OMC outstanding debt pursuant to a "put right"
arising as a result of the tender offer and/or the Merger (the "Phase I Loan")
and (ii) to OMC, the surviving corporation of a merger involving Borrower and
OMC (the "Merger"), up to the sum of One Hundred Fifty Million Dollars
($150,000,000) to be used to repay the Phase I Loan, to pay (in the Merger) for
any OMC Shares not acquired in the tender offer and for any required repurchase
of OMC outstanding debt pursuant to a "put right" arising as a result of the
tender offer and/or Merger (the "Phase II Loan"). The loans to be made pursuant
to this commitment will be made upon the following terms and conditions:
1. Amount of Each Loan. Up to a maximum of One Hundred Fifty Million Dollars
($150,000,000). All amounts outstanding under the Phase I Loan shall be
fully repaid prior to or with the proceeds of the Phase II Loan.
2. Purpose of Loan. The proceeds of the Phase I Loan shall be used by Borrower
solely toward the purchase of shares of outstanding common stock of OMC
("OMC Common Stock") pursuant to a tender offer for such shares by Borrower
and for any required repurchase of OMC outstanding debt pursuant to a "put
right" arising as a result of the tender offer and/or the Merger. The
proceeds of the Phase II Loan shall be used to repay the Phase I Loan, to
pay (in the Merger) for any OMC Common Stock not acquired in the tender
offer and for any required repurchase of OMC outstanding debt pursuant to a
"put right" arising as a result of the tender offer and/or Merger.
3. Collateral. As security for the repayment of the Phase I Loan and the
performance of Borrower under the loan documentation to be entered into,
the entity which will own all of the equity of Borrower shall pledge to
Lender the two million shares of OMC Common Stock which it shall
beneficially own ("Initial OM Shares") and Borrower shall pledge to Lender
all shares of OMC Common Stock tendered in the tender offer, the aggregate
value of which at all times will be equal to or greater than twice the
outstanding principal balance of all loans made pursuant to this
commitment. The Phase II Loan shall be secured by a pledge of all of the
shares of capital stock of the surviving corporation of the Merger. In the
event that prior to the Phase II Loan, Xxxxxxxx makes a loan to OMC to fund
OMC's "put right" purchase obligations with respect to its outstanding
debt, Borrower shall assign its right to receive repayment of such loan to
Lender, as additional collateral securing repayment of the Phase I Loan.
4. Term. The terms of the Phase I Loan shall commence upon the first
disbursement of the Phase I
Loan proceeds and terminate upon the earlier of the Merger or nine months
after the first disbursement under the Phase I Loan, at which time all
principal and accrued interest shall be due and payable on the Phase I
Loan. The term of the Phase II Loan shall commence upon the Merger and
terminate nine months after the first disbursement under the Phase I Loan,
at which time all principal and accrued interest shall be due and payable
on the Phase II Loan. Xxxxxx's obligation to first disburse funds shall
remain open for a period of 90 days following the execution of a
satisfactory loan agreement and related documentation.
5. Interest. Interest shall accrue on the outstanding principal under the
loans at a rate of Ten Percent (10%) per annum. Interest shall be payable
monthly in arrears on the first day of each month during the term of the
loans.
6. Commitment Fee. Upon the execution of this commitment letter by Xxxxxxxx,
Borrower shall pay Lender, by wire transfer of immediately available funds,
a non-refundable commitment fee of One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Commitment Fee").
7. Funding Fee. Upon each disbursement of loan proceeds other than proceeds of
the Phase II Loan used to repay the Phase I Loan, Borrower shall pay Lender
a funding fee equal to one percent of the amount of proceeds so disbursed.
The maximum funding fee payable to Lender under the loan documents will be
One Million Five Hundred Thousand Dollars ($1,500,00).
8. Certain Costs and Expenses. In addition to the fees set forth in Paragraphs
6 and 7 above, Borrower shall promptly pay all reasonable costs, fees and
expenses incurred by Lender in connection with the loans, including but not
limited to, reasonable attorneys fees, recording and filing fees, and other
expenses incurred in the preparation and review of loan documentation,
whether or not any transaction contemplated hereby is consummated.
9. Expiration Date of Commitment. This commitment shall remain open until
August 11, 1997. If the commitment is not accepted and executed by Xxxxxxxx
and received by Lender together with the Commitment Fee prior to the
earlier of (a) the public announcement of the tender offer or (b) 5:00 p.m.
August 11, 1997, the commitment shall be immediately withdrawn and be null
and void.
10. Certain Covenants. The Loan documents will contain customary warranties,
representations, indemnities, covenants and conditions for transactions of
this size and nature, including, but not limited to those contained herein.
Prior to the date of disbursement of any loan proceeds, neither Borrower
nor OMC shall have suffered any adverse material change in their financial
condition and shall not be the subject of any bankruptcy, reorganization or
insolvency proceedings. While any portion of the Phase I Loan is
outstanding, Borrower shall not (a) incur any indebtedness other than the
Loan, (b) make a distribution to, or repurchase shares from, its
shareholders, or (c) pay a dividend to its shareholders. While any portion
of the Phase II Loan is outstanding, OMC shall not (a) make a distribution
to, or repurchase shares from, its shareholders other than pursuant to the
Merger, or (b) pay a dividend to its shareholders. While either the Phase I
Loan or the Phase II Loan is outstanding, neither Borrower nor OMC shall
expend in excess of $27.5 million in the aggregate for costs and expenses
in connection with the transactions contemplated hereby, including, but not
limited to, break-up fees, golden parachute payments, and similar expenses
arising in connection with the transactions contemplated hereby, and
attorney fees, brokers' and finders' fees incurred by or on behalf of
Borrower, unless Borrower or OMC shall have received cash equity equal to
any such excess in addition to the cash equity provided for in paragraph
11.
11. Conditions Precedent. Immediately prior to the funding of the Phase I Loan,
Borrower and its parent on a consolidated basis shall have a minimum
shareholders' equity of $265 million, composed of $231 million of cash
equity and $34 million allocable to the Initial OM Shares,
2
plus additional equity, if necessary, calculated on the basis of the
difference, if any, between the final tender offer price per share and
$17.00, as set forth below. The tender offer shall be funded first with the
cash equity and any additional equity, as provided in clauses (a), (b) and
(c) below, before any portion of the Phase I Loan proceeds are disbursed.
Any increase in the tender offer price in excess of $17.00 per share shall
be partially funded by additional equity contributions to Borrower as
follows:
(a) If the tender offer price is greater than $17 per share, but less than
or equal to $18 per share, an equity contribution amount equal to $10
million multiplied by a fraction, the numerator of which is the number of
cents by which such price exceeds $17 per share, and the denominator of
which is 100;
(b) If the tender offer price is greater than $18 per share, but less than
or equal to $20 per share, an equity contribution amount equal to $10
million, plus $25 million multiplied by a fraction, the numerator of which
is the number of cents by which such price exceeds $18 per share, xxx the
denominator of which is 200; and
(c) If the tender offer price is greater than $20 per share, an equity
contribution amount equal to $35 million, plus an amount equal to
$182,055.20 multiplied by the number of cents by which the tender offer
price exceeds $20 per share.
In determining the cash equity of Borrower and its parent on a consolidated
basis, Borrower and its parent shall receive a credit for up to $27.5
million of any fees and expenses paid directly by Borrower or its parent in
connection with the tender offer or the Merger.
12. Indebtedness of OMC. Following the Merger OMC shall not incur any new
indebtedness for borrowed money other than (a) the Phase II Loan, (b)
pursuant to its existing bank credit facility, or a successor bank credit
facility, in an amount up to $150 million and (c) refinancings of other
existing debt on terms no less favorable to OMC taken as a whole than the
indebtedness being replaced or which would shorten the maturity of such
debt to a date prior to the due date of the loans to be made hereunder.
13. Documentation. All Loan documentation shall be prepared by Xxxxxx's legal
counsel, and shall be in form and substance satisfactory to Borrower and
its counsel.
14. Assignment. Lender retains the right to assign this transaction, or any
portion thereof, to any of its affiliated companies. The commitment granted
herein shall not be assigned by Xxxxxxxx.
Upon acceptance of this commitment, the loan documents shall
be prepared and executed as soon as practicable following the execution of this
commitment letter. This letter shall be superseded in its entirety by the terms
and conditions of the loan documents, when such documents are executed.
Very truly yours,
AMERICAN FINANCIAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------
Xxxxx X. Xxxxx
Senior Vice President
Accepted this 7th day of August, 1997.
GREENMARINE ACQUISITION CORP.
/s/ Xxxx X. Xxxxxxxxxx
--------------------------------
By: Xxxx X. Xxxxxxxxxx
Its: Vice-President
