Exhibit 10.12
BANKERS TRUST COMPANY
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
June 10, 1999
Generac Portable Products, LLC
0 Xxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx, Chief Financial Officer
Dear Xxxx:
Reference is made to a Credit Agreement (the "Credit
Agreement") dated as of July 9, 1998, among Generac Portable Products, Inc., a
Delaware corporation ("Holdings"), GPPW, Inc., a Wisconsin corporation
("WisCorp" and together with Holdings, the "Parent Guarantors"), Generac
Portable Products, LLC, a Delaware limited liability company (the "Borrower"),
the Banks party thereto from time to time, and Bankers Trust Company, as
Administrative Agent. Unless otherwise defined herein, all capitalized terms
used herein shall have the respective meanings provided such terms in the Credit
Agreement. You have advised Bankers Trust Company ("BTCo") that Holdings intends
to effect an initial public offering of its common stock and to use the cash
proceeds from such offering together with proceeds from the Additional Senior
Bank Financing (as defined below) to repay (via tender) the Senior Subordinated
Notes (the "Senior Subordinated Notes Redemption").
In order to finance the Senior Subordinated Notes Redemption
and to pay fees and expenses owing in connection with the transaction, it is
presently contemplated that Holdings shall (x) obtain $40 million of additional
senior secured bank financing (the "Additional Senior Bank Financing") and (y)
receive gross proceeds of approximately $104 million from issuance of its common
stock pursuant to an initial public offering (the "Initial Public Offering" and,
together with the Additional Senior Bank Financing and the Senior Subordinated
Notes Redemption, the "Transaction").
We understand that the Additional Senior Bank Financing shall
be in the form of an increase to the Revolving Loan Commitment under the Credit
Agreement, in an amount up to $10 million (such increase, the "Additional
Revolving Loan Commitments"), and a new term loan facility for $30 million (the
"Tranche C Term Loan Facility"). Based on our discussions to date, we propose
that the Additional Senior Bank Financing be made available pursuant to an
amendment to the Credit Agreement. A summary of certain terms and conditions of
the Additional Senior Bank Financing is set forth on Exhibit A attached hereto
(the "Term Sheet"). Please note that those matters that are not covered or made
clear herein, in the Term Sheet or in the Fee Letter of even date herewith (the
"Fee Letter") are subject to mutual agreement of the parties. The terms and
conditions of this commitment may be modified only in writing signed by each of
the parties hereto.
BTCo is pleased to confirm that (i) it is willing to provide,
on, and subject to the terms and conditions set forth herein and in the Term
Sheet, 100% of the Additional Senior Bank Financing and (ii) BTCo will continue
to act as sole Administrative Agent under the Credit Agreement. You agree that
no other agents, co-agents or arrangers will be appointed, no other titles will
be awarded and no compensation (other than that expressly contemplated by the
Term Sheet and the Fee Letter) will be paid in connection with the Additional
Senior Bank Financing unless you and we shall so agree.
BTCo reserves the right, prior to or after execution of the
definitive credit documentation for the Additional Senior Bank Financing, to
syndicate all or part of its commitment hereunder to one or more financial
institutions (collectively with BTCo, the "Banks") reasonably acceptable to the
Borrower that will become party to such definitive credit documentation pursuant
to a syndication to be managed by BTCo. BTCo will commence syndication promptly
after your acceptance of this letter and you agree to assist BTCo actively in
achieving a syndication that is satisfactory to BTCo and you. Such syndication
will be accomplished by a variety of means, including direct contact during the
syndication between senior management and advisors of Beacon, Holdings, WisCorp
and the Borrower and the proposed syndicate members. To assist BTCo in its
syndication efforts, you hereby agree (a) to provide and cause your advisors to
provide BTCo and the other syndicate members upon request with all information
deemed reasonably necessary by BTCo to complete syndication, including but not
limited to information and evaluations prepared by Beacon, Holdings, WisCorp and
the Borrower or the Borrower's advisors relating to the Transaction and the
other transactions contemplated hereby, (b) to assist BTCo upon request in the
preparation of an Information Memorandum to be used in connection with the
syndication of the Additional Senior Bank Financing and (c) to make available
the senior officers and representatives of Beacon, Holdings, WisCorp and the
Borrower, in each case from time to time and to attend and make presentations
regarding the business and prospects of Beacon, Holdings, WisCorp and the
Borrower and their respective subsidiaries at a meeting or meetings of Banks or
prospective Banks.
It is understood and agreed that, if BTCo deems such actions
advisable in order to ensure successful syndications of the Additional Senior
Bank Financing, BTCo shall be entitled (before the closing of the Additional
Senior Bank Financing) to increase the applicable margin for the Tranche C Term
Loans set forth in the Term Sheet by up to 1/2%.
BTCo's commitment hereunder also is subject to (a) its
reasonable satisfaction that prior to and during the syndication of the
Additional Senior Bank Financing there shall be no competing offering, placement
or arrangement of any debt securities or bank financing by or on behalf of
Parent Guarantors, the Borrower or their subsidiaries, (b) there not occurring
or becoming known to BTCo any material adverse condition or material adverse
change in or
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affecting the business, property, assets, nature of assets, liabilities,
conditions (financial or otherwise) or prospects of Holdings, the Borrower or
Holdings and its subsidiaries taken as a whole, (c) the absence after the date
hereof of any material disruption of or a material adverse change in financial,
banking or capital market conditions that, in the reasonable judgment of BTCo,
could materially impair the syndication of the Additional Senior Bank Financing
and (d) the other conditions set forth or referred to in the Term Sheet,
including obtaining the requisite consents of the Required Banks under the
Credit Agreement.
BTCo's commitment hereunder shall terminate on August 31,
1999 unless the Amendment Effective Date (as defined in the Term Sheet) has
occurred on or before such date.
You hereby agree to pay all reasonable costs and expenses
(including the reasonable fees and expenses of White & Case LLP as BTCo's
counsel, the reasonable fees and expenses of third party consultants retained by
BTCo and BTCo's reasonable out-of-pocket expenses) arising in connection with
the preparation, execution and delivery of this letter and the definitive
financing agreements (and our due diligence and syndication efforts in
connection therewith), provided that, in each case, you receive reasonably
detailed invoices regarding such costs and expenses). In addition, you agree to
pay when and as due the fees described in the Fee Letter. You further agree to
indemnify and hold harmless us and each of the Banks and each director, officer,
employee, agent and affiliate thereof (each an "indemnified person") in
connection with any losses, claims, damages, liabilities or other expenses to
which any indemnified person may become subject, insofar as such losses, claims,
damages, liabilities (or actions or other proceedings commenced or threatened in
respect thereof) or other expenses arise out of or in any way relate to or
result from the Transaction or this letter or the extension of the Additional
Senior Bank Financing contemplated by this letter, or in any way arise from any
use or intended use of this letter or the proceeds of the Additional Senior Bank
Financing, and you agree to reimburse each indemnified person for any legal or
other expenses incurred in connection with investigating, defending or
participating in any such loss, claim, damage, liability or action or other
proceeding (whether or not any such indemnified person is a party to any action
or proceeding out of which any such expenses arise), provided that you shall
have no obligation hereunder to indemnify any indemnified person for any loss,
claim, damage, liability or expense to the extent that same results from the
gross negligence or willful misconduct of such indemnified person. This letter
is furnished for your benefit only, and may not be relied upon by any other
person or entity. Neither BTCo nor any other Bank shall be responsible or liable
to you or any other person or entity for consequential damages which may be
alleged as a result of this letter. It is understood and agreed by the parties
hereto that, upon the execution and effectiveness of the definitive
documentation with respect to the Additional Senior Bank Financing, the
indemnification provisions contained above in this paragraph shall be superseded
and replaced by the provisions contained in such definitive documentation.
This letter and the Term Sheet (collectively, the "Commitment
Letter") are furnished for your benefit, and may not be relied upon by any other
person or entity. You agree that this Commitment Letter is for your confidential
use only and that neither its existence nor the terms hereof will be disclosed
by you to any person other than your officers, directors, employees,
accountants, attorneys and other advisors, and then only on a "need to know"
basis in connection with the transactions contemplated hereby and on a
confidential basis. Notwithstanding the fore-
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going, following your acceptance of the provisions hereof and your return of an
executed counterpart of this Commitment Letter and the related Fee Letter to us
as provided below, (i) you may make public disclosure of the existence and
amount of the commitments hereunder and of the identity of BTCo, (ii) you may
file a copy of this Commitment Letter (but not the Fee Letter) in any public
record in which it is required by law to be filed and (iii) you may make such
other public disclosure of the terms and conditions hereof as, and to the
extent, you are required by law, in the opinion of your counsel, to make.
The provisions of the two immediately preceding paragraphs
shall survive any termination of this letter.
BTCo reserves the right to employ the services of its
affiliates (including BT Alex. Xxxxx Incorporated ("BTAB")) in providing the
services contemplated by this letter and to allocate, in whole or in part, to
such affiliates (including, BTAB) certain fees payable to BTCo in such manner as
BTCo and its affiliates may agree in their sole discretion. You acknowledge that
BTCo may share with any of its affiliates (including BTAB) any information
relating to the Transaction, Holdings and its subsidiaries and affiliates. BTCo
agrees to treat, and cause any such affiliate to treat, all non-public
information provided to it by Holdings and its subsidiaries, as confidential
information in accordance with customary banking industry practices.
If you are in agreement with the foregoing, please sign and
return to us the enclosed copy of this letter, together with an executed copy of
the enclosed Fee Letter. This offer shall terminate at 5:00 P.M., New York time,
on June 18, 1999 unless a signed copy of this letter and the enclosed Fee Letter
have been delivered to us (including by way of telecopier) by such time. This
letter may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument.
* * * *
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THIS LETTER AND THE FEE LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK, AND ANY RIGHT TO TRAIL BY JURY WITH
RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED
BY THIS LETTER AND/OR THE FEE LETTER IS HEREBY WAIVED. THE PARTIES HERETO HEREBY
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE
COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO
THIS LETTER AND/OR THE FEE LETTER OR ANY MATTERS CONTEMPLATED HEREBY OR THEREBY.
If this letter is not accepted by you as provided in the
second preceding paragraph, you are directed to immediately return this letter
(and any copies hereof) to the undersigned.
Very truly yours,
BANKERS TRUST COMPANY
By: /s/ Xxxxxxxx Xxxx
------------------------
Title: Managing Director
Agreed to and Accepted this
10th day of June, 1999
GENERAC PORTABLE PRODUCTS, LLC.
By: /s/ Xxxx X. Xxxx
------------------------------
Title: Chief Financial Officer
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EXHIBIT A
SUMMARY OF CERTAIN OF THE TERMS AND
CONDITIONS OF THE ADDITIONAL SENIOR BANK FINANCING(1)
Administrative Agent: Bankers Trust Company ("BTCo").
Lead Arranger: BTCo.
Banks: A syndicate of Banks reasonably acceptable to
the Borrower arranged by BTCo (the "Banks").
Borrower: Generac Portable Products, LLC.
Amount: $40 million, allocated as a new $30 million
term loan facility (the "Tranche C Term Loan
Facility"), and a $10 million increase in the
Revolving Loan Facility under the Credit
Agreement (such increase, the "Additional
Revolving Loan Commitments").
Use of Proceeds: A. The loans under the Tranche C Term
Loan Facility (the " Tranche C Term
Loans") may only be incurred on one
date occurring within 60 days of the
date the conditions precedent set
forth below under "Conditions
Precedent" are satisfied (the
"Amendment Effective Date") and the
proceeds thereof shall be utilized
solely to finance, in part, the
Senior Subordinated Notes
Redemption, and to pay the fees
and expenses owing in connection
with the Senior Subordinated
Notes Redemption. The aggregate
amount of the Tranche C Term
Loans is limited to the amount
paid for the Senior Subordinated
Notes Redemption less the gross
cash proceeds from the Initial
Public Offering plus fees and
expenses payable in connection
with the Initial Public Offering
and the Additional Senior Bank
Financing.
B. The Additional Revolving Loan
Commitments shall be utilized solely
for working capital and general
corporate purposes of the Borrower.
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(1) All capitalized terms used herein and not otherwise defined herein or
in the Commitment Letter attached hereto shall have the meaning
provided in the Credit Agreement.
Exhibit A
Page 2
Maturity: The final maturity of the Tranche C Term Loans
shall be June 30, 2006. The Tranche C Term
Loans shall be amortized in quarterly
installments to be determined.
Availability: A. Tranche C Term Loans may only be
incurred within 60 days of the
Amendment Effective Date. No amount
of Tranche C Term Loans once repaid
may be reborrowed.
B. The Additional Revolving Loan
Commitment shall be effective on the
Amendment Effective Date and shall
remain effective through the
Revolving Loan Maturity Date.
Guaranties: The Additional Senior Bank Financing shall be
unconditionally guaranteed on the same basis as
all existing indebtedness under the Credit
Agreement.
Security: The Additional Senior Bank Financing (and the
guaranties thereof) shall be secured on a PARI
PASSU basis by all collateral securing the
existing indebtedness under the Credit
Agreement.
Mandatory
Repayments: A. Mandatory repayments of outstanding
Tranche C Term Loans and reductions
of the remaining scheduled
amortization of the Tranche C Term
Loans shall be required from excess
cash flow, asset sales, issuances of
equity, incurrence of debt and
receipt of insurance proceeds all on
the same basis as currently provided
in the Credit Agreement for Term
Loans, PROVIDED, that the proceeds
from the Initial Public Offering
which are utilized to fund the
Senior Subordinated Notes Redemption
and to pay fees and expenses in
connection therewith within 60 days
of the receipt thereof (or 90 days
in the case of fees and expenses)
shall not be required to be applied
to the repayment of the Term Loans
under the Credit Agreement.
B. The Additional Revolving Loan
Commitment shall be subject to
reductions in the same manner as the
Revolving Loan Commitment under the
Credit Agreement.
Exhibit A
Page 3
Voluntary
Prepayments: A. Voluntary prepayments of Tranche C
Term Loans may be made at any time
without premium or penalty on the
same basis as currently provided in
the Credit Agreement for Term Loans,
PROVIDED, that any prepayment of
Term Loans will be applied PRO RATA
among each Tranche of the Term
Loans.
B. Voluntary reductions of the
Additional Revolving Loan Commitment
shall be on the same basis as the
Revolving Loan Commitment under the
Credit Agreement.
Commitment Termination: The commitments hereunder shall terminate on
August 31, 1999 unless the Amendment Effective
Date has occurred on or before such date.
Interest Rates: A. The Tranche C Term Loans will bear
interest at the same rates, on the
same basis, and paid at the same
times, as the Term Loans under the
Credit Agreement, PROVIDED that the
Applicable Margin for the Tranche C
Term Loans maintained as (x) Base
Rate Loans shall be 1.50% at all
times and (y) Eurodollar Loans shall
be 2.50% at all times (such margin
shall not be adjusted pursuant to
the pricing grid).
B. The loans under the Additional
Revolving Loan Commitment shall bear
interest at the same rates, on the
same basis, and paid at the same
times, as the Revolving Loan
Commitment in the Credit Agreement.
C. In addition, for the period
commencing on the Amendment
Effective Date and ending on the
three month anniversary thereof, the
Applicable Margin (but not the
Applicable Commitment Commission
Percentage) for Loans under the
Credit Agreement will not be less
than Level 4.
Agent Fees: The Administrative Agent shall receive such
fees as have been separately agreed upon with
the Administrative Agent.
Exhibit A
Page 4
Assignments and
Participations: On the same basis as provided in the Credit
Agreement.
Conditions
Precedent: In addition to conditions precedent typical for
these types of facilities and any other
conditions appropriate in the context of the
proposed transaction, the following conditions
shall apply:
(i) The Administrative Agent shall have
received for the account of each
Bank making Tranche C Term Loans,
the appropriate Tranche C Term Note,
in the amount, maturity and
otherwise provided in the Section
1.05 of the Credit Agreement, and
each such Bank with an Additional
Revolving Loan Commitment shall
receive a replacement Revolving Note
reflecting the increase in its
Revolving Loan Commitment.
(ii) The Borrower shall have paid to the
Administrative Agent and the Banks
all costs, fees and expenses
(including, without limitation,
legal fees and expenses) payable to
the Administrative Agent and the
Banks to the extent then due.
(iii) The Banks shall have received legal
opinions from counsel, and covering
matters, reasonably acceptable to
the Administrative Agent.
(iv) All actions shall be taken to ensure
that the Security Documents and the
Subsidiaries Guaranty secure and
guarantee the Additional Senior Bank
Financing.
(v) All necessary governmental (domestic
and foreign) and third party
approvals and/or consents in
connection with the Transaction
shall have been obtained and remain
in effect, and all applicable
waiting periods shall have expired
without any action being taken by
any competent authority which
restrains, prevents, or imposes
materially adverse conditions upon,
the consummation of the Transaction.
Additionally, there shall not exist
any judgment, order, injunction or
other restraint prohibiting or
imposing materially adverse
conditions upon the Transaction.
Exhibit A
Page 5
(vi) (a) The Initial Public Offering
shall have been consummated in
accordance with all applicable law,
(b) the the gross cash proceeds
thereof (before payment of fees,
costs and expenses) shall be at
least $104 million, (c) net cash
proceeds thereof (after payment of
fees, costs and expenses) shall have
been contributed as a common equity
contribution to DelCorp and WisCorp,
(d) DelCorp and WisCorp shall have
contributed such amount to the
Borrower and (e) the Borrower shall
have utilized the full amount
received pursuant to clause (d) to
redeem the Senior Subordinated Notes
(and to pay related fees, costs and
expenses).
(vii) The Borrower shall have accepted for
payment all Senior Subordinated
Notes issued by it, in each case to
the extent tendered and not
withdrawn pursuant to an offer to
purchase and consent solicitation,
which shall be in form and substance
satisfactory to BTCo (including,
without limitation, the tender
price) and shall be in accordance
with all applicable law, and each of
the conditions to such purchase as
set forth in such offer to purchase
either shall have been (i) satisfied
or (ii) waived with the consent of
the Administrative Agent (it being
understood that in any event at
least 80% of the aggregate
outstanding principal amount of the
Senior Subordinated Notes shall be
purchased pursuant to such offer to
purchase).
(viii) In the event that 100% of the Senior
Subordinated Notes shall not have
been accepted for payment pursuant
to the offer to purchase and consent
solicitation referred to in clause
(vii) above, amendments to the
documentation for the Senior
Subordinated Notes, satisfactory in
form and substance to BTCo, shall
have become effective.
(ix) There shall not exist or be
continuing any Default or Event of
Default under the Credit Agreement
and all representations and
warranties set forth in the Credit
Agreement shall be true and correct
in all material respects.
(x) The amendment to the Credit
Agreement incorporating the
provisions contemplated hereby
Exhibit A
Page 6
and satisfactory in form and substance to BTCo
shall have become effective in accordance with
the terms of the Credit Agreement.
Representation and Warranties: Substantially the same as the representations
and warranties contained in the Credit
Agreement, with appropriate changes thereto and
any additional representations and warranties
as are necessary in the context of the
Transaction.
Covenants: Substantially the same as the covenants
contained in the Credit Agreement, with
appropriate changes thereto and any additional
covenants as are necessary to permit the Senior
Subordinated Notes Redemption, PROVIDED that
Section 9.07(a) of the Credit Agreement shall
be amended to permit Capital Expenditures of
$12.5 million during the fiscal year ending on
December 31, 1999 and $10.0 million for each
fiscal year thereafter.
Events of Default: Substantially the same as the events of default
contained in the Credit Agreement, with
appropriate changes thereto and any additional
events of default as are necessary in the
context of the Transaction.
