<PAGE> 1
EXHIBIT 10.15
September 6, 2000
CONFIDENTIAL
W-H Energy Services, Inc.
10370 Richmond Avenue, Suite 990
Houston, Texas 77042
Attention: Mr. Kenneth T. White Jr.
Chief Executive Officer
Re: W-H Energy Services, Inc. Commitment Letter
Gentlemen:
You have advised DLJ Capital Funding, Inc. ("DLJ") that W-H Energy
Services, Inc. (the "COMPANY"), a Texas corporation owned in part by affiliates
of The Jordan Company (the "SPONSOR"), proposes to refinance existing
indebtedness of approximately $220.5 million (the "REFINANCING") with the gross
proceeds of (i) an initial public offering of the Company's common equity of
$162.5 million (the "EQUITY OFFERING") and (ii) borrowings of approximately
$76.5 million under a senior secured credit facility (the "CREDIT FACILITY"). In
addition, fees and expenses related to the Equity Offering, Refinancing, Credit
Facility and related transactions will be approximately $18.5 million (the
"EXPENSE PAYMENTS"). The Equity Offering, Refinancing, Expense Payments and
related transactions are collectively referred to herein as the "TRANSACTION".
In addition, as used herein, the term "CREDIT GROUP" shall refer, collectively,
to the Company and its subsidiaries.
We understand that the $239.0 million required to consummate the
Transaction will be financed with (i) borrowings under the Credit Facility by
the Company in the amount of up to $76.5 million and (ii) gross proceeds of
$162.5 million from the Equity Offering. The sources and uses of funding
anticipated to be required to consummate the Transaction are set forth in the
Sources and Uses table attached hereto as Schedule I.
DLJ Capital Funding hereby commits (the "COMMITMENT") to provide the
Company up to $95.0 million, senior secured Credit Facility consisting of a (i)
a $75.0 million term loan facility (the "TERM FACILITY"), consisting of a
six-year $50.0 million term loan A facility (the "TERM A FACILITY", and a six
and one-half year $25.0 million term loan B facility (the "TERM B FACILITY") and
(ii) a six-year $20.0 million revolving credit facility (the "REVOLVING
FACILITY"), of which, $1.5 million will be funded at the closing date of the
Credit Facility ("CLOSING DATE"). In the event the Company raises more than
$162.5 million of gross proceeds (the "EXCESS Proceeds") from the Equity
Offering, the Term Facility Commitment amount will be reduced on a
dollar-for-dollar basis with the Excess Proceeds that are in excess of $1.5
million.
<PAGE> 2
CONFIDENTIAL
Page 2
DLJ will act as the sole and exclusive advisor and arranger in respect of
the Credit Facility. DLJ, as "ARRANGER", hereby confirms its willingness to use
its reasonable commercial efforts to arrange a syndicate of other financial
institutions that will, together with DLJ, participate in the Credit Facility.
The financial institutions (including DLJ) which participate in the Credit
Facility are referred to herein as the "LENDERS". DLJ will manage all aspects of
the syndication including decisions as to the selection of the institutions to
be approached and the timing as to when they will be approached, when their
Commitment will be accepted, which institutions will participate, the
allocations of the Commitment among potential Lenders and the amount and
distribution of fees among the Lenders. 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 set forth herein and in the Fee Letter)
will be paid in connection with the Credit Facility unless you and we shall so
agree. You agree to assist DLJ in completing a syndication satisfactory to it.
Such assistance shall include (i) you using your commercially reasonable efforts
to ensure that the syndication efforts benefit materially from the existing
lending relationships of the Company, (ii) you using your reasonable efforts to
make members of the management of the Company, as well as its consultants and
advisors, available during regular business hours to answer questions regarding
the Credit Facility, (iii) assistance by the Company in the preparation of a
confidential information memorandum to be used in connection with the
syndication and (iv) the hosting by the Company of meetings with prospective
Lenders.
DLJ shall be entitled, in consultation with you, to change the structure,
terms or pricing of the Credit Facility if the syndication has not been (or will
not be) successfully completed and if we determine that such changes are
advisable in order to insure a successful syndication of the Credit Facility,
provided however, the amount of the Credit Facility and the fees payable
therewith will remain unchanged. DLJ reserves the right to propose alternative
financing amounts or structures that assure adequate protection for DLJ and the
Lenders. The Commitment, undertakings and agreements of DLJ are subject to and
contingent upon the agreements in this paragraph.
In consideration of the Commitment, the Company agrees to pay, or to
cause the Credit Group to pay, to DLJ the fees set forth in the financing fee
letter (the "FEE LETTER") executed by the parties hereto in accordance with the
terms of the Fee Letter.
The Commitment, and all other obligations of DLJ hereunder, is expressly
subject to (a) the terms and conditions set forth in this commitment letter, and
the conditions and other provisions set forth in Exhibits A through C hereto
(collectively, the "COMMITMENT LETTER") and the Fee Letter, (b) the absence of
any material disruption of or material adverse change in current financial,
banking or capital market conditions that, in the good faith judgment of the
DLJ, could materially impair the satisfactory syndication of the Credit
Facility, (c) there being no facts, events or circumstances, now existing or
hereafter arising, which come to the attention of DLJ and which, in its good
faith determination, materially adversely affect the business, assets, condition
(financial or otherwise), operations, performance, and properties of the Credit
Group taken as a whole , and (d) the execution and delivery of definitive
documentation reasonably satisfactory to DLJ and the Company and covering the
matters expressly referred to herein and such other customary matters as DLJ may
reasonably request (collectively, the "DEFINITIVE DOCUMENTATION"). In the event
any of the foregoing conditions are not satisfied, DLJ reserves the right to
either terminate its Commitment (and thereafter DLJ shall have no other or
further obligations hereunder or in connection with the Transaction) or to
propose alternative financing amounts or structures that assure adequate
protection for DLJ and the Lenders.
<PAGE> 3
CONFIDENTIAL
Page 3
The Commitment is not assignable by you. Nothing in this Commitment
Letter, expressed or implied, shall give any person, other than the parties
hereto, any benefit or any legal or equitable right, remedy or claim under this
Commitment Letter. The Company agrees to indemnify, or to cause the Credit Group
to, indemnify and hold the Indemnified Parties, as defined in Exhibit C hereto,
harmless to the extent set forth in Exhibit C to this Commitment Letter, and,
upon demand from time to time, to reimburse the Indemnified Parties for all
reasonable out-of-pocket costs, expenses and other payments, including but not
limited to reasonable legal fees and disbursements incurred or made in
connection with the Commitment, the syndication of the Commitment, and the
preparation, execution and delivery of the Definitive Documentation, regardless
of whether or not any Definitive Documentation is executed, or any of the
Commitment expire or are terminated.
The Company hereby represents that (a) all information, other than the
Projections (as defined below), which has been made available to DLJ by you or
any of your representatives in connection with the transactions contemplated
hereby (together with information hereafter made available, the "INFORMATION"),
as supplemented as contemplated by the next sentence, is (or will be, in the
case of Information made available after the date hereof) complete and correct
in all material respects and does not (or will not, as the case may be) contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein not materially misleading in
light of the circumstances under which such statements were or are made, and (b)
all financial projections concerning the Credit Group that have been or are
hereafter made available to DLJ by the Company or any of their representatives
in connection with the transactions contemplated hereby (the "PROJECTIONS") have
been (or will be, in the case of Projections made available after the date
hereof) prepared in good faith based upon reasonable assumptions. The Company
agrees to supplement the Information and Projections, to the extent the Company
becomes aware of or are furnished with such Information and/or Projections, from
time to time so that the representation and warranty in the preceding sentence
is correct on the Closing Date of the Credit Facility. In arranging and
syndicating the Credit Facility, we may use and rely on the Information and the
Projections without independent verification thereof. The representations and
covenants contained in this paragraph shall remain effective until the
Definitive Documentation is executed and thereafter the disclosure
representations contained herein shall be superceded by those contained in the
Definitive Documentation.
The Commitment Letter and the Fee Letter are delivered to you with the
understanding that neither this Commitment Letter nor the Fee Letter, nor the
substance hereof or thereof, shall be disclosed to any third party (including,
without limitation, other lenders, underwriters, placement agents, or advisors
or any similar persons), without the prior written consent of DLJ except in the
case of those in a confidential relationship to you, such as your officers,
legal counsel or accountants, or as required by law or by any court or
governmental agency (and in each such event of permitted disclosure as required
by law or by court or government agency you agree promptly to inform us).
This Commitment Letter may not be amended or waived except by an
instrument in writing signed by DLJ and the Company.
This Commitment Letter and the Fee Letter set forth the entire
understanding of the parties as to the scope of the Commitment and the
obligations of DLJ hereunder. The Commitment will expire at 5:00 PM, New York
City time on September 6, 2000 unless this Commitment Letter and the Fee Letter
shall have been accepted prior to such time. The Commitment will also expire at
the earliest of (i) the closing of the Transaction without the funding of the
Commitment; (ii) the commencement by any member of the Credit Group of any
securities offering or the arrangement of any other financing relating to the
<PAGE> 4
CONFIDENTIAL
Page 4
Transaction for which Donaldson, Lufkin & Jenrette Securities Corporation
("DLJSC") or one of its affiliates is not lead manager, arranger or agent, as
the case may be; or (iii) 5:00 PM New York City time on October 26, 2000 if the
closing of the Transaction has not occurred by such time; provided however, that
any term or provision hereof to the contrary notwithstanding all your
obligations hereunder in respect of indemnification, confidentiality and fee and
expense reimbursement provisions shall survive any termination of the
Commitment.
This Commitment Letter shall be governed by, and construed in accordance
with, the laws of the State of New York as applied to contracts made and
performed within such state, without giving effect to the principles of
conflicts of laws thereof. To the fullest extent permitted by applicable law,
each of the parties hereto hereby irrevocably submits to the jurisdiction of any
New York State court or Federal court sitting in the Borough of Manhattan in New
York City in respect of any suit, action or proceeding arising out of or
relating to the provisions of this Commitment Letter or the making of the
Commitment and irrevocably agrees that all claims in respect of any such suit,
action or proceeding may be heard and determined in any such court. Each of the
parties hereto waives to the fullest extent permitted by applicable law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court, and any claim that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum and any right to trial by jury in any such suit, action
or proceeding.
<PAGE> 5
CONFIDENTIAL
Page 5
Please indicate your acceptance of the Commitment and your agreement to
the matters contained in this Commitment Letter by executing this document and
returning it to us prior to the time of expiration set forth above.
Sincerely,
DLJ CAPITAL FUNDING, INC.
/s/ Richard N. Beaudoin
------------------------------
By: Richard N. Beaudoin
Title: Senior Vice President
Accepted and Agreed to this
September 6, 2000
W-H ENERGY SERVICES, INC.
/s/ Jonathan F. Boucher
-----------------------------
By: W-H Energy Services, Inc.
Title: Vice President
Enclosures:
Exhibit A - Summary Term Sheet
Exhibit B - Conditions to Closing
Exhibit C - Indemnification
<PAGE> 6
CONFIDENTIAL
Page 6
SCHEDULE I
($ in millions)
<TABLE>
<CAPTION>
SOURCES USES
---------------------------------------------- -----------------------------------------------------
<S> <C> <C> <C>
Revolving Facility $ 1.5 Refinance Existing Debt (1)(2) $ 220.5
Term Facility 75.0 Expense Payments 18.5
Equity Offering 162.5
---------------------------------------------- -----------------------------------------------------
Total Sources $239.0 Total Uses $ 239.0
============================================== =====================================================
</TABLE>
(1) June 30, 2000 balances under the existing credit facilities.
(2) Estimated September 30, 2000 balances for the 12.5% Senior Subordinated
Notes and the 13.0% Senior Subordinated Notes.
<PAGE> 7
EXHIBIT A
SUMMARY TERM SHEET
Set forth below is a summary of certain of the material terms of the Credit
Facility and the Definitive Documentation. This summary is intended merely as an
outline, and does not include descriptions of all of the terms, conditions and
other provisions that are to be contained in the Definitive Documentation. The
Commitment, undertakings and obligations described herein will be subject to
negotiation and execution of Definitive Documentation in form and substance
satisfactory to DLJ, the Lenders and their legal counsel. Capitalized terms used
herein and not otherwise defined have the meaning set forth in the Commitment
Letter dated September 6, 2000 to which the Summary Term Sheet is attached and
of which it forms a part.
BORROWER: W-H Energy Services, Inc. (the "BORROWER" or the
"COMPANY").
GUARANTORS: All direct and indirect subsidiaries of the
Borrower, existing currently or hereafter
acquired; provided however, that non-U.S.
subsidiaries shall only be required to deliver
guarantees to the extent it would not result in
material increased tax or similar liabilities
for the Borrower and its subsidiaries on a
consolidated basis.
ARRANGER: DLJ Capital Funding, Inc. ("DLJ") as sole lead
Arranger.
SYNDICATION AGENT: DLJ (the "SYNDICATION AGENT") as sole
Syndication Agent.
ADMINISTRATIVE AGENT: A financial institution to be agreed upon by the
Arranger and the Borrower (the "ADMINISTRATIVE
AGENT"; the Syndication Agent and Administrative
Agent are herein collectively referred to as the
"AGENTS").
LENDERS: DLJ and a group of financial institutions
(collectively, the "LENDERS") as may be
acceptable to the Syndication Agent and the
Borrower.
CLOSING DATE: No later than October 26, 2000.
DESCRIPTION OF
THE CREDIT FACILITY: A maximum amount of $95.0 million in a senior,
first-priority, secured financing to be provided
to the Borrower consisting of (a) a revolving
credit facility (the "REVOLVING FACILITY") of up
to $20.0 million, and (b) a term
<PAGE> 8
CONFIDENTIAL
Page 2
loan facility of up to $75.0 million (the "TERM
FACILITY") which shall consist of (i) a term A
loan facility (the "TERM A FACILITY") in the
amount of $50.0 million and (ii) a term B loan
facility (the "TERM B FACILITY") in the amount
of $25.0 million.
PURPOSE: Proceeds will be used to fund, in part, the
consummation of the Transaction.
REVOLVING FACILITY
COMMITMENT AMOUNT: $20.0 million.
REVOLVING FACILITY
COMMITMENT AVAILABILITY: Proceeds from Revolving Loans made under the
Revolving Facility (including Letters of Credit)
will be available for post-closing, working
capital and general corporate purposes of the
Company.
Pursuant to the Revolving Facility, loans
("REVOLVING LOANS") may be borrowed, prepaid and
reborrowed from time to time prior to the
Revolving Facility Commitment Termination Date
(as defined below).
REVOLVING
FACILITY COMMITMENT
TERMINATION DATE: The sixth anniversary of the Closing Date.
LETTERS OF CREDIT SUB-FACILITY: Outstanding Letters of Credit and related
reimbursement obligations may not exceed $10.0
million in the aggregate. Each issuance of a
Letter of Credit will constitute usage under the
Revolving Facility, on a dollar-for-dollar
basis. Letters of Credit will expire on the
earlier of (i) one year from the date of
issuance or (ii) the Revolving Facility
Commitment Termination Date.
TERM A FACILITY: The Term A Facility will be made available to
the Borrower in a single borrowing pursuant to
which Term A Loans will be made. Once repaid or
prepaid, Term A Loans cannot be reborrowed. TERM
A FACILITY COMMITMENT AMOUNT: $50.0 million.
AMORTIZATION OF
THE TERM A FACILITY: The Term A Loans will amortize each year in
equal quarterly installments in an annual amount
equal to the percentages listed in the following
repayment schedule multiplied by the Term A
Facility Commitment amount:
<PAGE> 9
CONFIDENTIAL
Page 3
YEAR REPAYMENT AMOUNTS
---- -----------------
1.0 0.0%
2.0 10.0%
3.0 15.0%
4.0 20.0%
5.0 25.0%
6.0 30.0%
FINAL MATURITY FOR
ALL TERM A LOANS: The sixth anniversary of the Closing Date.
TERM B FACILITY: The Term B Facility will be made available to
the Borrower in a single borrowing pursuant to
which Term B Loans will be made. Once repaid or
prepaid, Term B Loans cannot be reborrowed.
TERM B FACILITY
COMMITMENT AMOUNT: $25.0 million.
AMORTIZATION OF
THE TERM B FACILITY: The Term B Loans will amortize each year in
equal quarterly installments in an annual amount
equal to the percentage listed in the following
repayment schedule multiplied by the Term B
Facility Commitment amount:
YEAR REPAYMENT AMOUNTS
---- -----------------
1.0 1.0%
2.0 1.0%
3.0 1.0%
4.0 1.0%
5.0 1.0%
6.0 1.0%
6.5 94.0%
FINAL MATURITY FOR
ALL TERM B LOANS: The six and one-half year anniversary of the
Closing Date.
INTEREST RATES: At the Borrower's option, Loans will bear
interest at the Administrative Agent's (i)
alternate base rate or (ii) reserve-adjusted
LIBO rate, plus, in each case, the applicable
margins (the "APPLICABLE MARGINS") as shown
below (in basis points):
<PAGE> 10
CONFIDENTIAL
Page 4
<TABLE>
<CAPTION>
ALTERNATE BASE
LIBO RATE LOANS RATE LOANS
--------------- ----------
<S> <C> <C>
Revolving Loans 275 175
Term A Loans 275 175
Term B Loans 325-350 225-250
</TABLE>
The Applicable Margins set forth above for
Revolving Loans, Term A Loans and Term B Loans
will be subject to performance-based adjustments
(based on a leverage ratio) commencing on the
date (the "PRICE ADJUSTMENT DATE") on which the
financial statements of the Borrower are
delivered in respect of the second full fiscal
quarter of the Borrower following the Closing
Date.
LETTERS OF CREDIT FEES: Upon each issuance of a Letter of Credit, the
Borrower agrees to pay quarterly in arrears (a)
a per annum letter of credit fee equal to the
Applicable Margin for Revolving LIBO Rate Loans
minus 1/8 of 1% multiplied by the face amount of
the such Letter of Credit plus (b) a fronting
fee of 25 basis points, in an amount to be
determined, to the issuer of the Letters of
Credit (the "LC Issuer").
INTEREST PAYMENT DATES: Interest periods for LIBO rate Loans shall be,
at the Borrower's option, one, two, three or six
months (and nine or twelve months, if available
to all Lenders) and shall be payable on the last
business day of the applicable interest period
therefor (or, if earlier, each third month
following the commencement of such interest
period). Interest on alternate base rate Loans
shall be payable quarterly in arrears.
VOLUNTARY PREPAYMENTS: Outstanding Loans are voluntarily payable
without penalty; provided however, that LIBO
breakage costs, if any, shall be for the account
of the Borrower.
MANDATORY PREPAYMENTS: Customary for the type of transaction proposed
and others to be reasonably specified (subject
to certain exceptions to be negotiated) by the
Syndication Agent, including, without
limitation, as follows:
(i) 100% of net proceeds of asset sales,
proceeds from condemnations and the like and
proceeds from loss or casualty (subject to
certain permitted reinvestments within 365 days
to be agreed upon);
(ii) 100% of net proceeds from the sale or
issuance of debt securities (until the Term
Facility is repaid or prepaid in full); and
<PAGE> 11
CONFIDENTIAL
Page 5
Lenders having Term B Loans will have the right
to decline to have such Term B Loans prepaid
with the mandatory prepayments set forth above,
in which case the amounts that would have been
applied to a prepayment of Term B Loans shall
instead be applied first to Term A Loans on a
pro rata basis according to the amortization
payment schedule until all such Term A Loans
have repaid in full and second to Revolving
Loans (without a corresponding reduction in the
Revolving Commitment).
COMMITMENT FEE: Commencing on the Closing Date, a non-refundable
fee (the "COMMITMENT FEE") will accrue at a rate
of 1/2 of 1% per annum on the daily average
unused portion of the Revolving Facility
Commitment Amount (whether or not then
available), payable quarterly in arrears and on
the final maturity of the Revolving Facility
(whether by stated maturity or otherwise).
Following the Pricing Adjustment Date, the
Commitment Fee will be subject to
performance-based adjustments in amounts to be
determined.
SECURITY: The Credit Facility will be secured by a
first-priority perfected lien on (subject to
certain exceptions): (i) all existing and future
property and assets (real and personal, tangible
and intangible (including, but not limited to,
licenses, brand names and trademarks)) of the
Borrower and its subsidiaries; (ii) all of the
capital stock of all of the Borrower's direct
and indirect subsidiaries (existing and future);
provided however, no more than 65% of the equity
interests of non-U.S. subsidiaries will be
required to be pledged as a security in the
event that a pledge of a greater percentage
would result in material increased tax or
similar liabilities for the Borrower and its
subsidiaries on a consolidated basis and (iii)
all intercompany indebtedness.
GUARANTEES: Senior secured guarantees to be delivered by all
direct and indirect subsidiaries of the
Borrower, provided however, that non-U.S.
subsidiaries shall only be required to deliver
guarantees to the extent it would not result in
material increased tax or similar liabilities.
Each such guarantee shall be an unconditional
guaranty of payment, and not of collection.
REPRESENTATIONS
AND WARRANTIES: Customary for the type of transaction proposed
for credits of this nature and others to be
mutually agreed upon by the Syndication Agent
and the Borrower.
AFFIRMATIVE COVENANTS: Customary for the type of transaction proposed
for credits of this nature and others to be
mutually agreed upon by the Syndication Agent
and the Borrower.
<PAGE> 12
CONFIDENTIAL
Page 6
NEGATIVE COVENANTS: Customary for the type of transaction proposed
for credits of this nature and others to be
mutually agreed upon by the Syndication Agent
and the Borrower, including, without limitation,
the following:
1. Restricting the incurrence of
additional debt, sale leasebacks and
contingent liabilities (other than
certain permitted exceptions to be
mutually agreed upon).
2. Restricting the incurrence or
sufferance of liens or other
encumbrances.
3. Defeasance, repurchase or prepayment
of any indebtedness or preferred
stock.
4. Restricting the making of restricted
payments and other similar
distributions.
5. Restricting the sale of assets or
similar transfers (other than in the
ordinary course of business).
6. Restricting the making of capital
expenditures.
7. Restricting mergers, consolidations
and similar combinations.
8. Restricting investment or
acquisitions.
9. Restricting transactions with
affiliates.
FINANCIAL COVENANTS: Customary for the type of transaction proposed
for credits of this nature, including, without
limitation, the financial covenants set forth
below (all accounting terms to be interpreted,
and all accounting determinations and
computations to be made, in accordance with
generally accepted accounting principles):
1. Minimum interest coverage ratio of
2.50x.
2. Maximum leverage ratio of 3.25x.
3. Maximum capital expenditures.
EVENTS OF DEFAULT: Customary for the type of transaction proposed,
including, without limitation, a cross default
to other indebtedness of the Borrower and its
subsidiaries and a change of control (to be
defined).
MISCELLANEOUS: Customary for the type of transaction proposed,
including, without limitation, the following:
<PAGE> 13
CONFIDENTIAL
Page 7
1. Customary indemnity and capital
adequacy provisions, including,
without limitation, compensation in
respect of taxes (including gross-up
provisions for withholding taxes)
and decreased profitability
resulting from U.S. or foreign
capital adequacy requirements,
guidelines or policies or their
interpretation or application and
any other customary yield and
increased cost protection deemed
necessary by the Lenders to provide
customary protection.
2. The Lenders will be permitted to
assign and participate Loans and
Commitments. Any assignments would
be by novation, would be subject to
a minimum amount of $5.0 million for
Revolving Loans and $1.0 million for
Term Loans and would require the
Borrower's consent and the consent
of the Syndication Agent (such
consent, in each case, not to be
unreasonably withheld or delayed).
Participations shall be without
restrictions and participants will
have the same benefits as the
Lenders with regard to increased
costs, capital adequacy, etc.
(provided however, that such amounts
are not greater than the amount of
costs that would have been incurred
by the Lender selling the
participation), and receipt of
information pursuant to the
Definitive Documentation . Voting by
participants will be subject to
customary limitations.
3. Indemnification of the Arranger, the
Agents, each of the Lenders and each
of their respective affiliates,
directors, officers, agents and
employees (collectively, the
"INDEMNIFIED PARTIES") from and
against losses, claims, damages,
liabilities or other expenses, as
set forth in Exhibit C hereto.
4. The Borrower shall pay all of the
fees and out-of-pocket expenses as
set forth in Exhibit C hereto.
5. Amendments and waivers of the
Definitive Documentation will
require the approval of Lenders
holding more than 50% of the Loans
and Commitment, except that the
consent of all the Lenders shall be
required with respect to certain
customary issues.
6. Waiver of jury trial.
7. New York governing law; consent to
New York jurisdiction; appointment
of New York process agent.
<PAGE> 14
CONFIDENTIAL
Page 8
LEGAL COUNSEL TO
THE AGENTS: Mayer, Brown and Platt.
<PAGE> 15
EXHIBIT B
CONDITIONS TO CLOSING
The Commitment of DLJ is subject to the execution of Definitive Documentation
(as defined below) which will contain the applicable terms and conditions set
forth in the Commitment Letter and such other conditions precedent, covenants,
representations, warranties, events of default and other provisions determined
by DLJ in their sole discretion and to satisfaction of the conditions precedent
set forth below together with other reasonable conditions precedent as may be
reasonably requested by DLJ.
(i) Receipt by the Borrower of gross proceeds from the Equity Offering
of at least $150.0 million on terms satisfactory to DLJ;
(ii) The definitive documentation including credit, guarantee,
security, intercreditor and other related documentation evidencing the
Credit Facility (the "DEFINITIVE DOCUMENTATION") shall be prepared by
counsel to DLJ and shall be in form and substance satisfactory to DLJ in
all respects;
(iii) Satisfaction that prior to and during the syndication of the
Credit Facility, there shall be no competing equity or debt securities
(other than the Equity Offering) or bank credit facilities of the Credit
Group;
(iv) No indebtedness and no preferred stock of the Credit Group shall
be outstanding on the Closing Date other than up to $2.5 million of other
indebtedness and borrowings under the Credit Facility. In addition, the
Credit Group shall have terminated all other bank financing arrangements
and commitments;
(v) On the Closing Date, the Company shall have a minimum of $10.0
million available under the Revolving Facility available for working
capital requirements;
(vi) Receipt by DLJ of consolidated financial statements and other
information that would be required to be included or incorporated by
reference in a registration statement filed pursuant to the Securities Act,
including, without limitation: (a) consolidated financial statements of the
Company and its subsidiaries including balance sheets as of the end of the
last two fiscal years and income and cash flow statements for each of the
last three fiscal years, in each case, audited by independent public
accountants of recognized international standing and prepared in conformity
with GAAP, together with the report thereon; and (b) unaudited interim
consolidated financial statements of the Company and its subsidiaries,
prepared in each case in the same manner as the historical audited
statements, for the period from the most recent audited annual financial
statements referred to in clause (a) above to the fiscal quarter preceding
the Closing Date;
(vii) The corporate, tax, capital and ownership structure (including
articles of incorporation and by-laws) and management of the Credit Group
after the Transaction shall be satisfactory to DLJ in all respects. DLJ
acknowledges the structure and management as currently represented to DLJ
is satisfactory in all respects;
(viii) The Lenders shall have been granted on the Closing Date first
priority perfected liens and guarantees (as applicable) to the extent
required and described in the Definitive Documentation and shall have
received such other reports, documents and agreements as reasonably
requested in connection with security interests in real property assets;
<PAGE> 16
CONFIDENTIAL
Page 2
(ix) Receipt by DLJ of (a) a consolidated pro forma balance sheet and
income statements of the Company and its subsidiaries for the quarter end
preceding the Closing Date, giving effect to the Transaction reflecting
related accounting adjustments, prepared by independent public accountants
of recognized international standing in accordance with Regulation S-X and
(b) projected financial statements (including balance sheets, statements of
operations and cash flows) of the Company and its subsidiaries for the
seven-year period after the Closing Date in form and substance satisfactory
to DLJ;
(x) DLJ shall have received a solvency certificate signed by the chief
financial officer of the Company, in form and substance satisfactory to
DLJ, supporting the conclusions that, after giving effect to the
Transaction and the related transactions contemplated hereby, the Credit
Group will not be insolvent or be rendered insolvent by the indebtedness
incurred in connection therewith, or be left with unreasonably small
capital with which to engage in its businesses, or have incurred debts
beyond its ability to pay such debts as they mature;
(xi) All governmental, shareholder and third party consents (including
Hart-Scott Rodino clearance, if required) and approvals necessary or
desirable in connection with the Transaction, the related financings, any
other transactions contemplated hereby and the continuing operations of the
business of the Credit Group shall have been obtained and be in full force
and effect, and all applicable waiting periods shall have expired without
any action being taken or threatened by any competent authority that could
restrain, prevent or impose any materially adverse conditions on the
Transaction or such other transactions or that could seek or threaten to
restrain, prevent or impose any materially adverse conditions on any of the
forgoing, and no law or regulation shall be applicable which in the
judgment of DLJ could have any such effect;
(xii) Absence of any material adverse change in the business, assets,
condition (financial or otherwise), operations, performance or properties
of the Credit Group taken as a whole since the end of the most recently
ended fiscal year for which audited financial statements have been provided
to DLJ or in the facts and information as represented to date;
(xiii) Absence of any action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect the Transaction, the
Credit Facility or any of the other transactions contemplated hereby, that
could have a material adverse effect on the Transaction, the Credit
Facility or any of the other transactions contemplated hereby, or that
could have a material adverse effect on the business, assets, condition
(financial or otherwise), operations, performance or properties of the
Credit Group taken as a whole;
(xiv) DLJ shall have received satisfactory opinions of counsel to the
Credit Group as to the transactions contemplated hereby (including without
limitation the tax and corporate aspects thereof and compliance with all
applicable securities laws), and such corporate resolutions, certificates
and other documents as DLJ shall reasonably request;
(xv) Absence of any default under the Definitive Documentation or
event that, with notice and/or the passage of time, could become an event
of default and satisfaction as to the accuracy of all representations and
warranties set forth in the Definitive Documentation;
(xvi) All fees and expenses due to DLJ as set forth in the Fee Letter
or otherwise shall have been paid in full; and
<PAGE> 17
CONFIDENTIAL
Page 3
(xvii) Absence of any material disruption or material adverse change
in the current financial, banking or capital market conditions that in the
judgement of DLJ would reasonably be expected to materially impair the
satisfactory syndication of the Credit Facility.
<PAGE> 18
EXHIBIT C
INDEMNIFICATION
Unless otherwise defined, terms used herein shall have the meanings assigned
thereto in (a) the commitment letter (the "COMMITMENT LETTER") to which this
Exhibit C is attached and (b) Exhibit A and Exhibit B to the Commitment Letter.
The Company (the "INDEMNITOR") shall pay all reasonable fees, costs and expenses
(including all reasonable out-of-pocket costs and expenses arising in connection
with the syndication of the Credit Facility and any due diligence investigation
performed by the Arranger or any Agent, and the reasonable fees and expenses of
legal counsel to the Arranger and to the Administrative Agent, including any
local or foreign legal counsel) arising in connection with the negotiation,
preparation, execution, delivery or administration of the Commitment Letter, the
exhibits thereto (including, without limitation, the Summary Term Sheet), the
Fee Letter and the Definitive Documentation, and the Indemnitor shall be
obligated to pay such fees and expenses whether or not the Definitive
Documentation is executed or delivered or the Transaction is consummated.
In addition, the Indemnitor hereby indemnifies and holds harmless each
Indemnified Party (as defined below) from and against all Liabilities (as
defined below). "INDEMNIFIED PARTY" shall mean the Arranger, each Agent, each of
the Lenders, each affiliate of any of the foregoing and the respective
directors, officers, agents and employees of each of the foregoing, and each
other person controlling any of the foregoing within the meaning of either
Section 15 of the Securities Act of 1933, as amended, or Section 20 of the
Securities Exchange Act of 1934, as amended. "LIABILITIES" shall mean any and
all losses, claims, damages, liabilities or other costs or expenses to which an
Indemnified Party may become subject which arise out of or relate to or result
from any transaction, action or proceeding to or connected with the transaction
described in the Commitment Letter, Fee Letter or Summary Term Sheet (other than
any losses, claims, damages, liabilities or other costs or expenses that are
determined by final judgment of a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct).
In addition to the foregoing, the Indemnitor agrees to reimburse each
Indemnified Party for all reasonable legal or other reasonable expenses incurred
in connection with investigating, defending or participating in any action or
other proceeding relating to any Liabilities (whether or not such Indemnified
Party is a party to any such action or proceeding).
