EXHIBIT (B)(1)
CONFIDENTIAL
October 1, 2000
SENIOR SECURED CREDIT FACILITIES
COMMITMENT LETTER
Rawhide Holdings Corporation
c/o DLJ Merchant Banking III, Inc.
277 Park Avenue
New York, NY 10172
Attention: Mr. Ari Benacerraf
Principal
Dear Sirs:
We understand that DLJ Merchant Banking III, Inc. and certain of its
affiliates ("DLJMB"), certain existing minority shareholders ("Minority
Shareholders"), and certain other members of management of Target (as defined
below) ("Management", and together with the Minority Shareholders, the
"Rollover Equity Holders", and together with DLJMB the "Buyers") intend to
acquire (the "Acquisition") all of the issued and outstanding capital stock
(the "Shares") of a company that you have identified to us (the "Target"). We
further understand that the Acquisition will be consummated pursuant to a
merger agreement (the "Merger Agreement") to be entered into by AcquisitionCo
(as defined below) and Target which will provide, among other things, for the
merger (the "Merger") of Rawhide Acquisition Corporation, a newly-formed,
special purpose Delaware corporation ("AcquisitionCo"), which shall be a
direct, wholly-owned subsidiary of Rawhide Holdings Corporation, a
newly-formed, special purpose Delaware corporation ("Holdco"), which will be
wholly-owned by the Buyers, with and into the Target, with the Target being the
surviving corporation of the Merger. As used herein, "Borrower" shall mean (i)
prior to the consummation of the Merger, AcquisitionCo and (ii) from and after
the consummation of the Merger, the corporation surviving the Merger.
Based on our review of information you have provided to us and our
discussions with you, we understand that approximately $3,894.2 million
(including the value of the Rollover Shares (as defined below) and the
continuation of the Continuing Senior Notes (as defined below) and the
Continuing Capital Leases (as defined below) will be required to consummate the
Merger, to repay certain existing indebtedness (the "Refinancing") of the
Target, including all of the Target's outstanding senior bank debt and all of
the Target's outstanding 6.0% remarketable or redeemable securities due January
2011 (the "ROAR Securities") but excluding the 7.95% senior notes due 2010, the
7.45% senior notes due 2007, the 6.125% senior notes due 2006 and the 7.125%
senior notes due 2026 (collectively, the "Continuing Senior Notes") in an
aggregate principal amount of approximately $625.0 million and
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certain existing capital leases (the "Continuing Capital Leases" in an
aggregate amount of approximately $26.7 million, and to pay reasonable fees and
expenses in an amount not exceeding $116.5 million (the "Expense Payments").
We understand that the funds necessary to consummate the Merger and the
Refinancing will be obtained from the following sources: (i) the issuance and
sale (the "Equity Issuance") by Holdco of approximately 65.0% of its common
stock to DLJMB for total gross cash proceeds of approximately $646.7 million
(provided, that a portion of the proceeds may be used by DLJMB to purchase
Shares (the "DLJMB Purchased Shares") from certain of the Minority Shareholders
and certain members of Management, which DLJMB Purchased Shares will be
exchanged by DLJMB for certain of the common stock of Holdco issued in the
Common Equity Issuance), (ii) the issuance and sale (the "Holdco Debenture
Issuance") by Holdco of senior discount debentures (the "Holdco Discount
Debentures", the terms of which will, in all respects, be satisfactory to us)
to DLJMB for total gross cash proceeds of approximately $200.0 million, (iii)
the exchange (the "Equity Exchange") by the Rollover Equity Holders of Shares
of the Target (the "Rollover Shares") for shares of common stock of Holdco and
the purchase by certain members of Management of additional shares of common
stock of Holdco with the proceeds of loans made to them by AcquisitionCo (the
"Management Purchased Shares") (which Rollover Shares and Management Purchased
Shares are valued at (x) $268.0 million in the case of the Rollover Shares
collectively held by the Minority Shareholders and (y) $79.5 million in the
case of the Rollover Shares and Management Purchased Shares held by
Management); which shares of common stock of Holdco represent approximately
35.0% of Holdco's common stock, (iv) the contribution by Holdco to
AcquisitionCo of the cash proceeds of the Equity Issuance and the Holdco
Debenture Issuance (the "Holdco Contribution"), (v) the borrowing by the
Borrower of approximately $1,150.0 million under the Term Facilities (as
defined below), (vi) the issuance (the "Senior Unsecured Notes Issuance") by
the Borrower of approximately $500.0 million of senior unsecured notes (the
"Senior Unsecured Notes") or, if no such Senior Unsecured Notes are issued, the
issuance (the "Senior Unsecured Bridge Notes Issuance") by the Borrower of
approximately $500.0 million of senior unsecured bridge notes (the "Senior
Unsecured Bridge Notes"), the terms of which Senior Unsecured Notes or Senior
Unsecured Bridge Notes will, in all respects, be satisfactory to us, it being
understood that the terms of the Senior Unsecured Bridge Notes set forth in the
commitment letter dated of even date herewith from DLJ Bridge Finance, Inc. to
you are acceptable to us, and (vii) the issuance (the "Senior Subordinated
Notes Issuance") by the Borrower of approximately $400.0 million of senior
subordinated unsecured notes (the "Senior Subordinated Notes") or, if no such
Senior Subordinated Notes are issued, the issuance (the "Senior Subordinated
Bridge Notes Issuance") by the Borrower of approximately $400.0 million of
senior subordinated unsecured bridge notes (the "Senior Subordinated Bridge
Notes"), the terms of which Senior Subordinated Notes or Senior Subordinated
Bridge Notes will, in all respects, be satisfactory to us, it being understood
that the terms of the Senior Subordinated Bridge Notes set forth in the
commitment letter dated of even date herewith from DLJ Bridge Finance, Inc. to
you are acceptable to us. The Continuing Senior Notes and the Continuing
Capital Leases will remain outstanding immediately after the consummation of
the Merger and the Refinacing. The Acquisition, the Equity Issuance, the Holdco
Debenture Issuance, the Holdco Contribution, the Senior Unsecured Notes
Issuance or Senior Unsecured Bridge Notes Issuance, the Senior Subordinated
Notes Issuance or Senior Subordinated Bridge Notes Issuance, the Refinancing,
the Equity Exchange, the Expense Payments and all transactions related thereto
(including, without limitation, the initial borrowing under the Senior Secured
Credit Facilities (as defined below)) are collectively referred to as the
"Transaction".
We understand that in connection with the Transaction you are
interested in obtaining a commitment for a $1,650.0 million senior secured
financing (the "Senior Secured Credit Facilities"), consisting of (i) a
six-year $500.0 million revolving facility (the "Revolving Facility"), (ii) a
six-year $500.0 million amortizing term A loan facility (the "Term A Facility")
and (iii) a seven-year $650.0 million amortizing term B loan facility (the
"Term B Facility" and, together with the Term A Facility, the "Term
Facilities").
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We further understand that the proceeds from (a) the Term Facilities will
be used (i) to finance, in part, the Merger and the Refinancing and (ii) to pay
up to $116.5 for related fees and expenses; and (b) the Revolving Facility will
be used for post-closing general corporate purposes of the Borrower and its
subsidiaries.
DLJ Capital Funding, Inc. ("DLJ Capital Funding") is pleased to inform you
that it hereby commits, subject to the terms and conditions set forth herein,
to provide the full amount of the Senior Secured Credit Facilities and is
pleased to inform you that it undertakes to use its reasonable commercial
efforts to arrange a syndicate of other financial institutions identified by it
in consultation with you that will participate in the Senior Secured Credit
Facilities. DLJ Capital Funding is sometimes referred to herein as the
"Exclusive Financial Advisor", "Sole Book Runner", "Lead Arranger", or
"Syndication Agent" and the financial institutions (including DLJ Capital
Funding) which participate in the Senior Secured Credit Facilities are referred
to herein as the "Lenders". A financial institution mutually acceptable to DLJ
Capital Funding and you will act as the administrative agent (the
"Administrative Agent") for the Lenders and a financial institution mutually
acceptable to DLJ Capital Funding and you will, if agreed among DLJ Capital
Funding and you, act as the documentation agent (the "Documentation Agent") for
the Lenders. The Syndication Agent and the Administrative Agent are sometimes
referred to herein as the "Agents".
All commitments, undertakings and agreements hereunder are subject to (a)
the terms and conditions set forth herein and in the term sheet annexed hereto
as Annex I (the "Term Sheet") and the provisions set forth in Annex II hereto,
(b) the terms and conditions contained in the confidential fee letter, dated
the date hereof (the "Fee Letter"), between you and the undersigned, (c) 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 Lead Arranger, could materially impair the satisfactory
syndication of the Senior Secured Credit Facilities, and (d) the absence of a
Material Adverse Effect (as defined in the Merger Agreement) with respect to
the Target and its subsidiaries, taken as a whole, since the date hereof. In
the event that any of the foregoing conditions, events or circumstances is not
satisfied or proves unsatisfactory, the Lead Arranger reserves the right to
either terminate its commitment, undertaking and agreement hereunder (and
thereafter have no other or further obligations hereunder or in connection with
the Senior Secured Credit Facilities) or to propose alternative financing
amounts or structures that assure adequate protection for the Lead Arranger and
the Lenders. Furthermore, as a condition to the commitments, undertakings and
agreements contained herein, you agree that no other agents, co-agents or
arrangers will be appointed, no other titles will be awarded and no
compensation (other than as expressly set forth in the Term Sheet and the Fee
Letter between you and the undersigned) will be paid in connection with the
Senior Secured Credit Facilities unless you and we shall so agree.
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As we discussed, it is the intent of the Lead Arranger to solicit
commitments from prospective Lenders promptly following the execution of this
commitment letter equal to an amount sufficient to allow DLJ Capital Funding to
achieve its desired hold level in the Senior Secured Credit Facilities.
Nonetheless, our commitment is not subject to syndication of the Senior Secured
Credit Facilities. The Lead Arranger, in consultation with you, will manage all
aspects of the syndication, including decisions as to the selection of
institutions to be approached, when such institutions will be approached, when
their commitments will be accepted, the allocations of the commitments among
the Lenders and the amount and distribution of fees among the Lenders. In that
regard, you agree actively to assist the Lead Arranger, in all commercially
reasonable respects, in the syndication of the Senior Secured Credit
Facilities, which assistance will require, among other things, that you provide
all information the Lead Arranger reasonably deems to be necessary to complete
successfully the syndication, including all projections (the "Projections") and
other information prepared by you or on your behalf relating to the
Transaction, and Holdco, AcquisitionCo, the Target and their respective
subsidiaries and their financial condition, operations, assets, liabilities,
business, properties or prospects. You hereby represent and covenant that to
the best of your knowledge (i) all factual information (the "Information") that
has been or will be made available to the Lead Arranger by you or on your
behalf is or will be, when furnished, taken as a whole, complete and correct in
all material respects and does not and will not, when furnished, taken as a
whole, contain any untrue statement of a material fact or fail to state a
material fact necessary in order to make the statements contained therein not
materially misleading in light of the circumstances under which such statements
are made, and (ii) the Projections that have been or will be made available to
the Lead Arranger by you or on your behalf have been or will be prepared in
good faith based upon reasonable assumptions. In arranging and syndicating the
Senior Secured Credit Facilities, the Lead Arranger will use and rely on the
Information and Projections without independent verification thereof.
The Lead Arranger reserves the right, after consultation with you, to
change the structure and terms of the Senior Secured Credit Facilities if the
Lead Arranger determines that such changes are necessary to insure a successful
syndication of the Senior Secured Credit Facilities.
In addition, you agree, to the best of your ability, to make
Management and certain other members of management of Target and its
subsidiaries, as well as your consultants and advisors, available during
regular business hours to answer questions regarding the Transaction and the
Senior Secured Credit Facilities, to review and assist in the preparation of
the syndication memorandum relating to the Senior Secured Credit Facilities, to
meet with prospective Lenders and to use all commercially reasonable efforts to
ensure that the Lead Arranger's syndication efforts benefit from your lending
relationships.
By your signature below you hereby indemnify and hold harmless the Lead
Arranger, each of the Agents, each of the Lenders committing to participate in
the Senior Secured Credit Facilities and each of their respective affiliates,
and each of their respective directors, officers, agents and employees, and
agree to pay the reasonable fees and expenses, in each case following demand,
as set forth in Annex II hereto (with the terms and provisions of such Annex II
hereby being incorporated by reference), whether or not definitive credit,
security and other documentation (collectively, the "Credit Documentation") is
ultimately executed and delivered or the Transaction or any of the other
transactions contemplated hereby or in connection therewith are ultimately
consummated. This commitment letter, the Term Sheet, and Annex II hereto and
the Fee Letter are delivered to you with the understanding that neither this
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commitment letter, the Term Sheet, such Annex II or 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 the Lead
Arranger, except in the case of those in a confidential relationship to you,
such as legal counsel or accountants, or as required by law or any court or
governmental agency (and in each such event of permitted disclosure as required
by law, court or governmental agency, you agree, to the extent permitted by
law, promptly to inform us). DLJ Capital Funding hereby consents to your
disclosure of this commitment letter, the Term Sheet and Annex II hereto (but
not the Fee Letter) on a confidential basis to the other Buyers, the Target and
their respective financial and legal advisors for their use in connection with
their evaluation of your proposal for the Transaction. This commitment letter,
the Term Sheet, Annex II hereto and the Fee Letter constitute the entire
understanding among the parties hereto with respect to the subject matter
hereof and thereof and supersede any prior agreements, written or oral, with
respect hereto or thereto.
THIS COMMITMENT LETTER, THE TERM SHEET, ANNEX II HERETO AND THE FEE
LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF NEW YORK. EACH OF THE UNDERSIGNED PARTIES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF OR IN CONNECTION WITH,
THIS COMMITMENT LETTER, THE TERM SHEET, ANNEX II HERETO AND THE FEE LETTER, AND
ANY OTHER COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF ANY OF THE UNDERSIGNED PARTIES IN CONNECTION HEREWITH OR
THEREWITH. IN NO EVENT SHALL ANY PARTY TO THIS COMMITMENT LETTER BE LIABLE ON
ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES.
If you agree with the foregoing, please sign and return to us the
enclosed copy of this commitment letter and the Fee Letter no later than 5:00
p.m., New York time, on October 6, 2000. All commitments, undertakings and
agreements of the undersigned will terminate at such time unless executed
copies of this commitment letter and the Fee Letter, each signed by you, have
been delivered to the undersigned; provided, however, that, any term or
provision hereof to the contrary notwithstanding, (i) all your obligations
hereunder in respect of indemnification, confidentiality and fee and expense
reimbursement shall survive any termination of the commitments, undertakings
and agreements of the Lead Arranger pursuant to this paragraph, and (ii) all
such commitments, undertakings and agreements will terminate in any event at
5:00 p.m., New York time, on March 31, 2001 unless, on or prior to such time,
the definitive documentation with respect to the Senior Secured Credit
Facilities satisfactory to us and our counsel has been executed and delivered
by Holdco, the Borrower and their respective subsidiaries, the applicable
Lenders and the Agents.
We look forward to working with you.
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Very truly yours,
DLJ CAPITAL FUNDING, INC.
/s/ Jim Paradise
------------------------------
By: Jim Paradise
Title: Senior Vice President
Accepted and Agreed to this
October 1st, 2000
DLJ MERCHANT BANKING III, INC.
/s/ OhSang Kwon
--------------------------------
By: OhSang Kwon
Title: Vice President
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ANNEX I
TERM SHEET
(Unless otherwise defined, terms used in this Term Sheet have the meanings
ascribed thereto in the commitment letter dated October 3, 2000 (the
"Commitment Letter"), to which this Term Sheet is annexed).
I. PARTIES
Borrower: Rawhide Acquisition Corporation, a newly-formed,
special purpose Delaware corporation
("AcquisitionCo"), which shall be a direct,
wholly-owned subsidiary of Rawhide Holdings
Corporation, a newly-formed, special purpose
Delaware corporation ("Holdco"), which will be
wholly-owned by DLJ Merchant Banking Partners III,
Inc. and certain of its affiliates ("DLJMB"),
certain existing minority shareholders of Target
(as defined below) (the "Minority Shareholders"),
and certain members of management of Target (as
defined below) ("Management", and together with the
Minority Shareholders, the "Rollover Equity
Holders", and together with DLJMB the "Buyers"),
which will be merged (the "Merger") with and into a
company (the "Target") identified to the Lead
Arranger (as defined below) by DLJMB as the target
of the acquisition. The term "Borrower" shall mean
(i) prior to the consummation of the Merger,
Acquisition Co. and (ii) from and after the
consummation of the Merger, the surviving entity of
the Merger.
Guarantors: Holdco and all existing and future material direct
and indirect domestic subsidiaries of the Borrower
(collectively, the "Guarantors").
Sole Book Runner, DLJ Capital Funding, Inc. ("DLJ Capital Funding" or
Lead Arranger the "Lead Arranger").
and Syndication Agent:
Administrative Agent: Financial institution mutually acceptable to the
Borrower and the Lead Arranger.
Documentation Agent: If agreed by the Borrower and the Lead Arranger,
a financial institution mutually acceptable to
the Borrower and the Lead Arranger.
Lenders: DLJ Capital Funding and a group of financial
institutions (collectively, the "Lenders")
acceptable to the Lead Arranger and the Borrower.
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II. THE SENIOR SECURED CREDIT FACILITIES
Closing Date: No later than March 31, 2001.
Senior Secured Credit A $1,650.0 million senior secured financing (the
Facilities Description: "Senior Secured Credit Facilities"), which shall be
comprised of (i) a six-year $500.0 million
revolving facility (the "Revolving Facility"), (ii)
a six-year $500.0 million amortizing term A loan
facility (the "Term A Facility"), and (iii) a
seven-year $650.0 million amortizing term B loan
facility (the "Term B Facility" and, together with
the Term A Facility, the "Term Facilities").
Purpose: The proceeds from (a) the Term Facilities will be
used (i) to finance, in part, the Merger and the
Refinancing and (ii) to pay up to $116.5 for
related fees and expenses; and (b) the Revolving
Facility will be used for post-closing general
corporate purposes of the Borrower and its
subsidiaries.
Revolving Facility $500.0 million.
Commitment Amount:
Revolving Facility Pursuant to the Revolving Facility, (i) loans
Description: ("Revolving Loans") may be borrowed, prepaid and
re-borrowed by the Borrower, and (ii) letters of
credit ("Letters of Credit") may be issued,
reimbursed and reissued on behalf of the Borrower
and its subsidiaries, in each case from time to
time prior to the Revolving Facility Commitment
Termination Date (as set forth below).
Revolving Facility Availability under the Revolving Facility will be
Availability: limited to a maximum amount equal to the lesser of
(i) the Revolving Facility Commitment Amount and
(ii) the sum (the "Borrowing Base") of (a) 85% of
the value of all eligible accounts receivable, and
(b) 50% of the value of all eligible inventory.
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Increase of Senior Secured At any time prior to the Revolving Facility
Credit Facility: Commitment Termination Date, the Borrower shall
have the right, without the consent of any Lender
(other than the Lenders providing additional
Revolving Facility commitments, Term A Facility
commitments or Term B Facility commitments), to
effectuate an increase in the Revolving Facility
commitments, the Term A Facility and/or the Term B
Facility, by requesting that the Syndication Agent
arrange additional Revolving Facility commitments,
Term A Facility commitments and/or Term B Facility
commitments; provided, that (a) such increased and
added Revolving Facility commitments, Term A
Facility commitments and/or Term B Facility
commitments shall not exceed $50.0 million of
additional Revolving Facility commitments, Term A
Facility commitments and/or Term B Facility
commitments in the aggregate and (b) before
offering additional Revolving Facility commitments,
Term A Facility commitments or Term B Facility
commitments to non- first offer the additional
commitments to existing Lenders on a pro rata basis
followed, if necessary, by an offer on a non-pro
rata basis.
Revolving Facility The six-year anniversary of the Closing Date.
Commitment Termination
Date:
Term A Facility Pursuant to the Term A Facility, non-revolving loans
Description: ("Term A Loans") will be made in a single borrowing
in dollars on the Closing Date. Once repaid, Term A
Loans cannot be reborrowed.
Term A Facility Commitment $500.0 million.
Amount:
Amortization of Term A Term AuLoans will amortize each year in quarterly
Facility Commitment installments in the following percentage of
Amount: aggregate principal amount outstanding for each such
year set forth below.
Annual Percentage
Year Principal Amount
--------------------------------------------------------------------------------
1 5.0%
2 10.0%
3 10.0%
4 20.0%
5 25.0%
6 30.0%
--------------------------------------------------------------------------------
Final Maturity for The six-year anniversary of the Closing Date.
Term A Loans:
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Term B Facility Pursuant to the Term B Facility, non-revolving loans
Description: ("Term B Loans" and, together with the Term A Loans,
the "Term Loans", and the Term Loans, together with
the Revolving Loans, the "Loans") will be made in a
single borrowing in dollars on the Closing Date.
Once repaid, Term B Loans cannot be reborrowed.
Term B Facility Commitment $650.0 million.
Amount:
Amortization of Term B Term B Loans will amortize each year in quarterly
Facility Commitment installments in the following percentage of
aggregate principal amount outstanding for each
such year set forth below.
Annual Percentage
Year Principal Amount
--------------------------------------------------------------------------------
1 1.0%
2 1.0%
3 1.0%
4 1.0%
5 1.0%
6 1.0%
7 94.0%
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Final Maturity for The seven-year anniversary of the Closing Date.
Term B Loans:
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III. COMMON TERMS APPLICABLE TO ALL FACILITIES
Interest Rate: At the Borrower's option, the Loans will bear
interest at the Administrative Agent's alternate
base rate or reserve-adjusted LIBO rate plus, in
each case, the applicable margins set forth below.
Alternate Base Rate LIBO
Loans Rate Loans
--------------------------------------------------------------------------------
Term A Loans 2.25% 3.50%
Revolving Loans 2.25% 3.50%
Term B Loans 2.75% 4.00%
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Commencing after the first two full fiscal quarters
after the Closing Date, the applicable margin for
Revolving Loans and Term A Loans will be subject to
a performance-based grid based upon the Leverage
Ratio, with levels to be determined.
Interest Payment Interest periods for reserve-adjusted LIBO rate
Dates: Loans shall be, at the Borrower's option, one, two,
three, six, or, if available to the applicable
Lenders, nine or twelve months. Interest for
reserve-adjusted LIBO rate Loans shall be payable
on the last business day of the applicable interest
period thereof (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.
Optional Prepayments: Outstanding Loans are voluntarily pre-payable in
whole or in part (subject to minimum amounts and
increments thereof) without penalty (exclusive of
customary LIBO rate breakage costs).
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Mandatory Customary for the type of transaction proposed,
including: (i) 50% of excess cash flow to the
extent the Leverage Ratio is greater than 3.0
times; (ii) 100% of asset sales (subject to certain
exceptions including an exception for proceeds
reinvested in the business of the Borrower and its
subsidiaries within 360 days of receipt); (iii)
100% of the proceeds from the sale or issuance of
debt (subject to certain exceptions, including, if
the Senior Unsecured Bridge Notes or Senior
Subordinated Bridge Notes are issued, debt (having
terms and provisions satisfying criteria to be
agreed) the proceeds of which is used to refinance
such Senior Unsecured Bridge Notes or Senior
Subordinated Bridge Notes); and (iv) 50% from the
proceeds from the sale or issuance of equity
securities to the extent the Leverage Ratio is
greater than 3.0 times (subject to certain
exceptions, including, if Senior Unsecured Bridge
Notes or Senior Subordinated Bridge Notes are
outstanding, then all equity proceeds will be used
to refinance such Senior Unsecured Bridge Notes or
Senior Subordinated Bridge Notes) (with the balance
being retained by the Borrower). Prepayments shall
be applied pro rata between the Term A Facility and
the Term B Facility to reduce the remaining
amortization payments in direct order of maturity
and then to the repayment of the outstanding
principal amount under the Revolving Facility (but
without reducing the Revolving Facility
commitments). Notwithstanding the foregoing, if the
Borrower at any time elects in writing, in its sole
discretion, to permit Lenders holding Term B Loans
to decline to have such Loans prepaid, then any
Lender holding Term B Loans may, in its sole
discretion, waive the applications of its
respective pro rata share of any mandatory
prepayment, with 50% of such waived proceeds being
applied to the prepayment of Term A Loans (until
paid in full) and the balance being retained by the
Borrower.
Letter of Credit Fees: A Letter of Credit fee shall accrue on the daily
average undrawn portion of all outstanding Letters
of Credit at a rate per annum equal to (i) in the
case of standby Letters of Credit, the then
existing applicable LIBO rate margin in respect of
the Revolving Loans, and (ii) in the case of trade
Letters of Credit, 1.25%. Letter of Credit fees
will be payable quarterly in arrears. A Letter of
Credit fronting fee shall also be payable to the
Issuer for its own account in respect of each
Letter of Credit issued by it and in such amounts
and at such times as may be agreed to by the
Borrower and the Issuer.
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Commitment Fee: Commencing on the Closing Date, a non-refundable fee
(the "Commitment Fee") will accrue at a rate of
0.50% per annum on the daily average unused portion
of the Revolving Credit Facility commitments
(whether or not then available), payable quarterly
in arrears and on the final maturity of the
Revolving Facility (whether by stated maturity or
otherwise).
Commencing after the first two fiscal quarters
after the Closing Date, the Commitment Fee will be
subject to a performance-based grid based upon the
Leverage Ratio, with levels to be determined.
Security: The Senior Secured Credit Facilities and the
Continuing Senior Notes will be secured by a first
priority, perfected lien on: (i) substantially all
property and assets (tangible and intangible) of
the Borrower and the Guarantors; (ii) the capital
stock of the Borrower and its material subsidiaries
(65% in the case of foreign subsidiaries); and
(iii) all intercompany indebtedness in favor of the
Borrower and the Guarantors.
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Conditions Precedent Customary for the type of transaction proposed and
to Initial Extensions of others to be reasonably specified by the Lead
Credit under the Senior Arranger, including, without limitation, the
Secured Credit facilities: following:
1. Execution and delivery of the credit, security,
guarantee and other related documentation as are
necessary to embody the structure, terms and
conditions with respect to the Senior Secured
Credit Facilities.
2. Review and satisfaction with (i) the final
structure of the Transaction, (ii) the sources
and uses of proceeds used to consummate the
Transaction and (iii) the terms and provisions
of all documents, agreements and contracts
related to the Transaction (it being understood
that the structure, sources and uses described
in writing, and terms and provisions contained
in executed documents or drafts thereof
provided, to the Lend Arranger on or prior to
the date hereof are satisfactory).
3. Absence of a Material Adverse Effect (as defined
in the Merger Agreement) with respect to the
Target and its subsidiaries, taken as a whole,
since June 30, 2000.
4. Receipt of closing certificates, resolutions,
solvency certificates, opinions of counsel, etc.
customary for the type of transaction proposed,
in each case reasonably satisfactory to the Lead
Arranger.
5. The Lenders and the Agents shall have received
all fees and expenses required to be paid on or
before the Closing Date.
6. All material governmental and third party
approvals necessary in connection with the
Transaction, the financing contemplated hereby
and the continuing operations of the Borrower
and its subsidiaries shall have been obtained
and be in full force and effect, and all
applicable waiting periods, if any, shall have
expired without any action being taken or
threatened by any competent authority which
would restrain, prevent or otherwise impose
material adverse conditions on the Transaction
or the financing thereof.
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7. There shall exist no pending or threatened
material litigation, proceedings or
investigations which (i) would reasonably be
expected to materially adversely affect the
consummation of the Transaction, the Senior
Secured Credit Facilities or any other aspect of
the Transaction or (ii) could reasonably be
expected to have a Material Adverse Effect (as
defined in the Merger Agreement) with respect to
the Target and its subsidiaries, taken as a
whole.
8. Receipt of (i) GAAP audited consolidated
balance sheets of the Target and its
subsidiaries for the fiscal years ended December
31, 1998 and December 31, 1999 and GAAP audited
consolidated statements of income and cash flows
for the fiscal years ended December 31, 1997,
December 31, 1998 and December 31, 1999; (ii)
GAAP unaudited consolidated financial statements
of the Target and its subsidiaries for the
fiscal quarters ended following December 31,
1999 and then available and (iii) a pro forma
consolidated balance sheet of the Borrower and
its subsidiaries as of June 30, 2000, certified
by the chief financial officer of the Borrower
and giving effect to the contemplated
Transaction and reflecting the proposed legal
and capital structures of the Borrower and its
subsidiaries.
9. The Lenders shall have received the liens and
guarantees referred to above under the captions
"Security" and "Guarantees", respectively.
10. The terms of the Merger Agreement (and any
amendments, waivers or other modifications made
thereto or instruments, agreements or other
documents delivered in connection therewith
prior to the Closing Date), shall be reasonably
satisfactory to the Lead Arranger, it being
understood that the draft thereof provided to
the Lead Arranger prior to the date of the
Commitment Letter is satisfactory to the Lead
Arranger.
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11. Holdco shall have issued (the "Equity
Issuance") 65.0% of its common stock to DLJMB
for total gross cash proceeds (including amounts
paid to certain Rollover Equity Holders for
shares of common stock of Target ("DLJMB
Purchased Shares") contributed by DLJMB to
Holdco in exchange for Holdco common stock) of
approximately $646.7 million.
12. Holdco shall have issued (the "Holdco Debenture
Issuance") senior discount debentures (the
"Holdco Discount Debentures", the terms of which
will, in all respects, be satisfactory to the
Lead Arranger) to DLJMB for total gross cash
proceeds of approximately $200.0 million.
13. The Rollover Equity Holders shall have
exchanged (the "Equity Exchange") their Shares
of the Target (the "Rollover Shares") for common
shares of HoldCo, and certain members of
Management shall have purchased certain shares
of common stock of Holdco with the proceeds of
loans made to them by AcquisitionCo (the
"Management Purchased Shares") (which Rollover
Shares and Management Purchased Shares shall be
valued at (x) $268.0 million in the case of the
Rollover Shares collectively held by the
Minority Shareholders and (y) $79.5 million in
the case of the Rollover Shares and Management
Purchased Shares held by Management, with such
shares of Holdco representing approximately
35.0% of Holdco's common stock.
14. The Borrower shall have issued approximately
$400.0 million of senior subordinated unsecured
notes (the "Senior Subordinated Notes") or, if
no such Senior Subordinated Notes are issued,
approximately $400.0 million of senior
subordinated unsecured bridge notes (the "Senior
Subordinated Bridge Notes"), the terms of which
Senior Subordinated Notes or Senior Subordinated
Bridge Notes will, in all respects, be
satisfactory to the Lead Arranger, it being
understood that the terms of the Senior
Subordinated Bridge Notes set forth in the
commitment letter of even date herewith (the
"Bridge Commitment Letter") from DLJ Bridge
Finance, Inc. to DLJMB are satisfactory to the
Lead Arranger.
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15. Holdco shall have contributed to AcquisitionCo
all of the cash proceeds of the Equity Issuance
(the "Holdco Cash Contribution").
16. The Borrower shall have issued approximately
$500.0 million of senior unsecured notes (the
"Senior Unsecured Notes") or, if no such Senior
Unsecured Notes are issued, approximately $500.0
million of senior unsecured bridge notes (the
"Senior Unsecured Bridge Notes"), the terms of
which Senior Unsecured Notes or Senior Unsecured
Bridge Notes will, in all respects, be
satisfactory to the Lead Arranger, it being
understood that the terms of the Senior
Unsecured Bridge Notes set forth in the Bridge
Commitment Letter are satisfactory to the Lead
Arranger.
17. The Merger shall have been consummated in
accordance with the Merger Agreement.
18. Consummation of the Refinancing on or prio to the
Closing Date.
Additional Conditions The making of each Loan and the issuance of each
Precedent: Letter of Credit will be conditioned upon (i) all
representations in the credit documentation
relating to the Senior Secured Credit Facilities
being true and correct in all material respects and
(ii) there being no event of default or condition
which, with the giving of notice or passage of time
(or both), would constitute an event of default.
Representations and Customary for the type of transaction proposed and
Warranties: Additional others to be reasonably agreed by the Borrower and
Conditions Precedent: the Lead Arranger. The making of each Loan and the
issuance of each Letter of Credit will be
conditioned upon (i) all representations in the
credit documentation relating to the Senior Secured
Credit Facilities being true and correct in all
material respects and (ii) there being no event of
default or condition which, with the giving of
notice or passage of time (or both), would
constitute an event of default.
Representations and Customary for the type of transaction proposed and
Warranties: others to be reasonably agreed by the Borrower and
the Lead Arranger.
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Affirmative Covenants: Customary for the type of transaction proposed and
others to be reasonably agreed by the Borrower and
the Lead Arranger (with customary exceptions to be
agreed), including, without limitation, as follows:
1. Restricting the incurrence of additional
debt, sale leasebacks and contingent
liabilities.
2. Restricting the making of dividends or
similar distributions (including, without
limitation, direct or indirect redemptions of
capital stock).
3. Restricting the incurrence or sufferance of liens
or other encumbrances.
4. Restricting the sale of assets or similar
transfers.
5. Restricting the making of investments or
acquisitions (in a single transaction or in a
series of related transactions).
6. Restricting mergers, consolidations and
similar combinations.
7. Restricting transactions with affiliates.
8. Limiting capital expenditures.
9. Restricting the refinancing, defeasance,
repurchase or prepayment of subordinated debt
(other than, if Senior Subordinated Bridge Notes
are issued, the Senior Subordinated Bridge Notes
with the proceeds of the issuance of the Senior
Subordinated Notes having customary terms and
provisions that meet criteria to be agreed).
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<PAGE>
Financial Covenants: Customary for the type of transaction proposed,
including, the following:
1. Minimum interest coverage ratio.
2. Maximum leverage ratio.
3. Minimum fixed charge coverage ratio.
4. Minimum EBITDA.
Negative Covenants: Customary for the type of transaction proposed and
others to be reasonably agreed by the Borrower and
the Lead Arranger (with customary exceptions to be
agreed), including, without limitation, as follows:
1. Restricting the incurrence of additional debt,
sale leasebacks and contingent liabilities.
2. Restricting the making of dividends or similar
distributions (including, without limitation,
direct or indirect redemptions of capital stock).
3. Restricting the incurrence or sufferance of
liens or other encumbrances.
4. Restricting the sale of assets or similar
transfers.
5. Restricting the making of investments or
acquisitions (in a single transaction or in a
series of related transactions).
6. Restricting mergers, consolidations and similar
combinations.
7. Restricting transactions with affiliates.
8. Limiting capital expenditures.
9. Restricting the refinancing, defeasance,
repurchase or prepayment of subordinated debt
(other than, if Senior Subordinated Bridge Notes
or senior Unsecured Bridge Notes are issued, the
Senior Subordinated Bridge Notes and with the
proceeds of the issuance of the Senior
Subordinated Notes or Senior Unsecured Notes
having customary terms and provisions that meet
criteria to be agreed).
Events of Default: Customary for transactions of this nature, including
without limitation, a cross default to other
indebtedness of the Borrower, any Guarantor and
their respective subsidiaries in excess of a
threshold to be agreed, and a change of control (to
be defined).
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<PAGE>
Miscellaneous: Customary for the type of transaction proposed,
including the following:
1. Customary indemnity and capital adequacy
provisions, including but not limited to
compensation in respect of taxes (including
gross-up provisions for withholding taxes) and
decreased profitability resulting from changes
in 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 Loans,
notes and commitments in minimum amounts of $5.0
million in respect of the Revolving Facility and
the Term A Facility and $2.5 million in respect
of the Term B Facility . Any assignments would
be by novation, and, would require the consent
of the Borrower (so long as no event of default
had occurred and was then continuing), and,
except for assignments by DLJ Capital Funding to
another Lender or an affiliate of another
Lender, the Administrative Agent, such consents
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, 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 Credit Documentation. Voting by
participants will be subject to customa
3. Customary indemnification of the Lead
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.
4. Customary reimbursement by the Borrower of the
Lead Arranger's fees and out-of-pocket expenses.
5. Amendments and waivers of the Credit
Agreement will require the approval of Lenders
holding a majority of the Loans and commitments,
except that the consent of all the Lenders shall
be required with respect to certain customary
issues.
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6. Waiver of jury trial.
7. New York governing law; consent to New York
jurisdiction.
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 the definite Credit Documentation. All
commitments are obligations of the Agents and the Lenders will be subject to
negotiation and execution of definitive Credit Documentation in form and
substance to the Lead Arranger, the Agents, the Lenders and their counsel.
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ANNEX II
INDEMNIFICATION PROVISIONS
DLJ Merchant Banking Partners III, Inc. (the "Indemnitor") shall pay for
all reasonable fees, costs and expenses (including all reasonable out-of
pocket costs and expenses arising in connection with the syndication of
the Senior Secured Credit Facilities and any diligence investigation
performed by the Lead Arranger and the reasonable fees and expenses of a
legal counsel (and, if necessary local counsel) to the Lead Arranger)
arising in connection with the negotiation, preparation, execution and
delivery of the Commitment Letter, the Term Sheet, the Fee Letter and the
definitive Credit Documentation, and the Indemnitor shall be obligated to
pay such fees, costs and expenses whether or not definitive Credit
Documentation is executed or delivered or the Transaction is consummated.
In addition, the Indemnitor hereby indemnifies and holds harmless all
Indemnified Parties (as defined below) from and against all Liabilities
(as defined below). "Indemnified Party" shall mean the Lead 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 claim, action,
litigation or proceeding related to or connected with the transactions
described in the Commitment Letter, Fee Letter or Term Sheet other than
Liabilities to the extent related to the Indemnified Parties' gross
negligence or willful misconduct. In addition to the foregoing, the
Indemnitor agrees to reimburse each Indemnified Party for all reasonable
legal or other expenses incurred in connection with investigating,
defending or participating in any claim, action, litigation or proceeding
relating to any Liabilities (whether or not such Indemnified Party is a
party to any such claim, action, litigation or proceeding).
Any terms or provisions of this Annex II to the contrary notwithstanding,
upon (i) the execution and delivery of definitive Credit Documentation by
the Borrower, the Lead Arranger, and the Lenders and (ii) the making of
the initial Loans under the Senior Secured Credit Facilities, the terms
and provisions of this Annex II shall be superseded in their entirety by
the terms and provisions of such Credit Documentation, and the terms and
provisions of this Annex II shall be of no further force or effect.
