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EXHIBIT (b)(2)
[BANCBOSTON LETTERHEAD]
November 3, 2000
Mr. Harold O. Rosser
Managing Director
Bruckmann, Rosser, Sherrill & Co.
126 East 56th Street, 29th Floor
New York, New York 10022
Re: Il Fornaio America Corporation
Dear Hal:
I am pleased to advise you that BancBoston Capital, Inc. or an affiliate ("BBC")
is able to provide $15,000,000 of mezzanine financing and $2,000,000 of equity
financing to assist Bruckmann, Rosser, Sherrill & Co. ("BRS") in acquiring (the
"Acquisition") Il Fornaio America Corporation ("Il Fornaio" or the "Company").
The principal terms of our commitment are set forth in an attachment to this
letter. This commitment is also subject to the following conditions:
1. Satisfactory review of the confirmatory legal and accounting due diligence to
be conducted on your behalf.
2. Completion of the Acquisition by not later than April 30, 2001 on terms and
conditions satisfactory to BBC.
3. The availability on terms and conditions satisfactory to BBC of (a) at least
$38,000,000 of equity financing from BRS management and existing
shareholders, and (b) not more than $50,000,000 of senior debt facilities.
4. Absence of (A) any material environmental problems involving the Company's
assets; (B) any material adverse change in the Company's business or
financial condition; and (C) any material litigation relating to the Company,
the proposed financing, or the Acquisition.
5. Execution on terms satisfactory to BBC of a shareholders' agreement between
the Company and its shareholders.
6. Compliance by the Company with all legal and regulatory requirements
applicable to the Acquisition and the proposed financing.
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Mr. Harold O. Rosser
November 3, 2000
Page 2 of 3
7. Execution by BBC and BRS of mutually satisfactory final documentation
containing customary terms and conditions and receipt by BBC of satisfactory
evidence of corporate approvals by all parties to the Acquisition and the
proposed financing.
As you know, we would like to work with you on this transaction and are prepared
to complete the aforementioned due diligence upon your acceptance of this
letter. If you accept this commitment and the Acquisition closes, you will be
responsible for all of our out-of-pocket expenses. If you accept this commitment
and the Acquisition does not close, you will be responsible only for our legal
expenses.
In addition, in consideration of the time and resources devoted by BBC to this
transaction, you agree you will not solicit, negotiate or accept any proposal or
agreement for any alternative debt or equity financing to the financing
contemplated herein. In the event that you proceed to complete the Acquisition
within one year without utilizing the financing proposed by BBC hereunder, in
addition to all out-of-pocket expenses mentioned above, you agree to pay BBC a
break-up fee of $500,000, payable in cash upon the closing date of the
Acquisition. Such break-up fee constitutes liquidated damages to compensate BBC
for its lost investment opportunities (which you hereby agree are not and will
not be susceptible to reasonable proof of amount, and therefore will not be
compensated by ordinary damages.)
You further agree to keep this letter and its contents confidential and, without
the prior consent of BBC, agree not to disclose to any person (other than on a
confidential basis to your legal and investment advisors) the terms, conditions
or other contents of this letter or subsequent negotiations between the parties
hereto.
This commitment will terminate at 5:00 p.m. on November 6, 2000 unless we have
received a signed copy of this letter and the attached term sheet signifying
your agreement to its terms and conditions.
We are delighted to have the opportunity to work with you and look forward to
the successful completion of the transaction.
Sincerely,
BANCBOSTON CAPITAL, INC.
/s/ Craig H. Deery
--------------------------
By: Craig H. Deery
Its: Managing Director
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Mr. Harold O. Rosser
November 3, 2000
Page 3 of 3
Accepted and Agreed to this ____ day of November 2000:
BRUCKMANN, ROSSER, SHERRILL & CO.
/s/ Harold O. Rosser
------------------------------
By: Harold O. Rosser
Its: Managing Director
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Summary of BBC's Investment Terms
for the Acquisition of Il Fornaio
I. Senior Subordinated Notes
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Obligor: The Company
Face Amount: $15,000,000
Purchase Price: Par
Amortization/Maturity: Face Amount due on the seventh anniversary of closing.
Interest Rate: 13% per annum payable quarterly in arrears in cash in
Years 1 through 5. Thereafter, the greater of (a)
Fleet Boston's Base Rate plus 500 basis points, and
(b) 13% per annum, payable quarterly in arrears in
cash.
Transaction Fee: 2% of the Face Amount payable in cash at closing
Prepayment Penalty: 5% in Year 1, 4% in Year 2, 3% in Year 3 of the amount
prepaid. No prepayment penalty thereafter.
Transfer Rights: Freely transferable subject to applicable securities
laws.
Subordination: To the senior bank debt only on terms reasonably
satisfactory to BBC.
General Covenants: In addition to normal representations, warranties and
covenants, BBC would expect that the Securities
Purchase Agreement would include, but necessarily be
limited to, the following:
o Consolidated financial ratio tests and covenants
similar to those of the senior lender.
o Limitations on the kinds of businesses in which the
Company engages and restrictions on mergers and
acquisitions.
o Limitations on distributions, dividends, and
management fees.
o Limitations on transactions with affiliates.
o Limitations on additional indebtedness without BBC's
consent.
</TABLE>
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<TABLE>
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o No amendment subsequent to closing of clauses in the
senior debt arrangements relating to terms and
conditions of BBC's Securities Purchase Agreement
regarding the maturity, amortization, interest, or
fees of the Senior Subordinated Notes or redemption
of the Warrant or Warrant Stock.
o BBC's consent required on change of ownership and/or
control of the Company and on changes to the
Company's charter documents.
o Right to receive copies of all financial information
delivered to the Company's senior lenders.
o Monthly financial reporting, including income
statement, balance sheet and cash flow, covenant
compliance reports, certified annual audit, and any
other information BBC may reasonably request.
II. Warrant
Description: BBC will receive a detached Warrant representing a 6%
equity interest (including all preferred and common
stock) on a fully-diluted basis in the Company.
Purchase Price: Nominal ($1.00)
Exercise Price: Nominal ($0.01 per share)
Exercise Period: At any time.
Expiration: 10 years from closing.
Put Rights: At any time after the fifth anniversary of closing,
BBC may require the Company to repurchase all of the
Warrant or Warrant Stock for cash equal to the
percentage of equity represented by the Warrant or
Warrant Stock multiplied by the fair market value of
the Company's equity as determined by negotiation or,
if necessary, appraisal. The Company's Put Rights will
terminate upon completion of an initial public
offering by the Company.
Call Rights: At any time after the seventh anniversary of closing,
the Company may repurchase all of BBC's Warrant or
Warrant Stock on the same basis as under Put Rights.
The Company's Call Rights will terminate upon
completion of an initial public offering by the
Company.
</TABLE>
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Transfer Rights: Freely transferable subject to applicable securities
laws.
Shareholder Rights: o Anti-dilution provisions including, without
limitation, provisions providing for additional
compensation to BBC to compensate it for the effects
of any dilution of the value of its Warrant or
Warrant Stock in the event any of the Company's
equity capital at closing is contributed in the form
of junior subordinated debt or preferred stock.
o Pre-emptive rights.
o Rights to piggyback on a pro rata basis on any
public or private sale of the Company's equity
securities.
o Demand registration rights after the Company has
gone public.
o The right to attend the Company's Board of
Directors' meetings (which shall meet at least
quarterly).
</TABLE>
III. Preferred and Common Stock
BBC will invest $2,000,000 in the Company's preferred and common stock on the
same basis and in the same proportions as BRS. BBC will be entitled to the same
rights with respect to the preferred and common stock as are set forth in the
Shareholder Rights section above.
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This summary of terms does not purport to include all of the provisions
(including usual representations and warranties, conditions, covenants and
events of default) which would be contained in documents for this transaction,
all of which must be satisfactory in form and substance to us and our counsel,
and to BRS and the Company and their counsel, prior to the making of the
proposed investment.
