SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 7
to
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
BAILEY CORPORATION
(Name of Subject Company)
VEMCO ACQUISITION CORP.
VENTURE HOLDINGS TRUST
(Name of Person(s) Filing Statement)
COMMON STOCK, Par Value $0.10 PER SHARE
(Title of Class of Securities)
056 771306
(CUSIP Number of Class of Securities)
Michael G. Torakis
33662 James J. Pompo Drive
P.O. Box 278
Fraser, Michigan 48026-0278
(810) 296-8851
(Name, address and telephone number of person authorized
to receive notice and communications on
behalf of the person(s) filing statement)
with a copy to:
Paul R. Rentenbach
Dykema Gossett PLLC
400 Renaissance Center
Detroit, MI 48243-1668
(313) 568-6973
<PAGE>
<PAGE>
Venture Holdings Trust, a grantor trust ("Parent"), and Vemco
Acquisition Corp., a Delaware corporation formed by Parent (the
"Purchaser"), hereby further amend and supplement their Statement on
Schedule 14D-1 ("Schedule 14D-1"), filed with the Securities and Exchange
Commission (the "Commission") on June 11, 1996, with respect to the
Purchaser's offer to purchase all outstanding shares of common stock, par
value $.10 per share (the "Common Stock"), of Bailey Corporation, a Delaware
corporation (the "Company"), and the associated common stock purchase rights
issued pursuant to the Rights Agreement, dated as of September 28, 1995, as
amended, between the Company and State Street Bank & Trust Company, as
Rights Agent (the "Rights" and, together with the Common Stock, the
"Shares"), at a price of $8.75 per Share, net to the seller in cash, without
interest thereon. This amendment to Schedule 14D-1 also constitutes an
amendment and supplement to Schedule 13D with respect to the acquisition by
the Purchaser and Parent of beneficial ownership of the Shares subject to
the Tender and Option Agreement (as defined in the original statement). The
item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information set forth in Item 4(a)-(b) of the Schedule 14D-1 is
hereby amended and supplemented by the following information:
On August 16, 1996, Parent and NBD Bank executed a revised
commitment letter (the "Revised Commitment Letter") providing for, inter
alia, the total amount of funds required by the Purchaser to consummate the
Acquisition and to pay related fees and expenses. The terms of the Revised
Commitment Letter, a copy of which is attached hereto as Exhibit (b)(2) and
incorporated herein by reference, are substantially the same as those
contemplated by the Commitment Letter, previously described, except as
follows:
The Revised Commitment Letter provides for three loans totaling
$216,000,000 (the "Commitment Amount"), in the form of a $96,000,000
Revolving Credit Facility, a $75,000,000 Term Loan B Facility and a
$45,000,000 Term Loan C Facility. At the option of Parent, borrowings
under the Revolving Credit Facility and under Term Loan B will bear interest
on the aggregate unpaid principal amount thereof at a floating rate per
annum equal to either the Alternate Base Rate plus 1.50% or the Eurodollar
Rate plus 2.75%, and Term Loan C will bear interest at a floating rate per
annum equal to either the Alternate Base Rate plus 1.75%, or the Eurodollar
Rate plus 3.25%, in either case with adjustments subject to a performance-
based grid, beginning six months after the date of Closing. The one time
commitment fee to be paid to NBD Bank under the Revised Commitment Letter is
2.00% of the Commitment Amount. The Revised Commitment Letter permits the
Parent to purchase up to but not exceeding $21,052,000 principal amount of
the Parent's Senior Subordinated Notes Due 2004 (the "Senior Subordinated
Notes") at a price equal to 95% of par. The Revised Commitment Letter
contemplates that certain indebtedness of Bailey in an amount not to exceed
$3,148,000, consisting principally of industrial revenue bonds, may remain
outstanding. In addition to the conditions to lending previously described,
the Revised Commitment Letter further requires as conditions to lending that
(a) at least 51% of the holders of the Senior Subordinated Notes shall have
signed a consent agreement and a supplemental indenture (the "Consent
Agreement and Supplemental Indenture") in form and substance satisfactory to
NBD Bank and (b) that NBD Bank shall receive a calculation of projected
interest coverage ratios and fixed charge coverage ratios at December 31,
1996, as required by the terms of the Consent Agreement and Supplemental
Indenture.
ITEM 10. ADDITIONAL INFORMATION.
On August 12, 1996, Purchaser issued a press release, a copy of
which is attached hereto as Exhibit (a)(19) and is incorporated herein by
reference, relating to the extension of the Offer. On August 19, 1996,
Purchaser issued a press release, a copy of which is attached hereto as
Exhibit (a)(20) and is incorporated herein by reference, relating to the
execution of the Revised Commitment Letter and the further extension of the
Offer.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No. Description
(a)(19) Text of Press Release, dated August 12, 1996, issued by
Vemco Acquisition Corp.
(a)(20) Text of Press Release, dated August 19, 1996, issued by
Vemco Acquisition Corp.
(b)(2) Revised Commitment Letter, dated August 16, 1996, between
Parent and NBD Bank.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: August 19, 1996
VEMCO ACQUISITION CORP.
By: /S/ JAMES E. BUTLER, JR.
James E. Butler, Jr., Treasurer
VENTURE HOLDINGS TRUST
By: /S/ JAMES E. BUTLER, JR.
James E. Butler, Jr., Treasurer
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
(a)(19) Text of Press Release, dated August 12, 1996, issued by
Vemco Acquisition Corp.
(a)(20) Text of Press Release, dated August 19, 1996, issued by
Vemco Acquisition Corp.
(b)(2) Revised Commitment Letter, dated August 16, 1996, between
Parent and NBD Bank.
Exhibit (a)(19)
CONTACTS:
James E. Butler
Venture Industries
(810) 790-4708
or
Grace Protos
MacKenzie Partners, Inc.
(212) 929-5500
FOR IMMEDIATE RELEASE:
VEMCO ACQUISITION CORP. FURTHER EXTENDS
TENDER OFFER FOR BAILEY CORPORATION
FRASER, MI, August 12, 1996 -- Vemco Acquisition Corp. announced today that
it has further extended its offer to purchase all of the shares of Bailey
Corporation (NASDAQ:BAIB) until 6:00 p.m. (New York City time) on Friday,
August 16, 1996. The Offer was scheduled to expire at 6:00 p.m. on August
9, 1996, after having been extended previously, most recently on August 2,
1996.
Vemco reported that it has reached agreement with its financing source, NBD
Bank, with respect to the financing necessary to complete the offer and to
fund the previously reported arrangements with the holders of the 9-3/4%
Senior Subordinated Notes Due 2004 of Vemco's parent, Venture Holdings
Trust. Such financing remains subject to customary conditions, including
the finalization of definitive documentation.
Vemco commenced its offer to purchase all outstanding shares of Bailey at a
price $8.75 per share, net to the seller in cash, without interest, on June
11, 1996. As of 6:00 p.m. on August 9, 1996, 5,263,150 shares of Bailey had
been tendered and not withdrawn (including 254,175 shares subject to
guaranteed delivery procedures). The tendered shares constitute
approximately 98% of the total outstanding shares of Bailey's common stock.
MacKenzie Partners, Inc., is acting as Information Agent for the offer.
Exhibit (a)(20)
CONTACTS:
James E. Butler
Venture Industries
(810) 790-4708
or
Grace Protos
MacKenzie Partners, Inc.
(212) 929-5500
FOR IMMEDIATE RELEASE:
VEMCO ACQUISITION CORP. ANNOUNCES AGREEMENT
FOR FINANCING OF BAILEY TENDER OFFER AND FURTHER EXTENDS
TENDER OFFER FOR BAILEY CORPORATION UNTIL AUGUST 23, 1996
FRASER, MI, August 19, 1996 -- Vemco Acquisition Corp. announced today that
it has further extended its offer to purchase all of the shares of Bailey
Corporation (NASDAQ:BAIB) until 6:00 p.m. (New York City time) on Friday,
August 23, 1996. The Offer was scheduled to expire at 6:00 p.m. on August
16, 1996, after having been extended previously, most recently on August 9,
1996.
Vemco reported that it has accepted a revised commitment from its financing
source, NBD Bank, with respect to the financing necessary to complete the
offer and to fund the previously reported arrangements with the holders of
the 9-3/4% Senior Subordinated Notes Due 2004 of Vemco's parent, Venture
Holdings Trust, and that it has reached agreement with NBD Bank on
substantially all of the definitive terms for this financing. The
completion of the financing remains subject to customary conditions,
including the finalization of definitive documentation; however, Vemco
expects that it will be able to satisfy and complete such conditions during
the week of August 19, and does not expect to further extend the Offer to
acquire Bailey beyond the currently scheduled expiration date of August 23,
1996.
Vemco commenced its offer to purchase all outstanding shares of Bailey at a
price $8.75 per share, net to the seller in cash, without interest, on June
11, 1996. As of 6:00 p.m. on August 16, 1996, 5,165,987 shares of Bailey
had been tendered and not withdrawn (including 8,375 shares subject to
guaranteed delivery procedures). The tendered shares constitute
approximately 96% of the total outstanding shares of Bailey's common stock.
MacKenzie Partners, Inc., is acting as Information Agent for the Offer.
Exhibit (b)(2)
August 16, 1996
Venture Holdings Trust
c/o Venture Industries
33662 James J. Pompo Drive
P.O. Box 278
Fraser, Michigan 48026-0278
Attention: Michael G. Torakis
President and Chief Financial Officer
Dear Mike:
Venture Holdings Trust (the "Borrower") has requested credit
facilities (the "Facilities") in the aggregate principal amount of
$216,000,000 (the "Aggregate Commitment").
The Borrower has indicated that it intends to acquire Bailey
Corporation (herein, the "Company") pursuant to a two-step acquisition. The
first step will consist of an all cash tender offer by means of an offer to
purchase (as amended from time to time, the "Tender Offer") to be made by a
newly formed subsidiary (the "Acquisition Sub") of the Borrower for all of
the outstanding common stock of Company (the "Stock"). Prior to the making
of the Tender Offer, Acquisition Sub and the Company shall have entered into
a definitive plan and agreement of merger (the "Merger Agreement") to merge
Acquisition Sub and the Company, subject to shareholder approval by Company
(the "Merger") (the Tender Offer and the Merger, collectively the
"Acquisition"). The second step of the Acquisition will consist of the
Merger. The Agent's commitment is contingent upon the consummation of the
Tender Offer and Merger upon substantially the same terms and conditions set
forth in the Merger Agreement draft dated June 3, 1996, the Agent's
satisfactory review of the schedules to the Merger Agreement and the total
consideration for the Acquisition not being greater than $51,000,000 for the
acquisition of all shares, options and other equity interests of the Company
and $55,000,000 for all indebtedness of the Company and its subsidiaries,
whether refinanced pursuant to the Facilities or to remain outstanding after
the Acquisition.
NBD Bank is pleased to provide you with a financing commitment for,
and to agree to act as administrative agent bank (the "Agent") in connection
with, the entire amount of the Facilities on the terms and conditions set
forth in the term sheet attached hereto ("Term Sheet") and subject to the
conditions set forth in this letter. First Chicago Capital Markets, Inc.
(the "Arranger"), an affiliate of the Agent, is pleased to provide you with
its undertaking to syndicate all or a portion of the Facilities to a
syndicate of lenders (collectively, including NBD Bank, the "Lenders").
While the Agent's agreement herein is to provide the entire amount of the
Facilities on a fully underwritten basis, the Arranger reserves the right to
syndicate all or a portion of the Facilities to additional Lenders.
Each of the Agent and the Arranger has reviewed (i) financial
statements of the Borrower, as of and for the three-month period ended March
31, 1996, (ii) financial statements of the Company as of and for fiscal the
year ended July 31, 1995 and as of and for the six-month period ended
January 31, 1996, which statements were prepared by the Borrower and the
Company, respectively, and (iii) forecasts prepared by the Borrower dated
July 9, 1996. Agents, officers and employees of each of NBD Bank and First
Chicago Capital Markets, Inc. will have the right to share information
received from the Borrower and the Company and their affiliates, and their
respective agents, officers, and employees.
The Borrower agrees to (i) reimburse the Agent and the Arranger for
all reasonable and documented out-of-pocket expenses (including the fees of
outside counsel and time charges for inside counsel) incurred in connection
with this Commitment Letter, the transactions contemplated hereby and the
Agent's and the Arranger's on-going due diligence in connection therewith,
including without limitation travel expenses and costs incurred in
connection with the preparation, negotiation, execution, administration,
syndication, and enforcement of any document relating to this transaction
and its role hereunder; (ii) indemnify and hold harmless the Agent, the
Arranger, the Lenders and their respective officers, employees, agents and
directors (collectively, the "Indemnified Persons") against any and all
losses, claims, damages, or liabilities of every kind whatsoever to which
the Indemnified Persons may become subject in connection in any way with the
transaction which is the subject of this Commitment Letter, including
without limitation expenses incurred in connection with investigating or
defending against any liability or action whether or not a party thereto,
except to the extent any of the foregoing is found in a final judgment by a
court of competent jurisdiction to have arisen solely from such Indemnified
Person's gross negligence or willful misconduct (including an intentional
breach by the Agent and Arranger of their express obligations hereunder);
and (iii) assert no claim against any Indemnified Persons seeking
consequential damages on any theory of liability in connection in any way
with the transaction which is the subject of this Commitment Letter. The
obligations described in this paragraph are independent of all other
obligations of the Borrower hereunder and under the Loan Documents, shall
survive the expiration, revocation or termination of this Commitment Letter,
and shall be payable whether or not the financing transactions contemplated
by this Commitment Letter shall close. The Agent's and the Arranger's
respective obligations under this Commitment Letter are enforceable solely
by the party signing this Commitment Letter and may not be relied upon by
any other person. For purposes of enforcing this indemnity, the Borrower
irrevocably submits to the non-exclusive jurisdiction of any court in which
a claim arising out of or relating to the services provided under this
Commitment Letter is properly brought against the Agent, the Arranger, or
the Lenders and irrevocably waives any objection as to venue or inconvenient
forum. IF THIS COMMITMENT LETTER, THE TERM SHEET, THE FEE LETTER (DEFINED
BELOW), OR ANY ACT, OMISSION OR EVENT DESCRIBED IN THIS PARAGRAPH BECOMES
THE SUBJECT OF A DISPUTE, THE PARTIES HERETO ALL HEREBY WAIVE TRIAL BY JURY.
The Borrower agrees not to settle any claim, litigation or proceeding
relating to this transaction (whether or not the Agent or the Arranger is a
party thereto) unless such settlement releases all Indemnified Persons from
any and all liability in respect of such transaction.
The Agent's commitment and the Arranger's undertaking are subject to
(i) the preparation, execution, and delivery of a mutually acceptable credit
agreement ("Credit Agreement") and other loan documents (collectively, the
"Loan Documents") incorporating, without limitation, substantially the terms
and the conditions outlined herein and in the Term Sheet; (ii) the Agent's
and the Arranger's respective determination that (a) there is an absence of
a material adverse change (a "Material Adverse Change") in the business,
condition (financial or otherwise), operations, performance, properties, or
prospects of the Borrower and its subsidiaries or the Company and its
subsidiaries from that reflected in their respective financial statements
described in the first sentence of the fourth paragraph of this letter or in
other information previously provided the Agent and the Arranger in
connection with the Acquisition; and (b) there is an absence of any material
adverse change prior to closing in primary and secondary loan syndication
markets or capital markets generally.
The Arranger and the Agent will, in consultation with the Borrower,
manage all aspects of the syndication, including, without limitation,
decisions as to the selection of institutions to be approached and when they
will be approached, when their commitments will be accepted, which
institutions will participate, the allocations of the commitments among the
Lenders and the amount and distribution of the fees discussed herein among
the Lenders. To assist the Arranger in its syndication efforts, the
Borrower shall (a) provide and cause its advisors and management of the
Company to provide the Arranger upon request with all information deemed
reasonably necessary by it to complete successfully the syndication,
including, without limitation, all information and projections prepared by
the Borrower or on the Borrower's behalf relating to the transactions
contemplated hereby; and (b) cause its advisors and the management of the
Company to actively participate in both the preparation of an information
package regarding the operations and prospects of the Borrower and the
Company and the presentation of the information to prospective Lenders.
The Borrower authorizes each of the Agent and the Arranger to answer
inquiries from financial media with respect to the Facilities. By its
acceptance hereof, the Borrower hereby authorizes each of the Agent and the
Arranger, at their respective sole expense but without any prior approval by
the Borrower, to publish such tombstones and give such other publicity to
the Facilities as each may from time to time determine in its sole
discretion. The foregoing authorization shall remain in effect unless the
Borrower notifies each in writing that such authorization is revoked.
This Commitment Letter and the attached Term Sheet supersede and
replace the Commitment Letter and Term Sheet delivered to and signed by the
Borrower dated June 3, 1996 (the "June Commitment Letter Sheet"), provided
that the reimbursement, indemnification obligations of the Borrower under
the second full paragraph starting on page 2 of the June Commitment Letter
shall survive.
Please indicate your acceptance of this commitment by the Agent and
undertaking by the Arranger in the space indicated below and return a copy
of this letter so executed to the Agent. This commitment and undertaking
will expire at 6:00 p.m. (Detroit time) August 16, 1996 unless on or prior
to such time the Agent shall have received a copy of this letter executed by
the Borrower together with the fee required under paragraph 1(a) of the
Agent's Fee Letter of even date herewith (the "Fee Letter").
Notwithstanding timely acceptance of the commitment pursuant to the
preceding sentence, the commitment will automatically terminate unless
definitive Loan Documents are executed on or before August 31, 1996. By its
acceptance hereof, the Borrower agrees to pay the Agent and the Arranger the
fees described in the Fee Letter.
By accepting delivery of this Commitment Letter, the Fee Letter and
the Term Sheet, the Borrower hereby agrees that, prior to executing this
Commitment Letter, the Borrower will not disclose either expressly or
impliedly, without the Agent's and the Arranger's consent, to any person any
of the terms of this Commitment Letter, the Fee Letter or Term Sheet, or the
fact that this Commitment Letter, the Fee Letter or Term Sheet or the
financing proposal represented thereby exists except that the Borrower may
disclose any of the foregoing to the Company, to any employee, financial
advisor (but not to a financial advisor which might be a provider of senior
debt in this transaction) or attorney of the Borrower or the Company to
whom, in each case, it is necessary to disclose such information so long as
the Company and any such employee, advisor or attorney is directed to
observe this confidentiality obligation. Upon the Borrower's execution of
this Commitment Letter, the Borrower may make public disclosure of the
existence and the amount of the commitment; and the Borrower may file a copy
of the Commitment Letter, or make such other disclosures if such disclosure
is, in the opinion of the Borrower's counsel, required by law. If the
Borrower does not accept this commitment, the Borrower is to immediately
return this Commitment Letter, the Fee Letter and the Term Sheet (and all
copies of the foregoing) to the Agent.
This Commitment Letter and Term Sheet supersede any and all prior
versions thereof. This Commitment Letter shall be governed by the internal
laws of the State of Michigan, and may only be amended by a writing signed
by all parties hereto.
Very truly yours,
NBD BANK
By: /S/ ERIC W. BAKKER
Title: Vice President
FIRST CHICAGO CAPITAL MARKETS, INC.
By: /S/ CAROLANN M. MORYKWAS
Title: Managing Director
Accepted and agreed:
VENTURE HOLDINGS TRUST
By: /S/ MICHAEL G. TORAKIS
Title: President
Date: August 16, 1996
<PAGE>
Term Sheet
Venture Holdings Trust
August 16, 1996
This Term Sheet is delivered with a commitment letter of even date
herewith (the "Commitment Letter") from NBD Bank and First Chicago Capital
Markets, Inc. to the Borrower. Capitalized terms used herein shall have the
meanings set forth in the Commitment Letter.
The Facilities
Borrower: Venture Holdings Trust, a grantor trust organized under the
laws of the State of Michigan (the "Borrower") certain
subsidiaries of the Borrower determined by the Agent
(collectively, the "Subsidiary Borrowers").
Guarantors: All direct and indirect subsidiaries of the Borrower,
whether now existing or hereafter acquired or created.
Amount: $216,000,000 (the "Aggregate Commitment") comprised of loans
and letters of credit under the facilities described below.
Arranger: First Chicago Capital Markets, Inc.
Administrative
Agent: NBD Bank (the "Agent")
Lenders: A group of lenders to be determined (collectively, together
with the Agent in its capacity as lender, the "Lenders").
Documentation: The Facilities will be evidenced by a Credit Agreement,
notes, guaranties, security agreements and other Loan
Documents mutually satisfactory to the Borrower and the
Lenders.
Syndication
Management: The Arranger and the Agent will, in consultation with the
Borrower, manage all aspects of the syndication including,
without limitation, the timing of offers to potential
Lenders, the amounts offered to potential Lenders, the
acceptance of commitments, the final allocation of
commitments among Lenders and the compensation provided, all
as set forth in the Commitment Letter.
Facility A: Revolving Credit
Amount: $96,000,000 (the "Facility A Commitment"). The Facility A
Commitment may include a swingline facility within such
revolving credit facility, as determined by the Agent and
the Arranger.
Purpose: To provide funds for the purchase of Bailey Corporation (the
"Company") pursuant to the Acquisition, for payment of
expenses incurred in connection with the Acquisition and for
general corporate purposes of the Borrower and its
subsidiaries, with a $10,000,000 sublimit for commercial and
standby letters of credit.
Maturity: June 30, 2002.
Borrowing Base: The aggregate outstanding amount of loans and letters of
credit under Facility A shall not at any time exceed the
Borrowing Base. Borrowing Base means a to-be-determined
percentage of eligible inventory and eligible accounts
receivable. Eligibility criteria are to be determined by
the Agent.
Letters of
Credit: One or more Lenders selected by the Borrower or any
Subsidiary Borrower will (with the consent of each such
Lender) issue standby and commercial letters of credit for
the account of the Borrower or any Subsidiary Borrower in an
aggregate face amount not to exceed $10,000,000. Lenders
will hold pro rata risk participations in each letter of
credit.
Facility B: Term Loan
Amount: $75,000,000 (the "Facility B Commitment"). The Arranger, in
its discretion, may reallocate a portion of the Facility B
Commitment to Facility C, or vice versa.
Purpose: To provide funds for the purchase of the Company pursuant to
the Acquisition and for payment of expenses incurred in
connection with the Acquisition.
Maturity: June 30, 2002.
Amortization: Quarterly installments of principal acceptable to the Agent
and the Arranger.
Facility C: Term Loan
Amount: $45,000,000 (the "Facility C Commitment"). The Arranger, in
its discretion, may reallocate a portion of the Facility C
Commitment to Facility B, or vice versa.
Purpose: To provide funds for the purchase of the Company pursuant to
the Acquisition and for payment of expenses incurred in
connection with the Acquisition.
Maturity: September 30, 2003.
Amortization: Quarterly installments of principal acceptable to the Agent
and the Arranger.
Fees
The Borrower will pay the following fees:
Commitment
Fee: A commitment fee of 0.5%, (with adjustments subject to a
performance based grid acceptable to the Agent and the
Arranger, provided that adjustments will not occur until six
months after the effective date of the Credit Agreement) on
the average daily unused portion of the Facility A
Commitment payable quarterly in arrears to the Lenders
(including the Agent) ratably from the Closing Date until
termination of Facility A Commitment.
Agent and
Other Fees: Such fees payable to the Arranger and Agent as are specified
in the fee letter among the Arranger, the Agent and the
Borrower (the "Agent's Fee Letter").
L/C Fees: In connection with each letter of credit issued under
Facility A, a letter of credit fee at the per annum rate set
forth on the pricing grid for such type of letter of credit
on the undrawn face amount of such letter of credit, payable
quarterly in arrears to the Agent for the account of the
Lenders. In addition, a letter of credit fronting fee
payable to the issuing Lender in its capacity as issuer in
an amount to be agreed upon between the letter of credit
applicant and the issuing Lender and, in connection with the
issuance of or any draw under any letter of credit,
customary processing and other fees charged by such issuing
Lender.
Interest Rates
At the Borrower's option:
Facilities A and B:
ABR plus 1.50%, with adjustments subject to a performance based grid
acceptable to the Agent and the Arranger, provided that adjustments
will not occur until six months after the effective date of the
Credit Agreement.
Eurodollar Rate plus 2.75%, with adjustments subject to the
performance based grid acceptable to the Agent and the Arranger,
provided that adjustments will not occur until six months after the
effective date of the Credit Agreement.
Facility C:
ABR plus 1.75% per annum
Eurodollar Rate plus 3.25% per annum
"ABR" means the Alternate Base Rate and is the larger of the Prime
Rate or the federal funds rate plus 1/2% per annum.
"Prime Rate" means the rate of interest announced by the Agent from
time to time as its "prime rate" (it being acknowledged that such announced
rate may not necessarily be the lowest rate charged by the Agent to any of
its customers), changing when and as said prime rate changes.
"Eurodollar Rate" means the rate offered by the Agent in the London
interbank market for deposits in the amount of, and for a maturity
corresponding to, the Agent's portion of the loan, as adjusted for maximum
statutory reserves.
Eurodollar Rate interest periods shall be one, two, three or six
months. Interest shall be payable in arrears on the last day of each
interest period and, in the case of an interest period longer than three
months, quarterly, and upon any prepayment. Interest and fees will be
computed for actual days elapsed on a 360-day year basis.
The Credit Agreement will include customary provisions relating to
yield protection, availability and capital adequacy. After default (if
required by the Required Lenders), the interest rate will be equal to the
then-highest rate applicable under the Facilities plus 3% per annum.
The Eurodollar Rate will not be made available, at the Agent's sole
option, for the first 90 days following the initial funding of the loans or
earlier at the Agent's option.
Collateral, Guaranties or Other Credit Support
Each of the Facilities will be secured by a first perfected security
interest in all of the Borrower's, and each Subsidiary Borrower's and each
Guarantor's assets. The assets to be pledged as collateral will include all
of the stock or other evidence of ownership of any direct and indirect
subsidiaries. The collateral will also secure interest rate swaps or hedge
obligations owing to any Lender. All intercompany funds flows will be
evidenced by notes which, in the case of notes payable to any borrower or
guarantor, shall be senior obligations of such obligor.
Prepayments
Mandatory
Prepayment -
Sale of Assets: Upon the sale, transfer or other disposition of any assets
(other than the sale of inventory in the ordinary course of
business and the sale of equipment if the proceeds are used
to purchase replacement equipment of comparable value), to
the extent permitted under the Loan Documents, the Borrower
shall make a mandatory prepayment in an amount equal to 100%
of the proceeds (net of income taxes and expenses of sale)
realized from any such sale, transfer or other disposition,
such mandatory prepayment to be applied pro rata to
Facilities B and C until paid in full, then to reduce
commitments under Facility A to $0.
Mandatory
Prepayment -
Excess Cash
Flow: Upon delivery of its audited financial statements in each
year commencing with the fiscal year ending December 31,
1997, the Borrower shall make a mandatory prepayment in an
amount equal to 75% of the Excess Cash Flow (definition to
be determined), if positive, for the most recently ended
fiscal year, such mandatory prepayment to be applied pro
rata to Facilities B and C until paid in full, then to
reduce commitments under Facility A to $0.
Mandatory
Prepayment -
Debt/Equity
Sale: Upon the sale of any common stock, preferred stock, warrant
or other equity or the placement of any debt, the Borrower
shall make a mandatory prepayment in an amount equal to 100%
of the proceeds of such equity or debt, such mandatory
prepayment to be applied pro rata to Facilities B and C
until paid in full, then to reduce commitments under
Facility A to $0.
Voluntary
Prepayments: Facility B and Facility C may be prepaid in whole or in part
without premium on one day's notice, provided that such
payments will be in amounts of at least $5,000,000 and
multiples of $1,000,000 in excess thereof; and the Facility
A Commitment may be permanently reduced without premium on
one day's notice, provided such reductions will be in an
amount of at least $5,000,000 and multiples of $1,000,000 in
excess thereof. The Borrower will pay breakage costs with
respect to any payments of Eurodollar-rate based loans which
are made on a date other than the last day of the interest
period therefor.
Allocation of
Prepayments: Any mandatory prepayments which are not accepted by the
Lenders under Facility C shall be paid to the Lenders under
Facility B until Facility B is paid in full. Any mandatory
prepayments which are not accepted by the Lenders under
Facility B shall be paid to the Lenders under Facility C
until Facility C is paid in full. All prepayments to be
applied to either of Facilities B or C shall be applied to
the principal installments thereof in the inverse order of
maturity.
Conditions of Lending
The Loan Documents shall be in form and substance acceptable to the
Lenders. The Credit Agreement shall include, without limitation, conditions
precedent, representations and warranties, covenants, events of default,
indemnification (of Agent, Arranger and Lenders) and other provisions
customary for such financings.
Conditions Precedent
Usual conditions to each loan (including absence of default or
unmatured default, lack of material adverse change from the Borrower's or
the Company's financial condition and operations as reflected in (i) the
Borrower's consolidated financial statements as of March 31, 1996 previously
delivered to the Agent and (ii) the Company's consolidated financial
statements as of January 31, 1996 previously delivered to the Agent).
Additional conditions precedent to initial loan will include without
limitation those set forth below.
Initial
Funding: Initial funding shall occur no later than August 31, 1996.
Approval: Evidence satisfactory to the Agent and the Required Lenders
(to be defined in the Credit Agreement) that the Company's
directors and shareholders and the Borrower's directors
(and, if required by law or by the Borrower's constitutive
documents, the Borrower's shareholders) shall have approved
the Acquisition; and all regulatory and legal approvals for
the Acquisition shall have been obtained, including, without
limitation, any filings required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
Litigation: Absence of injunction or temporary restraining order which,
in the judgment of the Agent or the Required Lenders would
prohibit the making of the loans or the consummation of the
Acquisition, and absence of litigation which would
reasonably be expected to result in a material adverse
effect on the Borrower and its subsidiaries or the Company
and its subsidiaries.
Due
Diligence: Results of a review of contingent liabilities (e.g.,
environmental, retiree medical benefits, ERISA, etc.), a
review of contracts and insurance, plant tours, a
comprehensive field examination of all assets, and a review
of appraisals of all fixed assets and contractual
obligations, showing no Material Adverse Change. A
satisfactory review of all contracts, liabilities and assets
of Autostyle satisfactory to the Agent. All financial,
accounting, legal and tax aspects of the Acquisition and the
financing must be acceptable.
Total
Consideration: The amounts and forms of the consideration paid in the
Acquisition shall be acceptable to the Agent and the
Required Lenders, together with evidence of such
consideration to be paid satisfactory to the Agent.
Tender Offer: The terms of the tender offer shall not be amended without
the consent of the Agent and the Required Lenders. Without
limiting the foregoing, the Lenders' obligation to fund
shall be conditioned upon the tendering of the minimum
number of shares required to consummate a merger by any
applicable corporate statute, anti-takeover statute or
provision in the Company's articles of incorporation, by
laws, etc.
Acquisition
Agreement: The representations and warranties in the Acquisition
Agreement shall be true and correct in all material respects
as of the date of the Acquisition closing and the conditions
therein shall have been satisfied and the Lenders must have
received an opinion of counsel satisfactory to the Agent and
the Required Lenders as to the enforceability of the
Acquisition Agreement and its compliance with all applicable
law.
Subordinated
Debt: The 9-3/4% Senior Subordinated Notes of the Borrower due
2004 (the "Subordinated Notes") shall remain outstanding on
and as of the Closing Date, provided that the Borrower shall
be allowed to redeem up to but not exceeding $20,000,000 of
the Subordinated Notes on or about the closing of the Credit
Agreement per the supplemental indenture (i.e., expend
$20,000,000 to redeem Subordinated Notes at 95% of the face
amount thereof per the supplemental indenture, such that the
aggregate face amount of Subordinated Notes to be redeemed
may not exceed $21,052,000), and the Borrower agrees that
any amount less than $20,000,000 expended by the Borrower
for such redemption shall permanently reduce the Facilities
by such amount, with the Agent determining whether the
Facility A Commitment, the Facility B Commitment or the
Facility C Commitment, or any combination thereof, is so
reduced. After giving effect to the closing of the
Facilities and the initial borrowings thereunder, no default
or event which with the giving of notice or the passage of
time could become a default shall exist under the
Subordinated Notes and all indebtedness incurred or to be
incurred under the Facilities shall be classified as senior
indebtedness, permitted indebtedness and designated senior
indebtedness thereunder. Additionally, the Borrower, the
Borrowing Subsidiaries and at least 51% of the (based on the
outstanding amount of the Subordinated Notes) of the holders
of the Subordinated Notes shall have signed a consent
agreement and a supplemental indenture with respect to the
Subordinated Notes in form and substance satisfactory to the
Agent and the Arranger.
Financial
Statements: The Agent and the Required Lenders shall have received (i)
pro forma opening financial statements giving effect to the
Acquisition which must not be materially less favorable, in
the Agent's and Required Lenders' reasonable judgment, than
the projections previously provided to them and which must
demonstrate, in their reasonable judgment, together with all
other information then available to the Agent and Required
Lenders, that the Borrower and its subsidiaries can repay
their debts and satisfy their respective other obligations
as and when due, and can comply with financial covenants
acceptable to the Agent and Required Lenders, (ii) an
opening borrowing base certificate and projected borrowing
base availability for the next twelve months based on the
advance rates and eligibility requirements provided by
Coopers & Lybrand an agreed to by the Agent and the Required
Lenders, in each case showing unused availability in an
amount acceptable to the Agent, (iii) calculation of
projected interest coverage ratios and fixed charge coverage
ratios at December 31, 1996 per the terms of the consent
agreement and supplemental indenture among the Borrower,
certain of its subsidiaries and the holders of the
Subordinated Notes, prepared and certified by Deloitte &
Touche and (iv) such information as the Agent and the
Required Lenders may reasonably request to confirm the tax,
legal and business assumptions made in such financial
statements and borrowing base certificates.
Fairness
Opinion: Receipt of a copy of a fairness opinion from the Company's
investment banker addressed to the Company's board of
directors, relating to the Acquisition.
Valuation: The Agent and the Required Lenders shall have received
evidence reconfirming the solvency and other appropriate
factual information and advice in form and substance
satisfactory to them and from the chief financial officer of
the Borrower supporting the conclusions that after giving
effect to the Acquisition, the Borrower and the Company and
their subsidiaries, on a consolidated basis, are solvent and
will be solvent subsequent to incurring the indebtedness in
connection with the Acquisition, will be able to pay their
debts and liabilities as they become due and will not be
left with unreasonably small capital with which to engage in
their businesses. Such evidence of value shall include,
without limitation, (i) with respect to non real-estate
fixed assets, orderly liquidation appraisals thereof and
(ii) with respect to real estate, fair market value
appraisals as set forth in the following paragraph.
Environmental: An environmental review report, satisfactory in form and
substance, showing no Material Adverse Change, to the Agent
and the Required Lenders, from an environmental review firm
acceptable to the Agent and the Required Lenders, as to any
environmental hazards or liabilities involving the
Borrower's or the Company's assets.
Existing
Facilities: Refinancing, amending and replacing, with the Facilities, of
(i) all obligations under existing loan facilities (other
than those under the Facilities) in which Agent is a Lender
and (ii) all outstanding notes issued under the First
Amended and Restated Trust Indenture dated as of February 1,
1994 from the Borrower and certain of its subsidiaries to
NBD Bank, as Trustee. All Indebtedness (as defined in the
documents relating to the Subordinated Notes) of the Company
and its Subsidiaries shall be in the amount acceptable to
the Agent and be refinanced by the Facilities, other than
Indebtedness in aggregate amount of $3,148,000, which
consists in part of industrial revenue bonds of the Company
in aggregate amount outstanding of $2,918,321 (such
Indebtedness of the Company and its Subsidiaries which is
not being refinanced by the Facilities defined herein as the
"Remaining Company Debt"). Receipt and satisfactory review
of all agreements and documents relating to the Remaining
Company Debt, such satisfactory review to include, without
limitation, satisfactory review that the Remaining Company
Debt can remain outstanding after the closing of the
Facilities and the Acquisition and all transactions
contemplated in connection therewith.
Legal: All legal (including tax implications) and regulatory
matters shall be satisfactory to the Agent and the Required
Lenders.
Collateral: Liens creating a first priority security interest in the
Collateral shall have been perfected.
Regulations: Compliance with all applicable requirements of Regulations
G, T, U and X of the Board of Governors of the Federal
Reserve System.
No Default;
No MAC: No default or unmatured default shall exist on the funding
date and no Material Adverse Change shall have occurred.
Interest Rate
Protection: The Borrower shall enter into interest rate swap and hedge
agreements or other agreements which effectively limit the
amount of interest that the Borrower must pay on notional
amounts of at least 50% of the Borrower's and its
Subsidiaries' total debt.
Customary
Documents: Receipt of other customary closing documentation, including,
without limitation, customary legal opinions of the
Borrower's counsel acceptable to the Agent, including
without limitation an unqualified legal opinion with respect
to no default under the Subordinated Notes after giving
effect to the transactions contemplated hereby and the
classification of all indebtedness under the Facilities as
senior indebtedness and such other matters with respect to
the Subordinated Notes, in all respects acceptable to the
Agent.
Covenants
Covenants: The Credit Agreement will contain customary covenants,
including, without limitation, restrictions (subject to
exceptions, as appropriate, to be negotiated) on the
following:
-liens and encumbrances
-dividends/restricted payments
-guarantees
-sale and leaseback transactions
-sale of assets
-consolidations and mergers
-investments and acquisitions
-capital expenditures
-loans and advances
-indebtedness and additional indebtedness
-compliance with pension, environmental and other laws
-operating leases and usage fees
-transactions with affiliates
-changes in line of business
-hedging of interest rates (e.g., with swaps, caps)
-prepayment of other debt
-permit inspection of records and assets
Financial
Covenants: The Credit Agreement will contain financial covenants
containing limitations to be negotiated, including, without
limitation, covenants pertaining to:
-tangible net worth
-interest coverage ratio
-fixed-charge coverage ratio
-total debt to EBITDAR ratio
Representations
and Warranties
Usual representations and warranties in connection with each loan
shall be included in the Credit Agreement, including but not limited to
absence of material adverse change, absence of material litigation, absence
of default or unmatured default, representations regarding environmental
issues, priority of the Lenders' liens, compliance with all material
requirements of law and contracts, and compliance with Regulations G, T, U
and X.
Defaults
Customary events of default, including, without limitation, cross
default to occurrence of a default (whether or not resulting in
acceleration) under any other agreement governing indebtedness of the
Borrower or any of its subsidiaries and change of control.
Assignments and Participations
Each Lender may, in its sole discretion, sell participations and
may, with the consent of the Borrower (which shall not be unreasonably
withheld) and the Agent, sell assignments in the loans and participations in
letters of credit and in its commitment and disclose information to
prospective participants and assignees, and share, at its option, any fees
with such participants and assignees.
The assignor shall pay an assignment fee (each an "Assignment Fee")
of $4,500 to Agent upon any assignment by a Lender of its rights and
obligations under the Credit Facilities (including, but not limited to, an
assignment by a Lender to another Lender).
Other
This commitment is, and the Loan Documents will be, governed by the
law of the State of Michigan. 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
definitive legal documentation for the financing contemplated hereby. The
commitment of the Agent and the other Lenders is subject to negotiation and
execution of definitive Loan Documents in form and substance satisfactory to
the Agent and the other Lenders and their respective counsel.
