<PAGE>
BANK OF AMERICA, N.A.
BANC OF AMERICA BRIDGE LLC
BANC OF AMERICA SECURITIES LLC
100 North Tryon Street
Charlotte, North Carolina 28255
December 20, 2000
Vestar Capital Partners IV, L.P.
Seventeenth Street Plaza
1225 17th Street
Suite 1600
Denver, Colorado 80202
Attention: Mr. James P. Kelley
Re: Commitment Letter for Michael Foods, Inc. Acquisition Financing
---------------------------------------------------------------
Dear Jim:
You have advised Bank of America, N.A. ("Bank of America"), Banc of
America Securities LLC ("BAS") and Banc of America Bridge LLC ("Banc of America
Bridge") that Vestar Capital Partners IV, L.P. (the "Sponsor") and certain
affiliates and certain other investors (collectively with the Sponsor, the
"Equity Investors") intend to form a corporation ("Holdings") which will (i)
acquire (the "Acquisition") all of the outstanding capital stock of Michael
Foods, Inc., a Minnesota corporation (together with its subsidiaries, the
"Acquired Company"), through the merger (the "Merger") of a newly created
wholly-owned subsidiary of Holdings (the "Borrower") into the Acquired Company
and (ii) contemporaneously with consummation of the Acquisition and the Merger,
refinance (the "Refinancing") all existing funded indebtedness of the Acquired
Company (except for such debt in amounts to be agreed which may remain
outstanding). After giving effect to the Acquisition, the Merger and the
Refinancing, Holdings will be a holding company that directly owns all of the
equity interests in the Acquired Company.
You have also advised us that you intend to finance the Acquisition,
the Merger, the Refinancing and the payment of transaction fees and expenses in
connection therewith from the following sources: (a) no less than $150.0 million
in equity contributed by the Equity Investors on terms reasonably satisfactory
to us (the "Equity Financing"), (b) approximately $50.0 million of common equity
and option value of the Acquired Company currently held by existing shareholders
of the Acquired Company which will be rolled over (directly or indirectly) into
common equity of Holdings and deferred compensation arrangements of Holdings on
terms reasonably acceptable to Bank of America, BAS and Banc of America Bridge,
(c) not more than $400.0 million from borrowings under $470.0 million senior
secured credit facilities (the "Senior Credit Facilities") of the Borrower
comprised of term loan facilities aggregating $370.0 million (the "Term Loan
Facilities") and a $100.0 million revolving credit facility (the "Revolving
Credit Facility") and (d) at least $200.0 million in gross proceeds from the
issuance and sale by the Borrower of either (i)
<PAGE>
Vestar Capital Partners IV, L.P.
December 20, 2000
Page 2
unsecured senior subordinated debt securities (the "Senior Subordinated Notes")
or (ii) unsecured senior subordinated bridge notes (the "Bridge Notes"). The
Revolving Credit Facility will also be used to finance the continuing operations
of the Borrower and its subsidiaries after consummation of the Transaction. The
Senior Credit Facilities and Bridge Notes are collectively referred to herein as
the "Financings"; the Acquisition, the Merger, the Refinancing, the Equity
Contribution, the entering into and funding of the Senior Credit Facilities and
the issuance and sale of the Senior Subordinated Notes or the Bridge Notes, and
all related transactions, are hereinafter collectively referred to as the
"Transaction"; and if you have accepted the terms of this Commitment Letter in
respect of the Senior Credit Facilities, the day of the initial funding under
the Senior Credit Facilities, and/or if you have accepted the terms of this
Commitment Letter in respect of the Bridge Notes, the day of the issuance and
sale of the Senior Subordinated Notes or the Bridge Notes, in each case, is
referred to herein as the "Closing Date".
In connection with the foregoing, (i) Bank of America is pleased to
advise you of its commitment to act as exclusive administrative agent (in such
capacity, the "Agent") and to provide the full principal amount of the Senior
Credit Facilities, upon and subject to the terms and conditions of this letter
and the Summary of Terms and Conditions attached hereto as Annex I (together
with Appendix A referred to therein and attached thereto, the "Term Sheet"),
(ii) BAS is pleased to advise you of its willingness, as sole and exclusive lead
arranger and sole and exclusive book running manager for the Senior Credit
Facilities, to use its best efforts to form a syndicate of financial
institutions (the "Senior Lenders") reasonably acceptable to you for the Senior
Credit Facilities, (iii) Banc of America Bridge is pleased to advise you of its
commitment to purchase the full principal amount of the Bridge Notes, all upon
and subject to the terms and conditions set forth in this letter and in the
summary of terms attached as Annex II hereto (together with Appendix A referred
to therein and attached thereto, the "Bridge Term Sheet") and (iv) BAS is
pleased to advise you of its willingness, as sole and exclusive lead arranger
and sole and exclusive book running manager in respect of the Bridge Notes, to
use its best efforts, in consultation with you, to form a syndicate of financial
institutions to purchase the Bridge Notes, including Banc of America Bridge (the
"Bridge Note Purchasers"). This letter, the Senior Term Sheet and the Bridge
Term Sheet are collectively referred to herein as the "Commitment Letter".
Bank of America will act as sole and exclusive administrative agent
for the Senior Credit Facilities and BAS will act as sole and exclusive lead
arranger and sole and exclusive book running manager for the Senior Credit
Facilities and as sole and exclusive lead arranger and sole and exclusive book
running manager in respect of the Bridge Notes. We will coordinate with you the
appointment of any co-agents, co-managers and additional agents for the
Financings, which co-agents, co-managers and additional agents will be
acceptable to you and shall be appointed on terms which you and we shall have
agreed in writing. No additional agents, co-agents, co-managers, arrangers or
book running managers will be appointed and no other titles will be awarded
without our prior written approval.
The commitments of Bank of America and Banc of America Bridge
hereunder and the agreement of BAS to provide the services described herein are
subject to the agreement in the
<PAGE>
Vestar Capital Partners IV, L.P.
December 20, 2000
Page 3
preceding paragraph and the satisfaction or waiver of each of the following
conditions precedent in a manner reasonably acceptable to us: (a) in the case of
the Senior Credit Facilities, each of the terms and conditions set forth herein
and in the Term Sheet; (b) in the case of the Bridge Notes, each of the terms
and conditions set forth herein and in the Bridge Term Sheet; (c) execution of
the fee letter of even date herewith among the Sponsor, Bank of America, Banc of
America Bridge and BAS (the "Fee Letter"); (d) the absence of a material breach
of any representation, warranty or agreement of the Sponsor set forth herein;
(e) the absence of any change, occurrence or development since December 31, 1999
that has not been previously disclosed to us (including through public
disclosures) that could, in our reasonable opinion, have a material adverse
effect on the business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects of the Acquired Company; (f) our
not having become aware of any information with respect to the Acquired Company
which in our reasonable judgment is inconsistent in a material and adverse
manner with any information with respect to the Acquired Company previously
disclosed to us; (g) prior to and during the primary syndication of the
Financings there shall be no competing offering, placement or arrangement of any
debt securities or bank financing by or on behalf of the Acquired Company (other
than the Senior Subordinated Notes); and (h) no material adverse change in or
material disruption of conditions in the financial, banking or capital markets
which we, in our reasonable discretion, deem material in connection with the
syndication of the Senior Credit Facilities or the Bridge Notes, as applicable,
shall have occurred and be continuing (any change, occurrence, development,
inconsistency, or disruption referred to under clauses (e) or (f) above, this
clause (h), or clause (i) of Appendix A attached to this Commitment Letter is
referred to herein as a "Material Event").
BAS has provided you with a separate letter of engagement and
indemnity dated the date hereof (the "Engagement Letter") designating BAS as the
sole managing underwriter, sole book running manager, sole lead initial
purchaser and sole lead manager or placement agent for any and all Senior
Subordinated Notes and other Permanent Securities (as defined in the Fee Letter)
and financial advisor in connection with the Transaction. BAS will coordinate
with you the appointment of any co-managers and underwriters for the Senior
Subordinated Notes and any other Permanent Securities, which co-managers and
underwriters will be acceptable to you and shall be appointed on terms which you
and BAS shall have agreed in writing. It is understood that your execution and
delivery of the Engagement Letter is a condition precedent to the effectiveness
of the commitment of Banc of America Bridge hereunder. It is further understood
to be a condition precedent to the obligation of Banc of America Bridge to
purchase the Bridge Notes that the Engagement Letter be in full force and effect
at the time of such purchase.
BAS intends to commence syndication of each of the Financings and the
offering of Permanent Securities as soon as practicable after your acceptance of
this Commitment Letter, the Fee Letter and the Engagement Letter. You agree to
actively assist, and, prior to the Closing Date (as hereinafter defined) to use
your commercially reasonable efforts to cause, and thereafter to cause, the
Acquired Company to actively assist, BAS in achieving a syndication of each of
the Financings and the offering and sale of Permanent Securities that is
reasonably satisfactory to BAS and you. Such assistance shall include (a) your
providing and causing your advisors to provide Bank of
<PAGE>
Vestar Capital Partners IV, L.P.
December 20, 2000
Page 4
America, Banc of America Bridge, BAS and the other Lenders and Bridge Note
Purchasers upon request with all information in your possession which is
reasonably available to you concerning the Transaction and reasonably deemed
necessary by Bank of America, Banc of America Bridge and BAS to complete
syndication of the Financings and the offer and sale of Permanent Securities,
including, but not limited to, information and evaluations prepared by you, the
Acquired Company and your and its advisors, or on your or their behalf, relating
to the Transaction, (b) your assistance in the preparation of an information
memorandum with respect to the Senior Credit Facilities to be used in connection
with the syndication of the Senior Credit Facilities and an information
memorandum with respect to the Bridge Notes to be used in connection with the
syndication of the Bridge Notes, (c) your assistance in the preparation of an
offering memorandum for the offer and sale of Permanent Securities in an
offering pursuant to Rule 144A of the rules and regulations under the Securities
Act of 1933, as amended (the "Securities Act"), containing such disclosures as
may be required by applicable laws, as are customary and appropriate for such a
document or as may be required by BAS in its reasonable judgment, (d) using your
commercially reasonable efforts to ensure that the efforts of BAS to syndicate
the Financings and to offer and sell Permanent Securities benefit materially
from existing lending relationships of the Sponsor and the Acquired Company and
(e) otherwise assisting BAS in its efforts to syndicate the Financings and to
offer and sell Permanent Securities, including by making your officers and
advisors and, to the extent reasonably practical, the officers of the Acquired
Company, available from time to time to attend and make presentations regarding
the business and prospects of the Acquired Company, as appropriate, at one or
more meetings, including a roadshow, of prospective Lenders, prospective Bridge
Note Purchasers or prospective investors in Permanent Securities, as the case
may be.
It is understood and agreed that BAS will manage and control all
aspects of the syndications in consultation with you, including decisions as to
the selection of prospective Lenders (which shall be reasonably acceptable to
you) and the prospective Bridge Note Purchasers (in consultation with you) and
any titles offered to proposed Lenders and proposed Bridge Note Purchasers (in
coordination with you as hereinabove provided), when commitments will be
accepted and the final allocations of the commitments among the Lenders and the
Bridge Note Purchasers. It is understood that no Lender participating in the
Senior Credit Facilities and no Bridge Note Purchaser participating in the
Bridge Notes will receive compensation from you in order to obtain its
commitment, except on the terms contained in this Commitment Letter. It is also
understood and agreed that (i) the amount and distribution of the fees among the
Lenders will be at the sole discretion of Bank of America and BAS and (ii) the
amount and distribution of the fees among the Bridge Note Purchasers will be at
the sole discretion of Banc of America Bridge and BAS.
You hereby represent, warrant and covenant that (a) all information,
other than Projections (as defined below), which has been or is hereafter made
available to Bank of America, BAS, Banc of America Bridge, the other Lenders or
the other Bridge Note Purchasers by you or any of your representatives (or on
your or their behalf) or by the Acquired Company or any of its representatives
(or on their behalf) in connection with any aspect of the Transaction (the
"Information"), when taken as a whole, is and will be complete and correct in
all material respects as of the date made and does not and will not contain any
untrue statement of a material fact or omit
<PAGE>
Vestar Capital Partners IV, L.P.
December 20, 2000
Page 5
to state a material fact necessary to make the statements contained therein not
materially misleading and (b) all financial projections concerning the Acquired
Company that have been or are hereafter made available to Bank of America, BAS,
Banc of America Bridge, the other Lenders or the other Bridge Note Purchasers by
you or any of your representatives (or on your or their behalf) or by the
Acquired Company or any of its representatives (or on their behalf) (the
"Projections") have been or will be prepared in good faith based upon
assumptions believed by you to be reasonable at the time made, it being
understood that Projections are inherently uncertain and that actual results may
be materially different. You agree to furnish us with such Information and
Projections as we may reasonably request and to supplement the Information and
the Projections from time to time until the Closing Date so that the
representation, warranty and covenant in the immediately preceding sentence is
correct on the Closing Date. In issuing the commitments hereunder and in
arranging and syndicating each of the Financings, Bank of America, BAS and Banc
of America Bridge are and will be using and relying on the Information and the
Projections without independent verification thereof. It is understood and
agreed that, notwithstanding anything to the contrary set forth herein, you will
have no liability to us for a breach of representation or warranty with respect
to any Information or Projections furnished pursuant to this paragraph, and our
sole remedy for any such breach shall be limited to the termination of our
commitments under this Commitment Letter; provided, however, that nothing in
this sentence shall be construed to limit or restrict your other obligations
under this Commitment Letter.
By accepting the terms of this Commitment Letter in respect of the
Senior Credit Facilities, you agree to reimburse, or to cause the Borrower to
reimburse, Bank of America and BAS within 10 business days after delivery to you
of invoices and/or other reasonable documentation at any time and from time to
time after the Closing Date or termination of this Commitment Letter, for all
reasonable out-of-pocket expenses (including, but not limited to, the reasonable
fees, disbursements and other charges of Moore and Van Allen, PLLC, as counsel
to Bank of America and BAS) incurred before or after the date hereof in
connection with the Senior Credit Facilities, including, but not limited to, the
syndication thereof and the preparation of the definitive documentation
therefor, but only to the extent that such expenses do not result primarily from
the gross negligence, bad faith or willful misconduct of Bank of America or BAS
or from the breach by Bank of America or BAS of its obligations hereunder. By
accepting the terms of this Commitment Letter in respect of the Bridge Notes you
agree to reimburse, or to cause the Borrower to reimburse, Banc of America
Bridge and BAS for out-of-pocket expenses in connection with the Bridge Notes as
more particularly provided in the Fee Letter.
In the event that Bank of America, BAS or Banc of America Bridge
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter contemplated by this Commitment Letter, the Sponsor
will reimburse Bank of America, BAS and Banc of America Bridge for their
reasonable legal and other expenses (including the cost of any investigation and
preparation) as they are incurred by Bank of America, BAS or Banc of America
Bridge, but only to the extent that such expenses do not result primarily from
the gross negligence, bad faith or willful misconduct of Bank of America, BAS or
Banc of America Bridge or from the breach by Bank of America, BAS or Banc of
America Bridge of its obligations hereunder. The
<PAGE>
Vestar Capital Partners IV, L.P.
December 20, 2000
Page 6
Sponsor also agrees to indemnify and hold harmless Bank of America, BAS, Banc of
America Bridge and their affiliates and their respective directors, officers,
employees and agents (the "Indemnified Parties") from and against any and all
actual losses, claims, damages and liabilities, joint or several, related to or
arising out of any matters contemplated by this letter, to the extent that such
losses, claims, damages or liabilities do not result from the gross negligence,
bad faith or willful misconduct of any Indemnified Party or from the breach by
an Indemnified Party of its obligations hereunder.
This Commitment Letter and the Fee Letter and the contents hereof and
thereof are confidential and, except for the disclosure hereof or thereof on a
confidential basis to your equity holders, co-investors, boards of directors or
management committees and their respective affiliates, accountants, attorneys
and other professional advisors retained in connection with the Transaction or
as otherwise required by law, may not be disclosed in whole or in part to any
person or entity without our prior written consent; provided, however, it is
understood and agreed that you may disclose this Commitment Letter but not the
Fee Letter or the Engagement Letter nor their respective contents, (i) to the
board of directors, shareholders, officers, attorneys and advisors of the
Acquired Company in connection with their consideration of the Transaction and
(ii) after your acceptance of this Commitment Letter and the Fee Letter (and the
payment of any fees payable upon acceptance pursuant to the terms of the Fee
Letter), in filings with the Securities and Exchange Commission and other
applicable regulatory authorities and stock exchanges; and provided, further,
that after written notice to BAS of any legally required disclosure, the
Engagement Letter may be disclosed as required by applicable law.
The provisions of the immediately preceding three paragraphs shall
remain in full force and effect regardless of whether any definitive
documentation for either of the Financings shall be executed and delivered and
notwithstanding the termination of this Commitment Letter or any commitment or
undertaking of Bank of America, BAS or Banc of America Bridge hereunder;
provided, however, that the Sponsor shall be deemed released of all of its
obligations hereunder (other than, for the period ending on the second
anniversary of the date hereof, pursuant to the immediately preceding
paragraph), (i) in respect of the Senior Credit Facilities, at such time as
definitive financing documentation for the Senior Credit Facilities shall have
become effective and (ii) in respect of the Bridge Notes, at such time as the
definitive financing documentation for the Bridge Notes shall have become
effective or the Permanent Securities are issued in lieu of all the Bridge
Notes.
In connection with the services and transactions contemplated hereby,
you agree that each of Bank of America, BAS and Banc of America Bridge is
permitted to access, use and share with any of its bank or non-bank affiliates,
agents, advisors (legal or otherwise) or representatives, any information
concerning you, the Acquired Company or any of your or its respective affiliates
that is or may come into the possession of Bank of America, BAS, Banc of America
Bridge or any of such affiliates so long as such information is kept
confidential and such parties agree to the terms of a confidentiality agreement
(the "Confidentiality Agreement") substantially in the form as agreed between
you and us. Bank of America, BAS, Banc of America Bridge and their affiliates
will treat
<PAGE>
Vestar Capital Partners IV, L.P.
December 20, 2000
Page 7
confidential information relating to you, the Acquired Company and your and its
respective affiliates with the same degree of care as they treat their own
confidential information.
This Commitment Letter, the Fee Letter and the Engagement Letter may
be executed in counterparts which, taken together, shall constitute an original.
Delivery of an executed counterpart of this Commitment Letter, the Fee Letter
and the Engagement Letter by telecopier shall be effective as delivery of a
manually executed counterpart thereof.
This Commitment Letter, the Fee Letter and the Engagement Letter shall
be governed by, and construed in accordance with, the laws of the State of New
York. Each of you, Bank of America, BAS and Banc of America Bridge hereby
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Commitment Letter, the Fee Letter and the Engagement Letter,
the Transaction and the other transactions contemplated hereby and thereby or
the actions of Bank of America, BAS and Banc of America Bridge in the
negotiation, performance or enforcement hereof.
This Commitment Letter (including the Term Sheet and Bridge Term
Sheet), the Fee Letter, the Engagement Letter and the Confidentiality Letter
embody the entire agreement and understanding among Bank of America, BAS and
Banc of America Bridge and you and your affiliates with respect to the
Financings and supersedes all prior agreements and understandings relating to
the specific matters hereof. This Commitment Letter is not assignable by you
without our prior written consent and is intended to be solely for the benefit
of the parties hereto and the Indemnified Parties.
With respect to the Senior Credit Facilities, this Commitment Letter
and all commitments and undertakings of Bank of America and BAS hereunder will
expire at 5:00 p.m. (New York City time) on December 31, 2000, unless you
execute this Commitment Letter and the Fee Letter and return them to us prior to
that time. With respect to the Bridge Notes, this Commitment Letter and all
commitments and undertakings of Banc of America Bridge and BAS hereunder will
expire at 5:00 p.m. (New York City time) on December 31, 2000, unless you
execute this Commitment Letter (with respect to the Bridge Notes), the Fee
Letter and the Engagement Letter and return them to us prior to that time.
Thereafter, all commitments and undertakings of Bank of America, BAS and Banc of
America Bridge hereunder will expire on the earliest of (a) April 15, 2001,
unless the Closing Date occurs on or prior thereto, (b) the closing of the
Acquisition (i) with respect to the Senior Credit Facilities, without the use of
the Senior Credit Facilities or (ii) with respect to the Bridge Notes, without
the use of the Bridge Notes and (c) the acceptance by the Acquired Company or
any of its affiliates of an offer for all or any substantial part of the capital
stock or property and assets of the Acquired Company other than as part of the
Transaction.
BY SIGNING THIS COMMITMENT LETTER, THE SPONSOR HEREBY ACKNOWLEDGES AND
AGREES THAT (I) BANK OF AMERICA IS OFFERING TO PROVIDE THE SENIOR CREDIT
FACILITIES SEPARATE AND APART FROM THE COMMITMENT OF BANC OF AMERICA BRIDGE TO
PURCHASE THE BRIDGE NOTES
<PAGE>
Vestar Capital Partners IV, L.P.
December 20, 2000
Page 8
AND (II) BANC OF AMERICA BRIDGE IS OFFERING TO PURCHASE THE BRIDGE NOTES
SEPARATE AND APART FROM THE COMMITMENT OF BANK OF AMERICA TO PROVIDE THE SENIOR
CREDIT FACILITIES. THE SPONSOR MAY, AT ITS OPTION, ELECT TO ACCEPT THIS
COMMITMENT LETTER WITH RESPECT TO EITHER THE SENIOR CREDIT FACILITIES OR THE
BRIDGE NOTES OR BOTH.
* * *
<PAGE>
Vestar Capital Partners IV, L.P.
December 20, 2000
Page 9
We are pleased to have the opportunity to work with you on this important
financing.
Very truly yours,
BANK OF AMERICA, N.A.
By:/s/Elton R. Vogel
-----------------------------------
Elton R. Vogel
Attorney-in-Fact
BANC OF AMERICA SECURITIES LLC
By:/s/Elton R. Vogel
-----------------------------------
Elton R. Vogel
Managing Director
BANC OF AMERICA BRIDGE LLC
By:/s/Lynne E. Wertz
-----------------------------------
Lynne E. Wertz
Managing Director
ACCEPTED AND AGREED TO AS OF DECEMBER 20, 2000:
WITH RESPECT TO THE WITH RESPECT TO THE
SENIOR CREDIT FACILITIES: BRIDGE NOTES:
VESTAR CAPITAL PARTNERS IV, L.P. VESTAR CAPITAL PARTNERS IV, L.P.
By: VESTAR ASSOCIATES IV, L.P., By: VESTAR ASSOCIATES IV, L.P.,
its General Partner its General Partner
By: VESTAR ASSOCIATES By: VESTAR ASSOCIATES
CORPORATION IV, CORPORATION IV,
its General Partner its General Partner
By:/s/Jack M. Feder By:/s/Jack M. Feder
---------------------- ----------------------
Title: Managing Director Title: Managing Director
and General Counsel and General Counsel
Date: December 20, 2000 Date: December 20, 2001
<PAGE>
ANNEX I
MICHAEL FOODS, INC.
SENIOR CREDIT FACILITIES
SUMMARY OF TERMS AND CONDITIONS
December 20, 2000
Unless otherwise defined herein, capitalized terms shall have the definitions
assigned to them in the Commitment Letter dated of even date herewith to which
this Summary of Terms & Conditions is attached.
===============================================================================
BORROWER: Newco, a newly formed Delaware corporation (the
"Borrower"), which will acquire all of the
outstanding stock of and be merged with and into
Michael Foods, Inc., a Minnesota corporation. The
Borrower shall be a wholly owned subsidiary of
Holdings following consummation of the
Acquisition.
GUARANTORS: The Senior Credit Facilities will be guaranteed by
Holdings and each of the existing and future
direct and indirect subsidiaries of Holdings that
is not a "controlled foreign corporation" (a
"CFC") under Section 957 of the Internal Revenue
Code. All guarantees will be guarantees of payment
and not of collection.
ADMINISTRATIVE AGENT: Bank of America, N.A. ("Bank of America") will act
as sole and exclusive administrative and
collateral agent (the "Agent").
SOLE LEAD ARRANGER
AND SOLE BOOK RUNNING
MANAGER: Banc of America Securities LLC ("BAS").
LENDERS: Bank of America and other banks, financial
institutions and institutional lenders acceptable
to BAS, the Agent and the Borrower.
SENIOR CREDIT FACILITIES: Revolving Credit Facility: a $100.0 million
revolving credit facility (the "Revolving Credit
Facility"), which will include a sublimit to be
determined for the issuance of standby and
commercial letters of credit
<PAGE>
(each a "Letter of Credit"). Letters of Credit
will be issued by Bank of America (in such
capacity, the "Issuing Bank"), and each of the
Lenders under the Revolving Credit Facility will
purchase an irrevocable and unconditional
participation in each Letter of Credit.
Tranche A Term Loan Facility: a $125.0 million
term loan facility (the "Tranche A Term
Facility").
Tranche B Term Loan Facility: a $245.0 million
term loan facility (the "Tranche B Term
Facility").
PURPOSE: The proceeds of the Senior Credit Facilities shall
be used to provide a portion of proceeds required
to consummate the Transaction and to provide for
working capital and general corporate needs
(including permitted acquisitions) of the Borrower
and its subsidiaries.
CLOSING DATE: On or before April 15, 2001.
INTEREST RATES: The Revolving Credit Facility and the Tranche A
Term Facility shall initially bear interest at a
rate equal to LIBOR plus 300 basis points or the
Alternate Base Rate (to be defined as the higher
of (i) the Bank of America prime rate and (ii) the
Federal Funds rate plus .50%) plus 200 basis
points. The Tranche B Term Facility shall
initially bear interest at a rate equal to LIBOR
plus 350 basis points or the Alternate Base Rate
plus 250 basis points.
Commencing six months from the Closing Date, the
Senior Credit Facilities shall bear interest at a
rate equal to LIBOR and/or Alternate Base Rate
plus the applicable margins described in the
Pricing Grid hereinafter set forth.
The Borrower may select interest periods of one,
two, three, six, nine or twelve months for LIBOR
rate advances, subject to availability. Interest
shall be payable at the end of the selected
interest period, but no less frequently than
quarterly.
-2-
<PAGE>
A default rate shall apply on all amounts not paid
when due at a rate per annum of 2% above the
applicable interest rate or letter of credit fee.
COMMITMENT FEE: Commencing on the Closing Date, a commitment fee
of 0.50% (calculated on a 360-day basis) shall be
payable on the unused portions of the Revolving
Credit Facility, such fee to be payable quarterly
in arrears and on the date of termination or
expiration of the commitments. Commencing six
months from the Closing Date, the commitment fee
will be determined pursuant to the Pricing Grid
hereinafter set forth.
LETTER OF CREDIT FEES: The Borrower shall pay a per annum letter of
credit fee on the outstanding amount of all
Letters of Credit. The applicable letter of credit
fee shall be (i) for standby letters of credit,
the percentage over LIBOR (the "LIBOR Margin")
applicable from time to time for LIBOR based loans
outstanding under the Revolving Credit Facility
and (ii) for trade letters of credit, 50% of the
LIBOR Margin. The letter of credit fee shall be
due quarterly in arrears and shared
proportionately by the Lenders.
In addition, the Borrower shall pay the Issuing
Lender for its own account a per annum facing fee
of 1/8% on the outstanding amount of all Letters
of Credit. The letter of credit facing fee shall
be due quarterly in arrears.
PERFORMANCE PRICING: Commencing six months from the Closing Date, the
LIBOR and Alternate Base Rate margins and the
commitment fee will be based upon the Borrower's
Leverage Ratio (total funded debt/EBITDA)
determined on a quarterly basis. Set forth below
are the applicable LIBOR margins for loans
outstanding under the Senior Credit Facilities and
the commitment fee. The applicable Alternate Base
Rate margin shall be 1.00% less than the
applicable LIBOR margin for the Revolving Loan
Facility, Tranche A Term Loan Facility or Tranche
B Term Loan Facility, as appropriate.
-3-
<PAGE>
<TABLE>
<CAPTION>
Revolving
Credit Facility
and Tranche A Tranche B
Leverage Term Loan Term Loan Commitment
Ratio Facility Facility Fee
<S> <C> <C> <C> <C>
> 4.25 3.00% 3.50% 0.50%
(less than or equal) 4.25 and 2.75% 3.50% 0.50%
> 3.75
(less than or equal) 3.75 and 2.50% 3.25% 0.50%
> 3.25
(less than or equal) 3.25 and 2.25% 3.25% 0.375%
> 2.75
(less than or equal) 2.75 2.00% 3.00% 0.375%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
CALCULATION OF INTEREST
AND FEES: Other than calculations in respect of interest at the
Alternate Base Rate (which shall be made on the
basis of actual number of days elapsed in a
365/366 day year), all calculations of interest
and fees shall be made on the basis of actual
number of days elapsed in a 360 day year.
MATURITY: Revolving Credit Facility: Six (6) years after
the Closing Date.
Tranche A Term Loan Facility: Six (6) years after
the Closing Date.
Tranche B Term Loan Facility: Seven (7) years
after the Closing Date.
AVAILABILITY/SCHEDULED
AMORTIZATION: Revolving Credit Facility: Extensions of credit
under the Revolving Credit Facility shall be
subject to availability under the aggregate
committed amount for the Revolving Credit
Facility.
Term Loan Facilities: Loans made under the Tranche
A Term Facility and loans made under the Tranche B
Term Facility will be available in a single
borrowing on the Closing Date. The Term Loan
Facilities will be subject to quarterly
amortization of principal according to the
following schedule (the "Scheduled Amortization"):
Year Tranche A Tranche B
1 $15 million $2.45 million
2 $15 million $2.45 million
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Year Tranche A Tranche B
3 $20 million $2.45 million
4 $20 million $2.45 million
5 $25 million $2.45 million
6 $30 million $2.45 million
7 NA $230.3 million
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
MANDATORY PREPAYMENTS: The Senior Credit Facilities will be prepaid by an
amount equal to (a) 100% of the net cash proceeds
of all non-ordinary course sales of assets
(including stock of subsidiaries) by Holdings, the
Borrower or any subsidiary, subject to baskets and
reinvestment provisions to be agreed upon; (b) 75%
(if the Leverage Ratio (to be defined) is equal to
or greater than 3.5:1.0) or 50% (if the Leverage
Ratio is less than 3.5:1.0) of Excess Cash Flow
(to be defined in the loan documentation) pursuant
to an annual cash sweep arrangement, provided
solely with respect to the fiscal year ending on
December 31, 2001, Excess Cash Flow shall be
calculated for the period commencing on the
Closing Date and ending on December 31, 2001; (c)
100% of the net cash proceeds from the issuance of
any funded debt for borrowed money by Holdings,
the Borrower or any subsidiary (other than certain
permitted funded debt to be determined or
Permanent Securities (as defined in the Fee
Letter) or other subordinated debt issued to
refinance amounts outstanding under the Bridge
Notes) and (d) 50% of the net cash proceeds from
the issuance of equity (other than equity from
shareholders on or about the Closing Date,
management, officers or directors and in
connection with permitted acquisitions, equity
issued to refinance amounts outstanding under the
Bridge Notes and other exceptions to be
determined) by Holdings, the Borrower or any
subsidiary. Prepayments shall be applied to reduce
the Term Loan Facilities, pro rata with respect to
each remaining installment of principal; provided,
however, that with respect to clause (a), solely
for purposes of determining the pro rata shares of
the Lenders under the Tranche A Term Loan
Facility, the outstanding principal amount of each
Lender's loans under Revolving Credit Facility and
participation interests in outstanding letters of
credit shall be deemed to be additional
outstanding
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
loans under the Tranche A Term Loan Facility owing
to such Lender, and with respect to clause (b)
above, 25% of such prepayment shall first be
applied to reduce the remaining principal
amortization payments of the Term Loan Facilities
in direct order of maturity. In the event that the
Term Loan Facilities shall have been fully repaid,
the mandatory prepayments described above shall be
applied to the Revolving Credit Facility (without
any corresponding commitment reductions except in
the case of prepayments pursuant to clause (a)
above).
OPTIONAL PREPAYMENTS: The Senior Credit Facilities may be prepaid at any
time in whole or in part without premium or
penalty, except that any prepayment of LIBOR rate
advances other than at the end of the applicable
interest periods therefor shall be made with
reimbursement for any funding losses and
redeployment costs of the Lenders resulting
therefrom. Each such prepayment of the Term Loan
Facilities shall be applied to the Tranche A Term
Loan Facility and the Tranche B Term Loan Facility
on a pro rata basis (ratably to the remaining
principal amortization payments thereof);
provided, however, 25% of such prepayment shall
first be applied to reduce the remaining principal
amortization payments of the Term Loan Facilities
in direct order of maturity.
The unutilized portion of any commitment under the
Senior Credit Facilities may be reduced or
terminated by the Borrower at any time without
penalty.
SECURITY: First priority, perfected security interest
(subject to no other liens except for permitted
liens to be determined) in (i) 100% of the issued
and outstanding capital stock of the Borrower,
(ii) 100% of the issued and outstanding capital
stock of each of the direct and indirect domestic
subsidiaries of the Borrower, (iii) 65% (or such
greater percentage allowable which would not
result in a material adverse tax consequences) of
the voting capital stock and 100% of the non-
voting capital stock of each direct foreign
subsidiary of the Borrower or any of its domestic
subsidiaries and (iv) substantially all other
present and future assets and properties of
Holdings, the Borrower
</TABLE>
-6-
<PAGE>
and the direct and indirect domestic subsidiaries
of the Borrower (including, without limitation,
accounts receivable, inventory, real property,
machinery, equipment, contracts, trademarks,
copyrights, patents, license agreements, and
general intangibles), except for assets which are
not assignable by their terms and other exceptions
to be agreed.
The priority of the liens and security interests
of the Agent shall be supported by such landlord
and mortgagee waivers, warehousemen and bailee
letters, third party consents, intercreditor
agreements and other agreements as shall be
requested by the Agent, in each case in form and
substance reasonably satisfactory to the Agent;
provided, the Borrower's obligations to obtain
such agreements shall be limited to using
commercially reasonable efforts.
The foregoing security shall ratably secure the
Senior Credit Facilities and any interest rate
swap/foreign currency swap or similar agreements
with a Lender or its affiliates under the Senior
Credit Facilities.
CONDITIONS PRECEDENT
TO CLOSING: The closing and the initial extension of credit
under the Senior Credit Facilities will be subject
to the satisfaction of the conditions precedent
provided in Appendix A attached hereto.
REPRESENTATIONS AND
WARRANTIES: Usual and customary for leveraged financings
generally and for this transaction in particular
(subject to appropriate materiality and
reasonableness limitations), including, but not
limited to, the following: (i) corporate existence
and status; (ii) corporate power and
authority/enforceability; (iii) no violation of
law or contracts or organizational documents; (iv)
no material litigation; (v) correctness of
specified financial statements and other
information and no material adverse change; (vi)
no required governmental or third party approvals;
(vii) use of proceeds/compliance with margin
regulations; (viii) status under Investment
Company Act; (ix) ERISA matters; (x) environmental
matters; (xi) perfected liens and security
interests;
-7-
<PAGE>
(xii) payment of taxes; (xiii) accuracy of
disclosure; and (xiv) consummation of the
Transaction.
COVENANTS: Usual and customary for leveraged financings
generally and for this transaction in particular
(subject to materiality limitations, baskets and
carve-outs to be negotiated), including, but not
limited to, the following: (i) delivery of
financial statements and other reports; (ii)
delivery of compliance certificates; (iii)
delivery of notices of default, material
litigation and material governmental and
environmental proceedings; (iv) compliance with
laws (including environmental laws and ERISA
matters) and material contractual obligations; (v)
payment of taxes; (vi) maintenance of insurance;
(vii) limitation on liens and negative pledges;
(viii) limitation on mergers, consolidations and
sales of assets; (ix) limitation on incurrence of
debt; (x) limitation on dividends, stock
redemptions and the redemption and/or prepayment
of other debt; (xi) limitation on investments
(including loans and advances) and acquisitions;
(xii) limitation on capital expenditures; and
(xiii) limitation on transactions with affiliates.
The loan documentation for the Senior Credit
Facilities shall include the following financial
covenants:
. Maintenance of a minimum Interest Coverage
Ratio (EBITDA/cash interest expense) with step-
up provisions to be agreed;
. Maintenance of a maximum Leverage Ratio (total
funded debt/EBITDA) with step-down provisions
to be determined; and
. Maintenance of a minimum Fixed Charge Coverage
Ratio (to be defined), with step-up provisions
to be agreed.
All of the financial covenants will be calculated
on a consolidated basis and for each consecutive
four fiscal quarter period.
-8-
<PAGE>
Holdings shall have agreed that it will not engage
in any business, activity or operation other than
owning and holding the capital stock of the
Borrower and activities directly related thereto.
Holdings shall not be permitted to merge with or
into any other person.
EVENTS OF DEFAULT: Usual and customary for leveraged financings
generally and for this transaction in particular
(subject to materiality and grace periods to be
negotiated), including, but not limited to, the
following: (i) nonpayment of principal, interest,
fees or other amounts; (ii) violation of
covenants; (iii) inaccuracy of representations and
warranties; (iv) cross-default to other material
agreements and indebtedness; (v) bankruptcy and
other insolvency events; (vi) material judgments;
(vii) ERISA matters; (viii) actual or asserted
invalidity of any loan documentation or security
interests; (ix) Holdings engaging in any business
or activity other than holding 100% of the capital
stock of the Borrower; or (x) change of control.
ASSIGNMENTS AND
PARTICIPATIONS: Each Lender will be permitted to make assignments
in minimum amounts of $2.5 million to other
financial institutions approved by the Borrower
and the Agent, which approval shall not be
unreasonably withheld or delayed; provided,
however, that neither the approval of the Borrower
nor the Agent shall be required in connection with
assignments to other Lenders or any of their
affiliates. Each Lender will also have the right,
without consent of the Borrower or the Agent, to
assign (i) as security all or part of its rights
under the loan documentation to any Federal
Reserve Bank and (ii) all or part of its rights or
obligations under the loan documentation to any of
its affiliates. Lenders will be permitted to sell
participations with voting rights limited to
significant matters such as decreasing amounts of
principal repayment, reduction in rate, extension
of commitments and extension of maturity date. Any
assignment by a Lender of any portion of its
commitments or loans outstanding under the
Revolving Loan Facility shall be accompanied by an
equal portion of its loans outstanding under the
Tranche A Term Loan Facility and vice versa.
-9-
<PAGE>
WAIVERS AND AMENDMENTS: Amendments and waivers of the provisions of the
loan agreement and other definitive credit
documentation will require the approval of Lenders
holding loans and commitments representing more
than 50% of the aggregate amount of loans and
commitments under the Senior Credit Facilities,
except that (i) the consent of all of the Lenders
affected thereby shall be required with respect to
(a) increases in the commitment of such Lenders,
(b) reductions of principal, interest, or fees,
(c) extensions of scheduled maturities or times
for payment, (d) releases of all or substantially
all of the collateral, and (e) releases of all or
substantially all of the Guarantors, and (ii) the
consent of the Lenders holding at least 50% of the
Tranche A Term Loan Facility and the Lenders
holding at least 50% of the Tranche B Term Loan
Facility shall be required with respect to any
amendment that changes the allocation of any
payments between the Term Loan Facilities.
INDEMNIFICATION: In the definitive documentation for the Senior
Credit Facilities, the Borrower shall indemnify
the Agent and the Lenders from and against all
losses, liabilities, claims, damages or expenses
relating to their loans, the Borrower's use of
loan proceeds or the commitments, including but
not limited to reasonable attorneys' fees and
settlement costs, but only to the extent that such
losses, liabilities, claims, damages or expenses
do not result primarily from the gross negligence,
bad faith or willful misconduct of the Indemnified
Party or from the breach by the Indemnified Party
of its obligations under the definitive
documentation for the Senior Credit Facilities.
GOVERNING LAW: New York.
EXPENSES: The Borrower will pay all reasonable out-of-pocket
costs and expenses of the Agent associated with
the preparation, due diligence, administration,
syndication and enforcement of all loan
documentation, including, without limitation, the
reasonable legal fees of the Agent's counsel. The
Borrower will also pay the reasonable out-of-
pocket expenses of each Lender in
-10-
<PAGE>
connection with the enforcement of any of the loan
documentation.
COUNSEL TO THE AGENT: Moore & Van Allen, PLLC.
MISCELLANEOUS: This term sheet is intended as an outline only and
does not purport to summarize all the other
conditions, covenants, representations, warranties
and other provisions which would be contained in
loan documentation not specifically set forth
herein and which will be subject to the mutual
agreement of the Agent and the Borrower. Each of
the parties shall (i) waive its right to a trial
by jury and (ii) submit to New York jurisdiction.
The loan documentation will contain customary
increased cost, withholding tax, capital adequacy
and yield protection provisions.
-11-
<PAGE>
ANNEX II
MICHAEL FOODS, INC.
SENIOR SUBORDINATED BRIDGE NOTES
SUMMARY OF TERMS AND CONDITIONS
December 20, 2000
Unless otherwise defined herein, capitalized terms shall have the definitions
assigned to them in the Commitment Letter dated of even date herewith to which
this Summary of Terms & Conditions is attached.
===============================================================================
ISSUER: Same entity as borrower under Senior Credit
Facilities.
BRIDGE NOTE PURCHASERS: Banc of America Bridge LLC or an affiliate thereof
("Banc of America Bridge" or the "Initial Bridge
Note Purchaser") and other purchasers arranged by
BAS in consultation with the Issuer.
SOLE LEAD ARRANGER AND
SOLE BOOK RUNNING MANAGER: Banc of America Securities LLC ("BAS").
BRIDGE NOTES: Senior Subordinated Bridge Notes (the "Bridge
Notes"), to be issued under a Note Purchase
Agreement (the "Note Purchase Agreement").
PRINCIPAL AMOUNT: Up to $200,000,000.
MATURITY: Ten (10) years after the Closing Date.
PURPOSE: Together with borrowings under the Senior Credit
Facilities, to provide a portion of proceeds
required to consummate the Transaction.
RANKING: The obligations of the Issuer under the Bridge
Notes will be unsecured senior subordinated
obligations, subordinated to the Senior Credit
Facilities and ranking pari passu with all other
unsecured senior subordinated obligations of the
Issuer.
GUARANTEES: Same guarantors as under Senior Credit Facilities.
The Guarantees will be subordinated to guarantees
<PAGE>
under the Senior Credit Facilities and will rank
pari passu with all other senior subordinated
obligations of the Guarantors.
CLOSING DATE: On or before April 15, 2001.
AVAILABILITY: In one drawing upon consummation of the
Acquisition.
INTEREST RATES, FEES
AND WARRANTS: As set forth in the Fee Letter.
OPTIONAL REDEMPTION: As set forth in the Fee Letter.
MANDATORY REDEMPTION: The Bridge Notes will be redeemed with 100% of the
net proceeds from the sale of any Permanent
Securities (or any other subordinated debt
securities of the Issuer) at par plus accrued and
unpaid interest to the date of redemption.
The Note Purchase Agreement will also contain a
provision customarily found in high yield debt
securities, providing that the Issuer will offer
to purchase Bridge Notes from all Bridge Note
Purchasers with the net cash proceeds from certain
asset sales by the Issuer and its subsidiaries.
REGISTRATION RIGHTS: Holders of 33% or more of the aggregate principal
amount of the Bridge Notes may demand one
registration under the Securities Act (which may
be a shelf registration with customary exceptions
to be negotiated); provided that, notwithstanding
any such demand, the Issuer shall not be required
to file any applicable registration statement
prior to the six month anniversary of the Closing
Date.
CHANGE OF CONTROL: In the event of a Change of Control, the Issuer
will be required to commence, within 30 days of
such occurrence, an offer to repurchase all
outstanding Bridge Notes at a repurchase price of
101% of the principal amount thereof, plus accrued
and unpaid interest to the repurchase date.
-2-
<PAGE>
CONDITIONS PRECEDENT
TO FUNDING: The closing of the purchase of the Bridge Notes by
the Initial Bridge Note Purchaser (and any other
Bridge Note Purchasers) will be subject to the
satisfaction of the conditions precedent provided
in Appendix A attached hereto.
COVENANTS: Usual and customary for leveraged financing
transactions of this type and for the particular
financing transaction contemplated hereby (subject
to materiality limitations and carve-outs to be
negotiated), and similar to those contained in a
high yield debt securities offering, including
(without limitation):
1. Limitations on incurrence of debt.
2. Limitations on liens.
3. Limitations on asset dispositions and
sale/leaseback transactions.
4. Limitations on the issuance and sale of
capital stock of restricted subsidiaries.
5. Limitations on restrictions on
distributions from subsidiaries.
6. Limitations on transactions with
affiliates.
7. Limitations on restricted payments.
8. Limitations on layered debt.
9. Limitations on mergers, consolidations,
sales of substantially all assets.
FINANCIAL COVENANTS: The Note Purchase Agreement shall include the
following financial covenants (which shall be
defined the same as in the Senior Credit
Facilities, but shall be less restrictive in
amounts to be agreed):
. Maintenance of a minimum Interest Coverage
Ratio (EBITDA/cash interest expense) with
step-up provisions to be agreed;
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<PAGE>
. Maintenance of a maximum Leverage Ratio
(total funded debt/EBITDA) with step-down
provisions to be determined; and
. Maintenance of a minimum Fixed Charge
Coverage Ratio (to be defined), with step-up
provisions to be agreed.
All of the financial covenants will be calculated
on a consolidated basis and for each consecutive
four fiscal quarter period.
REPRESENTATIONS AND
WARRANTIES, EVENTS OF
DEFAULT, WAIVERS AND
CONSENTS: Usual and customary for leveraged financing
transactions of this type and for the particular
financing transaction contemplated hereby (subject
to materiality limitations and carve-outs to be
negotiated), and similar to those contained in a
high yield debt securities offering.
ASSIGNMENTS: Banc of America Bridge shall have the absolute and
unconditional right to assign its rights under the
Note Purchase Agreement and in respect of the
Bridge Notes in whole or in part in compliance
with applicable law to any third parties in
consultation with the Issuer. In addition, Banc of
America Bridge may share its commitment with any
third party in consultation with the Issuer.
INDEMNIFICATION: In the Note Purchase Agreement, the Issuer shall
indemnify the Bridge Note Purchasers from and
against all losses, liabilities, claims, damages
or expenses relating to their purchase of Bridge
Notes, the Issuer's use of Bridge Note proceeds or
the commitments, including but not limited to
reasonable attorneys' fees and settlement costs,
but only to the extent that such losses,
liabilities, claims, damages or expenses do not
result primarily from the gross negligence, bad
faith or willful misconduct of the Indemnified
Party or from the breach by the Indemnified Party
of its obligations under the Note Purchase
Agreement.
-4-
<PAGE>
GOVERNING LAW: New York.
EXPENSES: The Issuer will pay out-of-pocket costs and
expenses of the Initial Bridge Note Purchaser
associated with the Bridge Notes as provided in
the Fee Letter. The Issuer will also pay the
reasonable out-of-pocket expenses of each Note
Purchaser in connection with the enforcement of
the Note Purchase Agreement and any other
documentation in respect of the Bridge Notes.
COUNSEL TO INITIAL
BRIDGE NOTE PURCHASER: Shearman & Sterling.
MISCELLANEOUS: This term sheet is intended as an outline only and
does not purport to summarize all the other
conditions, covenants, representations, warranties
and other provisions which would be contained in
the Note Purchase Agreement and other
documentation in respect of the Bridge Notes not
specifically set forth herein and which will be
subject to the mutual agreement of the Initial
Bridge Note Purchaser and the Issuer. Each of the
parties shall (i) waive its right to a trial by
jury and (ii) submit to New York jurisdiction.
-5-
<PAGE>
APPENDIX A
MICHAEL FOODS, INC.
CONDITIONS PRECEDENT TO EACH OF THE FINANCINGS
December 20, 2000
Unless otherwise defined herein, capitalized terms shall have the definitions
assigned to them in the Commitment Letter dated of even date herewith to which
this Summary of Terms & Conditions is attached.
===============================================================================
The closing (and the initial funding) of the Senior Credit Facilities and
the Bridge Notes will be subject to satisfaction of the following conditions
precedent:
(i) Reasonably satisfactory completion of legal, environmental, pension
and regulatory due diligence review with respect to the business,
assets, liabilities (actual and contingent), operations, condition
(financial or otherwise), of the Acquired Company.
(ii) In the case of the Senior Credit Facilities, the negotiation,
execution and delivery of definitive documentation for the Senior
Credit Facilities consistent with the Term Sheet and otherwise
satisfactory to Bank of America, BAS and the Borrower.
(iii) In the case of the Bridge Notes, the negotiation, execution and
delivery of the Note Purchase Agreement and other definitive
documentation for the Bridge Notes consistent with the Bridge Term
Sheet and otherwise satisfactory to Banc of America Bridge, BAS and
the Borrower.
(iv) Execution by the Borrower and the Acquired Company and/or other
appropriate parties of a definitive purchase agreement and other
related documentation for the Transaction (collectively, the
"Transaction Documents"), which Transaction Documents shall be in
form and substance reasonably satisfactory to Bank of America, Banc
of America Bridge and BAS. The Agent shall have received true and
complete executed copies of the Transaction Documents.
(v) Consummation of the Transaction in accordance in all material
respects with the terms the Transaction Documents and in compliance
in all material respects with applicable law and regulatory
approvals.
(vi) Satisfactory capitalization, shareholders' arrangements,
management, ownership structure and corporate structure of Holdings
and its subsidiaries (in the case of the Senior Credit Facilities,
including, without limitation, the term, amortization and coupon,
subordination, standstill and remedies provisions, covenants,
representations and events of default of the Senior Subordinated
Notes or the Bridge Notes, as applicable).
<PAGE>
(vi) (A) Receipt by the Borrower of (1) not less than $150.0 million in
cash equity contributed through Holdings by the Equity Investors
(at least $125.0 million of which shall be provided by the
Sponsor), (2) in the case of the Senior Credit Facilities, not less
than $200.0 million of cash proceeds from the issuance by the
Borrower of the Senior Subordinated Notes or the Bridge Notes and
(3) in the case of the Bridge Notes, not more than $400.0 million
of cash proceeds from borrowings by the Borrower under the Senior
Credit Facilities and (B) the roll over (directly or indirectly)
into common equity of Holdings and deferred compensation
arrangements of Holdings on terms reasonably acceptable to Bank of
America, BAS and Banc of America Bridge of not less than $50.0
million of existing common equity and option value of the Acquired
Company.
(vii) Absence of material pending or threatened litigation,
investigations or proceedings with respect to the Acquired Company.
(ix) Receipt by Bank of America, Banc of America Bridge and BAS of (A)
monthly consolidated and consolidating financial statements
(including balance sheets, income and cash flow statements) of the
Acquired Company for each month ending on or after September 30,
2000 and prior to the Closing Date as the same become available in
accordance with past practices and (B) a pro forma consolidated
balance sheet and income statement of the Acquired Company giving
effect to the Transaction prepared as of the Closing Date by
independent public accountants of recognized national standing (but
using the most recently available financial statements) and meeting
the requirements of Regulation S-X under the Securities Act of
1933, as amended, applicable to a Registration Statement under such
Act on Form S-1. The financial statements referred to in clause (B)
above shall evidence minimum EBITDA (to be defined) of at least
$134.0 million.
(x) Payment of all outstanding indebtedness for borrowed money, notes
payable and loans payable of the Acquired Company, and cancellation
of all other credit facilities and lines of credit, other than
surviving capitalized leases and purchase money indebtedness
disclosed on the most recently completed audited financial
statements of the Acquired Company prior to the date hereof and
other indebtedness to be agreed.
(xi) Satisfactory solvency certification and opinion from a third party
reasonably acceptable to the Agent and Banc of America Bridge.
(xii) In the case of the Senior Credit Facilities, evidence of perfection
of liens and security interests, together with (A) endorsements on
the appropriate insurance policies of the Borrower and its
subsidiaries naming the Agent as the loss payee or additional
insured thereunder and (B) such title policies, surveys, landlord
waivers and access letters as shall be agreed.
-2-
<PAGE>
(xiii) Receipt of requisite material governmental and material third-party
approvals and consents (and expiration, without the imposition of
conditions, of all applicable waiting periods) in connection with
the Transaction.
(xiv) Holdings and its subsidiaries shall be in compliance with all
existing material financial obligations (after giving effect to the
Transaction).
(xv) Reasonably satisfactory legal opinions, corporate certificates and
other customary closing documentation.
(xvi) Payment by the Borrower to the Lenders, the Agent, BAS and Banc of
America Bridge of all fees and expenses due and payable at closing
of the Financings (including reasonable fees and expenses of
counsel to the Agent, BAS and Banc of America Bridge).
(xvii) In the case of the Bridge Notes, (a) not later than 30 days prior
to the Closing Date, the Borrower shall have completed and made
available to BAS and potential investors copies of an offering
memorandum for the offer and sale of the Permanent Securities
pursuant to Rule 144A of the rules and regulations under the
Securities Act containing such disclosures as may be required by
applicable laws, as are customary and appropriate for such a
document or as maybe required by BAS (including all audited, pro
forma and other financial statements and schedules of the Borrower
of the type that would be required in a registered public offering
of the Permanent Securities) and (b) senior management of the
Acquired Company and officers of the Sponsor shall have made
themselves available for a roadshow and other meetings with
potential investors for the Permanent Securities as required by BAS
in its reasonable judgement to market such Permanent Securities.
-3-
