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Exhibit (b)
Provident Capital Corp.
November 6, 2000
Personal and Confidential
Mr. Todd Kumble
SPP Capital Partners, LLC
330 Madison Avenue, 28th Floor
New York, New York 10017
Dear Todd:
The Provident Bank ("Provident") is pleased to submit the following committed
terms and conditions of a senior bank credit facility for TEAM Mucho, an entity
to be formed as successor by way of merger between TEAM America Corporation and
Mucho.com, Inc. ("Borrower"). If you are in agreement with these terms and
conditions, please indicate your acceptance by signing in the space provided
below and returning the executed copy to our attention.
This letter, and the attached Fee Letter (incorporated by reference) (together,
the "Commitment Letter") are provided to Borrower, c/o SPP Capital Partners,
LLC, on the condition that neither it nor its contents will be disclosed
publicly or privately except to those individuals who are its officers,
employees or advisors who must know them as a result of their being specifically
involved in this transaction, provide, however, that this letter may be
circulated as considered necessary or desirable by Borrower solely in connection
with disclosure to and/or filing with the SEC. Under no circumstances may this
letter be shown to or discussed with other existing or potential financial
providers, without the express written consent of Provident.
This letter supercedes all prior oral or written commitments or proposals from
Provident.
We look forward to working with you to complete this transaction.
Very truly yours,
/s/Christopher B. Gribble /s/Nick Jevis
Christopher B. Gribble Nick Jevis
Vice President Senior Vice President
AGREED TO AND ACCEPTED THIS 7th DAY OF NOVEMBER, 2000
/s/S. Cash Nickerson
Chairman and CEO of Mucho.com
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SUMMARY OF TERMS AND CONDITIONS
Borrower: Team Mucho, an entity to be formed as successor by
way of merger between Team America Corporation and
Mucho.com, Inc., a Nevada C-corporation, and all of
its direct or indirect subsidiaries, whether now
owned or hereafter formed or acquired ("Borrower").
Guarantor(s): All subsidiaries of Borrower, whether now owned or
hereafter formed or acquired.
Administrative Agent: The Provident Bank ("Provident" or the
"Administrative Agent").
Syndication Agent: Provident ("Syndication Agent").
Documentation Agent: Provident ("Documentation Agent").
Lenders: Provident, and other banks or financial institutions
reasonably acceptable to Provident and Borrower
("Lenders").
Use of Proceeds: To refinance existing senior indebtedness, finance
the self-tender by Team America Corporation, fund
costs and expenses associated with the transaction
contemplated herein (the "Transaction"), and provide
funds for future Permitted Acquisitions (to be
defined) of Borrower.
Type and Amount: Up to $18.0 million senior secured revolving credit
facility, as described below (the "Facility").
Provident will underwrite and hold up to $10.0
million of the Facility.
Final Maturity: Five and one-half (5-1/2) years from Closing.
Interest Rates: As set forth in Addendum I.
Availability: An initial advance under the Facility, up to $4.0
million (the "Initial Advance"), shall be available
at Closing to finance, in part, the Transaction.
Borrowings under the Initial Advance shall reduce
availability of the Facility, and shall not be
available for Permitted Acquisitions. For the first
24 months after Closing, Borrower shall pay interest
only, at the applicable rate, on the Initial Advance.
Beginning in the 25th month after Closing, the
Initial Advance shall amortize in 42 equal,
consecutive, monthly installments. Any outstanding
balances, together with all accrued and unpaid
interest, shall be due and payable in full at Final
Maturity. Amounts repaid under the Initial Advance
may not be reborrowed.
Except as noted above, the Facility shall be
available for Permitted Acquisitions (definition of
Permitted Acquisitions to include, but not be limited
to, (a) same line of business, (b) positive operating
income, and (c) no default or event of default on a
proforma basis after giving effect to the
acquisition) for the first 24 months after Closing.
Funding for Permitted Acquisitions, which shall be
acceptable in all respects to Provident, shall be
subject to Provident's sole and absolute discretion.
Amounts borrowed for each Permitted Acquisition will
be converted at closing to a term loan (the
"Acquisition Term Loan"), which shall amortize in
equal, consecutive, monthly installments beginning in
the month following the acquisition closing date
through the Final Maturity date.
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Any outstanding balances, together with all accrued
and unpaid interest, shall be due and payable in full
at Final Maturity.
Availability under the Facility shall be limited to
the lesser of (i) the committed amount under the
Facility, (ii) the ratio of consolidated senior debt
to consolidated trailing twelve month EBITDA, which
shall at no time exceed 3.25x for the first 12 months
after Closing, with step-downs thereafter, and (iii)
the ratio of consolidated senior debt to trailing
twelve month EBITDA of Team America (calculated as if
it were a standalone entity), which shall at no time
exceed 2.0x. As required, standby letters of credit
(the "Letters of Credit") may be issued up to $1.0
million. Each issuance of a Letter of Credit shall
constitute usage under the Facility. Amounts repaid
under the Acquisition Term Loan(s) may not be
reborrowed.
Amortization: As set forth in Addendum I.
Security: Borrower shall provide Provident, as Agent for itself
and the other Lenders, with a first priority
perfected security interest in all tangible and
intangible assets of Borrower and Borrower's
subsidiaries (direct or indirect), wherever located,
whether now or hereafter owned, existing or acquired
or hereafter arising, including, but not limited to,
all cash and cash equivalents, accounts receivable,
certificates of deposit, investments, inventory,
equipment, contract rights, franchise rights,
furniture and fixtures, leasehold interests, real
property and rights to real property, including, but
not limited to, leases on property. All of the
Lenders' collateral would be free and clear of other
liens, claims and encumbrances. In addition, all of
the issued and outstanding capital stock of
Borrower's domestic subsidiaries (direct or
indirect), whether now existing or hereafter created
or acquired, shall also be pledged in connection with
the proposed credit facilities, as well as all of the
capital stock of each direct foreign subsidiary of
the Borrower, if any, which capital stock shall not
be subject to any other lien or encumbrance. All
obligations owing by Borrower to Lenders would be (i)
cross-defaulted with each other, as well as with all
other indebtedness of Borrower and its subsidiaries,
and (ii) cross-collateralized and guaranteed by the
Guarantors.
Optional Prepayments: The Facility may be prepaid prior to maturity, in
whole or in part, subject to the following prepayment
premium on the committed amount:
Year 1 3.0%
Year 2 2.0%
Year 3 1.0%
Thereafter 0.0%
No prepayment premium shall apply in the case of
mandatory prepayments from Excess Cash Flow (as
defined hereinafter).
Mandatory Prepayments: In addition to any regularly-scheduled payments of
principal, Borrower shall prepay the loans under the
Facility and/or the commitments under the Facility
shall be reduced in amounts equal to: (i) 100% of the
net after-tax cash proceeds of permitted asset sales
of Borrower or its subsidiaries (other than sale of
inventory in the ordinary course of business); (ii)
100% of the net cash proceeds of condemnation awards;
(iii) 100% of the net cash proceeds of tax refunds
(to the extent
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associated with NOL carrybacks) and/or casualty loss
insurance recoveries to the extent the affected
assets are not replaced in accordance with the terms
of the credit agreement; (iv) 100% of the net cash
proceeds, in excess of $25.0 million, received from
the sale or issuance of any debt or equity securities
of Borrower or any of its subsidiaries that are
incremental to those initial facilities associated
with the transaction contemplated hereby, (v) 100% of
the net cash proceeds received from payment of the
key man life insurance, and (vi) annually, beginning
within 90 days after the end of Fiscal Year 2002, 50%
of Excess Cash Flow (so long as consolidated senior
debt to consolidated EBITDA is greater than or equal
to 2.0x). For purposes of this calculation, Excess
Cash Flow shall be defined as Net Income plus
Depreciation and Amortization, plus (or minus) any
non-cash items, minus scheduled principal payments on
outstanding indebtedness, minus capital expenditures
paid in cash, plus net changes in working capital,
all on a consolidated basis and in accordance with
GAAP at Borrower's fiscal year end, all as outlined
hereinafter.
Mandatory Prepayments will be applied prorata against
outstandings under the Facility, until the Facility
is repaid in full. Amounts repaid under the Facility
by Mandatory Prepayments may not be reborrowed.
Life Insurance: Life insurance on Messrs. S. Cash Nickerson, Kevin
Costello, and William Johnston, in to-be-determined
amounts, shall be purchased prior to Closing, with
Provident as the named beneficiary on terms
acceptable to Provident.
Bank Services: All primary deposit accounts, including without
exception all operating and cash management accounts
of Borrower in which Provident shall have a security
interest, shall be maintained with Provident during
the term of the credit facilities, provided, however,
that Borrower may maintain local accounts, as
necessary, in a total number and with aggregate
balances acceptable to Provident.
Representations and
Warranties: Credit Agreement between Lenders and Borrower to
include customary and appropriate representations and
warranties, including but not limited to, authority,
organization, enforceability, compliance with law,
governmental matters, financial condition, no
material adverse changes, no material adverse
agreements, material contracts, title to properties,
liens, litigation, employee benefit liabilities,
environmental liabilities, payment of taxes, absence
of Year 2000 computer problems, perfection and
priority of liens securing the Facility, full
disclosure, and the accuracy of all representations
and warranties.
Financial Covenants: Usual and customary, including, but not limited to,
minimum EBITDA; maximum senior and total debt to
cash flow; minimum interest and fixed charge
coverage; minimum net worth; limitation on capital
expenditures, limitations on operating losses at
Mucho (see below), and limitations on payment of
management fees or other distributions to
shareholders or affiliates.
Events of Default: Customary and appropriate (subject to customary and
appropriate grace periods), including, without
limitation, failure to make payments when due,
defaults under other agreements or instruments of
indebtedness, noncompliance with covenants, breaches
of representations and
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warranties, bankruptcy, judgments in excess of
specified amounts, invalidity of guaranties,
impairment of security interests in collateral, and
"changes of control" as defined in the Credit
Agreement.
Affirmative Covenants: Usual and customary for transactions of this nature,
including, without limitation, the following:
a) Financial reporting to include: (i) monthly
and quarterly: consolidated and
consolidating financial statements,
certified by an authorized officer of
Borrower, compared to budget and prior
comparable period, and accompanied by a
satisfactory management letter; covenant
compliance and availability reporting; and
independent third-party reporting on and
analysis of workers' compensation claims and
adequacy of reserves; (ii) annually: audited
financial statements with an unqualified
opinion from a nationally recognized firm of
independent Certified Public Accountants
reasonably acceptable to Administrative
Agent;
b) AS REQUIRED: monthly Borrowing Base
Certificate, monthly collateral reports, and
such other information and reports requested
by the Administrative Agent. All reports and
financial statements to be in form and scope
acceptable to Administrative Agent;
c) A Board approved consolidated and
consolidating annual budget prepared on a
monthly basis, as part of a three-year
consolidated and consolidating budget
prepared on an annual basis;
d) If required by the Administrative Agent,
semi-annual ABL or field audits with
expenses borne by Borrower;
e) Maintenance of corporate existence,
insurance and collateral;
f) Collateral inspection rights;
g) Compliance with laws;
h) Payment of Indebtedness and Fees;
Negative Covenants: Usual and customary for transactions of this nature,
including, without limitation, the following:
a) Limitation on pledge, encumbrance, and
disposition of assets; acquisitions and
investments; transactions with affiliates;
liens; additional bank accounts; change of
business; and change of control;
b) Limitations on cash dividends to be paid on
Borrower's or any of Borrower's
subsidiaries' equity or securities
convertible into equity, except subsidiary
distributions to Borrower;
c) Limitation on management compensation and
management fees;
d) Prohibition against additional debt or
securities convertible into debt, except the
Facility provided in association with the
Transaction contemplated herein, and other
permitted indebtedness;
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e) Adherence to a budget, satisfactory to
Provident, limiting incremental quarterly
operating losses related to Mucho.com to
less than those amounts appearing on
Schedule 1 attached hereto.
Conditions to
All Borrowings: The conditions to all borrowings will include
requirements relating to prior written notice of
borrowing, the accuracy of representations and
warranties, and the absence of any default or
potential event of default, and will otherwise be
customary and appropriate for transactions of this
nature.
Conditions Precedent: Usual and customary for transactions of this nature,
including, but not limited to:
a) Satisfactory documentation of the Facility
as outlined herein and receipt by
Administrative Agent of valid security
interests as contemplated hereby;
b) Review and satisfaction with (i) the final
structure of the Transaction as contemplated
hereby, (ii) sources and uses of proceeds
used to consummate the Transaction as
contemplated hereby, (iii) the terms and
provisions of all documents, agreements and
contracts related to the Transaction as
contemplated hereby, and (iv) implementation
of a budget, satisfactory to Provident,
limiting incremental quarterly operating
losses related to Mucho.com to less than
those amounts appearing on Schedule 1
attached hereto;
c) Evidence of repayment in full of all
existing indebtedness of Borrower and
termination and release by current lender(s)
of any and all security interests in
connection therewith, satisfactory to
Administrative Agent;
d) Satisfactory completion of all legal,
financial and environmental due diligence,
including receipt of final pre-closing
consolidated reviewed financial statements
(acceptable to Provident), a final copy of
Borrower's S-4 filing, interim consolidated
and consolidating financial statements for
the period ended September 30, 2000, copies
of Phase I for each facility of Borrower (as
applicable), and Administrative Agent's
satisfaction that combined EBITDA (as
adjusted) for Borrower's twelve month period
ended September 30, 2000 equals or exceeds
$4.0 million, based on Team America
financial results;
e) The merger between Team America Corporation
and Mucho.com shall be a cashless merger;
f) Cash contribution of not less than $10.0
million of Series A Convertible Redeemable
Cumulative Preferred Stock, including
investment by Provident of not less than
$1.0 million on a prorata basis, on terms
and conditions, and by parties reasonably
acceptable to Administrative Agent (and as
generally set forth in the proposal from
Stonehenge to Borrower);
g) Sum of cash and undrawn portion of the
Facility at Closing shall not be less than
$17.0 million;
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h) Receipt of closing certificates,
resolutions, solvency certificates,
management letters from accountants,
opinions of counsel, evidence of
satisfactory insurance coverage, and other
items customary for the type of transaction
contemplated hereby, in each case reasonably
satisfactory to Administrative Agent;
i) No material adverse change in the
properties, operations, business, prospects,
profits or financial condition of Team
America Corporation or Mucho.com, taken as a
whole, since December 31, 1999, or in any
information furnished or to be furnished to
Administrative Agent regarding Borrower or
Borrower's subsidiaries;
j) Administrative Agent shall have received all
fees and reimbursement of expenses required
to be paid on or before the closing date;
k) All material governmental and third party
approvals necessary in connection with the
Transaction contemplated hereby and all
material governmental approvals necessary in
connection with the financing contemplated
hereby and the continuing operations of
Borrower and its respective subsidiaries
shall have been obtained and be in full
force and effect, and all applicable waiting
periods, if any, shall have expired without
any action being taken or threatened by any
competent authority which would restrain,
prevent, or otherwise impose material
adverse conditions on the Transaction
contemplated hereby or the financing
thereof;
l) There shall exist no pending or threatened
material litigation, proceedings or
investigations which (i) would reasonably be
expected to materially adversely effect the
consummation of the Transaction contemplated
hereby or (ii) could reasonably be expected
to have a material adverse effect on the
business, operations, customer relations,
results of operations, business prospects,
value or financial condition of Borrower and
its subsidiaries taken as a whole;
m) Administrative Agent shall have received
copies of and/or reviewed all other material
agreements, including, but not limited to:
asset or stock purchase agreement(s), any
non-compete or continuing employment
agreements with Seller(s) and existing
management, contracts and/or agreements with
suppliers, insurance programs, pension
plans, tax audits, litigation, and any other
matter Administrative Agent and/or its
counsel may deem necessary.
Syndication: If requested by Syndication Agent, Borrower shall
assist Syndication Agent in forming a syndicate of
lenders and will provide any appropriate information
and make appropriate members of management available
to assist Syndication Agent in this endeavor.
Provident's commitment hereunder is subject to there
not having occurred a material disruption of or
material adverse change in financial, banking or
capital market conditions that, in our judgment,
could materially adversely impair the syndication of
the Facility.
Whether before or after the closing of the Facility,
Provident shall be entitled, after consultation with
Borrower, to change the pricing, structure and/or
terms of the Facility if Provident determines that
such changes
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are necessary in order to ensure a successful
pre-closing or post-closing syndication or an optimal
credit structure, such right to continue and survive
(together with Borrower's other obligations with
respect to syndication provided for herein) until the
completion of such syndication notwithstanding any
termination of the Commitment; provided that the
total amount of the Facility remains unchanged.
Termination: Provident reserves the right to terminate its
obligations hereunder, if any, at any time due to any
of the following circumstances: (i) failure of
Borrower to comply with any of the provisions or
conditions hereof within the specified time; or (ii)
any material misrepresentation made by Borrower to
Provident in any of the data furnished in conjunction
with the loan application or in compliance with any
provisions of this letter; or (iii) if, at the time
of Closing, there shall have occurred, in the opinion
of Provident, a material adverse change in the
financial condition or operations of Borrower or any
of Borrower's subsidiaries; or (iv) failure of any
contingency provided herein.
Assignment/Reliance: The rights and obligations of Borrower hereunder may
not be assigned without the prior written consent of
Provident, which consent may be given or withheld by
Provident in its sole discretion. This letter and any
obligations of Provident hereunder, if any, are for
the benefit solely of Borrower and may not be relied
on by any third party without Provident's express
written consent.
Indemnification: Borrower shall indemnify the Agent, Lenders, and
their respective affiliates from and against all
losses, liabilities, claims, damages or expenses
arising out of or relating to the Facility,
Borrower's use of loan proceeds or the commitments,
including, but not limited to, reasonable attorneys'
fees (including the allocated cost of internal
counsel) and settlement costs. This indemnification
shall survive and continue for the benefit of the
indemnitees at all times after Borrower's acceptance
of the Lenders' commitments for the Facility,
notwithstanding any failure of the Facility to close.
Exclusive: Provident shall have the exclusive right to provide
the financing for the transaction outlined herein for
thirty business days following the execution of this
letter.
Closing Date: Expected no later than November 30, 2000. Provident
will use its best efforts to work toward a closing
within this time frame, time being of the essence.
Governing Law: Borrower will submit to the non-exclusive
jurisdiction and venue of the federal and state
courts of the State of Ohio and will waive any right
to trial by jury.
Expiration: This commitment shall expire unless an executed copy,
together with the Commitment Fee referenced
hereinabove, has been returned to our offices by 5:00
p.m. EST, November 7, 2000.
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ADDENDUM I
Interest Rate: Prime + 1.00% or LIBOR + 3.50% per annum;
Interest shall be due and payable monthly in arrears,
calculated on the basis of the actual number of days
elapsed over an assumed year consisting of three
hundred sixty (360) days, and shall be adjusted on
each change of the Prime rate. LIBOR borrowings shall
be based, at Borrower's option, on 1-, 3-, or 6-month
LIBOR. Borrower shall pay Provident for any breakage
fees associated with LIBOR borrowings.
From and after the occurrence of a default, the
default interest rate shall be 3.00% in excess of the
otherwise applicable interest rate, and shall be
payable upon demand.
Letter of Credit Fees: Letter of credit fees shall be payable quarterly in
arrears. Fees will be equal to the Interest Rate
Margin for LIBOR loans on a per annum basis plus a
fronting fee of 0.125% per annum to be paid to
Provident for its own account. Fees will be
calculated on the aggregate stated amount for each
Letter of Credit for the stated duration thereof.
Amortization:
Initial Advance: For the first 24 months after Closing, Borrower shall
pay interest only, at the applicable rate.
Beginning in the 25th month after Closing, the
Initial Advance shall amortize in 42 equal,
consecutive, monthly installments.
Any outstanding balances, together with all accrued
and unpaid interest, shall be due and payable in full
at Final Maturity. Amounts repaid under the Initial
Advance may not be reborrowed.None.
Acquisition Term
Loan(s): Acquisition Term Loan(s) shall amortize in equal,
consecutive, monthly installments beginning in the
month following the acquisition closing date through
the Final Maturity date.
Any outstanding amounts, together with all accrued
and unpaid interest, shall be due and payable in full
at Final Maturity.
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SCHEDULE 1
Forecasted quarterly operating income (loss), covering the calendar years 2001
through 2006, to be provided by Stonehenge, and acceptable to Administrative
Agent.
