Exhibit 99.1
[LOGO]CLEARLAKE CAPITAL
650 Madison Avenue,
23rd Floor
New York, New York 10022
Tel 212.610.9000
August 1, 2007
PERSONAL AND CONFIDENTIAL
GoAmerica, Inc.
433 Hackensack Avenue,
Hackensack, NJ 07601
Attn: Daniel R. Luis, Chief Executive Officer
Re: First Lien Debt Commitment Letter
Ladies and Gentlemen:
You have advised Clearlake Capital Group, LP (together with the funds and
accounts managed or advised by it, "Clearlake") that GoAmerica, Inc. (together
with its subsidiaries, the "Company"), intends to acquire all or substantially
all of the assets of the Tele Relay Services division of Verizon Communications
Inc. (the "TRS Division" and such acquisition, the "Acquisition") pursuant to a
definitive asset purchase agreement for the Acquisition (the "Acquisition
Agreement"). Upon the terms, and subject to satisfaction of the conditions, set
forth herein, CCP A, L.P., a fund managed by Clearlake, hereby commits to
provide certain debt financing for the Company to finance the Acquisition, for
the Company's expenses and working capital purposes and for the repayment of
certain of the Company's existing secured debt. The requested financing will be
structured as a $30 million first lien term loan or note issuance (the "First
Lien Debt Financing") having the terms set forth in Annex A, and will be subject
to the conditions set forth in this letter and in the attached Annexes A and B
hereto (collectively, the "Commitment Letter"). On the date hereof, the parties
hereto (or their affiliates) are also entering into (i) that certain $3,500,000
Credit Agreement (the "Bridge Credit Agreement"), (ii) that certain $1,500,000
Stock Purchase Agreement (the "$1,500,000 Stock Purchase Agreement"), (iii) that
certain $48,500,000 Stock Purchase Agreement (the "$48,500,000 Stock Purchase
Agreement") and (iv) that certain Second Lien Debt Commitment Letter (the
"Second Lien Debt Commitment Letter" and together with the $1,500,000 Stock
Purchase Agreement, the $48,500,000 Stock Purchase Agreement and the Bridge
Credit Agreement, the "Other Financing Documents").
1. Indemnification; Exclusivity; Commitment Fee.
(a) The Company agrees to the provisions with respect to Clearlake's
indemnity and other matters set forth in Annex B, which is incorporated by
reference into this Commitment Letter.
GoAmerica, Inc.
August 1, 2007
Page 2
(b) Except as expressly permitted by Section 9.5 of the $48,500,000 Stock
Purchase Agreement: (I) the Company hereby agrees to exclusively negotiate the
First Lien Debt Financing with Clearlake in good faith and will not enter into
any discussions with third parties with respect to the First Lien Debt Financing
or any other financing relating to the Acquisition (other than the financings
contemplated by the Other Financing Documents) until the earliest of (A) the
Exclusivity Termination Date (defined below), (B) the execution of definitive
agreements evidencing the First Lien Debt Financing, and (C) the date this
Commitment Letter is terminated pursuant to a Termination Notice (as defined
below); and (II) the parties hereto hereby agree to work together in good faith
and to use reasonable commercial efforts to execute the First Lien Debt
Financing Documents (defined below) within 45 days of the signing of the
Acquisition Agreement, provided that consummation of the closing provided for in
the First Lien Debt Financing Documents shall be subject only to the conditions
set forth in Section 3 hereof (other than the condition set forth in paragraph
(a)(1) of Section 3), to customary conditions concerning the perfection of
Clearlake's security interest in the collateral thereunder, and to such
stockholder approvals as shall be required by the rules of The Nasdaq Stock
Market, Inc. ("Nasdaq"). As used herein, "Exclusivity Termination Date" shall
mean December 31, 2007; provided that, if one or more Governmental Consents (as
defined in the Acquisition Agreement as in effect on the date hereof) have not
been obtained by December 31, 2007 and the Company exercises its option (the
"Option") under the Acquisition Agreement to extend the Exclusivity Termination
Date to March 31, 2008, Clearlake may, in its sole discretion, extend the
Exclusivity Termination Date to March 31, 2008 by delivering written notice of
such extension to the Company.
(c) The Company hereby agrees to pay Clearlake a commitment fee of 1.66%
of the face amount of the First Lien Debt Financing (the "Commitment Fee"),
which shall be due and payable in full on the date hereof. The Company hereby
acknowledges and agrees that the Commitment Fee is fully earned and
non-refundable on the date hereof and is in addition to any other fees payable
by the Company in connection with the First Lien Debt Financing.
2. Closing; Obligations.
Subject to the satisfaction of the conditions set forth in this Commitment
Letter, the closing of the First Lien Debt Financing would occur no later than
the closing of the Acquisition. Clearlake's obligation under this Commitment
Letter (but not under the Definitive Agreement described below) will terminate
upon the earliest of (a) the termination of the $48,500,000 Stock Purchase
Agreement by the Company pursuant to Section 10.1(d)(ii) thereof, (b) the
termination of the Acquisition Agreement, and (c) the later of (i) one day
following Clearlake's delivery to the Company of written notice (which notice (a
"Termination Notice") may be delivered at any time on or after December 31,
2007, except that if the Company exercises the Option and Clearlake elects to
extend the Exclusivity Termination Date to March 31, 2008, such date shall be
March 31, 2008 and not December 31, 2007) that Clearlake desires to terminate
its obligation to close the First Lien Debt Financing, or (ii) the date that is
specifically set forth as the termination date for this Commitment Letter in
such Termination Notice.
3. Conditions.
Clearlake's obligation to provide the First Lien Debt Financing is subject to
the following conditions:
GoAmerica, Inc.
August 1, 2007
Page 3
(a) The Company and Clearlake shall have negotiated, executed and
delivered (or, in the case of clause (3) below, the Company shall
have provided) (1) a definitive debt issuance and sale document with
respect to the First Lien Debt Financing (the "Definitive
Agreement"), (2) all documents related to the Definitive Agreement,
including without limitation legal opinions, a solvency certificate
from the Company and officers' certificates, and (3) corporate
records, customary documents from public officials and customary
evidence that the collateral agent shall have a valid and perfected
first priority lien and security interest in the collateral (the
documents referred to in this paragraph, collectively, the "First
Lien Debt Financing Documents"), which First Lien Debt Financing
Documents shall be in form and substance acceptable to Clearlake and
its counsel (such acceptance not to be unreasonably withheld or
delayed) and shall be based upon the Bridge Credit Agreement and the
Loan Documents referenced therein.
(b) The closing of the Acquisition in accordance with the Acquisition
Agreement (except to the extent that the Acquisition Agreement is
subsequently amended or any term or condition thereof waived, in
either case without Clearlake's consent, such consent not to be
unreasonably withheld or delayed) shall have occurred concurrently
with the closing of the First Lien Debt Financing;
(c) There shall have been no amendment of the managed services agreement
between Stellar Nordia Services LLC (together with its affiliates,
"Nordia") and the Company (the "Managed Services Agreement")
executed on the date hereof other than (i) amendments reasonably
acceptable to Clearlake (such acceptance not to be unreasonably
withheld or delayed), and (ii) an amendment of the Company's
existing services agreement with Nordia in form and substance
acceptable to Clearlake (such acceptance not to be unreasonably
withheld or delayed);
(d) In respect of Acquisition-related documents entered into on or
before the date hereof or attached as exhibits to agreements entered
into on or before the date hereof, there shall have been no
amendment to any such Acquisition-related documents other than
amendments in form and substance acceptable to Clearlake (such
acceptance not to be unreasonably withheld or delayed), and in
respect of other Acquisition-related documents, the Company shall
have executed and delivered any such Acquisition-related documents
in form and substance acceptable to Clearlake (such acceptance not
to be unreasonably withheld or delayed);
(e) The Company shall have received not less than $33,500,000 in gross
cash proceeds from the Investors under and as defined in the
$48,500,000 Stock Purchase Agreement as a result of the consummation
of the transactions contemplated thereby (unless the Investors are
in material breach of their obligations under the $48,500,000 Stock
Purchase Agreement);
(f) The Company, Verizon Communications Inc. and Clearlake shall have
received all necessary and material state and federal regulatory
approvals (other than approvals that the Company and Clearlake agree
should be waived, the consent to such waiver not to be unreasonably
withheld or delayed) for the First Lien Debt Financing and the
Acquisition,
GoAmerica, Inc.
August 1, 2007
Page 4
the Company's shareholders shall have approved the transactions
contemplated by the $48,500,000 Stock Purchase Agreement in
accordance with applicable law and the rules of Nasdaq, and the
Company and Verizon Communications Inc. shall have received all
other material consents required to consummate the Acquisition and
the First Lien Debt Financing; and
(g) There shall have occurred no material adverse change in the assets,
liabilities, customer or supplier relationships, financial
condition, operations or results of operations of the Company and
the TRS Division taken as a whole, provided, however, in each case,
not including any change that (A) is generally applicable to the
U.S. economy, (B) is generally applicable to Internet protocol data
and voice providers, (C) results from the execution of the
Acquisition Agreement, the announcement of the Acquisition Agreement
or the consummation of the transactions contemplated by the
Acquisition Agreement or (D) relates to changes in generally
accepted accounting principles generally applicable to companies
serving as Internet protocol data and voice providers occurring
after the date of the Acquisition Agreement, and there shall exist
no action, suit, investigation, litigation or proceeding pending or
threatened that (i) would reasonably be expected to have a material
adverse effect on the assets, liabilities, customer or supplier
relationships, financial condition, operations or results of
operations of the Company and the TRS Division taken as a whole,
(ii) would be of the type described in Section 6.1.2 of the
Acquisition Agreement, or (iii) are for the purpose of enjoining or
preventing the First Lien Debt Financing.
4. Miscellaneous.
Except for the integration of Section 9.5 of the $48,500,000 Stock Purchase
Agreement, the provisions of Sections 1 and 4 hereof shall remain in full force
and effect unless otherwise specifically stated in the definitive documentation
for the First Lien Debt Financing that is executed and delivered, and
notwithstanding the termination of this Commitment Letter or any commitment or
undertaking hereunder.
This Commitment Letter shall not be assignable by the Company without
Clearlake's prior written consent (and any purported assignment without such
consent shall be null and void), is intended to be solely for the benefit of the
parties hereto and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto. This Commitment
Letter may not be amended or any term or provision hereof waived or modified
except by an instrument in writing signed by each of the parties hereto.
This letter agreement shall be governed by the internal laws of the State of New
York, without regard to conflict of laws principles, except for applicable
Federal law.
EACH OF THE PARTIES TO THIS LETTER AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS LETTER AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS LETTER AGREEMENT.
GoAmerica, Inc.
August 1, 2007
Page 5
Clearlake hereby notifies the Company that pursuant to the requirements of the
USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001)
(the "Act"), Clearlake and each other investor party (each an "Investor") to the
definitive First Lien Debt Financing Documents are required to obtain, verify
and record information that identifies the Company, which information includes
the Company's name and address and other information that will allow Clearlake
and the Investors to identify the Company in accordance with the Act. This
notice is given in accordance with the requirements of the Act and is effective
for Clearlake and each other Investor.
Please note that neither Clearlake nor any of its affiliates provides
accounting, tax or legal advice. Notwithstanding anything herein to the
contrary, Clearlake (and each of its members, officers, directors, employees,
affiliates, agents, advisors and attorneys) may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of this
potential transaction and all materials of any kind (including tax opinions or
other tax analyses) that are provided to Clearlake relating to such tax
treatment and tax structure. However, the foregoing sentence shall not apply to
any information relating to the tax treatment or tax structure to the extent
nondisclosure of such information is reasonably necessary to enable any person
to comply with applicable securities laws. For this purpose, "tax treatment"
means U.S. federal income tax treatment, and "tax structure" is limited to any
facts relevant to the U.S. federal tax treatment of the First Lien Debt
Financing.
This Commitment Letter may be executed in any number of counterparts, each of
which when executed shall be an original, and all of which, when taken together,
shall constitute one agreement. Delivery of an executed counterpart of a
signature page of this Commitment Letter by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof. This Commitment
Letter is the only agreement that has been entered into among the parties hereto
with respect to the First Lien Debt Financing and sets forth the entire
understanding of the parties with respect thereto and supersedes any prior
written or oral agreements among the parties hereto with respect to the First
Lien Debt Financing.
THIS COMMITMENT LETTER REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
[Remainder of page intentionally left blank]
Please confirm that the foregoing is in accordance with your understanding by
signing and returning to Clearlake the enclosed copy of this Commitment Letter,
whereupon this Commitment Letter shall become a binding agreement between us.
Notwithstanding the foregoing, this letter shall be void if not signed and
returned by you by 11:59 pm New York time on August 2, 2007. We look forward to
working with you on this assignment.
Very truly yours,
CCP A, L.P.
By: Clearlake Capital Partners, LLC
Its: General Partner
By: CCG Operations, LLC
Its: Managing Member
By: /s/ Behdad Eghbali
------------------
Name: Behdad Eghbali
Title:
Accepted as of the date above:
GOAMERICA, INC.
By: /s/ Daniel R. Luis
------------------
Name: Daniel R. Luis
Title: Chief Executive Officer
ANNEX A
GOAMERICA, INC.
SUMMARY OF TERMS AND CONDITIONS
This Summary of Terms and Conditions of the Proposed First Lien Debt Financing
does not purport to summarize all the terms, conditions, representations,
warranties and other provisions with respect to the transactions referred to
herein. Certain capitalized terms used herein are defined in the Commitment
Letter.
Terms of the First Lien Debt Financing
Issuer: GoAmerica, Inc. ("GOAM", or the "Issuer").
Guarantors: All of GOAM's direct and indirect domestic
subsidiaries, other than non-material subsidiaries
(determined on a basis consistent with the terms
of the Bridge Credit Agreement).
Notes/Loan: Senior secured notes or a senior secured loan in
the principal amount of $30,000,000 (the "Senior
Debt").
Security: The Senior Debt will be secured by perfected first
priority pledges of all of the equity interests of
GOAM's direct and indirect domestic subsidiaries
other than the non-material subsidiaries
referenced above (GOAM and such subsidiaries,
collectively, the "Loan Parties"), and perfected
first priority security interests in and mortgages
on all tangible and intangible assets (including,
without limitation, accounts receivable,
inventory, equipment, general intangibles,
intercompany notes, insurance policies (other than
directors and officers liability insurance
policies), investment property, intellectual
property, real property, cash and proceeds of the
foregoing) of the Loan Parties, wherever located,
now or hereafter owned, subject to such exceptions
as are agreed.
Proposed Closing Date: Closing of the Acquisition.
Maturity: One week before the date that is four
years and six months from the closing of the
Acquisition.
Interest Rate: LIBOR + 700 bps per annum, payable quarterly in
cash.
Ranking: GOAM will ensure that its obligations with respect
to the Senior Debt will at all times constitute
general, direct,
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unsubordinated and unconditional obligations of
the Loan Parties ranking at all times at least
pari passu in priority of payment, and senior in
right of security and in all other respects, with
other senior indebtedness of GOAM now or hereafter
outstanding.
Amortization: None, bullet at Maturity.
Prepayment Premium: 102% during year 1 following issuance; 101% during
years 2 through 4 following issuance; and no
prepayment premium thereafter.
Covenants: The type of covenants will be customary for
transactions of this nature, including, but not
limited to, a limitation on debt incurrence,
limitation on sale of assets, restricted payments
and investments, consolidations, mergers and
change of control, issuance of subsidiary
securities, joint ventures and transactions with
affiliates.
The documents governing the Senior Debt will also
contain covenants requiring that the Company
maintain:
o Minimum Liquidity of $5 million at all times,
o Maximum CapEx in any fiscal year (excluding
capitalized labor) equal to the greater of
$1.5 million or 20% of prior year's EBITDA;
and
o Maximum Total Leverage Ratio (Total Debt
to Pro-Forma Adjusted EBITDA) of 3.5x, which
covenant shall be tested quarterly from and
after Q1 2009 on a TTM basis.
Use of Proceeds: Acquisition of the TRS Division, general working
capital purposes of GOAM and repayment of certain
of the Company's existing secured debt.
Governing Law: The agreements contemplated hereby shall be
governed by the internal laws of the State of New
York, without regard to conflicts of laws
principles.
Assignability: Clearlake and its assignees and transferees may
assign or transfer their interests in the First
Lien Debt Financing at their discretion (i) to
Reservoir Capital Group, L.L.C. and its affiliates
and affiliates of Clearlake, without the consent
of GOAM, (ii) in connection with the primary
syndication of the First Lien Debt Financing,
without the consent of GOAM (provided, however,
that Clearlake shall remain primarily and fully
liable hereunder if the conditions set forth
herein are satisfied and, for any reason, such
syndication does not provide
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the financing contemplated hereunder) and (iii)
otherwise, with the consent of GOAM, which consent
shall not be unreasonably withheld, conditioned or
delayed; provided that GOAM's consent to any such
assignment or transfer shall not be required
following the occurrence and during the
continuance of a default or event of default under
the First Lien Debt Financing Documents.
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ANNEX B
In the event that Clearlake becomes involved involuntarily in any capacity in
any action, proceeding or investigation brought by or against any person,
including stockholders or other equity holders of the Company, in connection
with the transactions contemplated by this Commitment Letter (the "Letter"), the
Company periodically will reimburse Clearlake for its reasonable legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith. The Company also will indemnify and hold Clearlake
harmless against any and all losses, claims, damages or liabilities to any such
person in connection with the transactions contemplated by the Letter, and
without regard to the exclusive or contributory negligence of Clearlake or its
affiliates, or the members, directors, agents, employees and controlling persons
(if any), as the case may be, of Clearlake and any such affiliate, except to the
extent that a court shall have found (in a judgment not subject to further
appeal or for which the time for appeal has expired) that any such loss, claim,
damage or liability results from the bad faith, gross negligence or willful
misconduct of Clearlake in performing obligations that are the subject of the
Letter. If for any reason the foregoing indemnification is unavailable to
Clearlake or is insufficient to hold it harmless, then the Company shall
contribute to the amount paid or payable by Clearlake as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative economic interests of the Company and its stockholders or other equity
holders on the one hand and Clearlake on the other hand in the matters
contemplated by the Letter as well as the relative fault of the Company and
Clearlake with respect to such loss, claim, damage or liability and any other
relevant equitable considerations. The reimbursement, indemnity and contribution
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any affiliate of Clearlake and the members, directors, agents,
employees and controlling persons (if any), as the case may be, of Clearlake and
any such affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company,
Clearlake, any such affiliate and any such person. The Company also agrees that
neither any indemnified party nor any of such affiliates, partners, directors,
agents, employees or controlling persons shall have any liability based on its
or their exclusive or contributory negligence or otherwise to the Company or any
person asserting claims on behalf of or in right of the Company or any other
person in connection with the transactions contemplated by the Letter except to
the extent that a court shall have found (in a judgment not subject to further
appeal or for which the time for appeal has expired) that any losses, claims,
damages, liabilities or expenses incurred by the Company resulted from the bad
faith, gross negligence or willful misconduct of such indemnified party in
performing the services that are the subject of the Letter; provided, however,
that in no event shall such indemnified party or such other parties have any
liability for any indirect, consequential or punitive damages in connection with
or as a result of such indemnified party's or such other parties' activities
related to the Letter.