EXHIBIT 10
FLEET BANK, N.A.
1185 Avenue of the Americas
New York, New York 10036
May 30, 2001
Cantel Medical Corp.
Overlook at Great Notch
150 Clove Road - 9th Floor
Little Falls, NJ 07424
Attn.: James P. Reilly
Ladies and Gentlemen:
You have advised Fleet Bank, N.A. ("FLEET") that Cantel Medical Corp., a
Delaware corporation (the "BORROWER") will acquire all the outstanding stock of
the TargetCo pursuant to a statutory merger of TargetCo and Borrower or
Borrower's wholly owned subsidiary (such transaction being the "ACQUISITION").
The Acquisition will be financed, in part, through an equity issuance by you,
and from funds borrowed pursuant to the Credit Facilities (as defined below).
Fleet is pleased to advise you of its commitment to provide up to the full
amount of $47,500,000 senior secured credit facilities (the "CREDIT FACILITIES")
on the terms and conditions summarized in this letter and in the Summary of
Terms and Conditions attached to this letter (the "TERM SHEET"). The Credit
Facilities will be used (i) to finance, in part, the purchase price for the
Acquisition and to pay fees and expenses of the Acquisition (ii) to repay
existing indebtedness and (iii) for general working capital purposes.
Although Fleet is committing to provide all of the Credit Facilities on a
fully underwritten basis, Fleet expects that a portion of the Credit Facilities
will be made available by other financial institutions (such lenders including
Fleet, the "LENDERS"). It is agreed that Fleet will act as the sole
administrative agent (in such capacity, the "ADMINISTRATIVE AGENT") for the
Credit Facilities and Fleet Securities, Inc ("FSI") will act as arranger for the
Credit Facilities. Fleet will be responsible for preparing and negotiating
definitive documentation for the Credit Facilities, and Fleet and FSI will
manage the syndication effort of forming the syndicate of lenders that will make
the Credit Facilities available. Additional agents, co-agents or arrangers may
be appointed at the discretion of Fleet and FSI.
You agree to assist Fleet and FSI in forming any such syndicate and to
provide Fleet, FSI and the other Lenders, promptly upon request, with all
information reasonably deemed necessary by them (consistent with industry
practice) to complete successfully the syndication, including, but not limited
to, (i) an information package for delivery to potential syndicate members and
participants and (ii) all information and projections prepared by you or your
advisers
Cantel Medical Corp.
May 30, 2001
relating to the transactions described herein. Prior to the closing of the
Credit Facilities you agree to refrain from any other financings (except equity
issuances having no debt characteristics) during such syndication process unless
otherwise agreed to by Fleet. You further agree to make appropriate officers and
representatives of the Borrower and its subsidiaries available to participate in
informational meetings for potential syndicate members and participants at such
times and places as Fleet or FSI may reasonably request.
Fleet and FSI reserve the right, based on market reception, in
consultation with the Borrower, to reallocate the aggregate principal amount of
the Credit Facilities among the Revolving Facility and the Term Facility (as
defined in the Term Sheet) and/or to otherwise change the structure or terms
thereof prior to the closing of the Credit Facilities if Fleet and FSI
determines that such reallocation or changes are advisable in order to ensure a
successful syndication and if the aggregate amount of the Credit Facilities
remains unchanged and if any pricing changes are consistent with credits of
similar quality.
You represent and warrant and covenant that (i) all information which has
been or is hereafter made available to Fleet or FSI by you or any of your
representatives in connection with the transactions contemplated hereby is and
will be complete and correct in all material respects with respect to the
matters such information purports to cover and does not and will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not materially misleading in
light of the circumstances under which such statements have been or will be made
and (ii) all financial projections that have been or are hereafter prepared by
you and made available to Fleet, FSI or any other participants in the Credit
Facilities have been or will be prepared in good faith based upon reasonable
assumptions. You agree to supplement the information and projections referred to
in clauses (i) and (ii) above from time to time until completion of the
syndication so that the representations and warranties in the preceding sentence
remain correct. In arranging and syndicating the Credit Facilities, Fleet and
FSI may use and rely on such information and projections without independent
verification thereof.
In connection with the syndication of the Credit Facilities, Fleet and FSI
may, in their discretion, allocate to other Lenders portions of any fees payable
to Fleet or FSI in connection with the Credit Facilities. You agree that no
Lender will receive any compensation of any kind for its participation in the
Credit Facilities, except as expressly provided for in this letter, the Term
Sheet or in the Fee Letter referred to below.
Please note, however, that the terms and conditions of this commitment and
undertaking are not limited to those set forth in this letter. Those matters
that are not covered or made clear herein or in the attached Term Sheet (which
is a part of this Commitment) are subject to mutual agreement of the parties.
The terms and conditions of this commitment and undertaking may be modified only
in writing. In addition, this commitment and undertaking is subject to: (i) the
preparation, execution and delivery of mutually acceptable loan documentation,
including a credit agreement incorporating substantially the terms and
conditions outlined herein and in the Term Sheet, (ii) the absence of (a) a
material adverse change in, or a development that would reasonably be expected
to have a material adverse effect on, the business, condition (financial or
otherwise), operations, properties or prospects of the Borrower and TargetCo and
their respective subsidiaries, taken as a whole, since July 31, 2000 to the date
of this Commitment Letter in respect
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Cantel Medical Corp.
May 30, 2001
of Borrower and its subsidiaries and since March 31, 2000 to the date of this
Commitment Letter in respect of TargetCo and its subsidiaries (other than items
disclosed specifically in the Disclosure Schedules to the Merger Agreement
referred to in paragraph 1 of the "Conditions Precedent to Funding" in the
attached Term Sheet the Agent acknowledges (for purposes of this clause (a) and
the following clause (b) that it has received the publicly released preliminary
summary 2001 fourth quarter balance sheet as at March 31, 2001 and the income
statement for the quarter ended March 31, 2001 of TargetCo and its subsidiaries,
and TargetCo's financial projections dated May 4, 2001) and (b) a material
adverse change in, or development that would reasonably be expected to have a
material adverse effect on, the condition (financial or otherwise), operations,
business, properties or prospects of the Borrower and TargetCo, and their
respective subsidiaries, taken as a whole, following the date of this Commitment
Letter, and (c) any material adverse change in loan syndication or financial or
capital market conditions generally from those currently in effect that would be
reasonably likely to have a material adverse effect on the ability of Fleet to
successfully syndicate the commitment under this letter, (iii) the accuracy and
completeness in all material respects of all representations, taken as a whole,
that you make to us and all information, taken as a whole, that you furnish to
us in connection with this commitment and undertaking and your compliance with
the terms of this letter, (iv) no development or change occurring after the date
hereof, and no information becoming known after the date hereof, that (a)
results in or would reasonably be expected to result in a material change in, or
material deviation from, the information, taken as a whole, previously delivered
by you or would reasonably be expected to be materially adverse to the condition
(financial or otherwise), business, operations, properties or prospects of the
Borrower and TargetCo and their respective subsidiaries, taken together, or to
the Administrative Agent, the Arranger or the Lenders, or to the legal, tax,
accounting or financial aspects of the Acquisition, or (b) has had or would
reasonably be expected to have a Material Adverse Effect (as defined under the
section "Conditions Precedent to Funding" in the Term Sheet) and (v) the
negotiation and delivery of definitive documentation on or before November 15,
2001.
The costs and expenses of Fleet and FSI (including, without limitation,
the reasonable fees and expenses of its counsel and its syndication and other
out-of-pocket expenses) in connection with the preparation, execution and
delivery of this letter and the definitive financing agreements shall be for
your account. You further agree to indemnify and hold harmless Fleet, FSI and
each director, officer, employee and affiliate or control person of either Fleet
or FSI (each an "indemnified person") from and against any and all actions,
suits, proceedings (including any investigations or inquiries), claims, losses,
damages, liabilities or expenses of any kind or nature whatsoever which may be
incurred by or asserted against or involve Fleet, FSI or any such indemnified
person as a result of or arising out of or in any way related to or resulting
from the Acquisition, or this letter or any eventual extension of credit, and,
upon demand, to pay and reimburse Fleet, FSI and each indemnified person for any
legal or other out-of-pocket expenses incurred in connection with investigating,
defending or preparing to defend any such action, suit, proceeding (including
any inquiry or investigation) or claim (whether or not Fleet, FSI or any such
person is a party to any action or proceeding out of which any such expenses
arise); PROVIDED, HOWEVER, that you shall not have to indemnify any indemnified
person against any loss, claim, damage, expense or liability to the extent that
it resulted from the gross negligence or willful misconduct of such indemnified
person. This letter is issued for your benefit only and no other person or
entity may rely hereon. Under no circumstances shall Fleet, FSI or any of their
respective affiliates be liable to you or any other person for any punitive,
exemplary, consequential
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Cantel Medical Corp.
May 30, 2001
or indirect damages which may be alleged in connection with this Commitment
Letter, the Fee Letter, the Term Sheet, the Acquisition, the Credit Facilities
or the documentation related thereto or any other financing, regardless of
whether the commitment herein is terminated or the Acquisition or the Credit
Facilities close.
The provisions of this letter are supplemented as set forth in a separate
fee letter dated the date hereof from us to you (the "FEE LETTER") and are
subject to the terms of such Fee Letter. By executing this letter, you
acknowledge that this letter and the Fee Letter are the only agreements among
you, Fleet and FSI with respect to the Credit Facilities and set forth the
entire understanding of the parties with respect thereto and you agree that this
letter and the Fee Letter are for your confidential use only and neither their
existence nor the terms hereof or thereof will be disclosed by you to any person
or entity other than your and TargetCo's respective officers, directors,
accountants, attorneys and other advisors, and then only on a "need to know"
basis in connection with the transactions contemplated by this letter and on a
confidential basis (except that, notwithstanding the foregoing, you may make
such public disclosures as you are required by law, in the opinion of your
counsel, to make). Neither this letter nor the Fee Letter may be changed except
pursuant to a writing signed by each of the parties hereto.
Your obligations under this letter and the Fee Letter with respect to fees
(to the extent that, at the time of expiration or termination they are owed
pursuant to the second paragraph of the Fee Letter), indemnification, costs and
expenses, and confidentiality shall survive the expiration or termination of
this letter.
This letter is intended to be solely for the benefit of the parties and is
not intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto and shall not be assignable by you without
the prior written consent of Fleet and FSI. This letter may be executed in any
number of counterparts, each of which shall be an original and all of which,
when taken together, shall constitute one agreement. Delivery of an executed
counterpart of this letter by telecopier shall be effective as delivery of a
manually executed counterpart of this letter. This letter shall be governed by,
and construed in accordance with, the laws of the State of New York.
If you are in agreement with the foregoing, please sign and return to
Fleet the enclosed copies of this letter and the Fee Letter no later than 5:00
P.M., New York time, on May 31, 2001. This offer shall terminate at such time
unless prior thereto we shall have received duly signed and completed copies of
such letters.
[SIGNATURE PAGE FOLLOWS]
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Cantel Medical Corp.
May 30, 2001
We look forward to working with you on this transaction.
Very truly yours,
FLEET BANK, N.A.
By: /s/ Steve Deluise
--------------------------------
Name: Steve Deluise
Title: Vice President
Accepted and agreed to as of the date first above written:
CANTEL MEDICAL CORP.
By /s/ Craig A. Sheldon
----------------------------------
Name: Craig A. Sheldon
Title: Vice President and Controller
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CONFIDENTIAL
CANTEL MEDICAL CORP.
SUMMARY OF TERMS AND CONDITIONS
$47,500,000 SENIOR SECURED CREDIT FACILITY
MAY 30, 2001
BORROWERS: Cantel Medical Corp. ("Cantel" or the "Borrower") and
certain designated subsidiaries acceptable to the agent.
Carsen Group Inc. ("Carsen"), a wholly owned subsidiary of
Cantel, will serve as the borrower for all Canadian
borrowings.
GUARANTORS: All obligations of any Borrower will be guaranteed in
full by each of Cantel's existing and future domestic
subsidiaries, as permitted.
ADMINISTRATIVE
AGENT: Fleet Bank NA ("Fleet" or the "Agent").
ARRANGER: Fleet Securities, Inc. (the "Arranger").
CREDIT
FACILITIES: a) SENIOR SECURED TERM LOAN FACILITY: (the "Term Loan
Facility") available in a single draw, for a maximum
original principal amount of up to $25,000,000.
b) SENIOR SECURED REVOLVING CREDIT FACILITY: for a
maximum principal amount of up to $22,500,000 (the
"Revolving Credit Facility"). The Revolving Credit
Facility also includes sublimits for (i) $5,000,000
working capital availability for U.S. dollar
borrowings by Carsen and (ii) a $2,000,000 swingline
facility available for short term borrowings by Cantel
and (iii) of $2,000,000 for letters of credit (L/C's
to be issued by Fleet Bank as L/C Issuing Bank).
The Revolving Credit Facility will be subject to a
Borrowing Base equaling to an amount not to exceed 85%
of Eligible Accounts Receivable (definition and final
advance rate to be determined), plus approximately 50%
of Eligible Inventory (eligibility definition and
final advance rate to be determined).
Together, the above are referenced as the "Credit Facility".
LENDERS: Fleet and lenders acceptable to the Agent, Arranger and
Cantel.
USE OF PROCEEDS: To finance, in part, the acquisition of the common
stock of the TargetCo by the Borrower pursuant to a
statutory merger ("Merger") of TargetCo & Borrower or
Borrower's wholly owned subsidiary, pay fees and
expenses of the Merger, repay any existing indebtedness
of the Borrower and TargetCo, and general working
capital purposes.
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[LOGO FLEET] CONFIDENTIAL PAGE 1
CONFIDENTIAL
CLOSING DATE: The date of the closing of the Merger, which shall be
on or before November 15, 2001.
SECURITY: The loans under the Credit Facilities will be
secured by perfected first priority liens on all of the
domestic tangible and intangible assets of the Borrower
and its subsidiaries and the TargetCo and its
subsidiaries, including, but not limited to, accounts
receivable, inventory, property, plant and equipment. A
pledge of stock by Cantel and its domestic subsidiaries
will also be required, along with a pledge of 65% of the
stock of all foreign subsidiaries. The Borrower shall
also provide a negative pledge on all present and future
assets and properties (excluding assets pledged for any
outstanding working capital lines of Carsen) of each of
the Borrower's existing and future foreign subsidiaries.
INTEREST RATE
AND COMMITMENT
FEE: Fleet's Alternate Base Rate ("ABR", as defined below)
or, at the Borrowers' option, the reserve adjusted LIBOR
Rate, plus the Applicable Margin. The initial Applicable
Margin is as follows:
Applicable Margin
Libor Margin ABR Margin Commitment Fee
------------ ---------- --------------
Revolving Credit Facility: 325 bps 200 bps 50 bps
Term Loan Facility: 325 bps 200 bps
The initial level of the commitment fee shall be .50%
per annum on the unused portion of the Revolving
Credit Facility
After six months from closing, the Applicable Margin
and Commitment of the Revolving Credit Facility and
Applicable Margin of the Term Loan will be subject to
a performance based pricing grid as follows:
Applicable Margin
Total Debt/EBITDA Libor Margin ABR Margin Commitment Fee
----------------- ------------ ---------- --------------
Greater than and equal to 2.0x 325 bps 200 bps 50 bps
1.75x Less than and equal to 2.0x 300 bps 175 bps 50 bps
1.5x Less than and equal to 1.75x 275 bps 150 bps 40 bps
1.0x Less than and equal to 1.5x 250 bps 125 bps 35 bps
Greater than and equal to 1.0x 200 bps 75 bps 30 bps
"LIBOR" means the average (rounded upward to the next
higher 1/8 of 1%) of the rates offered to Fleet in the
London interbank market for deposits in an amount and
maturity corresponding to the loan amount and the
interest period for the advance, adjusted for reserve
requirements as incurred. Interest periods for LIBOR
loans shall be one, two, or three months. In no event
shall LIBOR based advances extend beyond the Termination
Date of the Facility.
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[LOGO FLEET] CONFIDENTIAL PAGE 2
CONFIDENTIAL
Alternative Base Rate shall mean the greater of (i)
Fleet's Base Rate as announced from time to time and
(ii) the Federal Funds Rate plus 0.50% per annum.
TICKING FEE: A ticking fee equal to 0.25% per annum of the
total Credit Facility, which will start accruing 30 days
from the signing of the Credit Documents, and is payable
at the earlier of the commitment expiration date or the
Initial Funding Date.
LETTER OF CREDIT FEES: The Borrower shall pay a commission on all outstanding
Letters of Credit at a per annum rate equal to the
Applicable Margin (on the Revolving Credit Facility)
then in effect with respect to LIBOR loans on the face
amount of such Letter of Credit. Such commission shall
be shared pro rata among Lenders participating in the
Revolving Credit Facility and shall be payable quarterly
in arrears.
A fronting fee equal to 0.25% per annum on the face
amount of each Letter of Credit shall be payable
quarterly in arrears to the Issuing Lender for its own
account. In addition, customary administrative,
issuance, amendments, payments, and negotiation charges
shall be payable to the Issuing Lender for its own
account.
MATURITY DATE: a) The Term Loan Facility will be amortized on a
quarterly basis with final maturity five years from the
Closing Date. Quarterly amortization will commence three
months from the Closing Date as follows:
Quarters 1 to 4 $500,000 per Quarter
Quarters 5 to 8 $750,000 per Quarter
Quarters 9 to 12 $1,250,000 per Quarter
Quarters 13 to 16 $1,750,000 per Quarter
Quarters 17 to 20 $2,000,000 per Quarter
b) The Revolving Credit Facility shall mature, and any
outstanding loans thereunder shall be repaid in full
five years from the Closing Date. No Letter of Credit
shall have an expiration date 14 days prior to five
years from the Closing Date.
VOLUNTARY
PREPAYMENTS: The Credit Facilities may be repaid in full or in part
at any time at the option of the Borrower without
premium or penalty in minimum increments of $500,000.
Subject to the satisfaction of applicable conditions,
amounts prepaid or repaid under the Revolving Credit
Facility may be re-borrowed prior to maturity.
MANDATORY
PREPAYMENTS: In the event that Total Debt to EBITDA is greater than
or equal to 1.50x, Mandatory prepayments of the Term
Loan will be required from 100% of net cash proceeds
received by the Borrower from asset sales (other than
those incurred in the ordinary course of business) and
from all net proceeds from the sales of any public
equity securities or issuance of
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[LOGO FLEET] CONFIDENTIAL PAGE 3
CONFIDENTIAL
debt. A mutually agreed upon basket for asset sale
proceeds that may be retained by the Borrower to acquire
replacement property or other assets will be
established.
MANDATORY PREPAYMENT
FROM EXCESS CASH
FLOW SWEEP: In addition to the scheduled principal amortization,
in the event that Total Debt to EBITDA is greater than
or equal to 1.50x, 50% of Excess Cash Flow shall be
applied to the payment of the Term Loan Facility.
Excess Cash Flow will generally be defined as EBITDA
less (i) capital expenditures, (ii) cash taxes paid or
to be paid within 90 days of calculation date, (iii)
scheduled amortization of debt and voluntary permanent
prepayments of debt, (iv) cash interest, and (v) plus or
minus changes in working capital.
CONDITIONS
PRECEDENT TO FUNDING: Funding shall be conditioned upon the satisfaction of
the following conditions precedent and other conditions
customary in transactions of this type, or reasonably
required by the Agent:
1. The Merger shall have been, or shall be
concurrently, consummated pursuant to the terms
and conditions of the Merger Agreement in the form
of the draft dated May 30, 2001 (with Disclosure
Schedules draft dated May 30, 2001) previously
delivered to the Agent and in accordance with
applicable law and the documentation for the
financing of the Merger and related transactions,
and otherwise on terms reasonably satisfactory to
the Agent. The conditions of the Merger shall have
been satisfied without giving effect to waivers,
amendments, modifications or supplements except as
approved in advance in writing by the Agent and
without amendments, modifications or supplements
to any related disclosure letter or schedule not
approved in writing in advance by the Agent. The
documents and materials filed publicly by the
Borrower and TargetCo in connection with the
Merger shall have been furnished to the Agent in
form and substance reasonably satisfactory to the
Agent. All required stockholder approval to effect
the Merger shall have been obtained.
The Agent shall not have become aware of any
information not disclosed to it prior to the date
of this letter which it considers to be
inconsistent with its understanding of the
proposed business, assets, operations, structure,
prospects and conditions of each of the Borrower,
TargetCo and their respective subsidiaries that
results in or would reasonably be expected to
result in a material change in, or material
deviation from, the information, taken as a whole,
previously delivered to the Agent or would
reasonably be expected to be materially adverse to
the condition (financial or otherwise), business,
operations, properties or prospects of the
Borrower and TargetCo and their respective
subsidiaries, taken as a whole, or to
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[LOGO FLEET] CONFIDENTIAL PAGE 4
CONFIDENTIAL
the Agent, the Arranger or the Lenders, or to the
legal, tax, accounting or financial aspects of the
Acquisition or the Merger.
2. Minimum Consolidated LTM Pro Forma EBITDA of
$15,250,000 at Closing (as used in this paragraph
2 and the following paragraph 3, LTM of Cantel and
TargetCo respectively to be measured from their
respective most recently publicly filed financial
information in their SEC quarterly or annual
filing prior to the Closing Date; and each
reference in this Term Sheet to EBITDA shall mean
excluding non-recurring charges);
3. Maximum Consolidated Total Debt/LTM EBITDA at
Closing not to exceed 2.60x;
4. All contracts with Olympus America Inc. remain
valid and are in force, except to the extent that
the failure of any one or more such contracts to
remain valid and in force with Olympus America
Inc. or its affiliates, would not, individually or
together, have or reasonably be expected to have a
material adverse effect on the condition
(financial or otherwise), business, operations,
properties and/or prospects of Borrower and
TargetCo and their respective Subsidiaries, taken
as a whole (a "Material Adverse Effect");
5. Satisfactory review by legal counsel to the Agent
of all appropriate documentation to be entered
into and other corporate documents;
6. The negotiation, execution and delivery of loan
documentation satisfactory to the Agent, the
Arranger, and the Borrowers and their respective
counsel, (each of which shall be in full force and
effect on the Closing Date), containing customary
representations and warranties, conditions,
covenants, events of default, indemnifications,
opinions and increased cost and capital
requirement provisions customary in bank financing
documents in transactions of this type, including,
without limitation, the financial covenants
described herein;
7. The commitment contained herein is based on
certain information you have supplied to us and is
subject, INTER ALIA to the accuracy and
completeness of such information, taken as a
whole, in all material respects. The Agent shall
have been satisfied with the structure for the
financing and related processes and with the legal
and tax opinions requested by the Agent in
connection therewith, all of which opinions shall
be customary in the Agent's reasonable judgment
for financings of similar type;
8. Absence of any material adverse change in the
condition (financial or otherwise), operations,
business, properties and/or prospects of the
Borrower and TargetCo, and their respective
subsidiaries, taken as a whole, since July 31,
2000 to the date of this Commitment Letter in
respect of the Borrower and its subsidiaries and
since March 31, 2000 to the date of this
Commitment Letter in respect of TargetCo
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[LOGO FLEET] CONFIDENTIAL PAGE 5
CONFIDENTIAL
and its subsidiaries (other than the items
disclosed specifically in the Disclosure Schedules
referred to in paragraph 1 above of "Conditions
Precedent to Funding"). The Agent acknowledges,
for purposes of this paragraph 8 and 9 below, that
it has received the publicly released preliminary
summary 2001 fourth quarter balance sheet as at
March 31, 2001 and the income statement for the
quarter ended March 31, 2001 of TargetCo and its
subsidiaries, and TargetCo's financial projections
dated May 4, 2001, delivered to the Agent prior to
the date hereof;
9. Absence of any material adverse change in the
condition (financial or otherwise), operations,
business, properties and/or prospects of the
Borrower and TargetCo, and their respective
subsidiaries, taken as a whole, following the date
of this Commitment Letter;
10. There shall be no litigation or administrative
proceedings or other legal or regulatory
developments actual or threatened that would be
reasonably expected to result in a material
adverse effect on (a) the condition (financial or
otherwise), business, properties, operations, or
prospects of the Borrower and TargetCo and their
respective subsidiaries taken as a whole since
July 31, 2000 to the date of this Commitment
Letter in respect of the Borrower and its
subsidiaries and since March 31, 2000 to the date
of this Commitment Letter in respect of TargetCo
and its subsidiaries (taking into account items
disclosed specifically in the Disclosure Schedules
referred to in paragraph 1 above of "Conditions
Precedent to Funding", and the preliminary summary
2001 fourth quarter results and the projections
referred to in the preceding paragraph 8), (b) the
condition (financial or otherwise), operations,
business, properties or prospects of the Borrower
and TargetCo and their respective subsidiaries,
taken as a whole, following the date of this
Commitment Letter or (c) on the rights and
remedies of the Agent or on the ability of the
Borrower, the TargetCo and their respective
subsidiaries to perform their obligations;
11. Receipt of all necessary governmental and third
party approvals (which third party approvals are
material) and compliance with all laws, including
ERISA, except to the extent that failure by the
Borrower, TargetCo or their subsidiaries in
connection with the operations of their business
to comply with laws would not have or would not
reasonably be expected to have a Material Adverse
Effect (excluding for purposes of this exception
the consummation of the Merger and financing
transaction contemplated herein);
12. Receipt of a copy of a fairness opinion from
TargetCo's investment banker addressed to
TargetCo's board of directors, relating to the
terms of the Merger;
13. Receipt by the Agent of a report by ENVIRON
International Corporation or another acceptable
third party of the results of a Phase 2
environmental diligence review on which the Agent
will be
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[LOGO FLEET] CONFIDENTIAL PAGE 6
CONFIDENTIAL
expressly entitled to rely (including soil
samples and impact on groundwater) relating to the
Netherlands property of TargetCo and/or its
Netherlands subsidiary, the conclusion of which is
that TargetCo and/or its Netherlands subsidiaries
are not reasonably likely to have environmental
liabilities relating to the Netherlands property
of more than $1,000,000, based on the results of
the Phase 2 review. This condition will be deemed
waived if not invoked within 5 business days after
receipt by the Agent of a copy of the results of
such review.
14. Purchase of Interest Rate Protection for 50% of
the Term Facility in a manner satisfactory to the
Agent.
REPRESENTATIONS AND
WARRANTIES: Customary for credit agreements of this nature.
AFFIRMATIVE
COVENANTS: Customary, including but not limited to, delivery of
financial statements, reports, accountants' letters,
projections and other information requested by Agent;
payments of obligations; continuation of business and
maintenance of existence, rights and privileges;
compliance with contractual obligations and laws;
maintenance of property and insurance; maintenance of
books and records; right of Agent to inspect property
and books and records as it deems reasonably necessary;
and notices of default, litigation and material events
and other reasonable and customary covenants.
NEGATIVE
COVENANTS: Financial covenants will include, without limitation,
the covenants set forth below and as may be adjusted by
Agent in its sole discretion:
- Maximum Total Debt / Consolidated LTM EBITDA:
Through 7/30/02: 2.6X
7/31/02 through 7/30/03: 2.00X
7/31/03 through 7/30/04: 1.75X
7/31/04 and thereafter: 1.50X.
- Minimum Consolidated LTM EBITDA:
4/30/01: $15,250,000
7/31/01 $15,500,000
10/31/01, 1/31/02 and 4/30/02 $16,000,000
7/31/02 $17,500,000
10/31/02 $17,500,000
1/31/03 and 4/30/03 $18,000,000
7/31/03 and thereafter $20,000,000
- Minimum Fixed Charge Coverage:
Through 7/30/02: 1.2X
7/31/02 through 7/30/03: 1.35X
7/31/03 and thereafter: 1.50X.
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- Maximum annual Capital Expenditures of $4,000,000
- Minimum Available Adjusted US$ Cashflow Coverage:
So long as Total Debt/Total Consolidated EBITDA
is greater than or equal to 1.5X, the ratio of:
a) the sum of rolling four quarter EBITDA from the
Borrower's US operations plus dividends received
from foreign subsidiaries(net of applicable
withholding taxes)in the latest four quarter
period, available in US Dollars,
to:
b) the sum of the Borrower's US Fixed Charges for
the latest rolling four quarter period,
shall not be less than 1.1x.
"US Fixed Charges" shall be defined as the sum of:
a) cash interest payments in the US,
b) required principal amortization payments on the
Term Loan,
c) cash taxes paid in the US, and
d) capital expenditures in the US not financed
separately.
- Maximum Annual Investment in foreign subsidiaries
of $2,000,000
- Maximum Total Liability to Total Capitalization
of 50% for Carsen Group, Inc.
Other negative covenants will include without
limitation, restrictions on indebtedness and other
liabilities, liens, dividends, contingent
obligations, investments and acquisitions, asset
sales, third party management fees, creation of
subsidiaries, guarantees, loans and advances,
leases, mergers, negative pledges, consolidations,
sales and leasebacks, voluntary prepayments of
other debt, and other reasonable and customary
covenants.
EVENTS OF DEFAULT: Customary for credit agreements of this nature,
including but not limited to:
Failure to pay principal or interest; inaccurate or
false representations or warranties; failure to meet
covenants; cross default to indebtedness; failure to
observe terms of this agreement; bankruptcy;
insolvency; ERISA violation judgments; change in
control; environmental.
INDEMNIFICATION: Borrower will indemnify Lenders against losses,
liabilities, claims, damages, or expenses relating
to their loans, Borrower's use of the loan proceeds
or commitments, or Borrower generally, including
but not limited to reasonable attorney's fees and
settlement costs, except to the extent that they
are as a result of Lender's gross negligence or
willful misconduct.
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CONFIDENTIAL
EXPENSES: The Borrower shall pay all of the Agent's reasonable
out-of-pocket costs and expenses in connection with
this transaction, including, without limitation, the
reasonable fees and expenses of counsel to the
Agent.
GOVERNING LAW: State of New York
AGENT'S COUNSEL: Winston & Strawn
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