EXHIBIT 99.5
CHASE SECURITIES INC.
CHASE BANK OF TEXAS, N.A.
2200 Ross Avenue
Dallas, Texas 75201
April 5, 1999
$125,000,000
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Senior Secured Credit Facilities
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Commitment Letter
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Welsh, Carson, Anderson & Stowe VIII, L.P.
320 Park Avenue
Suite 2500
New York, New York 10022-6815
Attention: Anthony deNicola, General Partner
Robert Minicucci, General Partner
Gentlemen:
You have advised Chase Securities Inc. ("CSI") and Chase Bank of
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Texas, N.A. ("Chase") that you, together with your affiliates (collectively,
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"WCAS"), will form a new corporation ("Newco") for the purposes of effecting a
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recapitalization (the "Acquisition") of BancTec, Inc. ("BancTec"). The
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Acquisition will be effected by merging Newco with and into BancTec, with
BancTec continuing as the surviving corporation (the "Surviving Corporation"). A
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payment of cash consideration will be made for a specified proportion of the
outstanding common stock of BancTec (the "Electing Shares"), while the remaining
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outstanding common stock of BancTec will remain outstanding (the "Retained
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Shares") as shares of the Surviving Corporation. As a result of the Acquisition,
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each Electing Share will be converted into the cash consideration per share, the
Retained Shares will remain outstanding as shares of common stock of the
Surviving Corporation, and the outstanding shares of Newco will be converted
into approximately 93.5% (expressed as a percentage of the Surviving Corporation
following the Acquisition) of the outstanding common stock of the Surviving
Corporation. Alternatively, if able to be accounted for as a recapitalization,
WCAS and one or more other investors (collectively, the "Other Investor") will
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effect the Acquisition by permitting the Other Investor to acquire approximately
6.5% of Newco and merging Newco with and into BancTec, as a result of which WCAS
will become the owner of approximately 93.5% of the common stock of the
2
Surviving Corporation, the Other Investor will become the owner of approximately
6.5% of such common stock (the "Alternative Acquisition"), and the existing
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stockholders of BancTec will receive cash consideration in exchange for all of
their common stock in BancTec. Immediately after the Acquisition, BancTec USA,
Inc. will merge with or be liquidated into (the "Subsidiary Merger") the
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Surviving Corporation (after giving effect to the Subsidiary Merger, the
"Borrower"). In connection with the Acquisition and the Subsidiary Merger,
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approximately $6,300,000 of the existing indebtedness of BancTec will be
refinanced (the "Refinancing"; together with the Acquisition and the Subsidiary
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Merger, the "Transactions").
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In connection with the Transactions, you have advised us that you
propose to finance such Transactions with (i) senior secured credit facilities
in an aggregate amount of up to $125,000,000 (the "Facilities") of the
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Borrower, comprised of a term loan facility aggregating up to $75,000,000 (the
"Term Facility") and a $50,000,000 revolving credit facility (the "Revolving
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Facility"), (ii) senior subordinated financing in an aggregate amount of
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$160,000,000 of the Borrower on terms and conditions acceptable to the Agent (as
defined below), (iii) proceeds from the exercise by BancTec management of stock
options previously issued by BancTec of $23,300,000 and (iv) common equity in
Newco consisting of $145,000,000 in cash contributed by WCAS and the Other
Investor or $134,087,500 in cash contributed by WCAS and the Retained Shares.
The Revolving Facility will be used to finance a portion of the Transactions and
the continuing operations and general corporate purposes of the Borrower and its
subsidiaries, including the making of acquisitions and investments in other
entities subject to restrictions and limitations to be determined.
CSI is pleased to advise you that it is willing to act as sole and
exclusive advisor, lead arranger and book manager for the Facilities (in such
capacity, the "Arranger"), and Chase is pleased to advise you that it is willing
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to serve as administrative agent for the Facilities (in such capacity, the
"Administrative Agent"). In addition, Chase is pleased to advise you that it is
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willing to act as syndication agent for the Facilities (in such capacity, the
"Syndication Agent"; together with the Administrative Agent, collectively, the
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"Agent"). Furthermore, Chase is pleased to advise you of its commitment to
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provide up to $125,000,000 of the Facilities, upon the terms and subject to the
conditions set forth or referred to in this commitment letter (the "Commitment
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Letter") and in the Summary of Terms and Conditions attached hereto as Exhibit A
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(the "Term Sheet").
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It is agreed that CSI will act as the Arranger and that Chase will act
as the Administrative Agent and Syndication Agent for the Facilities. You agree
that no other agents, co-agents, arrangers or managers will be appointed, no
other titles will be awarded and no compensation will be paid in connection with
the Facilities unless you and CSI and Chase shall so agree (with CSI and Chase
to reasonably consider any requests by you).
CSI and Chase intend to syndicate the Facilities to a group of
financial institutions (together with Chase, the "Lenders") identified by CSI
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and Chase in consultation with you. CSI and Chase intend to commence syndication
efforts promptly upon your entering into definitive documentation with respect
to the Acquisition, and you agree actively to assist CSI and Chase in completing
a syndication satisfactory to them. Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the syndication efforts benefit
materially from the
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existing lending relationships of WCAS and BancTec, (b) direct contact between
senior management and advisors of WCAS, BancTec and the Borrower and the
proposed Lenders, (c) assistance in the preparation of a Confidential
Information Memorandum and other marketing materials to be used in connection
with the syndication and (d) the hosting, with CSI and Chase, of one or more
meetings of prospective Lenders.
CSI and Chase will manage all aspects of the syndication of the
Facilities, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders in consultation with you. To assist CSI and Chase in their syndication
efforts, you agree promptly to prepare and provide to CSI and Chase all
information with respect to WCAS, the Borrower, the Transactions and the other
transactions contemplated hereby and to obtain the agreement of BancTec to
prepare and provide all information with respect to it, in each case, including
all reasonable financial information and projections (the "Projections"), as we
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may reasonably request in connection with the arrangement and syndication of the
Facilities. You hereby represent and covenant that, to your knowledge, (a) all
information other than the Projections (the "Information") that has been or will
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be made available to CSI and Chase by you or any of your representatives is or
will be, when furnished, complete and correct in all material respects and does
not or will not, when furnished, 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 are made and (b) the Projections that have been or will be
made available to CSI and Chase by you or any of your representatives have been
or will be prepared in good faith based upon assumptions that you believe in
good faith to be reasonable. CSI and Chase understand that BancTec is not your
representative. You understand that in arranging and syndicating the Facilities
we may use and rely on the Information and Projections without independent
verification thereof.
As consideration for the commitments of Chase hereunder and the
agreements of the Agent to perform the services described herein, you agree to
pay, and to cause the Borrower to pay, the nonrefundable fees set forth in Annex
I to the Term Sheet and in the Fee Letter, dated the date hereof and delivered
herewith (the "Fee Letter").
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CSI and Chase shall be entitled, after consultation with you, to
change the pricing, terms, structure or amounts of any of the Facilities if the
syndication has not been completed and if CSI and Chase reasonably determine
that such changes are advisable to ensure a successful syndication of the
Facilities; provided that (a) the total amount of the Facilities shall remain
unchanged, (b) the interest rate margins and letter of credit fees respectively
applicable to the Facilities shall not be increased by more than 0.75% per annum
and (c) the Term Facility (as defined in the Term Sheet) shall not be revised to
include a "Tranche B" term loan facility of more than $40,000,000. Chase's
commitment hereunder is subject to the agreements in this paragraph.
The commitments hereunder and the agreements to perform the services
described herein are subject to (a) there not occurring or becoming known to us
any material adverse condition or material adverse change in or affecting the
business, operations, property, condition
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(financial or otherwise) or prospects of BancTec and its subsidiaries, taken as
a whole since December 31, 1998, (b) our not becoming aware after the date
hereof of any information or other matter affecting BancTec, the Borrower or the
transactions contemplated hereby which is inconsistent in a material and adverse
manner with any such information or other matter disclosed to us prior to the
date hereof, (c) there not having occurred a material disruption of or material
adverse change in financial, banking or capital market conditions that, in the
judgment of CSI and Chase, could materially impair the syndication of credit
facilities similar or comparable to the Facilities, (d) our satisfaction that
prior to and during the syndication of the Facilities there shall be no
competing offering, placement or arrangement of any debt securities or bank
financing by or on behalf of WCAS, BancTec or the Borrower or any of their
respective affiliates (except for any such debt securities as contemplated
hereby and for any debt securities or bank financing by or on behalf of WCAS and
its other affiliates as are reasonably coordinated with the syndication of the
Facilities in consultation with CSI and Chase), (e) the negotiation, execution
and delivery of definitive documentation with respect to the Facilities
satisfactory to CSI, Chase and their respective counsels, and the closing of the
transactions thereunder and the Transactions on or before September 15, 1999,
and (f) the other conditions set forth or referred to in the Term Sheet.
You agree (a) to indemnify and hold harmless CSI, Chase and their
respective affiliates and their respective officers, directors, employees,
advisors, and agents (each, an "indemnified person") from and against any and
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all losses, claims, damages and liabilities to which any such indemnified person
may become subject arising out of or in connection with this Commitment Letter,
the Facilities, the use of the proceeds thereof, the Transactions or any other
related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any indemnified person
is a party thereto, and to reimburse each indemnified person upon demand for any
reasonable legal or other expenses incurred in connection with investigating or
defending any of the foregoing, provided that the foregoing indemnity will not,
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as to any indemnified person, apply to losses, claims, damages, liabilities or
related expenses to the extent they are found by a final, non-appealable
judgment of a court to arise from the willful misconduct or gross negligence of
such indemnified person, and (b) to reimburse CSI, Chase and their respective
affiliates on demand for all reasonable out-of-pocket expenses (including due
diligence expenses, syndication expenses, consultant's fees and expenses, travel
expenses, and reasonable fees, charges and disbursements of counsel) incurred in
connection with the Facilities and any related documentation (including this
Commitment Letter, the Term Sheet, the Fee Letter and the definitive financing
documentation) or the administration, amendment, modification or waiver thereof.
No indemnified person shall be liable for any damages arising from the use by
others of Information (provided that such indemnified person is not in breach of
the confidentiality provisions hereof) or other materials obtained through
electronic, telecommunications or other information transmission systems or for
any special, indirect, consequential or punitive damages in connection with the
Facilities.
You acknowledge that we and our respective affiliates (the term "we"
being understood to refer hereinafter in this paragraph to include such
affiliates) may be providing debt financing, equity capital or other services
(including financial advisory services) to other companies in respect of which
you may have conflicting interests regarding the transactions described herein
and otherwise. We will not use confidential information obtained from you by
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virtue of the transactions contemplated by this Commitment Letter or our other
relationships with you in connection with the performance by us of services for
other companies, and we will not furnish any such information to other
companies. You also acknowledge that we have no obligation to use in connection
with the transactions contemplated by this Commitment Letter, or to furnish to
you, confidential information obtained from other companies.
This Commitment Letter shall not be assignable by any party hereto
(other than an assignment by you to the Surviving Corporation) without the prior
written consent of the other parties hereto (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 waived except by an instrument in
writing signed by you, CSI and Chase. This Commitment 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 signature page of this Commitment Letter by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof. This
Commitment Letter and the Fee Letter are the only agreements that have been
entered into among us with respect to the Facilities and set forth the entire
understanding of the parties with respect thereto. This Commitment Letter shall
be governed by, and construed in accordance with, the laws of the State of New
York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) you may disclose this Commitment Letter, the Term Sheet
and the Fee Letter (i) to your officers, agents and advisors who are directly
involved in the consideration of this matter or (ii) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law, including
public disclosures required under United States securities rules and regulations
(in which case you agree to inform us promptly thereof) and (b) you may disclose
this Commitment Letter and the Term Sheet, and their terms and substance (but
not the Fee Letter or their terms and substance) to BancTec, its officers,
agents and advisors who are directly involved in the consideration of the
Transactions on a confidential basis.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force and
effect regardless of whether definitive financing documentation shall be
executed and delivered and notwithstanding the termination of this Commitment
Letter or the commitments hereunder; provided, that your obligations under this
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Commitment Letter, other than those arising under the fourth, fifth, sixth and
thirteenth paragraphs hereof, shall automatically terminate and be superseded by
the provisions of the definitive documentation relating to the Facilities upon
the initial funding thereunder, and you shall automatically be released from all
liability in connection therewith at such time. Subject to the foregoing, this
Commitment Letter shall automatically terminate if the closing of the Facilities
shall not occur by reason of any condition described in clause (c) or (d) in the
ninth paragraph hereof not being satisfied or waived, as of the date on which
the parties hereto mutually agree that such closing would otherwise occur.
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If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter not later
than 5:00 p.m., New York City time, on Wednesday, April 7, 1999. The commitments
and the agreements herein will expire at such time in the event Chase has not
received such executed counterparts and such amounts in accordance with the
immediately preceding sentence.
We are pleased to have been given the opportunity to assist you in
connection with this important financing.
Very truly yours,
CHASE SECURITIES INC.
By: /s/ Brian Turrentine
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Name: Brian Turrentine
Title: Vice President
CHASE BANK OF TEXAS, N.A.
By: /s/ Mike Lister
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Name: Mike Lister
Title: Vice President
Accepted and agreed to
as of the date first
written above by:
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
By: WCAS VIII ASSOCIATES LLC, its
General Partner
By: /s/ Robert Minicucci
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Name: Robert Minicucci
Title: Managing Member
Exhibit A
SENIOR SECURED CREDIT FACILITIES
Summary of Terms and Conditions
April 5, 1999
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Welsh, Carson, Anderson & Stowe VIII, L.P., together with its
affiliates (collectively "WCAS"), will form a new corporation ("Newco") for the
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purposes of effecting a recapitalization (the "Acquisition") of BancTec, Inc.
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("BancTec"). The Acquisition will be effected by merging Newco with and into
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BancTec, with BancTec continuing as the surviving corporation (the "Surviving
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Corporation"). A payment of cash consideration will be made for a specified
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proportion of the outstanding common stock of BancTec (the "Electing Shares"),
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while the remaining outstanding common stock of BancTec will remain outstanding
(the "Retained Shares") as shares of the Surviving Corporation. As a result of
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the Acquisition, each Electing Share will be converted into the cash
consideration per share, the Retained Shares will remain outstanding as shares
of common stock of the Surviving Corporation, and the outstanding shares of
Newco will be converted into approximately 93.5% (expressed as a percentage of
the Surviving Corporation following the Acquisition) of the outstanding common
stock of the Surviving Corporation. Alternatively, if able to be accounted for
as a recapitalization, WCAS and one or more other investors (collectively, the
"Other Investor") will effect the Acquisition by permitting the Other Investor
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to acquire approximately 6.5% of Newco and merging Newco with and into BancTec,
as a result of which WCAS will become the owner of approximately 93.5% of the
common stock of BancTec, the Other Investor will become the owner of
approximately 6.5% of such common stock (the "Alternative Acquisition"), and the
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existing stockholders of BancTec will receive cash consideration in exchange for
their common stock in BancTec. Immediately after the Acquisition, BancTec USA,
Inc. will merge with or be liquidated into (the "Subsidiary Merger") the
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Surviving Corporation (after giving effect to the Subsidiary Merger, the
"Borrower"). In connection with the Acquisition and the Subsidiary Merger,
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approximately $6,300,000 of the existing indebtedness of BancTec will be
refinanced (the "Refinancing"; together with the Acquisition and the Subsidiary
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Merger, the "Transactions").
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I. Parties
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Borrower: The surviving corporation of the Acquisition and the Subsidiary
Merger (the "Borrower").
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Guarantors: To the extent permitted by BancTec's 7.5% Senior Notes due 2008
(the "Senior Notes"), all obligations of the Borrower under the
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Senior Secured Credit Facility and hedging arrangements entered
into with any Lender (as defined below) or any affiliate of any
Lender shall be unconditionally guaranteed by each of the
Borrower's existing and future direct and indirect wholly-owned
domestic subsidiaries (the
2
"Guarantors"; the Borrower and the Guarantors, collectively, the
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"Loan Parties").
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Sole and
Exclusive
Advisor, Lead
Arranger and
Book Manager: Chase Securities Inc. ("CSI" and, in such capacity, a
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"Arranger").
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Administrative
Agent: Chase Bank of Texas, N.A. ("Chase" and, in such capacity, the
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"Administrative Agent").
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Syndication
Agent: Chase (in such capacity, the "Syndication Agent"; together with
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the Administrative Agent, the "Agent").
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Lenders: A syndicate of banks, financial institutions and other entities,
including Chase, to be arranged by CSI and the Administrative
Agent in consultation with the Borrower (the "Lenders").
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II. Types and Amounts of Credit Facilities
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1. Term Facility
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Type and
Amount of
Facility: A five year term loan facility to the Borrower (the "Term
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Facility") in an aggregate principal amount of $75,000,000 (the
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loans thereunder, the "Term Loans"). The Term Loans shall be
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repayable in equal quarterly installments in each of the first
four 12-month periods following the first anniversary of the
Closing Date in an aggregate amount for each such 12-month period
to be determined.
Availability: The Term Loans shall be made in a single drawing on the Closing
Date (as defined below).
Purpose: The proceeds of the Term Loans shall be used to finance the
Transactions and to pay related fees and expenses.
2. Revolving Facility
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Type and
Amount of
Facility: Five-year revolving credit facility (the "Revolving Facility";
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together with the Term Facility, the "Credit Facilities") in the
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amount of $50,000,000 (the loans thereunder, the "Revolving
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Loans"; together with the Term Loans, the "Loans").
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Availability: The Revolving Facility shall be fully available on a revolving
basis during the period following the Closing Date and ending on
the fifth anniversary thereof (the "Revolving Termination Date").
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A portion of the Revolving Facility not in excess of $7,500,000
shall be available for borrowing on the Closing Date.
Letters of
Credit: A portion of the Revolving Facility not in excess of an amount to
be determined shall be available for the issuance of letters of
credit (the "Letters of Credit") by Chase (in such capacity, the
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"Issuing Lender"). No Letter of Credit shall have an expiration
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date after the earlier of (a) one year after the date of issuance
(unless approved by Lenders holding not less than a majority of
the Revolving Facility) and (b) five business days prior to the
Revolving Termination Date, provided that any Letter of Credit
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with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend
beyond the date referred to in clause (b) above).
Drawings under any Letter of Credit shall be reimbursed by the
Borrower (whether with its own funds or with the proceeds of the
Revolving Loans) on the next business day. To the extent that the
Borrower does not so reimburse the Issuing Lender, the Lenders
under the Revolving Facility shall be irrevocably and
unconditionally obligated to reimburse the Issuing Lender on a
pro rata basis.
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Maturity: The Revolving Termination Date.
Purpose: The proceeds of the Revolving Loans shall be used to finance a
portion of the Transactions and for general corporate purposes of
the Borrower and its subsidiaries, including the making of
acquisitions and investments in other entities subject to
restrictions and limitations to be determined.
III. Certain Payment Provisions
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Fees and
Interest
Rates: As set forth on Annex I.
Optional
Prepayments
and
Commitment
Reductions: Loans may be prepaid and commitments may be reduced by the
Borrower in minimum amounts to be agreed upon. Optional
prepayments of the Term Loans shall be applied to
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the installments thereof ratably in accordance with the then
outstanding amounts thereof (except that the first $7,500,000 of
optional and mandatory prepayments allocated to the Term Loans
may be applied to installments thereof at the direction of the
Borrower) and may not be reborrowed.
Mandatory
Prepayments
and
Commitment
Reductions: The following amounts shall be applied to prepay the Term Loans
and reduce the Revolving Facility:
(a) 50% of the net proceeds of any sale or issuance of equity
after the Closing Date by the Borrower (excluding equity issued
to directors and employees under benefit plans, equity issued to
sellers as consideration in acquisitions and equity issued to the
existing shareholders of BancTec or in a private placement to
investors arranged by WCAS to finance acquisitions);
(b) 100% of the net proceeds of any incurrence of certain
indebtedness (excluding Senior Subordinated Notes (as defined
below) the net proceeds of which are used to refinance the
Borrower Notes (as defined below)) after the Closing Date by the
Borrower or any of their subsidiaries;
(c) 100% of the net after tax proceeds of any sale or other
disposition (other than as a result of casualty or condemnation
where such proceeds are used to repair or replace assets up to a
maximum amount to be determined) by the Borrower or any of their
subsidiaries of any assets (except for the sale of inventory in
the ordinary course of business and certain other exceptions to
be agreed upon and subject to threshold and limitations to be
determined); provided that, upon the achievement of performance
targets to be agreed, a percentage to be agreed of any such net
proceeds of any sale or other disposition of the assets of PC &
Network Services may be used to prepay the Senior Subordinated
Notes or the Borrower Notes; and
(d) 50% of excess cash flow (to be defined in a mutually
satisfactory manner) for each fiscal year of the Borrower
commencing with the first full fiscal year after the Closing
Date).
All such amounts shall be applied, first, to the prepayment of
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the Term Loans and, second, to the permanent reduction of the
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Revolving Facility. Each such prepayment of the Term
Loans shall be applied to the installments thereof
ratably in accordance with the then outstanding
amounts thereof (except that the first $7,500,000 of
optional and mandatory prepayments allocated to the
Term Loans may be applied to installments thereof at
the direction of the Borrower) and may not be
reborrowed. The Revolving Loans shall be prepaid and
the Letters of Credit shall be cash collateralized or
replaced to the extent such extensions of credit
exceed the amount of the Revolving Facility.
IV. Collateral The obligations of each Loan Party in respect of the
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Credit Facilities and any hedging arrangements
entered into with any Lender (or any affiliate of any
Lender) shall be secured by perfected first priority
security interests in all of its tangible and
intangible assets (including, without limitation, its
intellectual property and real property and all of
the capital stock of each of the direct domestic
subsidiaries of the Borrower and 65% of the capital
stock of each of its direct foreign subsidiaries),
excluding assets subject to certain permitted liens
and rights under non-assignable contracts of types to
be agreed upon. To the extent required by the Senior
Notes (with the APermitted Lien@ basket being
reserved for other uses in a manner to be
determined), the security interests in the tangible
and intangible assets of the Borrower (other than its
inventories and accounts receivable) shall be held,
on an equal and ratable basis, for the benefit of the
holders of the Senior Notes.
V. Certain Conditions
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Initial Conditions: The availability of the Credit Facilities shall be
conditioned upon satisfaction of, among other things,
the following conditions precedent (the date upon
which all such conditions precedent shall be
satisfied, the "Closing Date"):
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(a) Each Loan Party shall have executed and
delivered satisfactory definitive financing
documentation with respect to the Credit Facilities
(the "Credit Documentation").
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(b) Newco shall have received at least $145,000,000
in cash from the issuance of its common stock (which
amount includes the cash purchase price for shares in
Newco purchased by WCAS and the Other Investor and
contributed to
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Newco, each as set forth in the Sources and Uses Table in
Annex II hereto, and the value of any Retained Shares),
and the Borrower shall have received no more than
$160,000,000 from the issuance of subordinated unsecured
notes to an affiliate of WCAS and other investors
arranged by it satisfactory to the Administrative Agent
(the "Borrower Notes") or from the issuance of its senior
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subordinated debt (the "Senior Subordinated Notes"), each
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on satisfactory terms and conditions to the
Administrative Agent, including, with respect to the
Borrower Notes, a maximum interest rate of 10% per annum
and a final maturity no sooner than one year and a day
after the stated maturity of the Term Loans. The
ownership and capital structure of each Loan Party after
the Transactions, and the terms applicable thereto, shall
be reasonably satisfactory in all respects.
(c) The Transactions shall have been consummated in a
manner consistent with the Sources and Uses Table
attached as Annex II hereto and pursuant to reasonably
satisfactory documentation, and no provision of such
documentation shall have been waived, amended,
supplemented or otherwise modified in any material
respect. BancTec and its subsidiaries shall not have any
indebtedness (other than immaterial indebtedness on terms
and conditions satisfactory to the Administrative Agent)
immediately prior to or immediately after the Closing
Date other than the Borrower Notes, the indebtedness
refinanced as contemplated on such Sources and Uses Table
and the Senior Notes which shall remain outstanding.
(d) The Lenders, the Arranger, and the Administrative
Agent shall have received all fees required to be paid,
and all expenses required to be reimbursed and for which
invoices have been presented, on or before the Closing
Date.
(e) All governmental and third party approvals
(including material landlords' and other material
consents) necessary or, in the discretion of the
Administrative Agent, advisable in connection with the
Transactions, the financing contemplated hereby and the
continuing operations of the Borrower and its
subsidiaries shall have been obtained and be in full
force and effect, and all applicable waiting periods
shall have expired without any action being taken or
threatened by any competent authority that would
restrain, prevent or otherwise impose
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adverse conditions on the Transactions or the financing
thereof.
(f) The Lenders shall have received (i) satisfactory
audited consolidated financial statements of BancTec for
its fiscal year ended December 31, 1998 and satisfactory
unaudited consolidating (on a business unit basis)
financial statements of BancTec for such fiscal year and
(ii) satisfactory unaudited interim consolidated and
consolidating (on a business unit basis) financial
statements of BancTec for each quarterly period and
satisfactory unaudited interim consolidated financial
statements of BancTec for each fiscal quarter, ended
subsequent to December 31, 1998, and for each fiscal
month, ended subsequent to the fiscal quarter most
recently completed prior to the Closing Date, as to which
such financial statements are available.
(g) BancTec shall have consolidated EBITDA (excluding
non-recurring charges not to exceed an amount to be
agreed upon and $37,500,000 in pre-tax expenses and
charges accrued for the quarter ended December 31, 1998)
for the twelve months ending with the fiscal quarter most
recently completed prior to the Closing Date as to which
financial statements are available of not less than
$88,000,000 calculated in a manner consistent with GAAP.
(h) The Lenders shall have received a satisfactory pro
---
forma consolidated balance sheet of the Borrower as at
-----
the date of the most recent consolidated balance sheet
delivered pursuant to paragraph (f) above, adjusted to
give effect to the consummation of the Transaction and
the financings contemplated hereby as if such
transactions had occurred on such date.
(i) The Lenders shall have received a satisfactory
business plan and a satisfactory written analysis of the
business and prospects of the Borrower and its
subsidiaries for the period from the Closing Date through
the final maturity of the Term Loans.
(j) The Lenders shall have received the results of a
recent lien search in each relevant jurisdiction with
respect to BancTec, the Borrower and their subsidiaries,
and such search shall reveal no liens on any of the
assets of the Borrower or its
8
subsidiaries except for liens permitted by the Credit
Documentation or liens to be discharged on or prior to
the Closing Date pursuant to documentation satisfactory
to the Administrative Agent.
(k) The fees and expenses to be incurred in connection
with the Transaction and the financing thereof shall not
exceed $18,000,000 in the aggregate, in the event that
Borrower Notes are issued or $23,000,000, in the
aggregate, in the event that Senior Subordinated Notes
are issued.
.
(l) The Lenders shall have received a satisfactory
solvency opinion from an independent valuation firm
reasonably satisfactory to the Administrative Agent that
shall document the solvency of the Borrower and its
subsidiaries after giving effect to the Transaction and
the other transactions contemplated hereby.
(m) The Lenders shall have received such legal opinions
(including opinions (i) from counsel to the Borrower and
its subsidiaries, (ii) delivered to Newco by counsel to
BancTec, accompanied by reliance letters in favor of the
Lenders as reasonably available and (iii) from such
special and local counsel as may be required by the
Administrative Agent, and such other documents as are
customary for transactions of this type or as they may
reasonably request.
On-Going Conditions: The making of each extension of credit shall be
conditioned upon (a) the accuracy of all representations
and warranties in the Credit Documentation (including,
without limitation, the material adverse change and
litigation representations) and (b) there being no
default or event of default in existence at the time of,
or after giving effect to the making of, such extension
of credit. As used herein and in the Credit
Documentation a "material adverse change" shall mean any
event, development or circumstance that has had or could
reasonably be expected to have a material adverse effect
on (a) the Transactions, (b) the business, property,
operations, condition (financial or otherwise) or
prospects of the Borrower and its subsidiaries taken as a
whole or (c) the validity or enforceability of any of the
Credit Documentation.
VI. Certain Documentation Matters
-----------------------------
9
The Credit Documentation shall contain representations,
warranties, covenants and events of default customary for
financings of this type and other terms deemed
appropriate by the Lenders, including, without
limitation:
Representations and
Warranties: Financial statements (including pro forma financial
statements); absence of material undisclosed liabilities;
no material adverse change; corporate existence;
compliance with law; corporate power and authority;
enforceability of Credit Documentation; no conflict with
law or contractual obligations; no material litigation;
no default; ownership of property; liens; intellectual
property; no material burdensome restrictions; taxes;
Federal Reserve regulations; ERISA; Investment Company
Act; subsidiaries; environmental matters; solvency; labor
matters; year 2000 matters; accuracy of disclosure in all
material respects; and creation and perfection of
security interests.
Affirmative Covenants: Delivery of financial statements, reports, accountants'
letters, projections, officers' certificates and other
information reasonably requested by the Lenders; payment
of other material obligations; continuation of business
and maintenance of existence and material rights and
privileges; compliance with laws and material contractual
obligations; maintenance of property and insurance;
maintenance of books and records; right of the Lenders to
inspect property and books and records; notices of
defaults, litigation and other material events;
compliance in all material respects with environmental
laws; further assurances (including, without limitation,
with respect to security interests in after-acquired
property); and agreement to obtain, within a period
following the Closing Date to be agreed upon, interest
rate protection for a portion of the Credit Facilities on
terms and conditions satisfactory to the Administrative
Agent.
Financial Covenants: Financial covenants (including, without limitation, an
asset coverage ratio, a minimum interest coverage ratio,
a fixed charge coverage ratio and a maximum leverage
ratio).
Negative Covenants: Limitations on (with exceptions to be agreed upon with
respect to): indebtedness; liens; guarantee obligations;
mergers, consolidations, liquidations and dissolutions;
sales of assets; leases; dividends and other payments in
respect of capital
10
stock; capital expenditures; investments, loans and
advances; optional payments and modifications of
subordinated and other debt instruments; transactions
with affiliates; sale and leasebacks; changes in fiscal
year; negative pledge clauses; and changes in lines of
business.
Events of Default: Nonpayment of principal when due; nonpayment of interest,
fees or other amounts after a grace period to be agreed
upon; material inaccuracy of representations and
warranties; violation of covenants (subject, in the case
of certain affirmative covenants, to a grace period to be
agreed upon); cross-default (subject to a threshold to be
agreed upon); bankruptcy events; certain ERISA events;
material judgments; actual or asserted invalidity of any
guarantee or security document, subordination provisions
or security interest; and a change of control (the
definition of which is to be agreed upon).
Voting: Amendments and waivers with respect to the Credit
Documentation shall require the approval of Lenders
holding not less than a majority of the aggregate amount
of the Credit Facilities, except that (a) the consent of
each Lender directly affected thereby shall be required
with respect to (i) reductions in the amount or
extensions of the scheduled date of amortization or final
maturity of any Loan, (ii) reductions in the rate of
interest or any fee or extensions of any due date thereof
and (iii) increases in the amount or extensions of the
expiry date of any Lender's commitment and (b) the
consent of 100% of the Lenders shall be required with
respect to (i) modifications to any of the voting
percentages and (ii) releases of all or substantially all
of the Guarantors or all or substantially all of the
collateral. In addition, "class" voting requirements will
apply to modifications affecting certain payment matters.
Assignments
and Participations: The Lenders shall be permitted to assign and sell
participations in their Loans and commitments, subject,
in the case of assignments (other than to another Lender
or to an affiliate of a Lender), to the consent of the
Administrative Agent and the Borrower (which consent in
each case shall not be unreasonably withheld). Non-pro
rata assignments shall be permitted. In the case of
partial assignments (other than to
11
another Lender or to an affiliate of a Lender), the
minimum assignment amount shall be $5,000,000 unless
otherwise agreed by the Borrower and the Administrative
Agent. Participants shall have the same benefits as the
Lenders with respect to yield protection and increased
cost provisions. Voting rights of participants shall be
limited to those matters with respect to which the
affirmative vote of the Lender from which it purchased
its participation would be required as described under
"Voting" above. Pledges of Loans in accordance with
applicable law shall be permitted without restriction.
Promissory notes shall be issued under the Credit
Facilities only upon request.
Yield Protection: The Credit Documentation shall contain customary
provisions (a) protecting the Lenders against increased
costs or loss of yield resulting from changes in reserve,
tax, capital adequacy and other requirements of law and
from the imposition of or changes in withholding or other
taxes and (b) indemnifying the Lenders for "breakage
costs" incurred in connection with, among other things,
any prepayment of a Eurodollar Loan (as defined in Annex
I) on a day other than the last day of an interest period
with respect thereto with the foregoing subject to the
right of the Borrower to replace any Lender who has
incurred material increased costs.
Expenses and
Indemnification: The Borrower shall pay (a) all reasonable out-of-pocket
expenses of the Administrative Agent and the Arranger
associated with the syndication of the Credit Facilities
and the preparation, execution, delivery and
administration of the Credit Documentation and any
amendment or waiver with respect thereto (including the
reasonable fees, disbursements and other charges of
counsel) and (b) all out-of-pocket expenses of the
Administrative Agent and the Lenders (including the fees,
disbursements and other charges of counsel) in connection
with the enforcement of the Credit Documentation.
The Administrative Agent, the Arranger and the Lenders
(and their affiliates and their respective officers,
directors, employees, advisors and agents) will have no
liability for, and will be indemnified and held harmless
against, any losses, claims, damages, liabilities or
expenses incurred in respect of the financing
contemplated hereby or the use or the proposed
12
use of proceeds thereof, except to the extent they are
found by a final, non-appealable judgment of a court
to arise from the gross negligence or willful
misconduct of the indemnified party.
Governing Law and Forum: State of New York.
Counsel to the
Administrative Agent
and the Arranger: Simpson Thacher & Bartlett.
Annex I
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Interest and Certain Fees
-------------------------
Interest Rate Options: The Borrower may elect that the Loans comprising
each borrowing bear interest at a rate per annum
equal to:
the ABR plus the Applicable Margin; or
the Eurodollar Rate plus the Applicable
Margin.
As used herein:
"ABR" means the highest of (i) the rate of
---
interest publicly announced by Chase as its prime
rate in effect at its principal office in New York
City (the "Prime Rate") and (ii) the federal funds
----------
effective rate from time to time plus 0.5%.
"Applicable Margin" means (a) in the case of ABR
-----------------
Loans (as defined below), 1.75%, and (b) in the
case of Eurodollar Loans (as defined below),
2.75%. The foregoing margins shall be subject to
change following the six month anniversary of the
Closing Date in accordance with a pricing grid to
be determined based on the ratio of Total Debt to
EBITDA and provided that no event of default has
occurred and is continuing.
"Eurodollar Rate" means the rate (adjusted for
---------------
statutory reserve requirements for eurocurrency
liabilities) for eurodollar deposits for a period
equal to one, two, three or six months (as
selected by the Borrower) appearing on Page 3750
of the Dow Jones Markets screen.
Interest Payment Dates: In the case of Loans bearing interest based upon
the ABR ("ABR Loans"), quarterly in arrears.
---------
In the case of Loans bearing interest based upon
the Eurodollar Rate ("Eurodollar Loans"), on the
----------------
last day of each relevant interest period and, in
the case of any interest period longer than three
months, on each successive date three months after
the first day of such interest period.
2
Commitment Fees: The Borrower shall pay a commitment fee calculated at the
rate of 2 of 1% per annum on the average daily unused
portion of the Revolving Facility, payable quarterly in
arrears. The commitment fee rate shall be subject to
change after the six month anniversary of the Closing
Date in accordance with a pricing grid to be determined
based on the ratio of Total Debt to EBITDA and provided
that no event of default has occurred and is continuing.
Letter of Credit Fees: The Borrower shall pay a fee on all outstanding Letters
of Credit at a per annum rate equal to the Applicable
Margin then in effect with respect to Eurodollar Loans on
the average daily undrawn face amount of each such Letter
of Credit. Such fee shall be shared ratably among the
Lenders participating in the Revolving Facility and shall
be payable quarterly in arrears.
A fronting fee equal to 0.125% per annum on the average
daily undrawn 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, amendment, payment and negotiation charges
shall be payable to the Issuing Lender for its own
account.
Default Rate: At any time when the Borrower is in default in the
payment of any amount of principal due under the Credit
Facilities, all outstanding Loans shall bear interest at
2% above the rate otherwise applicable thereto. Overdue
interest, fees and other amounts shall bear interest at
2% above the rate applicable to ABR Loans.
Rate and Fee Basis: All per annum rates shall be calculated on the basis of a
year of 360 days (or 365/366 days, in the case of ABR
Loans the interest rate payable on which is then based on
the Prime Rate) for actual days elapsed.
Annex II
--------
Sources and Uses Table
----------------------
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($ in millions)
SOURCES USES
- ------- ----
Cash from BancTec $ 14.7 Purchase Price for Shares and $369.5
Options in BancTec (including
Retained Shares)
Term Loans 75.0 Financing Fees--Chase 3.1
Financing Fees--WCAS 6.0
Working Capital Revolver 3.2 Transaction Expenses 7.5
Senior Subordinated Notes 160.0 Refinancing for Existing Debt 6.3
Common Equity (including any
Retained Shares) 145.0 Severance Trust 5.5
------ ------
Total Sources $397.9 Total Uses $397.9
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