1
EXHIBIT 4.1
NATIONSBANK, N.A.
NATIONSBANC MONTGOMERY SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
April 5, 1999
Fremont Investors I, LLC
Fifty Fremont Street, Suite 3700
San Francisco, CA 94105
Attention: Mark N. Williamson
Re: $125,000,000 Senior Secured Credit Facilities
Commitment Letter
Ladies and Gentlemen:
You have advised NationsBank, N.A. ("NATIONSBANK"), NationsBanc Montgomery
Securities LLC ("NMS") and Credit Suisse First Boston ("CSFB") that Fremont
Investors I, LLC or one of its affiliates (the "BUYER") intends to invest in a
leveraged recapitalization (the "TRANSACTION") of Juno Lighting, Inc. (the
"BORROWER"), as more specifically described in the Sources and Uses Table
attached hereto as Schedule I, with the respective amounts expended in
connection therewith being set forth therein. References herein to the
"Transaction" shall include the financing described herein, and all other
transactions related to the Transaction.
You have also advised NationsBank, NMS and CSFB that you propose to finance the
Transaction, the related premiums, fees and expenses and the ongoing general
corporate needs of the Borrower and its subsidiaries after completion of the
Transaction from the following sources: (a) not less than $106 million in common
and preferred equity on terms to be agreed upon by you and us (the "EQUITY
FINANCING"), (b) approximately $90.5 million from senior credit facilities (the
"SENIOR CREDIT FACILITIES") of the Borrower comprised of term loan facilities
aggregating $90 million (the "TERM LOAN FACILITIES") and a $35 million revolving
credit facility (the "REVOLVING CREDIT FACILITY"), (c) at least $125 million in
gross proceeds from the Borrower's issuance of senior subordinated unsecured
notes (the "SENIOR SUBORDINATED NOTES") and (d) existing cash balances of the
Borrower. The Revolving Credit Facility will also be used to finance the
continuing operations of the Borrower and its subsidiaries after consummation of
the Transaction.
In connection with the foregoing and upon and subject to the terms and
conditions of this letter and the Summary of Terms and Conditions attached
hereto as Exhibit A (the "TERM SHEET"), (a) NationsBank is pleased to advise you
of its commitment (this letter being the "COMMITMENT LETTER") to provide
$81,250,000 of the Senior Credit Facilities, and (b) CSFB is pleased to advise
you of its commitment to provide $43,750,000 of the Senior Credit Facilities.
The commitments of NationsBank and CSFB are several and shall be allocated
ratably among the Senior Credit Facilities. NMS is pleased to advise you of its
willingness to form a syndicate of financial institutions (the "LENDERS")
reasonably acceptable to you, NationsBank and CSFB for the Senior Credit
Facilities.
NationsBank will act as the sole and exclusive administrative agent (in such
capacity, the "ADMINISTRATIVE AGENT") for the Senior Credit Facilities. NMS will
act as the sole and exclusive lead arranger and book manager for the Senior
Credit Facilities. CSFB will be named as syndication agent (the "SYNDICATION
AGENT") for the Senior Credit Facilities. No additional agents, co-agents or
arrangers will be appointed and no other titles will be awarded without the
prior written approval of NationsBank, NMS and CSFB.
NMS will syndicate and arrange the Senior Credit Facilities, in consultation
with CSFB. You agree to take reasonable steps to actively assist, and to cause
the Borrower to assist, NMS in achieving a syndication of
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Fremont Investors I, LLC
April 5, 1999
Page 2
the Senior Credit Facilities that is reasonably satisfactory to NMS and CSFB.
Such assistance by you and the Borrower shall include (a) your providing and
causing your advisors to provide NMS, NationsBank, CSFB and the other Lenders
upon request with all information reasonably deemed necessary by NMS to complete
syndication, including, but not limited to, information and evaluations prepared
by the Buyer, the Borrower and their advisors, or on their behalf, relating to
the Transaction; (b) assistance in the preparation of an Offering Memorandum to
be used in connection with the syndication; (c) your using commercially
reasonable efforts to ensure that the syndication efforts benefit materially
from existing lending relationships of the Buyer and the Borrower; and (d)
otherwise assisting NMS in its syndication efforts, including by making senior
management and advisors of the Buyer, the Borrower and its subsidiaries
available from time to time on reasonable notice to attend and make
presentations regarding the business and prospects of the Borrower and its
subsidiaries, as appropriate, at one or more meetings of prospective Lenders.
It is understood and agreed that NationsBank and NMS, after consultation with
CSFB and you, will manage and control all aspects of the syndication, including
decisions as to the selection of proposed Lenders and any titles offered to
proposed Lenders, when commitments will be accepted and the final allocations of
the commitments among the Lenders. It is understood that no Lender participating
in the Senior Credit Facilities will receive compensation from you in order to
obtain its commitment, except on the terms contained herein and in the Term
Sheet. It is also understood and agreed that the amount and distribution of the
fees among the Lenders will be at NMS's sole discretion and that any syndication
prior to execution of the definitive documentation for the Senior Credit
Facilities will reduce ratably the commitments of NationsBank and CSFB.
In the event that such syndication cannot be achieved in a manner satisfactory
to NationsBank and NMS under the structure outlined in the Term Sheet, you agree
that NationsBank and NMS shall be entitled, in consultation with CSFB and you,
to change the pricing (exclusive of the fees provided for in the Fee Letter, as
later defined herein), structure or other terms of the Senior Credit Facilities
if NationsBank and NMS determine that such changes are advisable to achieve a
syndication that is reasonably satisfactory to NationsBank and NMS, provided
that (i) the total amount of the Senior Credit Facilities remains unchanged,
(ii) interest rates on the Senior Credit Facilities shall not be increased by
more than 0.25% over the applicable percentages as shown in the attached Term
Sheet, (iii) the maturity and amortization schedule of the Senior Credit
Facilities as set forth in the attached Term Sheet shall not be changed in such
a manner which shall materially restrict the Borrower's operational flexibility,
(iv) the financial covenant ratios contained in the Credit Agreement signed at
closing shall not be made materially more restrictive after closing, and (v) the
pricing, terms and structure of the Senior Credit Facilities are reasonably
consistent with comparable syndications occurring in the market. The agreement
in this paragraph shall survive closing of the Senior Credit Facilities.
The commitments of NationsBank and CSFB hereunder and the agreement of NMS to
provide the services described herein are subject to the agreement in the
preceding paragraph and the satisfaction of each of the following conditions
precedent in a manner acceptable to each of NMS, NationsBank and CSFB in their
sole discretion: (a) each of the terms and conditions set forth herein and in
the Term Sheet; (b) the proceeds from the Senior Subordinated Notes, the Equity
Financing, and the cash balances of the Borrower at the closing of the Senior
Credit Facilities, together with approximately $91 million from the Senior
Credit Facilities, shall be sufficient to finance the Transaction; (c) the
absence of a material breach of any representation, warranty or agreement of the
Buyer set forth herein; (d) execution by the Buyer and the Borrower and/or other
appropriate parties of a definitive purchase agreement and other related
documentation for the Transaction (collectively, the "TRANSACTION DOCUMENTS"),
which Transaction Documents shall be in form and substance reasonably
satisfactory to NMS, NationsBank and CSFB; (e) NMS, NationsBank and CSFB shall
be satisfied that prior to and during the syndication of the Senior Credit
Facilities there shall be no competing offering, placement or arrangement of any
debt securities or bank financing by or on behalf of the Borrower (other than
the Senior Subordinated Notes described herein); (f) the negotiation, execution
and delivery of definitive documentation for the Senior Credit Facilities
consistent with the Term Sheet and otherwise reasonably satisfactory to NMS,
NationsBank and CSFB (the "CREDIT AGREEMENT DOCUMENTS"); (g) no material adverse
change in or material disruption of conditions in
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April 5, 1999
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the financial, banking or capital markets which NMS, NationsBank or CSFB, in
their reasonable discretion, deem material in connection with the syndication of
the Senior Credit Facilities shall have occurred and be continuing; (h) no
change, occurrence or development that could, in the reasonable opinion of NMS,
NationsBank or CSFB, have a material adverse effect on the business, assets,
liabilities (actual or contingent), operations, condition (financial or
otherwise) or prospects of the Borrower and its subsidiaries taken as a whole,
shall have occurred or become known to NMS, NationsBank or CSFB; and (i) NMS,
NationsBank and CSFB not becoming aware after the date hereof of any information
or other matter which in any of their judgment is inconsistent in a material and
adverse manner with any information or other matter disclosed to any of them
prior to the date hereof (in which case NMS may, in its sole discretion, suggest
alternative financing amounts or structures that ensure adequate protection for
the Lenders or terminate this letter and any commitment or undertaking
hereunder).
You hereby represent, warrant and covenant that (a) to your knowledge, all
information, other than the Projections (defined below), which has been or is
hereafter made available to NMS, NationsBank, CSFB or the Lenders by you or any
of your repres.entatives in connection with the transactions contemplated hereby
(the "INFORMATION") is and, as of its date, will be complete and correct in all
material respects and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein not misleading, and (b) all financial projections concerning
the Borrower and its subsidiaries that have been or are hereafter made available
to NMS, NationsBank, CSFB or the Lenders by you or any of your representatives
(the "PROJECTIONS") have been or will be prepared in good faith based upon
assumptions you believe to be reasonable. You agree to furnish NMS, NationsBank
and CSFB with such Information and Projections as they may reasonably request
(including due diligence investigations of the Borrower prepared by accountants
and advisors of the Buyer to the extent permitted by such accountants and
advisors) and to supplement the Information and the Projections from time to
time until the closing date for the Senior Credit Facilities so that the
representation, warranty and covenant in the preceding sentence is correct on
such closing date. You understand that in arranging and syndicating the Senior
Credit Facilities, NationsBank, NMS and CSFB will be using and relying on the
Information and the Projections without independent verification thereof. We
acknowledge that the Projections are subject to significant contingencies and
uncertainties, many of which are beyond your control, and that there can be no
assurance that the Projections will be realized.
By acceptance of this offer, you agree to pay all reasonable out-of-pocket fees
and expenses (including the reasonable fees and expenses of Jones, Day, Reavis &
Pogue, counsel for the Administrative Agent and the Syndication Agent, and due
diligence expenses) incurred before or after the date hereof by NMS, NationsBank
and CSFB in connection with the Senior Credit Facilities, the syndication
thereof and the other transactions contemplated hereby; provided, however, that
the aggregate fees and expenses incurred before March 26, 1999, shall not exceed
$6,500 for NMS and NationsBank and $3,500 for CSFB.
You agree to indemnify and hold harmless NationsBank, NMS, CSFB and each of
their respective affiliates and their respective directors, officers, employees,
advisors and agents (each, an "INDEMNIFIED PARTY") from and against (and will
reimburse each Indemnified Party as the same are incurred) any and all losses,
claims, damages, liabilities, and expenses (including, without limitation, the
reasonable fees and expenses of outside counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation of a
defense in connection therewith) (a) the Transaction or any similar transaction
and any of the other transactions contemplated thereby, or (b) the Senior Credit
Facilities or any other financings, or any use made or proposed to be made with
the proceeds thereof (including any arising out of the negligence of any
Indemnified Party), unless and only to the extent that, as to any Indemnified
Party, it shall be determined in a final, non-appealable judgment by a court of
competent jurisdiction that such losses, claims, damages, liabilities or
expenses resulted from the gross negligence or willful misconduct of such
Indemnified Party. In the case of any investigation, litigation or proceeding to
which the indemnity in this paragraph applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by you,
your shareholders or creditors or an Indemnified Party and whether or not the
Transaction is consummated. You agree that no Indemnified
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April 5, 1999
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Party shall have any liability to you or your subsidiaries or affiliates or to
your or their respective security holders or creditors for any indirect or
consequential damages arising out of, related to or in connection with the
Transaction or any of the financings.
The terms of this Commitment Letter, the Term Sheet and the fee letter among
you, NMS, NationsBank and CSFB of even date herewith (the "FEE LETTER") are
confidential and, except for disclosure on a confidential basis to your
accountants, attorneys and other professional advisors retained by you in
connection with the Senior Credit Facilities or as may be required by law, may
not be disclosed in whole or in part to any other person or entity (including
the Borrower) without the prior written consent of NMS, NationsBank and CSFB;
provided, however, it is understood and agreed that you may disclose the terms
of this Commitment Letter and the Term Sheet (but not the Fee Letter) (i) on a
confidential basis to the board of directors and advisors of the Borrower in
connection with their consideration of the Transaction, and (ii) after your
acceptance of this Commitment Letter and the Fee Letter, in filings with the SEC
and other applicable regulatory authorities and stock exchanges, and in proxy
and other materials disseminated to stockholders and other purchasers of
securities of the Borrower.
The provisions of the immediately preceding three paragraphs shall remain in
full force and effect regardless of whether any definitive documentation for the
Senior Credit Facilities shall be executed and notwithstanding the termination
of this Commitment Letter or any commitment or undertaking hereunder; provided,
however, that the Buyer shall be deemed released from its reimbursement and
indemnification obligations hereunder upon the execution of all the Credit
Agreement Documents.
In connection with the services and transactions contemplated hereby, the Buyer
agrees that NationsBank, NMS and CSFB are permitted to access, use and share (on
a confidential basis) with any of their respective bank or non-bank affiliates,
agents, advisors (legal or otherwise) or representatives, any information
concerning the Buyer, the Borrower or any of their respective affiliates that is
or may come into the possession of NationsBank, NMS, CSFB or any of such
affiliates. NationsBank, NMS, CSFB and their respective affiliates will treat
confidential information relating to the Buyer, the Borrower and their
respective affiliates with the same degree of care as they treat their own
confidential information.
This Commitment Letter and the Fee Letter shall be governed by laws of the State
of New York. Each of us hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Commitment Letter, the Term Sheet,
the Fee Letter, the transactions contemplated hereby and thereby or the actions
of NationsBank, NMS and CSFB in the negotiation, performance or enforcement
hereof.
This Commitment Letter supersedes that certain commitment letter dated March 26,
1999, issued by NMS and NationsBank to Fremont Investors I, LLC (the "PRIOR
COMMITMENT LETTER"), and this Commitment Letter, together with the Term Sheet
and the Fee Letter, set forth the entire understanding of the parties with
respect to the Senior Credit Facilities. The Buyer, NMS, and NationsBank hereby
terminate the Prior Commitment Letter and agree that neither NMS, NationsBank
nor Fremont Investors I, LLC shall have any liabilities or obligations
thereunder, including those obligations that expressly survive any termination
of the Prior Commitment Letter. This Commitment Letter may be modified or
amended only by the written agreement of all of the parties hereto. This
Commitment Letter is not assignable by you without the prior written consent of
NMS, NationsBank and CSFB and is intended to be solely for the benefit of the
parties hereto and the Indemnified Parties. Upon execution of a Credit Agreement
by the Borrower, the Buyer shall be released from all obligations hereunder, and
this Commitment Letter shall be of no further force or effect, except to the
extent that the Buyer's obligations hereunder are assumed by the Borrower.
This offer will expire at 5:00 p.m. CST on April 7, 1999 unless you execute this
Commitment Letter and the Fee Letter and return them to NMS prior to that time
(which may be by facsimile transmission), whereupon this Commitment Letter and
the Fee Letter (each of which may be signed in one or more counterparts) shall
become binding agreements. Thereafter, this undertaking and commitment will
expire on the earliest to occur of (a) the closing of the Transaction without
the use of the Senior Credit Facilities, (b) the acceptance
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April 5, 1999
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by the Borrower or any of its affiliates of an offer for all or any substantial
part of the capital stock or assets of the Borrower other than the offer
contemplated hereby, and (c) July 31, 1999, unless definitive documentation for
the Senior Credit Facilities is executed and delivered prior to such date.
THIS WRITTEN AGREEMENT (WHICH INCLUDES THE SUMMARY OF TERMS AND CONDITIONS) AND
THE FEE LETTER REPRESENT 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.
We are pleased to have the opportunity to work with you in connection with this
important financing.
Very truly yours,
NATIONSBANK, N.A.
By:
----------------------------------
Title: Senior Vice President
NATIONSBANC MONTGOMERY SECURITIES LLC
By:
----------------------------------
Title: Principal
CREDIT SUISSE FIRST BOSTON
By:
----------------------------------
Title:
----------------------------------
By:
----------------------------------
Title:
----------------------------------
Accepted and Agreed to
as of ________________, ____:
FREMONT INVESTORS I, LLC
By:
----------------------------------
Title:
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SCHEDULE I
SOURCES AND USES TABLE
The Buyer will invest not less than $106.0 million of equity in the Borrower and
the Borrower will borrow (i) approximately $90.5 million under newly arranged
Senior Credit Facilities in the amount of $125.0 million and (ii) not less than
$125.0 million under newly issued Senior Subordinated Notes. The proceeds, along
with existing cash balances of the Borrower of approximately $107.0 million
shall be applied by the Borrower to (i) purchase approximately $404.9 million of
outstanding capital stock of the Borrower (ii) refinance substantially all
existing debt of the Borrower in the approximate amount of $3.3 million, and
(iii) pay fees and expenses estimated at approximately $20.3 million. Upon
completion of the Transaction, the Buyer will own at least 55% of the capital
stock of the Borrower on a fully diluted basis, with the remainder being held
publicly and by the management of the Borrower.
SOURCES ($ MILLIONS)
- --------------------
Existing Cash Balances $ 107.0
Revolving Credit Facilities (Amount funded at Closing)* 0.5
Tranche A Term Loan Facility 40.0
Tranche B Term Loan Facility 50.0
Senior Subordinated Notes 125.0
Equity Financing 106.0
Existing Equity Rolled 60.0
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Total Sources $488.5
USES ($ MILLIONS)
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Purchase capital stock of Borrower $404.9
Existing Equity Rolled 60.0
Refinance substantially all existing debt of Borrower 3.3
Payment of fees & expenses 20.3
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Total Uses $488.5
- --------------------
* Total amount of Revolving Credit Facility will be $35.0 million.
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EXHIBIT A
JUNO LIGHTING, INC.
SUMMARY OF TERMS AND CONDITIONS
APRIL 5, 1999
Unless otherwise defined herein, capitalized terms shall have the definitions
assigned to them in the Senior Secured Credit Facilities Commitment Letter (the
"COMMITMENT LETTER"), dated of even date herewith, to which this Summary of
Terms and Conditions is attached.
================================================================================
BORROWER: Juno Lighting, Inc. (the "BORROWER").
GUARANTORS: The Senior Credit Facilities (defined
below) shall be guaranteed by each
existing and future direct and
indirect domestic subsidiary of the
Borrower (collectively, the
"GUARANTORS"). All guarantees shall be
guarantees of payment and not of
collection.
ADMINISTRATIVE AGENT: NationsBank, N.A. (the
"ADMINISTRATIVE AGENT" or
"NATIONSBANK") will act as sole and
exclusive administrative and
collateral agent. As such,
NationsBank, in consultation with
CSFB, will negotiate with the
Borrower, act as the primary contact
for the Borrower and perform all other
duties associated with the role of
exclusive Administrative Agent.
LEAD ARRANGER
AND BOOK
MANAGER: NationsBanc Montgomery Securities LLC
("NMS").
SYNDICATION AGENT: Credit Suisse First Boston ("CSFB" or
the "SYNDICATION AGENT").
LENDERS: A syndicate of financial institutions
(including NationsBank and CSFB)
arranged by NMS in consultation with
CSFB, which institutions shall be
reasonably acceptable to the Borrower
and the Administrative Agent
(collectively, the "LENDERS").
SENIOR CREDIT
FACILITIES: An aggregate principal amount of up to
$125 million will be available upon
the terms and conditions hereinafter
set forth:
Revolving Credit Facility: $35 million
revolving credit facility (the
"REVOLVING CREDIT FACILITY"), which
will include a sublimit for the
issuance of standby and commercial
letters of credit (each a "LETTER OF
CREDIT") in an amount to be mutually
determined, and a $3 million sublimit
for swingline loans (each a "SWINGLINE
LOAN"). Letters of Credit will be
issued by NationsBank (in such
capacity, the "FRONTING BANK"), and
Swingline Loans will be made available
by NationsBank, and each Lender will
purchase an irrevocable and
unconditional participation in each
Letter of Credit.
Tranche A Term Loan Facility: $40
million term loan facility (the
"TRANCHE A TERM FACILITY").
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Tranche B Term Loan Facility: $50
million term loan facility (the
"TRANCHE B TERM FACILITY" and,
together with the Tranche A Term
Facility, the "TERM LOAN FACILITIES").
The Revolving Credit Facility and the
Term Loan Facilities are collectively
referred to herein as the "SENIOR
CREDIT FACILITIES".
SWINGLINE OPTION: Swingline Loans will be made available
by the Administrative Agent on a same
day basis in an aggregate amount not
exceeding $3 million. The
Administrative Agent, in its sole
discretion, may make Revolving Credit
Loans to repay Swingline Loans. Each
Lender will agree to provide its pro
rata portion of Revolving Credit Loans
if so requested by the Administrative
Agent, regardless of the existence of
any default or event of default.
PURPOSE: The proceeds of the Senior Credit
Facilities shall be used: (i) to
refinance the outstanding principal
amount of existing indebtedness of the
Borrower and its subsidiaries; (ii) to
purchase approximately 16.2 million
shares of the Borrower's capital stock
pursuant to the Transaction Documents
(defined below); (iii) to pay fees and
expenses incurred in connection with
the Transaction; and (iv) to provide
for working capital and other general
corporate purposes of the Borrower and
its subsidiaries.
CLOSING: The execution of definitive loan
documentation, to occur on or before
July 31, 1999 but no earlier than six
weeks following the Buyer's acceptance
of the Commitment Letter ("CLOSING").
INTEREST RATES: As set forth in Addendum I.
MATURITY: The Revolving Credit Facility shall
terminate and all amounts outstanding
thereunder shall be due and payable in
full six years from Closing.
The Term Loan Facilities shall be
subject to repayment according to the
Scheduled Amortization, with the final
payment of all amounts outstanding
thereunder being due and payable in
full six years from Closing for the
Tranche A Term Facility and seven
years from Closing for the Tranche B
Term Facility.
AVAILABILITY: Revolving Credit Facility: Loans under
the Revolving Credit Facility (the
"REVOLVING CREDIT LOANS") (including
Swingline Loans) may be made, and
Letters of Credit may be issued, on a
revolving basis up to the full amount
of the Revolving Credit Facility.
Term Loan Facilities: Loans made under
the Tranche A Term Facility ("TRANCHE
A TERM LOANS") and loans made under
the Tranche B Term Facility ("TRANCHE
B TERM LOANS") will be available in a
single borrowing at Closing. The Term
Loan Facilities will be subject to
quarterly amortization of principal,
based upon the annual amounts set
forth below (the "SCHEDULED
AMORTIZATION").
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Tranche A Tranche B
Loan year 1 $ 3,000,000 $ 500,000
Loan year 2 $ 5,000,000 $ 500,000
Loan year 3 $ 6,000,000 $ 500,000
Loan year 4 $ 8,000,000 $ 500,000
Loan year 5 $ 8,000,000 $ 500,000
Loan year 6 $ 10,000,000 $ 500,000
Loan year 7 -- $ 47,000,000
Total $ 40,000,000 $ 50,000,000
SECURITY: Concurrently with the Transaction, the
Administrative Agent (on behalf of the
Lenders) shall receive a first
priority perfected security interest
in (i) all of the capital stock of the
Borrower owned by the Buyer, all
capital stock of each of the domestic
subsidiaries (direct or indirect) of
the Borrower owned by a domestic
company and 65% of the capital stock
of each foreign subsidiary (direct or
indirect) of the Borrower owned by a
domestic company, which capital stock
shall not be subject to any other lien
or encumbrance; and (ii) all other
present and future domestic assets and
properties of the Borrower and its
domestic subsidiaries (including,
without limitation, accounts
receivable, inventory, real property,
machinery, equipment, contracts,
trademarks, copyrights, patents,
license rights and general
intangibles).
The priority of the lien and security
interest of the Administrative Agent
shall be supported by such landlord
and mortgagee waivers, warehousemen
and bailee letters, material third
party consents, intercreditor
agreements and other agreements as
shall be reasonably requested by the
Administrative Agent, in each case in
form and substance reasonably
satisfactory to the Administrative
Agent.
The foregoing security shall ratably
secure the Senior Credit Facilities
and any interest rate swap/foreign
currency swap or similar agreements
with a Lender or its affiliates under
the Senior Credit Facilities.
MANDATORY PREPAYMENTS
AND COMMITMENT
REDUCTIONS: In addition to the Scheduled
Amortization, the Senior Credit
Facilities will be prepaid by an
amount equal to (i) 100% of the net
cash proceeds of all asset sales by
the Borrower or any subsidiary of the
Borrower (including sales of stock of
subsidiaries), subject to de minimus
baskets and reinvestment provisions to
be agreed upon and net of selling
expenses and taxes to the extent such
taxes are paid; (ii) 75% (if the
Funded Debt to EBITDA Ratio (to be
defined in the loan documentation) is
equal to or greater than 3.75:1.00.)
or 50% (if the Funded Debt to EBITDA
Ratio is less than 3.75:1.00) of
Excess Cash Flow (to be defined in the
loan documentation); (iii) 100% of the
net cash proceeds from the issuance of
any debt (excluding certain permitted
debt to be agreed upon) by the
Borrower or any subsidiary of the
Borrower; and (iv) 100% of the net
cash proceeds from the issuance of
equity by the Borrower or any
subsidiary of the Borrower, with
certain exceptions to be mutually
agreed upon. Prepayments
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shall be applied pro rata to reduce
the Tranche A Term Loans and the
Tranche B Term Loans and within each
tranche pro rata with respect to each
remaining installment of principal.
Lenders holding the Tranche B Term
Loans may, so long as there is a
principal balance outstanding with
respect to the Tranche A Term Loans,
decline to accept any mandatory
prepayment described above and, under
such circumstances, all amounts that
would otherwise be used to prepay
Tranche B Term Loans above shall be
used to prepay Tranche A Term Loans.
In the event that the Term Loan
Facilities shall have been fully
repaid, the mandatory prepayments
described above shall be applied to
the Revolving Credit Facility (without
any corresponding commitment
reductions except in the case of
prepayments pursuant to clause (i)
above).
OPTIONAL PREPAYMENTS
AND COMMITMENT
REDUCTIONS: The Borrower may prepay the Senior
Credit Facilities in whole or in part
at any time without penalty, subject
to reimbursement of the Lenders'
breakage and redeployment costs in the
case of prepayment of LIBOR
borrowings. Prepayments shall be
applied pro rata to reduce the Tranche
A Term Loans and the Tranche B Term
Loans and within each tranche pro rata
with respect to each remaining
installment of principal. The
unutilized portion of any commitment
under the Senior Credit Facilities in
excess of the Swingline Loans and the
stated amount of all Letters of Credit
may be irrevocably canceled in whole
or in part.
CONDITIONS
PRECEDENT TO
CLOSING: The Closing (and the initial funding)
of the Senior Credit Facilities will
be subject to satisfaction of the
conditions precedent deemed
appropriate by the Administrative
Agent, the Syndication Agent and the
Lenders for leveraged financings
generally and for this transaction in
particular, including, but not limited
to, the following:
(i) Concurrent Transactions;
Documentation. The Equity
Financing and the Senior
Subordinated Notes shall have
been issued on terms reasonably
satisfactory to the
Administrative Agent and the
Syndication Agent pursuant to
definitive documentation in form
and substance reasonably
satisfactory to the
Administrative Agent and the
Syndication Agent. The
Transaction shall have been
consummated on terms reasonably
satisfactory to the
Administrative Agent and the
Syndication Agent pursuant to
the Transaction Documents, and
all conditions precedent to the
consummation of the Transaction
Documents shall have been
satisfied or, with the prior
approval of the Administrative
Agent and the Syndication Agent,
waived. The Borrower and the
Guarantors shall have entered
into the Credit Agreement
Documents in form and substance
reasonably satisfactory to the
Administrative Agent, the
Syndication Agent and the
Lenders, and all conditions
precedent to the initial
borrowings shall have been
satisfied.
(ii) Capitalization; Etc. After
giving effect to the
Transaction, the Administrative
Agent and the Syndication Agent
shall be reasonably satisfied
with the corporate, capital and
ownership
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structure (including articles of
incorporation and by-laws),
stockholders' agreements and
management of the Borrower and
its subsidiaries.
Notwithstanding the foregoing
(a) at Closing, the Borrower
shall have not less than $33
million of availability under
the Revolving Credit Facility,
and (b) the Borrower's pro forma
ratio of total debt/EBITDA shall
not exceed 5.20 to 1.00 (based
upon the Borrower's pro-forma
total debt and trailing 12 month
EBITDA as set forth in the pro
forma financial statements to be
delivered pursuant to (iii) (c)
and (d) below).
(iii) Financial Statements. The
Administrative Agent and the
Syndication Agent shall have
received (a) audited financial
statements of the Borrower and
its subsidiaries for its most
recent three fiscal years, (b)
the most recent unaudited
quarterly financial statements
of the Borrower and its
subsidiaries, (c) an unaudited
pro forma balance sheet of the
Borrower and its subsidiaries
which gives effect to the
Transaction as if it had
occurred on the last day of the
most recently completely fiscal
quarter of the Borrower and its
subsidiaries, and (d) an
unaudited pro forma income
statement of the Borrower and
its subsidiaries (including a
calculation of EBITDA) which
gives effect to the Transaction
for the trailing 12 months of
operations ending on the most
recently completed fiscal
quarter end of the Borrower and
its subsidiaries. All financial
statements shall be prepared in
accordance with the requirements
of Regulation S-X under the
Securities Act of 1933, as
amended, applicable to a
Registration Statement under
such Act on Form S-1.
(iv) Solvency. The Administrative
Agent and the Syndication Agent
shall have received
certification as to the
financial condition and solvency
of the Borrower and its
subsidiaries after giving effect
to the Transaction, from an
independent firm satisfactory to
the Agent.
(v) Other Obligations. On or prior
to Closing, (a) all fees and
expenses due and payable to NMS,
NationsBank, the Syndication
Agent, any other Lender and/or
their affiliates pursuant to the
Commitment Letter, the Fee
Letter or otherwise shall have
been paid in full as
contemplated therein, and (b)
the Borrower and the Buyer shall
have complied with all of their
obligations under the Commitment
Letter and the Fee Letter, and
each such letter shall be in
full force and effect.
(vi) Consents. All governmental,
shareholder and third-party
consents (including
Hart-Scott-Rodino clearance) and
approvals necessary or desirable
in connection with the
Transaction and the other
transactions contemplated hereby
shall have been obtained; all
such consents and approvals
shall be in full force and
effect; and all applicable
waiting periods shall have
expired without any action being
taken by any authority that
could restrain, prevent or
impose any material adverse
conditions on the Transaction or
such other transactions or that
could seek or threaten any of
the foregoing.
(vii) Judgments, Etc. There shall not
exist (a) any order, decree,
judgment, ruling or injunction
which restrains the consummation
of the Transaction in the manner
contemplated by the
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Transaction Documents and (b)
any pending or threatened
action, suit, investigation or
proceeding which, if adversely
determined, could reasonably be
expected to materially adversely
affect the ability of the
Borrower or the Guarantors to
perform any of their respective
obligations under the Credit
Agreement Documents or the
ability of the Lenders to
exercise their rights
thereunder.
(viii)Opinions, Etc. The
Administrative Agent and the
Syndication Agent shall have
received (a) satisfactory
opinions of counsel to the
Borrower and the Guarantors
(which shall cover, among other
things, authority, legality,
validity, binding effect and
enforceability of the Credit
Agreement Documents) and such
corporate resolutions,
certificates, and other
documents as the Administrative
Agent shall reasonably require
and (b) satisfactory evidence
that the Administrative Agent
holds a perfected, first
priority lien in all collateral
for the Senior Credit
Facilities, subject to no other
liens except for permitted liens
to be determined.
(ix) Other Reports. The
Administrative Agent and the
Syndication Agent shall have
received, in form and substance
reasonably satisfactory to it,
all environmental reports, Year
2000 questionnaires, field
audits, and such other reports,
audits or certifications and is
it may reasonably request.
REPRESENTATIONS AND
WARRANTIES: Usual and customary for leveraged
financings generally and for this
transaction in particular, including,
but not limited to, the following: (i)
corporate existence and status; (ii)
corporate power and
authority/enforceability; (iii) no
violation of law or contracts or
organizational documents; (iv) no
material litigation; (v) correctness
of specified financial statements and
other information and no material
adverse change; (vi) no required
governmental or third party approvals;
(vii) use of proceeds/compliance with
margin regulations; (viii) status
under Investment Company Act; (ix)
ERISA matters; (x) environmental
matters; (xi) perfected liens and
security interests; (xii) payment of
taxes; (xiii) accuracy of disclosure;
(xiv) Year 2000 preparedness; and (xv)
consummation of the Transaction.
COVENANTS: Usual and customary for leveraged
financings generally and for this
transaction in particular, including,
but not limited to, the following: (i)
delivery of financial statements and
other reports; (ii) delivery of
compliance certificates; (iii)
delivery of notices of default,
material litigation and material
governmental and environmental
proceedings; (iv) compliance with laws
(including environmental laws and
ERISA matters) and material
contractual obligations; (v) payment
of taxes; (vi) maintenance of
insurance; (vii) limitation on liens
and negative pledges; (viii)
limitation on mergers, consolidations
and sales of assets; (ix) limitation
on incurrence of debt; (x) limitation
on dividends, stock redemptions and
the redemption and/or prepayment of
other debt; (xi) limitation on
investments (including loans and
advances) and acquisitions; (xii)
limitation on capital expenditures;
(xiii) limitation on transactions with
affiliates; (xiv) satisfactory
interest rate protection, and (xv)
Year 2000 compliance. Each of the
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foregoing shall contain certain
mutually agreed upon exceptions as are
customary for leveraged financings
generally.
Financial covenants to include (but
not be limited to):
- Maintenance on a rolling four
quarter basis of a Maximum
Leverage Ratio (total debt/
EBITDA),
- Maintenance on a rolling four
quarters basis of a Minimum
Interest Coverage Ratio (EBITDA
/ Interest Expense), and
- Maintenance on a rolling four
quarter basis of a Minimum Fixed
Charge Coverage Ratio (EBITDA
less capital expenditures) /
(cash interest expense plus
scheduled principal repayments).
EVENTS OF DEFAULT: Usual and customary for leveraged
financings generally and for this
transaction in particular, including,
but not limited to, the following
(with customary grace periods to be
mutually agreed upon): (i) nonpayment
of principal, interest, fees or other
amounts, (ii) violation of covenants,
(iii) material inaccuracy of
representations and warranties, (iv)
cross-default to other material
agreements and indebtedness, (v)
bankruptcy and other insolvency
events, (vi) material judgments, (vii)
ERISA matters, (viii) actual or
asserted invalidity of any loan
documentation or security interests,
or (ix) change of control of the
Borrower (to be defined).
ASSIGNMENTS AND
PARTICIPATIONS: Each Lender will be permitted to make
assignments in acceptable minimum
amounts to other financial
institutions approved by the Borrower,
which approval shall not be
unreasonably withheld; provided,
however, that the approval of the
Borrower shall not be required in
connection with assignments to other
Lenders or any of their affiliates.
Lenders will be permitted to sell
participations with voting rights
limited to significant matters such as
changes in amount, rate and maturity
date and releases of all or
substantially all of the collateral
and the Guarantors. An assignment fee
of $3,500 shall be payable by the
Lender to the Administrative Agent
upon the effectiveness of any such
assignment (including, but not limited
to, an assignment by a Lender to any
other Lender).
WAIVERS AND
AMENDMENTS: Amendments and waivers of the
provisions of the loan agreement and
other definitive credit documentation
will require the approval of Lenders
holding loans and commitments
representing more than 50% of the
aggregate amount of loans and
commitments under the Senior Credit
Facilities, except that (i) the
consent of all of the Lenders affected
thereby shall be required with respect
to (a) increases in the commitment of
such Lenders, (b) reductions of
principal, interest, or fees, (c)
extensions of scheduled maturities or
times for payment, (d) releases of all
or substantially all of the
collateral, and (e) releases of all or
substantially all of the Guarantors,
and (ii) the consent of the Lenders
holding at least 50% each of the
Tranche A Term Facility and the
Tranche B Term Facility shall be
required with respect to any amendment
that changes the allocation of any
payments between the Term Loan
Facilities.
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INDEMNIFICATION: The Borrower shall indemnify the
Administrative Agent, NMS, CSFB and
the Lenders and their respective
affiliates from and against all
losses, liabilities, claims, damages
or expenses arising out of or relating
to the Transaction, the Senior Credit
Facilities, the Borrower's use of loan
proceeds or the commitments,
including, but not limited to,
reasonable attorneys' fees and
settlement costs (subject to customary
qualifications to be mutually agreed
upon).
GOVERNING LAW: New York
FEES/EXPENSES: As set forth in Addendum I.
OTHER: This Summary of Terms and Conditions
is intended as an outline of certain
of the material terms of the
Transaction and the Senior Credit
Facilities and does not purport to
summarize all of the conditions,
covenants, representations, warranties
and other provisions which would be
contained in definitive legal
documentation for the Senior Credit
Facilities contemplated hereby. The
Borrower and each Guarantor shall each
waive its right to a trial by jury.
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ADDENDUM I
JUNO LIGHTING, INC.
INTEREST RATES, FEES AND EXPENSES
APRIL 5, 1999
COMMITMENT FEE The Borrower will pay a per annum fee
(the "COMMITMENT FEE") on the unused
portion of the Senior Credit
Facilities at an applicable percentage
as set forth in the Pricing Grid
below. The Commitment Fee is payable
quarterly in arrears commencing upon
Closing. Swingline Loans will not be
deemed to be utilized for purposes of
calculating the Commitment Fee.
INTEREST RATES: The Revolving Credit Facilities
shall bear interest at the Borrower's
option of (a) LIBOR, or (b) the Base
Rate (to be defined as the higher of
(i) the NationsBank prime rate and
(ii) the Federal Funds rate plus
.50%); in each case plus an applicable
percentage as set forth in the Pricing
Grid below.
The Borrower may select interest
periods of 1, 2, 3 or 6 months for
LIBOR loans, subject to availability.
Interest shall be payable at the end
of the selected interest period, but
no less frequently than quarterly.
In the event of default under the
Senior Credit Facilities, a default
rate of 2% above the applicable
interest rate shall apply on all
loans.
If during the 30 day period following
the Closing, any breakage costs,
charges or fees are incurred with
respect to LIBOR loans on account of
the syndication of the Senior Credit
Facilities, the Borrower shall
immediately reimburse the
Administrative Agent and the
Syndication Agent for any such costs,
charges or fees. Such right of
reimbursement shall be in addition to
and not in limitation of customary
cost and yield protections.
LETTER OF
CREDIT FEES: The Borrower will pay a per annum fee
(the "LETTER OF CREDIT FEE") on the
amount available to be drawn under
each Letter of Credit at an applicable
percentage as set forth in the Pricing
Grid below. Letter of Credit Fees are
payable quarterly in arrears to be
shared proportionately among the
Lenders. The Borrower will also pay a
fronting fee (the "FRONTING FEE") of
0.25% per annum on the amount
available to be drawn under each
Letter of Credit. Fronting Fees are
payable quarterly in arrears for the
sole account of the Fronting Bank.
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PRICING GRID: Applicable percentages are determined
based upon the Borrower's Leverage
Ratio (defined as total debt/EBITDA).
Set forth below are the LIBOR
applicable percentages for loans
outstanding under the Senior Credit
Facilities, the Letter of Credit Fee
applicable percentage and the
Commitment Fee applicable percentage.
The Base Rate applicable percentages
for loans outstanding under each of
the Senior Credit Facilities will be
1.50% less than the LIBOR Applicable
Percentage set forth in the Pricing
Grid. Swingline Loans will bear
interest at the Base Rate + 0.50%
without regard to the Leverage Ratio.
Prior to the Administrative Agent's
receipt of the Borrower's August 31,
1999 financial statements, the
applicable percentages shall assume a
Leverage Ratio of x > 4.00.
-
PRICING GRID APPLICABLE PERCENTAGE
- ------------------------------------------------------------------------------------------------------------------------
Leverage Ratio = x x > 4.00 3.50 < x < 4.00 2.75 < x < 3.50 x < 2.75
- - -
Revolving Credit Loans 2.500% 2.250% 2.000% 1.625%
Tranche A Term Loans 2.500% 2.250% 2.000% 1.625%
Tranche B Term Loans 3.000% 3.000% 2.750% 2.750%
Letters of Credit 2.500% 2.250% 2.000% 1.625%
Commitment Fee 0.500% 0.500% 0.500% 0.375%
CALCULATION OF
INTEREST AND FEES: Other than calculations in
respect of interest at the Base Rate
(which shall be made on the basis of
actual number of days elapsed in a
365/366 day year), all calculations of
interest and fees shall be made on the
basis of actual number of days elapsed
in a 360 day year.
COST AND YIELD
PROTECTION: Customary for transactions and
facilities of this type, including,
without limitation, in respect of
breakage or redeployment costs
incurred in connection with
prepayments, changes in capital
adequacy and capital requirements or
their interpretation, illegality,
unavailability, reserves without
proration or offset and payments free
and clear of withholding or other
taxes.
EXPENSES: The Borrower will pay all reasonable
out-of-pocket costs and expenses
associated with the preparation, due
diligence, administration, syndication
and enforcement of all documentation
executed in connection with the Senior
Credit Facilities, including, without
limitation, the reasonable legal fees
of Jones, Day, Reavis & Pogue, counsel
to the Administrative Agent and the
Syndication Agent. The Borrower will
also pay the expenses of each Lender
in connection with the enforcement of
any of the Credit Agreement Documents.
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