UBS LOAN FINANCE LLC UBS SECURITIES LLC
677 Washington Boulevard 299 Park Avenue
Stamford, Connecticut 06901 New York, New York 10171
GENERAL ELECTRIC CAPITAL CORPORATION
2 Bethesda Metro Center, Suite 600
Bethesda, Maryland 20814
May 9, 2007
Inverness Medical Innovations, Inc.
51 Sawyer Road, Suite 200
Waltham, MA 02453
Attention: Ron Zwanziger
Bridge Facility Commitment Letter
Ladies and Gentlemen:
You have advised UBS Loan Finance LLC ("UBS"), UBS Securities LLC
("UBSS") and General Electric Capital Corporation ("GE Capital" and, together
with UBS and UBSS, "we" or "us") that Inverness Medical Innovations, Inc., a
Delaware corporation ("Borrower" or "you") proposes to form a wholly owned
subsidiary ("Merger Sub"), which will acquire (the "Acquisition") all of the
outstanding capital stock (the "Shares") of Biosite Incorporated (the "Acquired
Business"). The Acquisition will be effected by Borrower and Merger Sub entering
into a merger agreement (the "Acquisition Agreement") with the Acquired Business
pursuant to which Merger Sub will commence a tender offer (the "Tender Offer")
for the Shares. The Tender Offer shall be conditioned upon not less than a
majority (calculated on a fully diluted basis) of such Shares and not less than
a majority of the voting power of the outstanding shares of capital stock of the
Acquired Business entitled to vote in the election of directors being validly
tendered and not withdrawn. Merger Sub will, if the Tender Offer, together with
any exercise of the "top-up option," does not result in Merger Sub acquiring 90%
or more of the Shares (or such other amount as is sufficient for Merger Sub to
effect a "short form" merger under the Delaware General Corporation Law (such
amount, the "Minimum Condition")), acquire 100% of the outstanding capital stock
of the Acquired Business and merge with and into the Acquired Business (the
"Two-Step Merger" and the date of the consummation of the Two-Step Merger, if
applicable, the "Second Closing Date") pursuant to the Acquisition Agreement. If
the Minimum Condition is satisfied, immediately following completion of the
Tender Offer, the Acquired Business will be merged with and into Merger Sub (the
"One-Step Merger"; the One-Step Merger or the Two-Step Merger, as applicable,
the "Merger") pursuant to a short-form merger under Section 253 of the Delaware
General Corporation Law. All references to "dollars" or "$" in this agreement
and the attachments hereto (collectively, this "Commitment Letter") are
references to United States dollars. All references to "Borrower" or "Borrower
and its subsidiaries" for any period from and after consummation of the Tender
Offer shall include the Acquired Business.
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We understand that the sources of funds required to fund the
Acquisition consideration, to repay existing indebtedness of Borrower and the
Acquired Business and their respective subsidiaries of up to $162.0 million (the
"Refinancing"), to pay fees, commissions and expenses in connection with the
Transactions (as defined below) and to provide ongoing working capital
requirements of Borrower and its subsidiaries following the Transactions will
include:
- senior secured credit facilities consisting of (i) a senior secured
term loan facility to Borrower of $1,150.0 million ($850.0 million if
the joint venture (the "Joint Venture") anticipated to be entered into
among the Borrower and The Procter & Gamble Company for the
development, manufacturing, marketing and sale of existing and
to-be-developed consumer diagnostic products outside of the fields of
cardiology and diabetes is consummated on or prior to the Closing
Date) (the "Term Loan Facility") and (ii) a senior secured revolving
credit facility to Borrower of up to $150.0 million (the "Revolving
Credit Facility" and, together with the Term Loan Facility, the "Bank
Facilities"); and
- the issuance by Borrower of up to $317.5 million aggregate gross
proceeds of unsecured senior subordinated notes (the "Notes") pursuant
to a public offering or Rule 144A or other private placement (the
"Notes Offering") or, in the event the Notes are not issued at the
time the Transactions are consummated, borrowings by Borrower of up to
$317.5 million under a senior subordinated unsecured credit facility
(the "Bridge Facility" and, together with the Bank Facilities, the
"Facilities"), as described in the Bridge Facility Summary of
Principal Terms and Conditions attached hereto as Annex I (the "Term
Sheet").
No other financing will be required for the uses described above. Immediately
following the Transactions, neither Borrower nor any of its subsidiaries will
have any indebtedness or preferred equity other than the Bank Facilities, the
Notes or the Bridge Facility, $132.5 million of your 3% senior subordinated
convertible notes due 2016 and other limited indebtedness to be agreed
(including indebtedness contemplated by paragraph 7 of the Conditions Annex (as
defined below)). As used herein, the term "Transactions" means the Acquisition,
the Tender, the Merger, the Refinancing, the initial borrowings under the Bank
Facilities, the issuance of the Notes or the borrowings under the Bridge
Facility and the payments of fees, commissions and expenses in connection with
each of the foregoing.
Commitments.
You have requested that UBS commit to provide 60% of the Bridge
Facility, that GE Capital commit to provide 40% of the Bridge Facility and that
UBSS agree to structure, arrange and syndicate the Bridge Facility.
UBS is pleased to advise you of its commitment to provide 60% of the
Bridge Facility to Borrower upon the terms and subject to the conditions set
forth or referred to in this Commitment Letter. GE Capital is pleased to advise
you of its commitment to provide 40% of the Bridge Facility to Borrower upon the
terms and subject to the conditions set forth or referred to in this Commitment
Letter. The commitment of UBS, GE Capital and each other Lender (as defined
below) hereunder is subject to the negotiation, execution and delivery of
definitive documentation (the "Bridge Documentation)
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with respect to the Bridge Facility reasonably satisfactory to UBS, GE Capital
and the other Lenders reflecting the terms and conditions set forth in the Term
Sheet, in Annex II hereto (the "Conditions Annex") and in the letter of even
date herewith addressed to you providing, among other things, for certain fees
relating to the Bridge Facility (the "Fee Letter"). You agree that the closing
date of the Transactions and the concurrent closing of the Facilities, and if
applicable, the Notes Offering (the "Closing Date") shall be a date consistent
with the Tender Offer closing date, but in any event shall not occur until the
conditions hereof and in the Term Sheet and the Conditions Annex (including the
conditions to initial funding) have been satisfied.
Syndication.
It is agreed that UBSS will act as the sole and exclusive advisor,
arranger and bookmanager for the Bridge Facility, and, in consultation with you,
will exclusively manage the syndication of the Bridge Facility, and will, in
such capacities, exclusively perform the duties and exercise the authority
customarily associated with such roles. It is further agreed that no additional
advisors, agents, co-agents, arrangers or bookmanagers will be appointed and no
Lender (as defined below) will receive compensation with respect to any of the
Bridge Facility outside the terms contained herein and in the Fee Letter in
order to obtain its commitment to participate in the Bridge Facility, in each
case unless you and we so agree.
UBS and GE Capital reserve the right, prior to or after the execution
of the Bridge Documentation, to syndicate all or a portion of their respective
commitments to one or more institutions that will become parties to the Bridge
Documentation (UBS, GE Capital and the institutions becoming parties to the
Bridge Documentation, the "Lenders"). Upon any such additional Lender issuing
its commitment to provide a portion of the Bridge Facility, UBS and GE Capital
shall be released from a portion of their respective commitments in respect of
the Bridge Facility in an aggregate amount equal to the commitment of such
Lender with the reasonable consent of the Borrower (not to be unreasonably
withheld).
UBSS will exclusively manage all aspects of the syndication of the
Bridge Facility, including selection of additional Lenders, determination of
when UBSS will approach potential additional Lenders, awarding of any naming
rights and the final allocations of the commitments in respect of the Bridge
Facility among the additional Lenders. You agree to, and to use commercially
reasonable efforts to cause the Acquired Business to (including with a covenant
to such effect in the Acquisition Agreement), reasonably assist UBSS in
achieving a timely syndication of the Bridge Facility that is reasonably
satisfactory to UBSS and the Lenders participating in the Bridge Facility. To
assist UBSS in its syndication efforts, you agree that you will, and will cause
your representatives and advisors to, and will use commercially reasonable
efforts to cause the Acquired Business and its representatives and advisors to,
(a) promptly prepare and provide all financial and other information as UBSS may
reasonably request with respect to Borrower, the Acquired Business, their
respective subsidiaries and the transactions contemplated hereby, including but
not limited to financial projections (the "Projections") relating to the
foregoing, (b) provide copies of any due diligence reports or memoranda prepared
at the direction of you or any of your affiliates by legal, accounting, tax or
other advisors in connection with the Acquisition (subject to the delivery of
customary non-disclosure agreements reasonably acceptable to UBSS), (c) use
commercially reasonable efforts to ensure that such syndication efforts benefit
materially from existing lending relationships of Borrower, the Acquired
Business and
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their respective subsidiaries, (d) make available to prospective Lenders senior
management and advisors of Borrower and its subsidiaries (and use commercially
reasonable efforts to make available to prospective Lenders senior management
and advisors of the Acquired Business and its subsidiaries), (e) host, with
UBSS, one or more meetings with prospective Lenders under the Bridge Facility,
(f) assist UBSS in the preparation of one or more confidential information
memoranda satisfactory to UBSS and other marketing materials to be used in
connection with the syndication of the Bridge Facility and (g) obtain, at your
expense, monitored public ratings of the Bridge Facility and the Notes from
Moody's Investors Service ("Moody's") and Standard & Poor's Ratings Group
("S&P") at least 30 days prior to the Closing Date and to participate in the
process of securing such ratings, including having senior management of
Borrower, and using commercially reasonable efforts to have senior management of
the Acquired Business, meet with such rating agencies.
In connection with such syndication, UBS agrees, or shall cause its
affiliates, to manage such syndication process such that during such syndication
with respect to every dollar syndicated in respect of the Bridge Facility, such
dollar shall reduce each of UBS' and GE Capital's Bridge Facility commitments
and/or loans on a pro rata basis (determined based on the amount of each such
commitment and/or loan of UBS and GE Capital).
At UBSS's request, you agree to prepare a version of the information
package and presentation and other marketing materials to be used in connection
with the syndication that do not contain material non-public information
concerning Borrower or the Acquired Business, their respective affiliates or
their securities. In addition, you agree that unless specifically labeled
"Private -- Contains Non-Public Information," no information, documentation or
other data disseminated to prospective Lenders in connection with the
syndication of the Bridge Facility, whether through an Internet website
(including, without limitation, an IntraLinks workspace), electronically, in
presentations at meetings or otherwise, will contain any material non-public
information concerning Borrower or the Acquired Business, their respective
affiliates or their securities.
Information.
You hereby represent that (a) all information (other than the
Projections) that has been or will be made available to us or any of the Lenders
by you, the Acquired Business or any of your or their respective representatives
in connection with the transactions contemplated hereby (the "Information"),
when taken as a whole, is and will be 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, in the
light of the circumstances under which such statements are made, not misleading
and (b) the Projections that have been or will be made available to us or any of
the Lenders by you, the Acquired Business or any of your or their respective
representatives in connection with the transactions contemplated hereby have
been and will be prepared in good faith based upon assumptions believed by you
to be reasonable (it being understood that projections by their nature are
inherently uncertain and no assurances are being given that the results
reflected in the Projections will be achieved). You agree to supplement the
Information and the Projections from time to time and agree to promptly advise
us and the Lenders of all developments materially affecting Borrower, the
Acquired Business, any of their respective subsidiaries or affiliates or the
transactions contemplated hereby or the accuracy of Information and Projections
previously furnished to us or any of the Lenders.
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Compensation.
As consideration for the commitments of the Lenders hereunder with
respect to the Bridge Facility and the agreement of UBSS to structure, arrange
and syndicate the Bridge Facility and to provide advisory services in connection
therewith, you agree to pay, or cause to be paid, the fees set forth in the Term
Sheet and the Fee Letter. Once paid, such fees shall not be refundable under any
circumstances.
Conditions.
The respective commitments of UBS and GE Capital hereunder with
respect to the Bridge Facility and UBSS's agreement to perform the services
described herein may be terminated by UBS or GE Capital, as applicable, if (i)
any condition set forth in the Term Sheet or the Conditions Annex is not
satisfied or you have not complied with this Commitment Letter or the Fee Letter
in any material respect or (ii) there occurs a "Company Material Adverse Effect"
(as defined in the Acquisition Agreement). Notwithstanding anything in this
Commitment Letter, the Fee Letter, the Bridge Documentation or any exhibit,
annex or condition hereto or thereto or any other letter agreement or other
undertaking concerning the financing of the Transactions to the contrary, (x)
the only representations relating to the Borrower, the Acquired Business, their
respective subsidiaries and their businesses the making of which shall be a
condition to availability of the Bridge Facility on the Closing Date or, if
applicable, the Second Closing Date shall be (A) such of the representations
made by the Acquired Business in the Acquisition Agreement, as are material to
the interests of the Lenders, but only to the extent that you have the right to
terminate your obligations under the Acquisition Agreement as a result of a
breach of such representations in the Acquisition Agreement and (B) the
Specified Representations (as defined below) and (y) the terms of the Bridge
Documentation shall be in a form such that they do not impair availability of
the Bridge Facility on the Closing Date if the conditions set forth herein and
in the Term Sheet are satisfied. Those matters that are not covered by or made
clear under the provisions of this Commitment Letter are subject to the approval
and agreement of you and us; provided that such approvals and agreements shall
be in a manner that is consistent with the Term Sheet. For purposes hereof,
"Specified Representations" means the representations and warranties set forth
in the Term Sheet relating to corporate power and authority, due authorization,
execution and delivery of the Bridge Documentation, no conflicts with material
contractual restrictions, the enforceability of the Bridge Documentation,
Federal Reserve margin regulations and the Investment Company Act.
Clear Market.
From the date of this Commitment Letter until our completion of
syndication (as determined by us and notified in writing to you) of the Bridge
Facility and, if later, of the distribution of the Notes, you will ensure that
no financing for Borrower, the Acquired Business or any of their respective
subsidiaries or affiliates (other than the Bank Facilities, Bridge Facility or
the Notes) is announced, syndicated or placed without the prior written consent
of UBS if such financing, syndication or placement would have, in the reasonable
judgment of UBS, a detrimental effect in any material respect upon the
transactions contemplated hereby.
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Indemnity and Expenses.
By your acceptance below, you hereby agree to indemnify and hold
harmless us and the other Lenders and our and their respective affiliates
(including, without limitation, controlling persons) and the directors,
officers, employees, advisors and agents of the foregoing (each, an "Indemnified
Person") from and against any and all losses, claims, costs, expenses, damages
or liabilities (or actions or other proceedings commenced or threatened in
respect thereof) that arise out of or in connection with this Commitment Letter,
the Term Sheet, the Conditions Annex, the Fee Letter, the Bridge Facility or any
of the transactions contemplated hereby or thereby or the providing or
syndication of the Bridge Facility (or the actual or proposed use of the
proceeds thereof), and to reimburse each Indemnified Person promptly upon its
written demand for any legal or other expenses incurred in connection with
investigating, preparing to defend or defending against, or participating in,
any such loss, claim, cost, expense, damage, liability or action or other
proceeding (whether or not such Indemnified Person is a party to any action or
proceeding); provided that any such obligation to indemnify, hold harmless and
reimburse an Indemnified Person shall not be applicable to the extent determined
by a final, non-appealable judgment of a court of competent jurisdiction to have
resulted solely from the gross negligence or willful misconduct of such
Indemnified Person. You shall not be liable for any settlement of any such
proceeding effected without your written consent, but if settled with such
consent or if there shall be a final judgment against an Indemnified Person, you
shall, subject to the proviso in the preceding sentence, indemnify such
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. You shall not, without the prior written consent of any
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which such Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement (i) includes an unconditional release of such Indemnified
Person from all liability or claims that are the subject matter of such
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability, or a failure to act by or on behalf of such Indemnified Person.
None of us or any other Lender (or any of their respective affiliates) shall be
responsible or liable to Borrower, the Acquired Business or any of their
respective subsidiaries, affiliates or stockholders or any other person or
entity for any indirect, punitive or consequential damages which may be alleged
as a result of this Commitment Letter, the Term Sheet, the Conditions Annex, the
Fee Letter, the Bridge Facility or the transactions contemplated hereby or
thereby. In addition, you hereby agree to reimburse us and each of the Lenders
from time to time upon demand for all reasonable out-of-pocket costs and
expenses (including, without limitation, reasonable legal fees and expenses of
UBS, UBSS and GE Capital, appraisal, consulting and audit fees, and printing,
reproduction, document delivery, travel, communication and publicity costs)
incurred in connection with the syndication and execution of the Bridge
Facility, and the preparation, review, negotiation, execution and delivery of
this Commitment Letter, the Term Sheet, the Conditions Annex, the Fee Letter,
the Bridge Documentation and the administration, amendment, modification or
waiver thereof (or any proposed amendment, modification or waiver), whether or
not the Closing Date occurs or any Bridge Documentation is executed and
delivered or any extensions of credit are made under the Bridge Facility.
Confidentiality.
This Commitment Letter is delivered to you upon the condition that
neither the existence of this Commitment Letter, the Term Sheet, the Conditions
Annex, the Fee Letter nor any of
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their contents shall be disclosed by you or any of your affiliates, directly or
indirectly, to any other person, except that such existence and contents may be
disclosed (i) as may be compelled in a judicial or administrative proceeding or
as otherwise required by law and (ii) to your directors, officers, employees,
legal counsel and accountants, in each case on a confidential and "need-to-know"
basis and only in connection with the transactions contemplated hereby. In
addition, this Commitment Letter, the Term Sheet and the Conditions Annex (but
not the Fee Letter) may be disclosed to the Acquired Business and its directors,
officers, employees, advisors and agents, in each case on a confidential and
"need-to-know" basis and only in connection with the transactions contemplated
hereby; provided that the Acquired Business may disclose this Commitment Letter,
the Term Sheet and the Conditions Annex without limitation, including to Beckman
Coulter, Inc. and its representatives, in the Acquired Business's filings with
the Securities and Exchange Commission and in press releases.
Other Services.
You acknowledge and agree that we and/or our affiliates may be
requested to provide additional services with respect to Borrower, the Acquired
Business and/or their respective affiliates or other matters contemplated
hereby. Any such services will be set out in and governed by a separate
agreement(s) (containing terms relating, without limitation, to services, fees
and indemnification) in form and substance satisfactory to the parties thereto.
Nothing in this Commitment Letter is intended to obligate or commit us or any of
our affiliates to provide any services other than as set out herein.
Governing Law, Etc.
This Commitment Letter and the commitment of the Lenders shall not be
assignable by you without the prior written consent of us and the Lenders, and
any purported assignment without such consent shall be void. We reserve the
right to employ the services of our respective affiliates in providing services
contemplated by this Commitment Letter and to allocate, in whole or in part, to
our affiliates certain fees payable to us in such manner as we and our
affiliates may agree in our sole discretion. You also agree that UBS or GE
Capital may at any time and from time to time assign all or any portion of their
respective commitments hereunder to one or more of their respective affiliates.
You further acknowledge that we may share with any of our respective affiliates,
and such affiliates may share with us, any information related to Borrower, the
Acquired Business, or any of their respective subsidiaries or affiliates
(including, without limitation, information relating to creditworthiness) and
the transactions contemplated hereby. We agree to treat, and cause any of our
respective affiliates to treat, all non-public information provided to us by you
as confidential information in accordance with customary banking industry
practices.
This Commitment Letter may not be amended or any provision hereof
waived or modified except by an instrument in writing signed by us and you. 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 counterpart of a signature page of this
Commitment Letter by facsimile transmission shall be effective as delivery of a
manually executed counterpart of this Commitment Letter. Headings are for
convenience of reference only and shall not affect the construction of, or be
taken into consideration when interpreting, this Commitment Letter. This
Commitment Letter is intended to be for the benefit of the parties hereto and is
not intended to confer any benefits upon, or create any rights in favor of, and
may not be relied on by, any
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persons other than the parties hereto, the Lenders and, with respect to the
indemnification provided under the heading "Indemnity and Expenses," each
Indemnified Person. This Commitment Letter and the Fee Letter replace in their
entirety the Commitment Letters and Fee Letters dated April 4, 2007, April 15,
2007, April 19, 2007 and April 24, 2007 between the parties hereto and all
parties hereto agree that such letters shall be of no force or effect once this
Commitment Letter and the Fee Letter are fully executed.
THIS COMMITMENT LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WILL BE REQUIRED THEREBY. Any right to trial by jury with respect
to any claim or action arising out of this Commitment Letter is hereby waived.
You hereby submit to the non-exclusive jurisdiction of the federal and New York
State courts located in The City of New York (and appellate courts thereof) in
connection with any dispute related to this Commitment Letter or any of the
matters contemplated hereby, and agree that service of any process, summons,
notice or document by registered mail addressed to you shall be effective
service of process against you for any suit, action or proceeding relating to
any such dispute. You irrevocably and unconditionally waive any objection to the
laying of such venue of any such suit, action or proceeding brought in any such
court and any claim that any such suit, action or proceeding has been brought in
an inconvenient forum. A final judgment in any such suit, action or proceeding
brought in any such court may be enforced in any other courts to whose
jurisdiction you are or may be subject by suit upon judgment.
Patriot Act.
We hereby notify you that pursuant to the requirements of the USA
Patriot Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the
"Patriot Act"), we and the other Lenders may be required to obtain, verify and
record information that identifies Borrower and the Acquired Business, which
information includes the name, address and tax identification number and other
information regarding them that will allow us or such Lender to identify them in
accordance with the Patriot Act. This notice is given in accordance with the
requirements of the Patriot Act and is effective as to us and the Lenders.
Please indicate your acceptance of the terms hereof and of the Term
Sheet, the Conditions Annex and the Fee Letter by returning to us executed
counterparts of this Commitment Letter and the Fee Letter not later than 5:00
p.m., New York City time, on May 10, 2007 (the "Deadline"). This Commitment
Letter and the commitments of the Lenders hereunder and the agreement of UBSS to
provide the services described herein are also conditioned upon your acceptance
hereof and of the Fee Letter, and our receipt of executed counterparts hereof
and thereof on or prior to the Deadline. Upon the earliest to occur of (A) the
execution and delivery of the Bridge Documentation by all of the parties
thereto, (B) September 30, 2007, if the Bridge Documentation shall not have been
executed and delivered by all such parties prior to that date and (C) if earlier
than (B), the date of termination of the Acquisition Agreement without the
Tender Offer being consummated, this Commitment Letter and the commitments of
the Lenders hereunder and the agreement of UBSS to provide the services
described herein shall automatically terminate unless the Lenders, UBSS and GE
Capital shall, in their discretion, agree to an extension. The compensation,
expense reimbursement, confidentiality, indemnification and governing law and
forum provisions hereof and in the Term Sheet and the Fee Letter shall
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survive termination of (i) this Commitment Letter (or any portion hereof) and
(ii) any or all of the commitments of the Lenders hereunder. The provisions
under the headings "Syndication" and "Clear Market" above shall survive the
execution and delivery of the Bridge Documentation.
[Signature Page Follows]
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We are pleased to have been given the opportunity to assist you in
connection with the financing for the Transactions.
Very truly yours,
UBS LOAN FINANCE LLC
By: /s/ James Boland
------------------------------------
Name: James Boland
----------------------------------
Title: Managing Director
---------------------------------
By: /s/ Eric Botsma
------------------------------------
Name: Eric Botsma
----------------------------------
Title: Director & Counsel
---------------------------------
Region Americas Legal
---------------------------------
UBS SECURITIES LLC
By: /s/ James Boland
------------------------------------
Name: James Boland
----------------------------------
Title: Managing Director
---------------------------------
By: /s/ Eric Botsma
------------------------------------
Name: Eric Botsma
----------------------------------
Title: Director & Counsel
---------------------------------
Region Americas Legal
---------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Andrew Moore
------------------------------------
Name: Andrew Moore
----------------------------------
Title: Duly Authorized Signatory
---------------------------------
Accepted and agreed to as of
the date first written above:
INVERNESS MEDICAL INNOVATIONS, INC.
By: /s/ David Teitel
---------------------------------
Name: David Teitel
-------------------------------
Title: CFO
------------------------------
ANNEX I
BRIDGE FACILITY
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS(1)
Borrower: Inverness Medical Innovations, Inc.
("Borrower").
Sole Arranger: UBS Securities LLC ("UBSS" or the
"Arranger").
Lenders: A syndicate of banks, financial
institutions and other entities, including
UBS Loan Finance LLC ("UBS"), General
Electric Capital Corporation ("GE
Capital"), arranged by UBSS.
Administrative Agent: UBS AG, Stamford Branch (the
"Administrative Agent").
Type and Amount of Bridge Facility: $317.5 million senior subordinated
unsecured bridge loan facility (the
"Bridge Facility").
Purpose: Proceeds of borrowings under the Bridge
Facility (the "Initial Loans") will be
used to finance a portion of the
Acquisition consideration and the
Refinancing and to pay fees, commissions
and expenses in connection therewith.
Maturity/Exchange: All the Initial Loans will mature on the
date that is one year following the
Closing Date (the "Maturity Date"). If any
Initial Loan has not been previously
repaid in full on or prior to the Maturity
Date, subject to the conditions outlined
below under "Conditions to Conversion of
the Initial Loans," such Initial Loan
shall be converted into a term loan (each,
a "Extended Term Loan" and, together with
the Initial Loans, the "Loans") maturing
on the eighth anniversary of the Closing
Date (the "Final Maturity Date"). The
Lenders in respect of the Initial Loans
and the Extended Term Loans will have the
option (i) in the case of Initial Loans,
at the Maturity Date or (ii) in the case
of Extended Term Loans, at any time or
from time to time, to receive notes (the
"Exchange Notes") in exchange for such
Initial Loans or Extended Term Loans
having the terms set forth in the term
sheet attached hereto as Exhibit A.
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(1) All capitalized terms used but not defined herein shall have the meanings
provided in the Commitment Letter to which this summary is attached.
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Availability: Upon satisfaction of conditions precedent
to drawing set forth herein, in the
Conditions Annex and in the body of the
Commitment Letter, Initial Loans may be
drawn, on the Closing Date, but only after
the Term Loan Facility has been fully
drawn, up to the amount of the commitments
under the Bridge Facility, and additional
Initial Loans may be drawn on the Second
Closing Date in an amount up to the
remaining commitments under the Bridge
Facility. Any unused commitments shall
expire upon the earlier of the
consummation of the Acquisition and one
year after the date of this Commitment
Letter.
Interest and Fees: Prior to the Maturity Date, the Initial
Loans will accrue interest at a rate per
annum equal to (as determined on the
Closing Date and each three-month period
thereafter) the three-month London
Interbank Offered Rate ("LIBOR") as
determined by UBS for a corresponding U.S.
dollar deposit amount (adjusted quarterly)
plus the Spread. The Spread will initially
be, 475 basis points. If the Initial Loans
are not repaid in full within six months
following the Closing Date, the Spread
will increase by 50 basis points at the
beginning of the subsequent three-month
period and shall increase by an additional
50 basis points at the beginning of each
three-month period thereafter (but, in any
event, not on the Maturity Date). LIBOR
will be adjusted for maximum statutory
reserve requirements (if any). The initial
Spread shall increase by 50 basis points
if the Bridge Facility is not rated at
least Caa1 by Moody's and at least CCC+ by
S&P (in each case with a stable outlook or
better and pro forma for the
Transactions).
Interest on the Initial Loans will be
payable in arrears at the end of each
three-month period and at the Maturity
Date. Interest on the Initial Loans shall
not exceed 11.50% per annum (the "Total
Cap"); provided that the Total Cap for the
Initial Loans and the Exchange Notes shall
each be increased by 50 basis points if
the Bridge Facility is not rated at least
Caa1 (stable or positive outlook) by
Moody's and CCC+ (stable or positive
outlook) by S&P.
Following the Maturity Date, all
outstanding Extended Term Loans will
accrue interest at the rate provided for
in the Exchange Notes in Exhibit A hereto;
provided that a holder of an Extended Term
Loan may at any time fix the rate thereon
at the effective rate (such loans, "Fixed
Rate Term Loans").
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Calculation of interest shall be on the
basis of actual days elapsed in a year of
360 days.
A per annum commitment fee on the undrawn
portion of the commitments in respect of
the Bridge Facility shall accrue from the
Closing Date at a rate per annum equal to
one half of the Spread at any time, and
shall be payable quarterly in arrears.
Default Interest: Upon the occurrence and during the
continuance of an event of default,
interest will accrue on the amount of any
loan or other amount outstanding under the
Bridge Facility at a rate of 2.0% per
annum plus the rate otherwise applicable
to the loans under the Bridge Facility and
will be payable on demand.
Mandatory Prepayment: Borrower will be required to prepay
Initial Loans and Extended Term Loans
(other than Fixed Rate Term Loans), and
offer to prepay Fixed Rate Term Loans, on
a pro rata basis, at par plus accrued and
unpaid interest, in an amount equal to (a)
100% of the net proceeds received from the
sale or other disposition of assets of
Borrower or any of its subsidiaries after
the Closing Date, other than sales of
inventory in the ordinary course of
business and other exceptions to be agreed
and subject to reinvestment rights to be
agreed and prepayment of the Bank
Facilities, (b) 100% of the net proceeds
received by Borrower or any of its
subsidiaries from the issuance of debt or
preferred stock after the Closing Date,
other than exceptions to be agreed and (c)
100% of the net proceeds received from the
issuance of common equity (including, but
not limited to, upon the exercise of
warrants and options) by, or equity
contributions to, Borrower after the
Closing Date, other than exceptions to be
agreed upon and (d) 100% of all casualty
and condemnation proceeds received by
Borrower or any of its subsidiaries,
subject to reinvestment rights to be
agreed and prepayment of the Bank
Facilities. There shall be no mandatory
prepayments with respect to events
occuring at the Acquired Business or its
subsidiaries prior to the Second Closing
Date.
Optional Prepayments: The Initial Loans and Extended Term Loans
(other than Fixed Rate Term Loans) may be
prepaid, in whole or in part, at the
option of Borrower, at any time with prior
notice, at par plus accrued and unpaid
interest and breakage costs. The Fixed
Rate Term Loans will be subject to
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pre-payment restrictions and premiums
consistent with Fixed Rate Exchange Notes.
Guarantees: The Bridge Facility will be fully and
unconditionally guaranteed on a joint and
several basis by all of the existing and
future direct and indirect subsidiaries of
Borrower including the Acquired Business
(collectively, the "Guarantors"), subject
to exceptions for foreign subsidiaries to
the extent such guarantees would be
prohibited by applicable law or would
result in materially adverse tax
consequences. There shall be no guarantees
from the Acquired Business or its
subsidiaries prior to the Second Closing
Date.
Security: None.
Ranking: Subordinated to the Bank Facilities; pari
passu with or senior to all other
obligations of Borrower and the guarantors
(other than trade payables and ordinary
course indebtedness).
Conditions to Borrowing: Conditions precedent to borrowing under
the Bridge Facility will be those set
forth in the Commitment Letter and Annex
II to the Commitment Letter (provided that
in the case of condition number 8 on Annex
II on the Second Closing Date, if
applicable, the words "Tender Offer" shall
be replaced with the words "Two-Step
Merger").
Representations and Warranties: Representations and warranties will apply
to Borrower and its subsidiaries and will
include (without limitation):
Accuracy and completeness of financial
statements (including pro forma financial
statements); absence of undisclosed
liabilities; no material adverse change;
corporate existence; compliance with law;
corporate power and authority;
enforceability of the Bridge
Documentation; no conflict with law or
contractual obligations; no material
litigation; no default; ownership of
property; liens; intellectual property; no
burdensome restrictions; taxes; Federal
Reserve regulations; ERISA; Investment
Company Act; subsidiaries; environmental
matters; solvency; accuracy and
completeness of disclosure; Patriot Act
and anti-terrorism law compliance; and
creation and perfection of security
interests.
Affirmative and Negative Covenants: Affirmative covenants will apply to
Borrower and its subsidiaries and will
include (without limitation):
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Delivery of certified quarterly and
audited annual financial statements,
monthly management reports, reports to
shareholders, notices of defaults,
litigation and other material events,
budgets and other information customarily
supplied in a transaction of this type;
payment of other obligations; continuation
of business and maintenance of existence
and material rights and privileges;
compliance with all applicable laws and
regulations (including, without
limitation, environmental matters,
taxation and ERISA) 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;
agreement to hold annual meetings of
Lenders; further assurances (including,
without limitation, with respect to
guarantees from future subsidiaries);
agreement to establish an interest rate
protection program and/or have fixed rate
financing on a percentage to be determined
of the aggregate funded indebtedness of
Borrower and its subsidiaries; updates on
the status of the Acquisition; and
compliance with obligations in the Fee
Letter.
Negative covenants will apply to Borrower
and its subsidiaries and will include
(without limitation):
1. Limitation on dispositions of assets
and changes of business and ownership.
2. Limitation on mergers and
acquisitions.
3. Limitations on dividends, stock
repurchases and redemptions and other
restricted payments.
4. Limitation on indebtedness (including
guarantees and other contingent
obligations) and preferred stock and
prepayment, amendment and redemption
thereof.
5. Limitation on loans and investments.
6. Limitation on liens and further
negative pledges.
7. Limitation on transactions with
affiliates.
8. Limitation on sale and leaseback
transactions.
9. Limitation on capital expenditures.
10. Limitation on operating leases.
-6-
11. Maintenance of holding companies
and/or any inactive subsidiaries as
passive, non-operating enterprises.
12. No modification or waiver of material
documents (including, without
limitation, charter documents of
Borrower and its subsidiaries) in any
manner materially adverse to the
Lenders without the consent of the
Requisite Lenders.
13. No change to fiscal year.
Financial Covenants: Financial covenants will apply to Borrower
and its consolidated subsidiaries and will
include (without limitation):
1. Minimum interest coverage ratio.
2. Maximum leverage ratio.
Events of Default: Events of default will include (without
limitation) the following: nonpayment,
breach of representations and covenants,
cross-payment default and
cross-acceleration, invalidity of
guarantees, bankruptcy and insolvency
events, ERISA events, judgments and change
of ownership or control (to be defined).
Conditions to Conversion
of Initial Loans: On the Maturity Date, unless (i) Borrower
or any significant subsidiary thereof is
subject to a bankruptcy or other
insolvency proceeding, (ii) there exists a
matured default with respect to the
Initial Loans or (iii) there exists a
default in the payment when due at final
maturity of any indebtedness of Borrower
or any of its subsidiaries, or the
maturity of such indebtedness shall have
been accelerated, the Initial Loans shall
automatically be converted into Extended
Term Loans (subject to the Lenders' rights
to convert Initial Loans into Exchange
Notes as set forth in Exhibit A hereto).
Assignments and Participations: Each Lender may assign all or, subject to
minimum amounts to be agreed, a portion of
its loans and commitments under the Bridge
Facility. Assignments will require payment
of an administrative fee to the
Administrative Agent and, except for an
assignment to an existing Lender or an
affiliate of an existing Lender, the
consent of the Administrative Agent, which
consent shall not be unreasonably
withheld. In addition, each Lender may
sell participations
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in all or a portion of its loans and
commitments under the Bridge Facility;
provided that no purchaser of a
participation shall have the right to
exercise or to cause the selling Lender to
exercise voting rights in respect of the
Bridge Facility (except as to certain
basic issues).
Expenses and Indemnification: All reasonable out-of-pocket expenses
(including but not limited to reasonable
legal fees and expenses and expenses
incurred in connection with due diligence
and travel, courier, reproduction,
printing and delivery expenses) of the
Lenders, UBS, UBSS, GE Capital and the
Administrative Agent associated with the
syndication of the Bridge Facility and
with the preparation, execution and
delivery, administration, amendment,
waiver or modification (including proposed
amendments, waivers or modifications) of
the documentation contemplated hereby are
to be paid by Borrower. In addition, all
out-of-pocket expenses (including but not
limited to reasonable legal fees and
expenses) of the Lenders and the
Administrative Agent for workout
proceedings, enforcement costs and
documentary taxes associated with the
Bridge Facility are to be paid by
Borrower.
Borrower will indemnify the Lenders, UBS,
UBSS, GE Capital and the Administrative
Agent and their respective affiliates, and
hold them harmless from and against all
reasonable out-of-pocket costs, expenses
(including but not limited to reasonable
legal fees and expenses) and liabilities
arising out of or relating to the
transactions contemplated hereby and any
actual or proposed use of the proceeds of
any loans made under the Bridge Facility;
provided, however, that no such person
will be indemnified for costs, expenses or
liabilities to the extent determined by a
final, non-appealable judgment of a court
of competent jurisdiction to have been
incurred solely by reason of the gross
negligence or willful misconduct of such
person.
Yield Protection, Taxes and
Other Deductions: The Bridge Documentation will contain
yield protection provisions, customary for
facilities of this nature, protecting the
Lenders in the event of unavailability of
LIBOR, breakage losses and reserve and
capital adequacy requirements.
All payments are to be free and clear of
any present or future taxes, withholdings
or other deductions whatsoever (other than
income taxes in the jurisdiction of the
Lender's applicable lending office).
Borrower will indemnify the Lenders and
the Administrative Agent for such taxes
paid
-8-
by the Lenders or the Administrative
Agent. The Lenders will use commercially
reasonable efforts to minimize to the
extent possible any applicable taxes and
Borrower will indemnify the Lenders and
the Administrative Agent for such taxes
paid by the Lenders and the Administrative
Agent, as the case may be.
Requisite Lenders: Lenders holding at least a majority of
total loans and commitments under the
Bridge Facility, with certain
modifications or amendments requiring the
consent of Lenders holding a greater
percentage (or all) of the total Loans and
commitments under the Bridge Facility.
Governing Law and Forum: The laws of the State of New York. Each
party to the Bridge Documentation will
waive the right to trial by jury and will
consent to jurisdiction of the state and
federal courts located in The City of New
York.
Counsel to UBSS, GE Capital and
the Administrative Agent: Cahill Gordon & Reindel LLP.
Exhibit A to
ANNEX I
Summary of Principal Terms and Conditions
of Exchange Notes
Capitalized terms used but not defined herein have the meanings given
(or incorporated by reference) in the Summary of Principal Terms and Conditions
of the Bridge Facility to which this Exhibit A is attached.
Issuer: Borrower will issue Exchange Notes under
an indenture which complies with the Trust
Indenture Act (the "Indenture"). Borrower
in its capacity as issuer of the Exchange
Notes is referred to as the "Issuer."
Guarantors: Same as Initial Loans.
Principal Amount: The Exchange Notes will be available only
in exchange for the Initial Loans (at the
Maturity Date) or the Extended Term Loans
(at any time). The principal amount of any
Exchange Note will equal 100% of the
aggregate principal amount of the Initial
Loans or the Extended Term Loans for which
it is exchanged.
Maturity: The Exchange Notes will mature on the
eighth anniversary of the Closing Date.
Interest Rate: The Exchange Notes will bear interest at a
rate equal to the Initial Rate (as defined
below) plus the Exchange Spread (as
defined below). Any holder of an Exchange
Note may at any time fix the rate thereon
at the effective rate (such Exchange
Notes, "Fixed Rate Exchange Notes").
Notwithstanding the foregoing, the
interest rate in effect at any time shall
not exceed the Total Cap; provided that
upon transfer of any Exchange Note to a
person that is not a holder of Exchange
Notes on the Maturity Date, the interest
rate thereon shall thereupon be the Total
Cap. The "Initial Rate" shall be equal to
the interest rate applicable to the
Initial Loans and in effect on the
Maturity Date. "Exchange Spread" shall
mean 50 basis points during the
three-month period commencing on the
Maturity Date and shall increase by 50
basis points at the beginning of each
subsequent three-month period.
Calculation of interest shall be on the
basis of the actual number of days elapsed
in a year of twelve 30-day months.
Default Interest: In the event of a payment default on the
Exchange Notes, interest on the Exchange
Notes will accrue at a rate of 2.0% per
annum in excess of the rate otherwise
applicable to the
-2-
Exchange Notes, and will be payable in
accordance with the provisions described
above under the heading "Interest Rate."
Ranking: Same as Initial Loans.
Mandatory Offer to Purchase: The Issuer will be required to offer to
purchase the Exchange Notes upon a Change
of Control (to be defined in the
Indenture) at 101% of the principal amount
thereof plus accrued interest to the date
of purchase.
Optional Redemption: Exchange Notes (other than Fixed Rate
Exchange Notes) will be redeemable at the
option of the Issuer, in whole or in part,
at any time at par plus accrued and unpaid
interest to the redemption date.
Except as set forth in the following
paragraph, Fixed Rate Exchanges Notes will
not be redeemable at the option of the
Issuer prior to the third anniversary of
the Maturity Date. Thereafter, each Fixed
Rate Exchange Note will be redeemable at
the option of the Issuer at a premium
equal to 50% of the coupon of such Fixed
Rate Exchange Note, declining ratably to
par on the date which is two years prior
to the final maturity of the Exchange
Notes.
Each Fixed Rate Exchange Note will be
redeemable at the option of the Issuer
prior to the third anniversary of the
Maturity Date with the net cash proceeds
of qualified equity offerings of Borrower
at a premium equal to the coupon on such
Fixed Rate Exchange Note; provided that
after giving effect to such redemption at
least 65% of the aggregate principal
amount of Exchange Notes originally issued
shall remain outstanding.
Registration Rights: The Issuer will be required to:
- within 60 days after the Maturity
Date, file a registration statement
for an offer to exchange the Exchange
Notes for publicly registered notes
with identical terms;
- use its reasonable best efforts to
cause the registration statement to
become effective under the Securities
Act within 150 days after the
Maturity Date;
- complete the exchange offer within
180 days after the Maturity Date; and
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- file a shelf registration statement
for the resale of the Exchange Notes
if it cannot complete an exchange
offer within those time periods
listed above and in certain other
circumstances.
If the Issuer does not comply with these
obligations, it will be required to pay
additional interest to the holders of the
Exchange Notes.
In addition, unless and until the Issuer
has consummated the exchange offer and, if
required, caused the shelf registration
statement to become effective, the holders
of the Exchange Notes will have the right
to "piggy-back" the Exchange Notes in the
registration of any debt securities
(subject to customary scale-back
provisions) that are registered by the
Issuer (other than on a Form S-4) unless
all the Exchange Notes and Extended Term
Loans will be redeemed or repaid from the
proceeds of such securities.
Right to Transfer Exchange Notes: The holders of the Exchange Notes shall
have the absolute and unconditional right
to transfer the Exchange Notes in
compliance with applicable law to any
third parties.
Covenants: Those typical for an indenture governing a
high yield note issue of a new issuer.
Events of Default: Those typical for an indenture governing a
high yield note issue of a new issuer.
Governing Law: The laws of the State of New York.
ANNEX II
CONDITIONS TO CLOSING(1)
The commitment of the Lenders under the Commitment Letter with respect
to the Bridge Facility, the agreements of UBS, UBSS and GE Capital to perform
the services described in the Commitment Letter, the consummation of the
Transactions and the funding of the Bridge Facility are subject to the
conditions set forth in the Commitment Letter and satisfaction of each of the
conditions precedent set forth below.
1. The Borrower shall have delivered a pro forma consolidated balance
sheet and a related pro forma consolidated statement of income and other pro
forma information in conformity with Regulation S-X as of and for the
twelve-month period ending at the most recent fiscal quarter ending at least 45
days prior to the Closing Date prepared after giving effect to the Transactions
as if the Transactions had occurred as of such date (in the case of such balance
sheet) or at the beginning of such period (in the case of such other financial
statements), in each case which financial statements shall have been prepared in
a manner that is not materially inconsistent with the financial statements or
forecasts previously provided to the Lenders.
2. The Acquisition Agreement (including all schedules and exhibits
thereto) shall not be altered, amended or otherwise changed or supplemented in
any material respect from the draft Acquisition Agreement provided to the
Administrative Agent dated May 1, 2007 or any condition therein waived without
the prior written consent of UBS and GE Capital if they are adversely affected
thereby. In the case of fundings on the Closing Date, the Acceptance Time (as
defined in the Acquisition Agreement) shall have occurred (or shall occur
concurrently with the initial extension of credit under the Bridge Facility) in
accordance with the Acquisition Agreement and in compliance in all material
respects with applicable law. In the case of fundings on the Second CLosing
Date, if applicable, the Two-Step Merger shall have occurred in accordance with
the Acquisition Agreement and in compliance in all material respects with
applicable law.
3. Prior to any borrowings under the Bridge Facility, the Borrower
shall have received gross proceeds of $1,150.0 million from borrowings under the
Term Loan Facility ($850.0 million if the Joint Venture is consummated on or
prior to the Closing Date) and the Bank Facilities documentation shall be
consistent with the terms and conditions of the Commitment Letter related to the
Bank Facilities dated the date hereof.
4. All Bridge Documentation, including a credit agreement
incorporating substantially the terms and conditions outlined herein, shall be
in form and substance reasonably satisfactory to UBS and GE Capital, together
with customary closing documentation. There shall exist no uncured material
default (subject, in the case of representations, to the Specified
Representations) under any of the Bridge Documentation and the Specified
Representations of the Borrower and the Acquired Business set forth in the
Bridge Documentation shall be true and correct immediately prior to,
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(1) All capitalized terms used but not defined herein shall have the meanings
provided in the Commitment Letter to which this Annex II is attached.
-2-
and after giving effect to, the extension of credit under the Bridge Facility.
All Loans shall be in full compliance with the Federal Reserve's Margin
Regulations.
5. UBS and GE Capital shall have received all customary closing
documents and instruments, including (a) reasonably satisfactory opinions of
counsel (including local counsel as requested) and (b) such corporate
resolutions, certificates and other documents as shall be reasonably requested.
6. UBS and GE Capital shall have received all documentation and other
information required by bank regulatory authorities under applicable "know your
customer" and anti-money laundering rules and regulations, including without
limitation the U.S.A. Patriot Act.
7. After giving effect to the Transactions, the Borrower, the Acquired
Business and their respective subsidiaries shall have no outstanding
indebtedness or preferred stock other than (i) the loans and other extensions of
credit under the Bridge Facility, (ii) any indebtedness in respect of the Bank
Facilities, (iii) preferred stock outstanding on the date hereof or any right,
warrant or other agreement to issue preferred stock outstanding under agreements
in effect as of the date hereof, (iv) purchase money indebtedness and capital
leases in connection with the acquisition of equipment and real estate used in
connection with the business, (v) $132.5 million of your 3% senior subordinated
convertible notes due 2016 and (vi) other limited indebtedness for borrowed
money to be agreed upon.
8. All material governmental consents and approvals required as a
condition to the consummation of the Tender Offer under the terms of the
Acquisition Agreement shall have been obtained and shall remain in effect and
all applicable waiting periods shall have expired or been terminated and all
other foreign antitrust and competition approvals required to consummate the
Tender Offer and, if applicable, the One-Step Merger, shall have been obtained
(in the case of foreign legal requirements or approvals, only if such legal
requirements or approvals: (a) would have suspensory effect, (b) if not obtained
would reasonably be expected to result in material limitations on the ownership
or operation by the Borrower of the assets of the Borrower, its subsidiaries or
the Acquired Business or (c) if not obtained, would subject the Borrower, Merger
Sub or the Acquired Business to the payment of a material fine or penalty); and
no law or regulation shall be applicable in the reasonable judgment of UBS and
GE Capital that restrains, prevents or imposes materially adverse conditions
upon the Transactions or the Bridge Facility.
9. All costs, fees and expenses of UBS and GE Capital (including the
reasonable fees and expenses of counsel for each of UBS and GE Capital) shall
have been paid.