Exhibit: (b)(1)
(LASALLE BANK LOGO) LASALLE BANK, N.A.
One Metropolitan Square
211 North Broadway, Suite 4050
St. Louis, Missouri 63102-2711
(314) 613-1902
Fax: (314) 621-1612
andrew.dawson@abnamro.com
ANDREW K. DAWSON
First Vice President and
Deputy Division Head
February 27, 2004
Mr. Michael Coleman
Chairman and CEO
Integrity Media, Inc.
1000 Cody Road
Mobile, AL 36695
Dear Mike:
LaSalle Bank N.A. (the "Bank" or "LBNA") is pleased to provide you with the
following $22,636,666 financing commitment. In addition, while use of interest
rate protection products is not required, the Bank has obtained credit approval
sufficient to support interest rate protection products on a notional amount of
$11,000,000. Terms and conditions of the commitment are as follows:
BORROWERS: Integrity Media, Inc., Integrity Publishers, Inc., Integrity
Direct, LLC and INO Records, LLC.
FACILITIES: 1) $12,000,000 secured Line of Credit with a $1,000,000
sub-limit for the issuance of trade and/or standby letters
of credit.
2) $6,200,000 secured Term Loan A.
3) $4,436,666 secured Mortgage Term Loan B.
BALANCES ASSUME A CLOSING DURING 2Q 2004.
GUARANTOR: N/A
PURPOSE: 1) Finance ongoing working capital requirements, and general
corporate purposes.
2) To refinance existing senior indebtedness and to fund a
portion of the pending corporate finance transaction.
3) To refinance existing senior indebtedness.
MATURITY: 1-3) Five years from closing.
RATE: At the option of Borrower; interest on all loans shall accrue at
one of the following indices plus the applicable margin
("Applicable Margin") for such index selected as shown under the
Pricing section below:
LIBOR: The London Interbank Offered Rate ("LIBOR") as quoted by
LBNA, for one, two, three or six month ("Interest Period") dollar
deposits as offered by LaSalle to prime international lenders in
the offshore market at 11:00 am London time three business days
prior to the borrowing date, adjusted for statutory reserve
requirements.
Base Rate: The higher of (a) the rate publicly announced from
time to time by LaSalle as its "Prime Rate" and (b) the Federal
Funds Rate plus one-half of one percent per annum.
Calculations: All calculations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed. Interest
shall be payable quarterly in arrears, in the case of the Base
Rate option, and on the last day of each interest period in the
case of the LIBOR option, however, in no event less than every
three months.
[LASALLE BANK LOGO]
APPLICABLE Tied to the Senior Leverage Ratio (vs. prior Total Leverage
MARGIN: ratio); LIBOR options include 1, 2, 3, or 6 month contracts.
<Table>
<Caption>
Facility 1 Facility 2/3
Senior Debt to LIBOR LIBOR Facility 1/2/3 Line of Credit
EBITDA Margin Margin Prime Unused Fee
----------------- ----------- ------------ -------------- --------------
> 2.00 - 2.50x 300 bps 325 bps 75 bps 50 bps
-
> 1.50x - < 2.00x 275 bps 300 bps 50 bps 37.5 bps
-
> 1.00x - < 1.50x 250 bps 275 bps 25 bps 25 bps
-
< 1.00 225 bps 250 bps 25 bps 25 bps
</Table>
FEES: UNUSED FEE: - Tied to pricing ratio (see grid above);
payable quarterly in arrears.
L/C FEE: - Equal to the applicable Facility 1 LIBOR
Margin; payable quarterly in arrears.
AMENDMENT FEE: - 0.50% on the incremental increase of $3.0
million on the line of credit ($15,000)
NEW.
- 1.00% on the $1.5 million incremental
increase to Term Loan A ($15,000) NEW.
REPAYMENT: 1) Revolving, interest payable quarterly.
2) Quarterly principal payments of $258,333 plus interest;
total annual payments of $1,033,333; 6-year amortization;
balloon at maturity of $1,033,333.
3) Quarterly principal payments of $73,944 plus interest;
total annual payments of $295,778; 15-year amortization;
balloon at maturity of $2,957,777.
COLLATERAL: Secured by a first perfected lien on all assets of the
Company, including but not limited to the following: accounts
receivable, inventory, real estate, copyrights, song catalogs,
product masters, and general intangibles. In addition, LBNA
has a 65% pledge on the stock of the foreign subsidiary,
Sarepta. Advances under the line of credit will continue to be
governed by an 80% advance rate on eligible accounts
receivable and a 50% advance rate on eligible inventory. All
facilities are cross-defaulted and cross-collateralized,
except, the mortgage will only serve as collateral for the
term loans.
COVENANTS:
REVISED COVENANT STRUCTURE TO INCLUDE THE FOLLOWING (SPECIFIC LEVELS TO BE
NEGOTIATED):
1. Maximum senior funded debt to EBITDA
2. Minimum fixed charge ratio
3. Minimum net worth
4. Maximum capital expenditures
OTHER
REQUIREMENTS: A) Borrower agrees to pay all reasonable expenses
associated with the cost of documenting and closing the
loans, including but not limited to attorneys fees, UCC
filings, and tax lien and judgment searches etc.
B) Borrower agrees to maintain LBNA as its primary bank of
account.
C) Loan Documentation satisfactory to LaSalle Bank N.A.
D) No material adverse change in the operating performance
of the Borrower.
E) Satisfactory review of corporate finance related
structure and documentation.
(LASALLE BANK LOGO)
F) Bank commitment subject to the Company successfully raising a
minimum of $15,000,000 in unsecured subordinated debt at closing,
the terms and conditions of such debt to be acceptable to LaSalle
Bank NA.
G) No prepayment penalties.
H) Customary representations and warranties.
I) Customary affirmative and negative covenants.
J) Customary events of default.
INDEMNIFICATION: The Borrower shall indemnify the Bank from and against all
losses, liabilities, claims, damages, or expenses relating to
the Facility, the Borrower's use of the Facility, including
but not limited to, reasonable attorneys fees and settlement
costs.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT,
ARE NOT ENFORCEABLE. TO PROTECT BORROWER AND THE BANK FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ANY AGREEMENTS REACHED BY BORROWER AND THE BANK COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH ARE A COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENTS BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING
TO MODIFY IT.
Mike, on behalf of myself, Bob Holmes and LaSalle Bank N.A., we are pleased to
provide you with this financing commitment. We look forward to expanding the
relationship between LaSalle Bank and Integrity Media. If not acted upon, this
financing commitment will expire on Friday, June 27, 2004 at 5:00 p.m. (CST).
Please call me should you have any questions or comments.
Regards,
/s/ Andrew K. Dawson
Andrew K. Dawson
ACCEPTED BY:
/s/ Donald L. Ellington Sec/Treas - CFO 2/27/04
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