Commitment Letter dated November 18, 2018
Exhibit 2.2
EXECUTION VERSION
JPMORGAN CHASE BANK, N.A. 270 Park Avenue New York, New York 10017 | CREDIT SUISSE LOAN FUNDING LLC CREDIT SUISSE AG Eleven Madison Avenue New York, New York 10010 |
CONFIDENTIAL
November 18, 2018
Project Motion
Commitment Letter
Colfax Corporation
420 National Business Parkway, 5th Floor
Annapolis Junction, MD 20701
Attention: Christopher Hix, Chief Financial Officer
Ladies and Gentlemen:
You have advised JPMorgan Chase Bank, N.A. (JPMorgan), Credit Suisse AG (acting through such of its affiliates or branches as it deems appropriate, CS), and Credit Suisse Loan Funding LLC (CS Securities and, together with CS and their respective affiliates, Credit Suisse; JPMorgan and Credit Suisse are collectively referred to herein as we or us) that Colfax Corporation (the Borrower or you) intends to acquire (the Acquisition), directly or indirectly, the company you have identified to us as Motion (the Target) and consummate the other transactions described in the Transaction Summary attached hereto as Exhibit A (the Transactions). Capitalized terms used but not defined herein will have the meanings assigned to them in the Term Sheets (as defined below).
We understand that the sources of funds required to fund the Acquisition consideration and to pay fees, costs and expenses in connection with the Transactions will consist of $3.290 billion in gross cash proceeds from a combination of (i) the issuance of senior unsecured notes and/or convertible notes (which may include mandatorily convertible notes) (collectively, the Senior Notes) in a Rule 144A or other private placement, (ii) the issuance of equity interests, convertible preferred stock (including mandatory convertible preferred securities), other equity-linked securities (including tangible equity units or other stock purchase contracts) and/or any combination of one or more of the foregoing (including units representing one or more of the foregoing) of the Borrower in a registered offering (the Equity Securities), (iii) the incurrence of the Take-out Term Facilities (as defined below), (iv) the Closing Date Revolver Draw (as defined in Exhibit A) and any cash on hand and/or (v) if and only to the extent that the Bridge Facility (as defined below) is not reduced in accordance with the Bridge Facility Term Sheet (as defined below) on or prior to the Closing Date (as defined in Exhibit A), borrowings by the Borrower under a new senior unsecured bridge facility (the Bridge Facility) comprised of two tranches: (x) a tranche of $1.60 billion of senior unsecured term loans (Tranche 1) and (y) a tranche of $1.69 billion of senior unsecured term loans (Tranche 2), as described in Exhibit B to the Commitment Letter (the Bridge Facility Term Sheet).
In connection with the foregoing, you have advised us that you intend, prior to or substantially concurrently with such entry into the Bridge Facility, (i) to enter into an amendment to the Existing Credit Agreement (as defined in Exhibit A), which amendment (or amendment and restatement) (the Amendment and the Existing Credit Agreement as amended by the Amendment, the Amended
Facility) will (A) amend the total leverage ratio financial maintenance covenant set forth therein such that the maximum permitted total leverage ratio shall be 6.00:1.00, with a step-down to (i) 5.50:1.00 at the end of the second fiscal quarter following the Closing Date, (ii) 4.00:1.00 at the end of the sixth fiscal quarter following the Closing Date, and (iii) 3.50:1.00 at the end of the eighth fiscal quarter following the Closing Date, (B) amend Section 7.02 thereof to permit the incurrence of the Senior Notes, the Equity Securities and the Bridge Facility, (C) amend Section 7.06 thereof to permit the Acquisition, (D) limit the conditions to the availability of the revolving commitments under the Existing Credit Agreement on the Closing Date with respect to the Closing Date Revolver Draw to the conditions described in Exhibit C, (E) add a springing collateral provision, which shall require the obligations under the facility to be secured within 45 days following a Specified Collateral Event (as defined below) (or such later date as the Administrative Agent (as defined below) may agree to in its sole discretion) by substantially all personal property of the Borrower and its domestic subsidiaries (subject to customary excluded assets provisions to be mutually agreed upon), (F) modify the acquisition holiday provisions set forth therein to allow the Borrower to exercise the acquisition holiday on and after the end of the sixth fiscal quarter following the Closing Date and increase the maximum permitted total leverage ratio to 4.50:1.00 for the fiscal quarter in which the Borrower exercises the acquisition holiday and the immediately three following fiscal quarters, (G) extend the maturity date of the credit facilities under the Existing Credit Agreement to the fifth anniversary of the Closing Date and (H) effect such other amendments as agreed by us and you (the amendments set forth in clauses (A) through (E), the Required Amendments; and the amendments set forth in clauses (F) through (H), the Requested Amendments) and (ii) to solicit the consents required to permit the Required Amendments (such consents, the Required Consents) and the consents required to permit the Requested Amendments (such consents, the Requested Consents). You have also advised us that you wish to engage us to use commercially reasonable efforts to arrange for the Amendment in cooperation with the administrative agent under the Existing Credit Agreement. For purposes hereof, a Specified Collateral Event shall be deemed to have occurred if the Total Leverage Ratio (as defined in the Existing Credit Agreement) shall be greater than or equal to 4.50:1.00 for two consecutive fiscal quarters following the fourth fiscal quarter ending after the Closing Date.
Furthermore, you have advised us that if the Required Consents cannot be obtained from the lenders under the Existing Credit Agreement (the Existing Lenders), you will request us to acquire by assignment on or prior to the Closing Date at par and pursuant to customary documentation, sufficient loans and/or commitments of non-consenting lenders under the Existing Credit Agreement necessary to obtain the Required Consents (such necessary financing, the Consent Financing). In addition, you have advised us that if the Consent Financing cannot be obtained, you will request us to provide the financing necessary (the Backstop Facility) to replace the Existing Credit Agreement with a new credit agreement with substantially the same terms and conditions as the Existing Credit Agreement, modified to reflect (x) the Required Amendments and (y) the reasonable administrative, agency, operational and legal requirements of the Administrative Agent (as defined below) (the financing contemplated by clause (ii), the Backstop Financing). It is hereby understood and agreed, for the avoidance of doubt, that (A) the Backstop Facility shall only be available under this commitment letter (this Commitment Letter) in lieu of, and not in addition to the Amended Facility and (B) the Backstop Facility shall only be available under this Commitment Letter if the Amended Facility has not been entered into by the Borrower and/or any of its subsidiaries.
In addition, you have requested that we agree to use commercially reasonable efforts to structure, arrange and syndicate (a) a $1.3 billion five-year revolving credit facility (the New Revolving Facility) in lieu of the Amended Facility or the Backstop Facility, (b) a $500.0 million two-year senior unsecured term loan A facility (2-Year Term Facility), which may be in the form of an incremental term facility under the Existing Credit Agreement and (c) a $700.0 million five-year senior unsecured term loan A facility (the 5-Year Term Facility; the 2-Year Term Facility and the 5-Year Term Facility are
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collectively referred to herein as the Take-out Term Facilities; the New Revolving Facility, the 2-Year Term Facility and the 5-Year Term Facility are collectively referred to herein as the Take-out Facilities; the Backstop Facility, the Amended Facility, the Bridge Facility and the Take-out Facilities are referred to herein collectively as the Facilities), in each case, the proceeds of which shall be used to refinance and/or reduce the commitments under all or a portion of the other Facilities and, in the case of the New Revolving Facility, the revolving credit facility evidenced by the Existing Credit Agreement. The Take-out Facilities shall have conditions to borrowings thereunder identical to, or no more onerous than, the conditions set forth in Exhibit C to this Commitment Letter and otherwise have substantially the same terms and conditions as the Existing Credit Agreement, with modifications to reflect (i) the Required Amendments, (ii) in the case of the 2-Year Term Facility, a maturity date occurring on the second anniversary of the effective date thereof, (iii) in the case of the 5-Year Term Facility, a maturity date occurring on the fifth anniversary of the effective date thereof, (iv) the reasonable administrative, agency, operational and legal requirements of the Administrative Agent and (v) other changes mutually agreed.
1. | Commitments and Engagements. |
In connection with the Transactions,
(i) | (x) JPMorgan is pleased to advise you of its several commitment to provide 65% of the aggregate principal amount of the Bridge Facility and (y) Credit Suisse is pleased to advise you of its several commitment to provide 35% of the aggregate principal amount of the Bridge Facility, in each case, subject solely to the conditions set forth in Exhibit C to this Commitment Letter, the Bridge Facility Term Sheet and the Summary of Conditions attached hereto as Exhibit C (the Conditions Exhibit; and, together with the Transaction Summary attached hereto as Exhibit A and the Bridge Facility Term Sheet, the Term Sheets); |
(ii) | we are pleased to advise you of our agreement to use commercially reasonable efforts to solicit the Required Consents and the Requested Consents (the Consent Solicitation) from the Existing Lenders (it being understood that, notwithstanding anything herein to the contrary, there is no guarantee that the Required Consents or the Requested Consents can be obtained and we shall not be obligated to pay any amount in connection with obtaining any such consents); |
(iii) | if the Amendment is not obtained, (x) JPMorgan is pleased to advise you of its commitment to provide (A) 65% of principal amount of the Consent Financing and (B) 65% of the aggregate principal amount of the Backstop Facility and (y) Credit Suisse is pleased to advise you of its commitment to provide (A) 35% of principal amount of the Consent Financing and (B) 35% of the aggregate principal amount of the Backstop Facility, in each case, subject solely to the conditions set forth in the Conditions Exhibit; and |
(iv) | we are pleased to advise you of our agreement to use commercially reasonable efforts to structure, arrange and syndicate the Take-out Facilities. |
The term Commitment Party or Commitment Parties contained herein shall refer to JPMorgan and Credit Suisse, collectively.
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2. | Titles and Roles. |
It is agreed that (i) JPMorgan and CS Securities will act as joint lead arrangers and bookrunners for the Bridge Facility (acting in such capacities, collectively, the Bridge Lead Arrangers), (ii) JPMorgan and CS Securities will act as joint lead arrangers and bookrunners for the Backstop Financing (acting in such capacities, collectively, the Backstop Lead Arrangers), (iii) JPMorgan and CS Securities will act as joint lead arrangers and bookrunners for the Take-out Facilities (acting in such capacities, collectively, the Take-out Lead Arrangers) and (iv) JPMorgan will act as sole and exclusive administrative agent (the Administrative Agent) for each of the Facilities (as defined in Exhibit A) (other than the Amended Facility unless the existing administrative agent thereunder resigns), in each case upon the terms and subject to the conditions set forth in this Commitment Letter and in the Term Sheets. Notwithstanding the foregoing, the Borrower agrees that JPMorgan may perform its responsibilities hereunder through its affiliate, J.P. Morgan Securities LLC. It is agreed that (i) in the Confidential Information Memorandum referred to below and in all other marketing materials or advertisements related to the Facilities, JPMorgan shall have left side designation and shall appear on the top left and shall hold the leading role and responsibility customarily associated with such top left placement and (ii) CS Securities will be placed to the immediate right of JPMorgan. The term Lead Arrangers contained herein shall refer to (i) the Backstop Lead Arrangers, collectively, in respect of the Backstop Facility, (ii) the Bridge Lead Arrangers, collectively, in respect of the Bridge Facility and (iii) the Take-out Lead Arrangers, collectively, in respect of the Take-out Facilities.
You may, on or prior to the 15th business day after the Acceptance Date (as defined below), appoint additional lead arrangers, bookrunners, managers, agents or co-agents in respect of Tranche 1 of the Bridge Facility or confer other titles in respect of Tranche 1 of the Bridge Facility (each such person, an Additional Arranger) and you may allocate up to 30% in the aggregate of the commitments and corresponding compensatory economics with respect to Tranche 1 of the Bridge Facility to such Additional Arrangers (it being agreed that (x) each such Additional Arranger (or its affiliate) shall assume a proportion of the commitments with respect to Tranche 1 of the Bridge Facility that is equal to the proportion of the economics allocated to such Additional Arranger (or its affiliate) in respect of Tranche 1 of the Bridge Facility, (y) the economics (expressed as a percentage of the relevant persons commitments) granted to any Additional Arranger (or its affiliate) in respect of Tranche 1 of the Bridge Facility shall not exceed the economics (expressed as a percentage of the relevant persons commitments) granted to any of the relevant Commitment Parties party hereto as of the date hereof in respect of Tranche 1 of the Bridge Facility and (z) the commitment amounts of, and the economics allocated to, the Commitment Parties party hereto immediately prior to such appointment in respect of Tranche 1 of the Bridge Facility will be proportionately reduced by the commitment amounts of, and economics allocated to, each such Additional Arranger (or its affiliate), in each case upon the execution and delivery by such Additional Arranger (or its affiliate) of joinder documentation (which may be in the form of an amendment and restatement of this Commitment Letter) and a sell-down letter agreement, in each case in form and substance reasonably satisfactory to the Lead Arrangers and you, and, thereafter, each such Additional Arranger (and its affiliate) shall, solely to the extent relating to Tranche 1 of the Bridge Facility, constitute a Commitment Party, a Lead Arranger and a Bridge Lead Arranger under this Commitment Letter and under the Fee Letters referred to below.
Except as provided above, (a) no additional agents, co-agents, arrangers, co-arrangers, managers, co-managers, bookrunners or co-bookrunners will be appointed and no other titles will be awarded in connection with the Bridge Facility, the Consent Solicitation, the Amendment, the Backstop Financing or the Take-out Facilities and (b) no compensation (other than as expressly contemplated by the Term Sheets or the Fee Letters referred to below) will be paid in connection with the Bridge Facility, the Consent Solicitation, the Amendment, the Backstop Financing or the Take-out Facilities, in each case unless you and we so agree in writing; provided that, the foregoing clauses (a) and (b) shall not prohibit the existing administrative agent under the Existing Credit Agreement from continuing to act as administrative agent under the Amended Facility (and being compensated therefor), notwithstanding any execution of the Amendment or the Consent Financing.
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You also hereby engage the Lead Arrangers (or one or more of their designated affiliates) on terms to be agreed to act as joint lead arrangers and joint bookrunners in connection with any other credit facilities entered into by the Borrower or any of its subsidiaries within one year of the date hereof the proceeds of which are used to refinance all or a portion of the Facilities (any such credit facility, a Takeout Financing). It is agreed that in any confidential information memoranda or other marketing materials or advertisements related to any Take-out Financing in which the Lead Arrangers elect to participate, JPMorgan shall have left side designation and shall appear on the top left and shall hold the leading role and responsibility customarily associated with such top left placement and CS Securities will be placed to the immediate right of JPMorgan. In addition, you hereby agree to offer JPMorgan (or one or more of its designated affiliates) the opportunity to be the sole counterparty in connection with any interest rate or foreign currency derivatives, equity (including any forward contracts) or equity-derivatives contracts (including convertible hedge and structured share repurchases), commodity or currency transactions or currency conversions, caps, options or any other hedging agreements related to the Acquisition or the Facilities (any such engagement, a Hedging Arrangement).
In connection with any Take-out Financing in which any of the Lead Arrangers elect to participate or in any of the Take-out Facilities, the Borrower and such Lead Arrangers will enter into the appropriate form of agreement relating to the type of transaction involved and containing customary terms and conditions acceptable to the Borrower and such Lead Arrangers. In addition, in connection with any Hedging Arrangement in which JPMorgan elects to participate, the Borrower and JPMorgan will enter into the appropriate form of agreement relating to the type of transaction involved and containing customary terms and conditions acceptable to the Borrower and JPMorgan.
3. | Syndication and Consent Solicitation. |
The Lead Arrangers reserve the right, prior to or after the execution of definitive documentation for each of the Bridge Facility (the Bridge Facility Documentation) and the Backstop Facility (the Backstop Facility Documentation; and together with Bridge Facility Documentation, the Facilities Documentation; it being agreed that the terms and conditions of the Bridge Facility Documentation shall be based on and substantially similar to the Existing Credit Agreement, as modified (i) by the Bridge Facility Term Sheet, (ii) to reflect the Required Amendments, (iii) to reflect the reasonable administrative, agency, operational and legal requirements of the Administrative Agent (as defined below) and (iv) to contain such other terms as the Borrower and the Lead Arrangers shall reasonably agree), to syndicate all or a portion of the commitments (if any) hereunder in respect of each of the Facilities to one or more financial institutions reasonably satisfactory to you that will become parties to such definitive documentation pursuant to syndications to be managed by us (the financial institutions becoming parties to the Bridge Facility Documentation being collectively referred to herein as the Bridge Lenders; and the financial institutions becoming parties to the Backstop Facility Documentation being collectively referred to herein as the Backstop Lenders; and the Bridge Lenders and the Backstop Lenders collectively, the Lenders); provided, however, that notwithstanding the Lead Arrangers right to syndicate each of the Facilities and receive commitments with respect thereto, (a) no Commitment Party shall be relieved, released or novated from its obligations hereunder (i) in respect of the Bridge Facility (including its obligation to fund the Bridge Facility on the Closing Date if necessary) in connection with any syndication, assignment or participation of the Bridge Facility, including its commitment in respect thereof, until after the initial funding under the Bridge Facility on the Closing Date has occurred and (ii) in respect of the Backstop Facility (including its obligation to fund the Backstop Facility on the Closing Date if necessary) in connection with any syndication, assignment or participation of the Backstop Facility, including its commitment in respect thereof, until after the effectiveness of the Required Amendments or the initial funding under the Backstop Facility on the Closing Date, as applicable, has
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occurred, (b) no assignment or novation shall become effective with respect to all or any portion of any Commitment Partys commitment in respect of the Facilities until (i) in respect of the Bridge Facility, after the initial funding under the Bridge Facility on the Closing Date has occurred and (ii) in respect of the Backstop Facility, after the initial funding under the Backstop Facility on the Closing Date has occurred and (c) unless you otherwise agree in writing, the Commitment Parties shall retain exclusive control over all rights and obligations with respect to their commitments in respect of the Facilities, including all rights with respect to consents, modifications, supplements, waivers and amendments, until (i) in respect of the Bridge Facility, after the initial funding under the Bridge Facility on the Closing Date has occurred, and (ii) in respect of the Backstop Facility, after the initial funding under the Backstop Facility on the Closing Date has occurred. You understand that each of the Facilities may be separately syndicated.
The Lead Arrangers may decide to commence syndication and Consent Solicitation efforts promptly, and you agree, until the earlier of (x) the date upon which a Successful Syndication (as defined in the Arranger Fee Letter (as defined below)) is achieved and (y) the date that is 60 days after the Closing Date (such earlier date, the Syndication Date), to actively assist (and to use your commercially reasonable efforts, to the extent not in contravention of the terms of the Merger Agreement (as defined in Exhibit A), to cause the Target to actively assist) the Lead Arrangers in completing satisfactory syndications and a satisfactory Consent Solicitation. Such assistance shall include (a) your using commercially reasonable efforts to ensure that the syndication and Consent Solicitation efforts benefit from your existing banking relationships, (b) direct contact during the syndication and Consent Solicitation efforts between your senior management, representatives and advisors, the proposed Lenders and the Existing Lenders (and using your commercially reasonable efforts, to the extent not in contravention of the terms of the Merger Agreement, to ensure such contact between senior management of the Target and the proposed Lenders and the Existing Lenders), (c) your assistance (and using commercially reasonable efforts, to the extent not in contravention of the terms of the Merger Agreement, to cause the Target to assist) in the preparation of a Confidential Information Memorandum for each of the Facilities and other customary marketing materials to be used in connection with the syndications and the Consent Solicitation (collectively, the Information Materials), (d) prior to the launch of the syndication, using your commercially reasonable efforts to maintain (but not retain a specific rating) a public corporate credit rating and a public corporate family rating in respect of the Borrower from S&P Global Ratings, a division of S&P Global Inc. (S&P) and Moodys Investors Service, Inc. (Moodys), respectively, and ratings for the existing 3.250% senior notes due 2025 issued by the Borrower from each of S&P and Moodys, (e) prior to the launch of the offering of the Senior Notes, using your commercially reasonable efforts to obtain (but not retain a specific rating) an updated public corporate credit rating and an updated public corporate family rating in respect of the Borrower from S&P and Moodys, respectively, and ratings for the Senior Notes from each of S&P and Moodys, (f) the hosting, with the Lead Arrangers, of one or more meetings of or telephone conference calls with prospective Lenders at times and locations to be mutually agreed upon, (and using your commercially reasonable efforts, to the extent not in contravention of the terms of the Merger Agreement, to cause the officers of the Target to be available for such meetings) and (g) prior to the Syndication Date, there being no competing issues, offerings, placements or arrangements of debt securities or commercial bank or other credit facilities of you or your subsidiaries being issued, offered, placed or arranged (other than the Facilities) without the consent of the Lead Arrangers if such issuance, offering, placement or arrangement would reasonably be expected to materially impair the primary syndications of the Facilities; provided that, it is understood that the foregoing shall not (a) limit your ability to (i) obtain the issuance of any letter of credit, bank guaranty or similar instrument, (ii) incur intercompany indebtedness, (iii) enter into any letter of credit, bilateral line of credit for working capital purposes of your foreign subsidiaries or overdraft facility, in each case, in the ordinary course of business, (iv) incur purchase money indebtedness in the ordinary course of business or (v) enter into capital leases; or (b) limit the ability of the Target to incur debt permitted under the Merger Agreement (the debt described in the preceding clauses (a) and (b), the
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Permitted Surviving Debt). Notwithstanding anything to the contrary contained in this Commitment Letter, the Term Sheets, the Fee Letters or any other letter agreement or undertaking concerning the financing of the Transactions to the contrary, none of the compliance with the foregoing provisions of this paragraph or any syndications of the Facilities or the Consent Solicitation constitute a condition to the commitments hereunder or the funding of the Bridge Facility or (if applicable) the Backstop Facility on the Closing Date and in no event shall the commencement of syndication or a successful syndication of the Facilities or the Consent Solicitation constitute a condition to the availability of the Facilities on the Closing Date nor reduce the amount of our commitments hereunder with respect to any of the Facilities.
It is understood and agreed that the Lead Arrangers will, after consultation with and in a manner reasonably acceptable to you, manage all aspects of the syndications and Consent Solicitation, including but not limited to selection of Lenders (which Lenders shall be reasonably satisfactory to you), the determination of when the Lead Arrangers will approach potential Lenders and Existing Lenders and the time of acceptance of the Lenders commitments and the final allocations of the commitments among the Lenders. You hereby acknowledge that the Lead Arrangers will have no responsibility other than to arrange the syndications and Consent Solicitation as set forth herein, the Lead Arrangers are acting solely in the capacity of an arms-length contractual counterparty to the Borrower with respect to the arrangement of the Facilities, the Consent Solicitation, the Amendment and the Backstop Financing (including in connection with determining the terms of the Facilities and the Amendment) and not as a financial advisor or a fiduciary to, or an agent of, the Borrower or any other person. You agree that the Commitment Parties will act under this Commitment Letter as independent contractors and that nothing in this Commitment Letter will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between the Commitment Parties and you and your respective equity holders or your and their respective affiliates. You acknowledge and agree that (i) the transactions contemplated by this Commitment Letter are arms-length commercial transactions between the Commitment Parties and, if applicable, their affiliates, on the one hand, and you, on the other, (ii) in connection therewith and with the process leading to such transaction the Commitment Parties and, if applicable, their affiliates, are acting solely as a principal and have not been, are not and will not be acting as an advisor, agent or fiduciary of you, your management, equity holders, creditors, affiliates or any other person and (iii) the Commitment Parties and, if applicable, their affiliates, have not assumed an advisory or fiduciary responsibility or any other obligation in favor of you or your affiliates with respect to the transactions contemplated hereby or the process leading thereto (irrespective of whether the Commitment Parties or any of their affiliates have advised or are currently advising you or your affiliates on other matters) except the obligations expressly set forth in this Commitment Letter. You further acknowledge and agree that (i) you are responsible for making your own independent judgment with respect to such transactions and the process leading thereto, (ii) you are capable of evaluating and understand and accept the terms, risks and conditions of the transactions contemplated hereby, and the Commitment Parties shall have no responsibility or liability to you with respect thereto, and (iii) as Lead Arrangers, JPMorgan and CS Securities are not advising the Borrower as to any legal, tax, investment, accounting, regulatory or any other matters in any jurisdiction, and you shall consult with your own advisors concerning such matters and you shall be responsible for making your own independent investigation and appraisal of the transactions contemplated hereby. Any review by any Lead Arranger of the Borrower, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of such Lead Arranger and shall not be on behalf of the Borrower. The Borrower agrees that it will not assert any claim against any Lead Arranger based on an alleged breach of fiduciary duty by such Lead Arranger in connection with this Commitment Letter and the transactions contemplated hereby.
To assist the Lead Arrangers in their syndication and Consent Solicitation efforts, you agree to promptly prepare and provide to the Lead Arrangers (and use commercially reasonable efforts, to the extent not in contravention of the terms of the Merger Agreement, to cause the Target to prepare and
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provide) all customary information with respect to you, the Target and your and its respective subsidiaries, the Transactions and the other transactions contemplated hereby, including financial information and projections (the Projections) as the Lead Arrangers may reasonably request in connection with the structuring, arrangement and syndications of the Facilities and the Consent Solicitation. Notwithstanding anything in this Section 3, the only financial statements that shall be required to be provided to the Commitment Parties in connection with the syndication of the Facilities and the Consent Solicitation shall be those required to be delivered pursuant to paragraphs 4 and 5 of Exhibit C. At the request of the Lead Arrangers, you agree to assist the Lead Arrangers in preparing an additional version of the Information Materials (the Public Side Version) to be used by prospective Lenders public-side employees and representatives (Public-Siders) who do not wish to receive material non-public information (within the meaning of the United States Federal or State securities laws) with respect to you, the Target, your and its respective affiliates and any of your or its respective securities (such material non-public information, MNPI) and who may be engaged in investment and other market-related activities with respect to your, the Targets or your and its respective affiliates securities or loans. Before distribution of any Information Materials, (a) you agree to execute and deliver to the Lead Arrangers (i) a customary letter in which you authorize distribution of the Information Materials to a prospective Lenders employees willing to receive MNPI (Private-Siders) and (ii) a separate customary letter in which you authorize distribution of the Public Side Version to Public-Siders and represent that no MNPI is contained therein and (b) you agree to identify that portion of the Information Materials that may be distributed to Public-Siders as not containing MNPI, which, at a minimum, shall mean that the word PUBLIC shall appear prominently on the first page thereof (and you agree that, by marking Information Materials as PUBLIC, you shall be deemed to have authorized the Lead Arrangers and the prospective Lenders to treat such Information Materials as not containing MNPI (it being understood that you shall not be under any obligation to mark the Information Materials as PUBLIC)). You acknowledge that the Lead Arrangers will make available the Information Materials on a confidential basis to the proposed syndicate of Lenders and to the Existing Lenders by posting such information on a deal site on IntraLinks, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by JPMorgan to be its electronic transmission system (an Electronic Platform). You agree that the following documents may be distributed to both Private-Siders and Public-Siders, unless you advise the Lead Arrangers within a reasonable time after receipt of such materials for review that such materials should only be distributed to Private-Siders: (1) administrative materials prepared by the Lead Arrangers for prospective Lenders and Existing Lenders (such as a lender meeting invitation, bank allocation, if any, and funding and closing memoranda), (2) the Term Sheets and notification of changes in terms and conditions of any Facility and (3) drafts and final versions of the Facilities Documentation and the Amendment. If you so advise the Lead Arrangers that any of the foregoing should be distributed only to Private-Siders, then Public-Siders will not receive such materials without further discussions with you. You acknowledge that publishing debt analysts employed by the Lead Arrangers and their affiliates who are Public-Siders may participate in any meetings held pursuant to clause (f) of the third preceding paragraph; provided that such analysts shall not publish any information obtained from such meetings (i) with respect to the Bridge Facility, until the syndication of the Bridge Facility has been completed upon the making of allocations by the Lead Arrangers freeing the Bridge Facility to trade, (ii) with respect to the Backstop Facility, until the syndication of the Backstop Facility has been completed upon the making of allocations by the Lead Arrangers freeing the Backstop Facility to trade, (iii) with respect to any Take-out Facility, until the syndication of such Take-out Facility has been completed upon the making of allocations by the Lead Arrangers freeing such Take-out Facility to trade or (iv) in violation of any confidentiality agreement between you and any other party hereto.
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4. | Information. |
You hereby represent and warrant (with respect to any information or data relating to the Target, the following representations and warranties shall be made solely to your knowledge prior to the Closing Date) that (a) all written information and written data (other than the Projections and other forward-looking information and other than information of a general economic or industry specific nature) (such information and data, the Information) that has been or will be made available to us by or on behalf of you or your subsidiaries, or any of your representatives or affiliates, when taken as a whole, is or will be, when furnished, correct in all material respects and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made (giving effect to all supplements and updates provided thereto from time to time) and (b) the Projections that have been or will be made available to us by or on behalf of you or your subsidiaries, or any of your representatives or affiliates, have been and will be prepared in good faith based upon accounting principles consistent in all material respects with your historical audited financial statements and the historical audited financial statements of the Target and upon assumptions that are believed by you to be reasonable at the time made (it being understood that (i) the Projections are as to future events and are not to be viewed as facts, (ii) the Projections are subject to significant uncertainties and contingencies, many of which are beyond your control, (iii) no assurance can be given that any particular Projections will be realized and (iv) actual results during the period or periods covered by any such Projections may differ significantly from the projected results and such differences may be material). You agree that if at any time from and including the date hereof until the later of the Closing Date and the Syndication Date you become aware that the representation and warranty in the immediately preceding sentence would not be satisfied if the Information and Projections were being furnished, and such representations were being made, at such time, then you will (or with respect to Information and Projections relating to the Target, use commercially reasonable efforts to prior to the Closing Date) promptly supplement the Information and the Projections so that such representation and warranty would be correct, in all material respects, under those circumstances. In arranging the Facilities, including the syndications of the Facilities, and arranging the Consent Solicitation, the Lead Arrangers (A) will be entitled to use and rely primarily on the Information and the Projections without responsibility for independent verification thereof and (B) do not assume responsibility for the accuracy or completeness of the Information or the Projections.
5. | Fees. |
As consideration for the commitments and agreements of the Commitment Parties hereunder, you agree to pay the fees as set forth in (i) the Arranger Fee Letter dated the date hereof and delivered herewith with respect to the Facilities (the Arranger Fee Letter) and (ii) the Administrative Agent Fee Letter dated the date hereof and delivered herewith with respect to the Facilities (the Administrative Agent Fee Letter; and together with the Arranger Fee Letter, the Fee Letters). Once paid, except as expressly provided in the Fee Letters, such fees shall not be refundable under any circumstances, regardless of whether the Transactions are consummated, except as otherwise agreed in writing by you and the Commitment Parties. All fees payable hereunder and under the Fee Letters shall be paid in immediately available funds in U.S. Dollars and shall not be subject to reduction by way of withholding, setoff or counterclaim or be otherwise affected by any claim or dispute related to any other matter. In addition, all fees payable hereunder shall be paid without deduction for any taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any national, state or local taxing authority, or will be grossed up by you for such amounts (provided that we remain eligible to provide an IRS Tax Form W-9 or W-8ECI with respect to such payments). All fees received by the Lead Arrangers or the Commitment Parties pursuant to the Fee Letters may be shared by the Lead Arrangers or the Commitment Parties with their affiliates as they may determine in their sole discretion.
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6. | Conditions Precedent. |
Each Commitment Partys commitments and agreements hereunder are subject solely to the satisfaction (or waiver by the Commitment Parties) of solely the conditions set forth in this Section 6 and in Exhibit C.
Notwithstanding anything in this Commitment Letter, the Term Sheets, the Fee Letters or the Facilities Documentation or any other letter agreement or other undertaking concerning the financing of the Transactions to the contrary, (a) the only representations relating to you and your subsidiaries and the Target and its subsidiaries and their respective businesses the accuracy of which shall be a condition to availability and funding of the Facilities on the Closing Date shall be (i) such of the representations made by or on behalf of the Target in the Merger Agreement as are material to the interests of the Lenders, but only to the extent that the accuracy of any such representation is a condition to your (or any of your affiliates) obligations to close the Acquisition under the Merger Agreement or you (or any of your affiliates) have the right to terminate your (or any of your affiliates) obligations under the Merger Agreement or decline to consummate the Acquisition as a result of a breach of such representations in the Merger Agreement (the Merger Agreement Representations) and (ii) the Specified Representations (as defined below), and (b) the terms of the Facilities Documentation and the Closing Deliverables (as defined in Exhibit C) shall be in a form such that they do not impair the availability and funding of the Facilities on the Closing Date if the conditions set forth in Exhibit C, in each case, limited on the Closing Date as indicated therein, are satisfied (or waived by the Commitment Parties). For purposes hereof, Specified Representations mean the representations and warranties referred to in the Term Sheets relating solely to corporate or organizational existence; organizational power and authority of the Borrower and the Guarantors to enter into and perform the applicable Facilities Documentation; due authorization, execution and delivery by the Borrower and the Guarantors of, performance of, and enforceability against the Borrower and the Guarantors of, the Facilities Documentation; no conflicts of the Facilities Documentation with the organizational documents of the Borrower and the Guarantors as it relates to entering into and performance of the Facilities Documentation; Federal Reserve margin regulations; Patriot Act (as defined below); use of proceeds not violating margin regulations, OFAC, FCPA, anti-corruption laws or sanctions imposed by the U.S. (including OFAC), the United Nations Security Council, the European Union, any European Union member state or Her Majestys Treasury of the United Kingdom; solvency as of the Closing Date (after giving effect to the Transactions) of the Borrower and its subsidiaries on a consolidated basis (solvency to be defined in a manner consistent with the manner in which solvency is determined in the solvency certificate to be delivered pursuant to paragraph 1(b) of Exhibit C); and Investment Company Act. Notwithstanding anything in this Commitment Letter, the Term Sheets or the Fee Letters to the contrary, the only conditions to availability and initial funding of the Facilities on the Closing Date are set forth in this Section 6 and in Exhibit C, in each case, limited on the Closing Date as indicated therein; it being understood and agreed that there are no other conditions (implied or otherwise) to the commitments hereunder, including compliance with the terms of this Commitment Letter, the Fee Letters and the Facilities Documentation. This paragraph, and the provisions herein, shall be referred to as the Limited Conditionality Provision.
7. | Indemnification; Expenses. |
By executing this Commitment Letter, you agree (a) to indemnify and hold harmless the Commitment Parties, their affiliates and each of their respective Related Parties (as defined below) (each, an indemnified person) from and against any and all losses, claims, damages, liabilities and expenses, joint or several, to which any such indemnified person may become subject arising out of or in connection with this Commitment Letter, the Term Sheets, the Fee Letters, the Transactions, the Facilities, the Consent Solicitation, the Amendment, the Backstop Financing or any related transaction or any claim, litigation, investigation, arbitration or proceeding relating to any of the foregoing (including in relation to enforcing the terms of this paragraph (each, a Proceeding), regardless of whether any such indemnified person is a party thereto or whether a Proceeding is initiated by or on behalf of a third party or you or any
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of your affiliates, and to reimburse each such indemnified person upon demand for any reasonable and documented out-of-pocket legal expenses of one firm of counsel for all such indemnified persons, taken as a whole, and, if necessary, of a single firm of local counsel in each appropriate jurisdiction (which may include a single firm of special counsel acting in multiple jurisdictions) for all such indemnified persons, taken as a whole (and, in the case of an actual or perceived conflict of interest where the indemnified person affected by such conflict informs you of such conflict and thereafter retains its own counsel, of another firm of counsel for such affected indemnified person and, if necessary, of a single firm of local counsel in each appropriate jurisdiction (which may include a single firm of special counsel acting in multiple jurisdictions) for such affected indemnified person) and other reasonable and documented out-of-pocket fees and expenses, in each case incurred in connection with investigating or defending any of the foregoing; provided that the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities or related expenses to the extent they (i) are found in a final and non-appealable judgment of a court of competent jurisdiction to have resulted from the willful misconduct, bad faith or gross negligence of such indemnified person, (ii) result from a claim brought by you or any of your subsidiaries against such indemnified person for material breach of such indemnified persons obligations hereunder if you or such subsidiary has obtained a final and non-appealable judgment in your or its favor on such claim as determined by a court of competent jurisdiction or (iii) result from a proceeding that does not involve an act or omission by you or any of your affiliates and that is brought by an indemnified person against any other indemnified person (other than claims against any arranger, bookrunner or agent in its capacity or in fulfilling its roles as an arranger, bookrunner or agent hereunder or any similar role with respect to the Facilities, the Consent Solicitation, the Amendment or the Backstop Financing), and (b) to reimburse the Commitment Parties and their affiliates upon presentation of a summary statement for all reasonable and documented out-of-pocket expenses (including but not limited to due diligence expenses, consultants fees and expenses, syndication expenses, travel expenses and reasonable fees, disbursements and other charges of counsel (such charges and disbursements limited to one firm of counsel and, if necessary, one firm of local counsel in each appropriate jurisdiction)) incurred in connection with the Facilities, the Consent Solicitation and the Backstop Financing and the preparation of this Commitment Letter, the Term Sheets, the Fee Letters, the Facilities Documentation, any guarantees in connection therewith and the Amendment. You shall not be liable for any settlement of any Proceeding effected without your consent (which consent shall not be unreasonably withheld, conditioned or delayed), but if settled with your written consent or if there is a judgment by a court of competent jurisdiction in any such Proceeding, you agree to indemnify and hold harmless each indemnified person from and against any and all losses, claims, damages, penalties, liabilities and expenses by reason of such settlement or judgment in accordance with the other provisions of this paragraph. You shall not, without the prior written consent of an indemnified person (which consent shall not be unreasonably withheld, conditioned or delayed), effect any settlement of any pending or threatened Proceedings in respect of which indemnity could have been sought hereunder by such indemnified person unless (a) such settlement includes an unconditional release of such indemnified person in form and substance reasonably satisfactory to such indemnified person from all liability on claims that are the subject matter of such Proceedings and (b) such settlement does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any indemnified person or any injunctive relief or other non-monetary remedy. You acknowledge that any failure to comply with your obligations under the preceding sentence may cause irreparable harm to the Commitment Parties and the other indemnified persons. Notwithstanding any other provision of this Commitment Letter, (1) no indemnified person shall be liable for any damages directly or indirectly arising from the use by others of information or other materials obtained through electronic, telecommunications or other information transmission systems, including an Electronic Platform or otherwise via the internet (except to the extent that any such damages have resulted from the willful misconduct, bad faith or gross negligence of such indemnified person (as determined by a court of competent jurisdiction in a final non-appealable judgment)), and you agree, to the extent permitted by applicable law, to not assert any claims against any indemnified person with
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respect to the foregoing (except to the extent of damages that have resulted from the willful misconduct, bad faith or gross negligence of such indemnified person (as determined by a court of competent jurisdiction in a final non-appealable judgment)) and (2) none of the indemnified persons, you or the Target or your or its respective subsidiaries or affiliates shall be liable for any special, indirect, consequential or punitive damages in connection with the Facilities, the Consent Solicitation, the Backstop Financing or the Transactions; provided that nothing contained in this paragraph shall limit your indemnity and reimbursement obligations to the extent set forth in this paragraph. For purposes hereof, Related Parties means, with respect to any person, the directors, officers, employees, agents, advisors, representatives and controlling persons of such person.
8. Sharing Information; Affiliate Activities.
You acknowledge that each Commitment Party and its affiliates may be providing debt financing, equity capital or other services (including but not limited to financial advisory services) to other companies in respect of which you may have conflicting interests regarding the transactions described herein and otherwise. No Commitment Party will use confidential information obtained from you by virtue of the transactions contemplated by this Commitment Letter or its other relationships with you in connection with the performance by such Commitment Party of services for other companies, and no Commitment Party will furnish any such information to other companies. You also acknowledge that no Commitment Party has any obligation to use in connection with the transactions contemplated by this Commitment Letter, or to furnish to you, the Target or your or their respective subsidiaries or representatives, confidential information obtained by such Commitment Party from any other company or person.
You further acknowledge that each Commitment Party is a full service securities or banking firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, each Commitment Party may provide investment banking and other financial services to, and/or acquire, hold or sell, for its own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans) and other obligations of, you, the Target and other companies with which you or the Target may have commercial or other relationships. With respect to any securities and/or financial instruments so held by any Commitment Party or any of its customers, all rights in respect of such securities and financial instruments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion.
9. Assignments; Amendments; Governing Law, Etc.
This Commitment Letter and the commitments hereunder shall not be assignable by any party hereto (except in connection with the appointment of Additional Arrangers as set forth herein), and such partys obligations hereunder may not be delegated, without the prior written consent of each Commitment Party (in the case of any such assignment or delegation by the Borrower) or the Borrower (in the case of any such assignment or delegation by any Commitment Party), and any attempted assignment without such consent shall be null and void. This Commitment Letter may not be amended or any provision hereof waived or modified except by an instrument in writing signed by each Commitment Party and you. This Commitment Letter may be executed in any number of counterparts, each of which shall be deemed 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 or other electronic transmission (in pdf or tif format) shall be effective as delivery of a manually executed counterpart of this Commitment Letter. This Commitment Letter, the Term Sheets and the Fee Letters are the only agreements that have been entered into among us with respect to the Facilities, the Consent Solicitation, the Amendment and the Backstop Financing and set forth the entire understanding of the parties with respect thereto. This Commitment Letter, the Term Sheets and the Fee
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Letters supersede all prior understandings, whether written or oral, between us with respect to the Facilities, the Consent Solicitation, the Amendment and the Backstop Financing. This Commitment Letter is intended to be solely for the benefit of the parties hereto and the indemnified persons and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto and the indemnified persons. THIS COMMITMENT LETTER AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS COMMITMENT LETTER AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; PROVIDED THAT, THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN IN DETERMINING (I) THE INTERPRETATION OF THE DEFINITION OF A MATERIAL ADVERSE EFFECT (AS DEFINED IN EXHIBIT C) AND WHETHER OR NOT A MATERIAL ADVERSE EFFECT HAS OCCURRED, (II) THE ACCURACY OF ANY MERGER AGREEMENT REPRESENTATION AND WHETHER AS A RESULT OF ANY INACCURACY THEREOF, A CONDITION TO YOUR (OR ANY OF YOUR AFFILIATES) OBLIGATIONS TO CLOSE UNDER THE MERGER AGREEMENT HAS NOT BEEN MET OR YOU (OR ANY OF YOUR AFFILIATES) HAVE THE RIGHT TO TERMINATE YOUR (OR ANY OF YOUR AFFILIATES) OBLIGATIONS UNDER THE MERGER AGREEMENT AND (III) WHETHER THE ACQUISITION HAS BEEN CONSUMMATED IN ACCORDANCE WITH THE TERMS OF THE MERGER AGREEMENT (IN EACH CASE WITHOUT REGARD TO ITS RULES OF CONFLICTS OF LAW).
Subject to the last sentence of this paragraph, each of the parties hereto irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against any other party hereto or any of their respective affiliates or any of their respective officers, directors, employees, agents and controlling persons in any way relating to the Transactions, this Commitment Letter, the Term Sheets or the Fee Letters or the performance of services hereunder or thereunder, in any forum other than the United States District Court for the Southern District of New York, sitting in the Borough of Manhattan (or, if such court lacks subject matter jurisdiction, the Supreme Court of the State of New York sitting in the Borough of Manhattan) or any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such Federal court. Each of the parties hereto hereby agrees that service of any process, summons, notice or document by registered mail addressed to such party shall be effective service of process for any suit, action or proceeding brought in any such court. Each party hereto hereby irrevocably and unconditionally waives any objection to the laying of venue of any such action, litigation or proceeding brought in any such court and any claim that any such action, litigation or proceeding has been brought in any inconvenient forum. Each party hereto hereby agrees that a final judgment in any such action, litigation or proceeding brought in any such court shall be conclusive and binding upon such party and may be enforced in any other courts to whose jurisdiction such party is or may be subject, by suit upon judgment. Nothing in this Commitment Letter, the Term Sheets or the Fee Letters shall affect any right that any Commitment Party may have to bring any action, litigation or proceeding relating to the Transactions, this Commitment Letter, the Term Sheets or the Fee Letters or the performance of services hereunder or thereunder against you or your property in the courts of any other jurisdiction.
10. WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS COMMITMENT LETTER, THE TERM SHEETS, THE FEE LETTERS OR THE
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TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE PERFORMANCE OF SERVICES HEREUNDER OR THEREUNDER (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO HERBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS COMMITMENT LETTER AND THE FEE LETTERS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
11. Binding Obligation.
Each of the parties hereto agrees that this Commitment Letter, if accepted by you in accordance with the terms hereof, is a binding and enforceable agreement with respect to the subject matter contained herein (except as may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws relating to or affecting the rights of creditors generally), including an agreement to negotiate in good faith the Facilities Documentation by the parties hereto in a manner consistent with this Commitment Letter and the Term Sheets and as promptly as reasonably practicable, it being acknowledged and agreed that the commitments provided hereunder are subject to conditions precedent as provided herein.
12. Confidentiality.
You agree that you will not disclose, directly or indirectly, this Commitment Letter, the Term Sheets, the Fee Letters, the contents of any of the foregoing or the activities of any Commitment Party pursuant hereto or thereto to any person without the prior written approval of each Commitment Party, except that you may disclose (a) this Commitment Letter, the Term Sheets, the Fee Letters and the contents hereof and thereof (i) to the Target and your and the Targets directors, officers, employees, attorneys, accountants and advisors directly involved in the consideration of this matter on a confidential and need-to-know basis (provided that any disclosure of the Fee Letters or its terms or substance to the Target or its directors, officers, employees, attorneys, accountants and advisors shall be redacted in a manner reasonably satisfactory to the Commitment Parties), (ii) pursuant to the order of any court or administrative agency or in any legal, judicial or administrative proceeding or other compulsory process or otherwise as required by applicable law or regulations (in which case you shall promptly notify us, in advance, to the extent lawfully permitted to do so), (iii) in connection with the exercise of remedies to the extent relating to this Commitment Letter, the Term Sheets or the Fee Letters and (iv) to the extent this Commitment Letter, the Term Sheets, the Fee Letters or the contents hereof and thereof become publicly available other than by reason of disclosure by you, the Target or your or their affiliates or any of your or their respective Related Parties in breach of this Commitment Letter, (b) this Commitment Letter, the Term Sheets and the contents hereof and thereof (but not the Fee Letters or the contents thereof) (i) to S&P and Moodys in connection with the Transactions and on a confidential and need-to-know basis and (ii) in any prospectus or offering memoranda relating to the Senior Notes or Equity Securities, in any syndication or other marketing materials in connection with the Facilities or the Consent Solicitation (including the Information Materials) or, to the extent required by law, in connection with any public filing, (c) the aggregate fee amount contained in the Fee Letters as part of Projections, pro forma information or a generic disclosure of aggregate sources and uses related to fee amounts in connection with the Transactions in marketing materials for the Facilities or the Consent Solicitation or, to the extent required by applicable law, in any public filing and (d) generally the existence and amount of commitments hereunder.
The Commitment Parties shall use all non-public information received by it in connection with the Facilities, the Consent Solicitation and the Transactions solely for the purposes of providing the services that are the subject of this Commitment Letter, the Term Sheets and the Fee Letters and shall
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treat confidentially all such information; provided, however, that nothing herein shall prevent the Commitment Parties from disclosing any such information (a) to ratings agencies on a confidential basis and in consultation with you, (b) to any Existing Lenders, Lenders or participants or prospective Lenders or prospective participants, (c) pursuant to the order of any court or administrative agency or in any legal, judicial or administrative proceeding or other compulsory process or otherwise as required by applicable law or regulations (in which case, such Commitment Party shall promptly notify you, in advance, to the extent lawfully permitted to do so), (d) upon the request or demand of any regulatory authority (including any self-regulatory authority) or other governmental authority purporting to have jurisdiction over any Commitment Party or any of its affiliates (in which case such Commitment Party shall, except with respect to any audit or examination conducted by bank accountants or any governmental bank regulatory authority exercising examination or regulatory authority, promptly notify you, in advance, to the extent lawfully permitted to do so), (e) to the Related Parties of the Commitment Parties who are informed of the confidential nature of such information and are or have been advised of their obligation to keep all such information confidential or are otherwise under a professional or employment duty of confidentiality, and such Commitment Party shall be responsible for each such persons compliance with this paragraph, (f) to any of its affiliates (provided that any such affiliate is advised of its obligation to retain such information as confidential, and such Commitment Party shall be responsible for its affiliates compliance with this paragraph) solely in connection with the Transactions, (g) to the extent any such information becomes publicly available other than by reason of disclosure by the Commitment Parties, their affiliates or any of their respective Related Parties in breach of this Commitment Letter, (h) to the extent such information is received by such Commitment Party from a third party that is not, to such Commitment Partys knowledge, subject to a confidentiality obligation to you with respect to such information, (i) in connection with the exercise of any remedies hereunder or under the Fee Letters or any suit, action or proceeding relating to this Commitment Letter, the Fee Letters or the Facilities, and (j) pursuant to customary disclosure about the terms of the financings and amendments contemplated hereby in the ordinary course of business to market data collectors and similar service providers to the loan industry for league table purposes; provided that the disclosure of any such information to any Lenders or prospective Lenders or participants or prospective participants referred to above shall be made subject to the acknowledgment and acceptance by such Lender or prospective Lender or participant or prospective participant that such information is being disseminated on a confidential basis (on the terms set forth in this paragraph or as is otherwise reasonably acceptable to you) in accordance with the standard syndication processes of the Commitment Parties or customary market standards for dissemination of such type of information. The obligations of each Commitment Party under this paragraph shall automatically terminate and be superseded by the confidentiality provisions of the Facilities Documentation upon the initial funding thereunder; provided that if not previously terminated, the provisions of this paragraph shall automatically terminate two years following the date of this Commitment Letter; provided, further that the confidentiality provision of the Existing Credit Agreement shall remain in full force and effect notwithstanding the provisions hereof. After the Closing Date and at the Lead Arrangers expense, the Lead Arrangers may (i) after consultation with the Borrower, place advertisements in periodicals and on the Internet as it may choose and (ii) on a confidential basis, circulate promotional materials in the form of a tombstone or case study (and, in each case, otherwise describe the names of any of you or your affiliates and any other information about the Transaction, including the amount, type and closing date of the Facilities).
13. PATRIOT Act and Beneficial Ownership Regulation Notification.
Each Commitment Party hereby notifies you that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107 56 (signed into law October 26, 2001), as subsequently amended and reauthorized) (the Patriot Act) and the requirements of 31 C.F.R. §1010.230 (the Beneficial Ownership Regulation), that it and each of the Lenders may be required to obtain, verify and record information that identifies the Borrower and its subsidiaries, which information includes names,
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addresses, tax identification numbers and other information that will allow each Commitment Party and each of the Lenders to identify the Borrower and its subsidiaries in accordance with the Patriot Act. This notice is given in accordance with the requirements of the Patriot Act and is effective for each Commitment Party and each of the Lenders. You hereby acknowledge and agree that the Commitment Parties shall be permitted to share any or all such information with the Lenders.
14. Acceptance and Termination.
Please indicate your acceptance of the terms hereof and of the Fee Letters by signing in the appropriate space below and in the Fee Letters and returning to us executed original copies (or facsimiles or other electronic copies in pdf or tif format thereof) of this Commitment Letter and the Fee Letters not later than 9:00 a.m., New York City time, on November 19, 2018. The commitments and agreements of the Commitment Parties hereunder will expire at such time in the event that the Lead Arrangers have not received such executed original copies (or facsimiles or other electronic copies in pdf or tif format thereof) in accordance with the immediately preceding sentence (the date of receipt by us of such executed counterparts, the Acceptance Date). In the event that (i) the initial borrowing under the Facilities does not occur on or before the date that is 5 business days after the Outside Date (as defined in the Merger Agreement as of the Acceptance Date), (ii) the Merger Agreement is terminated prior to closing of the Acquisition in accordance with the terms thereof or (iii) with respect to a Facility, the Acquisition occurs without the use of such Facility, then this Commitment Letter and the commitments hereunder shall automatically terminate unless the Commitment Parties shall, in their sole discretion, agree to an extension. Additionally, in the event that the Required Consents are received, the commitments of the Commitment Parties in respect of the Backstop Financing shall automatically terminate. The syndication, information, compensation, reimbursement, indemnification, jurisdiction, governing law, waiver of jury trial, no fiduciary relationship and, except as expressly set forth above, confidentiality provisions contained herein and in the Fee Letters shall remain in full force and effect regardless of whether Facilities Documentation shall be executed and delivered and notwithstanding the termination of this Commitment Letter or the commitments hereunder. You may terminate this Commitment Letter and/or the Commitment Parties commitments with respect to the Facilities (or a portion thereof) or the Backstop Financing at any time subject to the provisions of the immediately preceding sentence.
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We are pleased to have been given the opportunity to assist you in connection with this important financing.
Very truly yours, | ||
JPMORGAN CHASE BANK, N.A. | ||
By: | /s/ Joon Hur | |
Name: | Joon Hur | |
Title: | Executive Director |
Commitment Letter
CREDIT SUISSE LOAN FUNDING LLC | ||
By | /s/ Adam Forchheimer | |
Name: | Adam Forchheimer | |
Title: | Authorized Signatory | |
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH | ||
By | /s/ Vipul Dhadda | |
Name: | Vipul Dhadda | |
Title: | Authorized Signatory | |
By: | /s/ Emerson Almeida | |
Name: | Emerson Almeida | |
Title: | Authorized Signatory |
Commitment Letter
Accepted and agreed to as of the date first above written: |
COLFAX CORPORATION |
By: | /s/ Christopher M. Hix | |
Name: | Christopher M. Hix | |
Title: | SVP, CFO and Treasurer |
Commitment Letter
EXHIBIT A
Project Motion
Transaction Summary
Capitalized terms used but not defined in this Exhibit A shall have the meanings set forth in the Commitment Letter to which this Exhibit A is attached and in Exhibits B and C thereto.
Colfax Corporation (the Borrower) intends to acquire (the Acquisition) the company identified to us as Motion (the Target) pursuant to an Agreement and Plan of Merger (together with all exhibits, schedules and disclosure letters thereto, as amended, supplemented, otherwise modified, or consented to or waived (the Merger Agreement) among the Borrower, the Target, and certain other parties. In connection therewith, it is intended that:
(a) The Borrower will obtain $3.29 billion in gross cash proceeds from a combination of (i) the issuance of senior unsecured notes and/or convertible notes (which may include mandatorily convertible notes) (collectively, the Senior Notes) in a Rule 144A or other private placement, (ii) the issuance of equity interests, convertible preferred stock (including mandatory convertible preferred securities), other equity-linked securities (including tangible equity units or other stock purchase contracts) and/or any combination of one or more of the foregoing (including units representing one or more of the foregoing) of the Borrower (the Equity Securities), (iii) the incurrence of the Take-out Term Facilities, (iv) the Closing Date Revolver Draw and cash on hand and/or (iv) if and only to the extent that the Bridge Facility is not reduced in accordance with the Bridge Facility Term Sheet on or prior to the Closing Date (as defined in Exhibit A), borrowings by the Borrower under a new senior unsecured bridge facility (the Bridge Facility) comprised of two tranches: (x) a tranche of $1.60 billion of senior unsecured term loans (Tranche 1) and (y) a tranche of $1.69 billion of senior unsecured term loans (Tranche 2), as described in Exhibit B.
(b) The Borrower will either (i) effect an amendment (the Amendment) to that certain Credit Agreement, dated as of June 5, 2015, among the Borrower, the subsidiaries of the Borrower party thereto as guarantors, the lenders and other parties party thereto and Deutsche Bank AG New York Branch, as administrative agent (as amended, restated, supplemented or otherwise modified prior to the Closing Date, the Existing Credit Agreement; the Existing Credit Agreement as modified by the Amendment, the Amended Facility), to permit the Acquisition and make certain other changes, including the Required Amendments, or (ii) obtain new credit facilities (the Backstop Facility) to replace the existing facilities outstanding under the Existing Credit Agreement, which new credit facilities will be on the same terms and conditions as the Existing Credit Agreement, modified to reflect (x) the Required Amendments and (y) the reasonable administrative, agency, operational and legal requirements of the Administrative Agent.
(c) The Borrower will borrow (in addition to any borrowings that are outstanding) an aggregate principal amount equal to $390.0 million under the Amended Facility, the Backstop Facility or the New Revolving Facility (such borrowing, the Closing Date Revolver Draw).
(d) The principal, accrued and unpaid interest, fees, premium, if any, and other amounts, other than contingent obligations not then due and payable and that by their terms survive the termination thereof (or letters of credit grandfathered, backstopped or cash collateralized), under (x) the Credit Agreement, dated as of May 7, 2015, among a subsidiary of the Target, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, (y) the Credit Agreement, dated as of May 7, 2015, among a subsidiary of the Target, the lenders party thereto and Macquarie US Trading LLC,
as administrative agent and (z) the Company Notes (as defined in the Merger Agreement), in each case, will be repaid, redeemed, defeased, discharged, refinanced, replaced or terminated, as applicable, or irrevocable notice (other than any condition requiring the consummation of the Acquisition on or prior to the applicable date of redemption) with respect thereto will be given, and the related guarantees, security interests shall be terminated (collectively, the Refinancing).
(e) The proceeds of the Senior Notes, the Equity Securities, the Closing Date Revolver Draw, the Take-out Term Facilities and the Bridge Facility will be applied (i) to consummate the Refinancing, (ii) to pay all amounts required to be paid under the Merger Agreement (the Acquisition Consideration) and (iii) to pay the fees and expenses incurred in connection with the Transactions (the amounts set forth in clauses (i) through (iii) above, collectively, the Transaction Costs).
The transactions described above are collectively referred to herein as the Transactions. For purposes of the Commitment Letter and the Fee Letters, Closing Date shall mean the date of consummation of the Acquisition and the initial funding under, and the availability of, the Facilities.
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EXHIBIT B
Project Motion
Summary of Principal Terms and Conditions
$3.290 Billion Bridge Facility
Capitalized terms used but not defined in this Exhibit B (this Bridge Facility Term Sheet) shall have the meanings set forth in the Commitment Letter to which this Exhibit B is attached and in Exhibits A and C thereto.
Borrower: | Colfax Corporation, a Delaware corporation (the Borrower). | |
Administrative Agent: | JPMorgan Chase Bank, N.A. (JPMorgan) acts as administrative agent for a syndicate of banks, financial institutions and other lenders (together with JPMorgan in its capacity as lender, the Bridge Lenders) and will perform the duties customarily associated with such role. | |
Joint Lead Arrangers and Joint Bookrunners: | JPMorgan and Credit Suisse Loan Funding LLC will act as joint lead arrangers and joint bookrunners for the Bridge Facility (as defined below) and will perform the duties customarily associated with such roles (the Lead Arrangers). | |
Bridge Facility: | 1. Amount: A 364-day senior unsecured term loan facility (the Bridge Facility) in an aggregate principal amount of $3.29 billion less all reductions pursuant to the Mandatory Prepayments and Commitment Reductions section below. The Bridge Facility shall be comprised of two tranches: (i) a tranche of $1.60 billion of senior unsecured term loans (Tranche 1; the term loans thereunder, the Tranche 1 Bridge Loans) and (y) a tranche of $1.69 billion of senior unsecured term loans (Tranche 2 ; the term loans thereunder, the Tranche 2 Bridge Loans). | |
2. Use of Proceeds: The loans made pursuant to the Bridge Facility (the Bridge Loans) may only be incurred on the Closing Date to (i) consummate the Refinancing, (ii) pay the Acquisition Consideration and (iii) pay other Transaction Costs. | ||
3. Maturity: The final maturity date of the Bridge Facility shall be the date that is 364 days after the Closing Date. | ||
4. Amortization: None. | ||
5. Availability: Bridge Loans may only be incurred on the Closing Date. No amount of Bridge Loans once repaid may be reborrowed. | ||
6. Currency: The Bridge Facility shall be available in U.S. dollars. | ||
Guaranties: | The Borrower, each subsidiary of the Borrower that guarantees obligations under the Existing Credit Agreement and each direct and indirect material wholly-owned subsidiary of the Borrower (other than inactive subsidiaries) organized under the laws of the United States (or any state thereof), subject to exceptions set forth in the |
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Bridge Facility Documentation (each, a Guarantor and, collectively, the Guarantors) shall be required to provide an unconditional guaranty (each a Guaranty and collectively, the Guaranties) of all amounts owing under the Bridge Facility by the Borrower and the other Guarantors (all such owed amounts, collectively, the Guaranteed Obligations); provided that, upon evidence that the Borrower has obtained an investment grade corporate rating from S&P Global Ratings, a division of S&P Global Inc. (S&P) or Moodys Investors Service, Inc. (Moodys), the Guaranties shall be released or not provided, as applicable; provided further that if the Borrower shall at any time after the initial achievement of such investment grade rating fail to maintain such rating from at least one of S&P or Moodys, the Guarantors shall be required to deliver Guaranties at such time. The Guaranties shall be in form and substance reasonably satisfactory to the Administrative Agent and shall be guaranties of payment and not of collection. | ||
Security: | None. | |
Voluntary Prepayments: | Voluntary prepayments may be made at any time on (i) three business days notice in the case of Eurodollar Loans or (ii) one business days notice in the case of ABR Loans, without premium or penalty, in minimum principal amounts as set forth in the Bridge Facility Documentation; provided that voluntary prepayments of Eurodollar Loans made on a date other than the last day of an interest period applicable thereto shall be subject to customary breakage costs. | |
Mandatory Prepayments and Commitment Reductions: | (i) From and after the date of signing of the Commitment Letter, the aggregate commitments in respect of the Bridge Facility shall be automatically, immediately and permanently reduced and (ii) after the Closing Date, the Bridge Loans shall be prepaid on a pro rata basis, at par plus accrued and unpaid interest, within three (3) business days of receipt of amounts from (without duplication):
(a) 100% of the commitments (in the case of credit facilities (including, without limitation, the Take-out Term Facilities)) or Net Cash Proceeds (as defined below) received by the Borrower or any of its consolidated subsidiaries on or after the date of the Commitment Letter from the incurrence of debt for borrowed money pursuant to a capital markets transaction (including the issuance of debt securities convertible into equity securities) pursuant to a public registered offering or Rule 144A or other private placement, or a commercial bank or other syndicated term loan facility (which commercial bank or other syndicated term loan facility is subject to conditions precedent to the initial funding thereunder that are no less favorable to the Borrower than the conditions set forth herein for such similar provisions and with a termination or expiration date of the commitments thereunder that is no earlier than the termination or expiration date of the commitments in respect of the Bridge Facility), other than Excluded Debt (as defined below);
(b) 100% of the Net Cash Proceeds received by the Borrower or any of its consolidated subsidiaries on or after the date of the Commitment Letter from any issuance of equity securities by the Borrower (other than (i) pursuant to any employee equity compensation plan or agreement or other employee equity compensation arrangement, any employee benefit plan or agreement or other employee benefit arrangement or any nonemployee director equity compensation plan or agreement or other non-employee director equity compensation arrangement or pursuant to the exercise or vesting of any employee or director |
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stock options, restricted stock or restricted stock units, warrants or other equity awards or pursuant to dividend reinvestment programs, (ii) any such issuance by a subsidiary of the Borrower to the Borrower or any other subsidiary, (iii) securities or interests issued or transferred directly (and not constituting cash proceeds of any issuance of such securities or interests) as consideration in connection with any acquisition (including the Acquisition), divestiture or joint venture arrangement (excluding, for the avoidance of doubt, the Senior Notes or the Equity Securities), (iv) equity issued upon conversion or exercise of outstanding securities or options, (v) issuances resulting in the receipt by the Borrower of Net Cash Proceeds not exceeding $25,000,000 in the aggregate, and (vi) other exceptions to be agreed);
(c) 100% of Net Cash Proceeds received by the Borrower or any of the Borrowers subsidiaries on or after the date of the Commitment Letter from the sale or other disposition (including as a result of a casualty or condemnation) of any assets (other than (i) the sale or other disposition of inventory or other assets in the ordinary course of business, (ii) intercompany transactions and (iii) sales or other dispositions of assets (including as a result of a casualty or condemnation) the Net Cash Proceeds of which do not exceed an aggregate amount of $25,000,000), in each case, by the Borrower or any of the Borrowers subsidiaries, in each case to the extent that such net cash proceeds are not (i) reinvested or committed to be reinvested in the Borrowers or its subsidiaries business within 365 days following receipt thereof (and if so committed, reinvested within 180 days after the end of such 365 day period) or (ii) required to be offered to repay any indebtedness that is pari passu in right of payment with the Bridge Facility, solely to the extent such offer to repay is accepted and actually repaid; and
(d) solely on and after the Closing Date, to the extent applied to pay any Transaction Costs on or after the Closing Date (and without duplication of any reduction from Net Cash Proceeds that reduce the Bridge Facility pursuant to the foregoing clauses (a) through (c)), 100% of any borrowings under the Amended Facility, the Backstop Facility or the New Revolving Facility and cash on hand.
Notwithstanding anything to the contrary above, mandatory repayments and commitment reductions required pursuant to clauses (a) through (c) above received by a foreign subsidiary of the Borrower shall not be required if and for so long as the Borrower has reasonably determined in good faith that repatriation of funds to the Borrower to make any such payment would have adverse tax consequences or would violate applicable local law or the applicable organizational documents of such foreign subsidiary.
All mandatory prepayments or commitment reductions (a) in respect of the issuance of the Senior Notes and/or the Equity Securities shall be applied, first, to the Tranche 1 Bridge Loans and commitments in respect of Tranche 1 (the Tranche 1 Commitments) and, second, to the Tranche 2 Bridge Loans and commitments in respect of Tranche 2 (the Tranche 2 Commitments), (b) in respect of the incurrence of the Take-out Facilities shall be applied, first, to the Tranche 2 Bridge Loans and the Tranche 2 Commitments and, second, to the Tranche 1 Bridge Loans and Tranche 1 Commitments, and (c) in respect of other mandatory prepayments or commitment reductions shall be applied ratably to Tranche 1 Bridge Loans and Tranche 1 Commitments and Tranche 2 Bridge Loans and Tranche 2 Commitments. |
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For purposes hereof:
Excluded Debt means (i) intercompany indebtedness, loans, and advances among the Borrower and/or its subsidiaries, (ii) credit extensions under the Existing Credit Agreement or any revolving facility (including the New Revolving Facility) in replacement thereof or amendments thereto (it being understood that the foregoing includes any increase in commitments from the amount available under the Existing Credit Agreement), (iii) any trade or customer related financing in the ordinary course of business, (iv) ordinary course capital leases, purchase money and equipment financings, (v) any ordinary course borrowings under working capital, liquidity, letter of credit or overdraft facilities, (vi) issuances of commercial paper and refinancings thereof, (vii) indebtedness under any facility to obtain or support bid, appeal and similar bonds, (viii) refinancings of existing indebtedness and (ix) other indebtedness (other than the Senior Notes and Equity Securities) in an aggregate principal amount not to exceed $25,000,000; provided that, notwithstanding the foregoing, no borrowings under the Amended Facility, the Backstop Facility or the New Revolving Facility to pay for any Transaction Costs on or after the Closing Date (including, without limitation, the Closing Date Revolver Draw) shall constitute Excluded Debt.
Net Cash Proceeds means, with respect to any event, (a) the cash (which term, for purposes of this definition, shall include cash equivalents) proceeds received in respect of such event including (i) any cash received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, minus (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid to third parties (other than affiliates) in connection with such event, (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount of all payments required to be made as a result of such event to repay indebtedness secured by such asset or otherwise subject to mandatory prepayment as a result of such event and (iii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount of all taxes paid (or reasonably estimated to be payable) and the amount of any reserves established to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by the Borrower). | ||
Interest Rates: | At the Borrowers option, Bridge Loans shall bear interest at a rate per annum equal to (x) the ABR plus the Applicable Margin or (y) the Adjusted LIBO Rate plus the Applicable Margin. |
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As used herein:
ABR means the highest of (i) the rate of interest last quoted by The Wall Street Journal in the U.S. as the prime rate in effect (the Prime Rate), (ii) the NYFRB Rate from time to time plus 0.5% and (iii) the Adjusted LIBO Rate for a one month interest period plus 1%. If the ABR as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00%.
Adjusted LIBO Rate means the LIBO Rate, as adjusted for statutory reserve requirements for eurocurrency liabilities.
Applicable Margin means (i) 2.00% in the case of Eurodollar Loans and (ii) 1.00% in the case of ABR Loans. Each such margin will increase by 0.25% at the end of each 90-day period after the Closing Date.
Federal Funds Effective Rate means, for any day, the rate calculated by the NYFRB based on such days federal funds transactions by depositary institutions, as determined in such manner as the NYFRB shall set forth on its public website from time to time, and published on the next succeeding business day by the NYFRB as the federal funds effective rate, provided that if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to zero for the purposes of calculating such rate.
Interpolated Rate means, at any time, for any interest period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate for the longest period for which the LIBO Screen Rate is available) that is shorter than the Impacted Interest Period; and (b) the LIBO Screen Rate for the shortest period (for which that LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time.
LIBO Rate means, with respect to any Eurodollar Borrowing for any interest period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such interest period; provided that if the LIBO Screen Rate shall not be available at such time for such interest period (an Impacted Interest Period) then the LIBO Rate shall be the Interpolated Rate.
LIBO Screen Rate means, for any day and time, with respect to any Eurodollar Borrowing for any interest period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for U.S. Dollars for a period equal in length to such interest period as displayed on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion); provided that if the LIBO Screen Rate as so determined would be less than zero, such rate shall be deemed to zero for the purposes of calculating such rate. |
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NYFRB Rate means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day; provided, that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to zero for the purposes of calculating such rate.
Overnight Bank Funding Rate means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar Borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).
The Bridge Facility Documentation will contain provisions to be mutually agreed with respect to a replacement of the LIBO Rate. | ||
The Bridge Facility shall include customary protective provisions for such matters as defaulting banks, capital adequacy, increased costs, reserves, funding losses, illegality and withholding taxes. The Borrower shall have the right to replace any Bridge Lender that (i) charges an amount in excess of that being charged by the other Bridge Lenders with respect to contingencies described in the immediately preceding sentence or (ii) refuses to consent to certain amendments or waivers of the Bridge Facility which expressly require the consent of such Bridge Lender and which have been approved by the Required Lenders (as defined below). | ||
Interest in respect of Bridge Loans bearing interest based on ABR (ABR Loans) shall be payable quarterly in arrears on the last business day of each calendar quarter. Interest in respect of Bridge Loans bearing interest based upon the Adjusted LIBO Rate (Eurodollar Loans) shall be payable in arrears at the end of the applicable interest period and every three months in the case of interest periods in excess of three months. Interest will also be payable at the time of repayment of any Bridge Loans and at maturity. All interest on ABR Loans and Eurodollar Loans shall be based on a 360-day year and actual days elapsed (or, in the case of ABR Loans determined by reference to the Prime Rate, a 365/366-day year and actual days elapsed). | ||
Default Interest: | Overdue principal, interest and other amounts shall bear interest at a rate per annum equal to the greater of (i) the rate which is 2% in excess of the rate otherwise applicable to ABR Loans from time to time and (ii) the rate which is 2% in excess of the rate then borne by the applicable borrowing (or, if any such amount does not relate to a borrowing, the rate which is 2% in excess of the rate applicable to Bridge Loans maintained as ABR Loans). Such interest shall be payable on demand. | |
Agent / Lender Fees: | The Administrative Agent, the Lead Arrangers and the Bridge Lenders shall receive such fees as have been separately agreed upon. | |
Duration Fees: | The Borrower shall pay to each Bridge Lender, in accordance with its respective interest, duration fees as follows: (a) 0.50% of the aggregate principal amount of the Bridge Loans held by such Bridge Lender on the date that is 90 days after the Closing Date, (b) 0.50% of the aggregate principal amount of the Bridge Loans |
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held by such Bridge Lender on the date that is 180 days after the Closing Date and (c) 0.50% of the aggregate principal amount of the Bridge Loans held by such Bridge Lender on the date that is 270 days after the Closing Date. | ||
Representations and warranties: | Shall be applicable to the Borrower and its subsidiaries and substantially similar to the representations and warranties set forth in the Existing Credit Agreement, and shall include the following: (i) existence, qualification and power, (ii) authorization; no contravention, (iii) governmental authorization; other consents, (iv) binding effect, (v) absence of material litigation, (vi) financial statements; no material adverse effect, (vii) true and complete disclosure (including with respect to the Beneficial Ownership Certifications delivered in connection with the closing of the Facilities), (viii) margin regulations, (x) inapplicability of Investment Company Act, (xi) solvency, (xii) ERISA compliance, (xiii) environmental compliance, (xiv) taxes, (xv) use of proceeds and (xvi) anti-corruption laws and sanctions. | |
Affirmative Covenants: | Shall be applicable to the Borrower and its subsidiaries and substantially similar to the affirmative covenants set forth in the Existing Credit Agreement, and shall include the following: (i) Compliance with laws and regulations (including, without limitation, ERISA and other applicable pension laws and environmental laws); (ii) payment of taxes and other obligations; (iii) maintenance of adequate insurance; (iv) preservation of corporate existence, rights, franchises, permits, licenses and approvals; (v) inspection rights; (vi) keeping of proper books; (vii) maintenance of properties; (viii) notice of defaults, material litigation and certain other material events, including ERISA and other pension events; (ix) financial and other reporting requirements (including, without limitation, unaudited quarterly and audited annual financials for the Borrower and its subsidiaries on a consolidated basis (in accordance with US GAAP); (x) use of proceeds; (xi) transactions with affiliates covenant; (xii) environmental covenants; (xiii) compliance with financial covenants; (xiv) compliance with anti-corruption laws and sanctions; and (xv) delivery of information reasonably requested by the Administrative Agent (or any Bridge Lender through the Administrative Agent) (including information for purposes of compliance with applicable know your customer and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation). | |
Negative Covenants: | Shall be applicable to the Borrower and its subsidiaries and substantially similar to the negative covenants set forth in the Existing Credit Agreement (with modifications as required to permit the Acquisition and other modifications as agreed) and to include restrictions on (i) liens; (ii) incurrences of debt; (iii) mergers, consolidations and other fundamental changes; (iv) sales, transfers and other dispositions of property and assets; (v) loans, acquisitions, joint ventures and other investments; (vi) dividends and other distributions to, and redemptions and repurchases from, equity holders; (vii) changes in the nature of business; (viii) changes in fiscal years; and (ix) use of proceeds (as to anti-corruption laws and sanctions). | |
Financial Covenants: | The following financial covenants (the Financial Covenants) (with financial definitions to be substantially consistent with those set forth in the Existing Credit Agreement): |
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Total Leverage Ratio. Maintenance on the last day of each fiscal quarter a Total Leverage Ratio of not more than 6.00:1.00, with a step-down to 5.50:1.00 at the end of the second fiscal quarter following the Closing Date.
Interest Coverage Ratio. Maintenance on the last day of each fiscal quarter an Interest Coverage Ratio of not less than 3.00:1.00.
The Financial Covenants will be tested on a quarterly basis and calculated on a consolidated basis for the Borrower and its subsidiaries for each consecutive four fiscal quarter period. | ||
Events of Default: | Events of Default (to be applicable to the Borrower and its subsidiaries) will be substantially the same as the Existing Credit Agreement and will include: (i) nonpayment of principal when due or interest, fees or other amounts after a grace period to be mutually agreed; (ii) failure to perform or observe covenants set forth in the Bridge Facility Documentation, subject to notice and grace periods consistent with the Existing Credit Agreement; (iii) any representation or warranty proving to have been incorrect in any material respect when made or deemed to be made; (iv) cross-defaults to other indebtedness in an amount consistent with the Existing Credit Agreement; (v) bankruptcy, insolvency proceedings, etc. (with a grace period for involuntary proceedings consistent with the Existing Credit Agreement); (vi) inability to pay debts, attachment, etc.; (vii) monetary judgment defaults in an amount consistent with the Existing Credit Agreement; (viii) customary ERISA and pensions defaults; (ix) actual or asserted invalidity of Bridge Facility Documentation in a material respect; and (x) change of control. | |
Assignments and Participations: | The Borrower may not assign its rights or obligations under the Bridge Facility without the prior written consent of the Administrative Agent and each Bridge Lender. Prior to the Closing Date, assignments of commitments in respect of the Bridge Facility shall be governed by the Commitment Letter. After funding under the Bridge Facility on the Closing Date, any Bridge Lender may assign, and may sell participations in, its rights and obligations under the Bridge Facility (other than to the Borrower and its affiliates and natural persons), subject (x) in the case of participations, to customary restrictions on the voting rights of the participants and (y) in the case of assignments, to such limitations as may be established by the Administrative Agent (including (i) a minimum assignment amount of $1,000,000 (or, if less, the entire amount of such assignors outstanding Bridge Loans at such time), (ii) an assignment fee in the amount of $3,500 to be paid by the respective assignor or assignee to the Administrative Agent, (iii) restrictions on assignments to any entity that is not an Eligible Assignee (to be defined to exclude the Borrower and its affiliates and natural persons), (iv) except in the case of an assignment to any Bridge Lender, its affiliates or an approved fund of a Bridge Lender, the receipt of the consent of the Administrative Agent and (v) except during the continuance of an Event of Default or in respect of an assignment to any Bridge Lender, its affiliates or an approved fund of a Bridge Lender, the receipt of the consent of the Borrower (provided that the Borrower shall be deemed to have consented to any assignment unless it objects thereto by written notice to the Administrative Agent within five business days after having received written notice thereof). The Bridge Facility shall provide for a mechanism which will allow for each assignee to become a direct signatory to the Bridge Facility and will relieve the assigning Bridge Lender of its obligations with respect to the assigned portion of its Bridge Loans. |
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Waivers and Amendments: | Amendments and waivers of the provisions of the Bridge Facility Documentation will require the approval of Bridge Lenders holding outstanding Bridge Loans representing more than 50% of the sum of the outstanding Bridge Loans (the Required Lenders), except that (a) the consent of each Bridge Lender directly affected thereby will be required with respect to (i) extensions or increases in commitment amounts, (ii) reductions of principal, interest or fees, (iii) extensions of scheduled payments of any Bridge Loans (including at final maturity) or times for payment of interest or fees, and (iv) modifications to the pro rata sharing or payment provisions, assignment provisions or the voting percentages and (b) the consent of all of the Bridge Lenders shall be required with respect to releases of all or substantially all of the value of the Guaranties provided by the Guarantors taken as a whole; provided that if any of the matters described in clause (a) or (b) above is agreed to by the Required Lenders, the Borrower shall have the right to substitute any non-consenting Bridge Lender by having its Bridge Loans assigned, at par, to one or more other institutions, subject to the assignment provisions described above. | |
The Bridge Facility Documentation shall also contain the customary ability of the Administrative Agent and the Borrower to modify terms to cure ambiguities, inaccuracies and mistakes, in each case, on terms, and subject to conditions, reasonably acceptable to the Borrower and the Administrative Agent. | ||
Defaulting Lenders: | The Bridge Facility Documentation shall contain customary provisions with respect to defaulting Bridge Lenders. | |
EU Bail In Provisions: | The Bridge Facility Documentation shall contain customary EU bail in provisions. | |
Indemnification: | The Bridge Facility Documentation will contain customary indemnities for the Administrative Agent, the Lead Arrangers, the Bridge Lenders and their respective affiliates employees, officers and agents as reasonably determined by the Administrative Agent (including, without limitation, for all reasonable costs and expenses of the Bridge Lenders incurred after the occurrence, and during the continuance of, an event of default under the Bridge Facility), in each case other than as a result of such persons gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable decision or as a result of a claim brought by the Borrower or a Guarantor against such person for breach in bad faith of such persons obligations under the Bridge Facility Documentation, if the Borrower or such Guarantor has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. | |
Costs and Expenses: | All reasonable out-of-pocket expenses incurred by Administrative Agent in connection with the preparation, negotiation, execution, delivery and administration of the Bridge Facility Documentation shall be paid by Borrower. | |
Governing Law: | New York. | |
Forum: | United States District Court for the Southern District of New York sitting in the Borough of Manhattan (or if such court lacks subject matter jurisdiction, the Supreme Court of the State of New York sitting in the Borough of Manhattan), and any appellate court from any thereof. |
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Counsel to Administrative Agent and Lead Arrangers: | Latham & Watkins LLP. |
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EXHIBIT C
Project Motion
Conditions
The availability and initial funding of the Facilities shall be subject to the satisfaction (or waiver by the Commitment Parties) of solely the following conditions (subject to the Limited Conditionality Provision). Capitalized terms used but not defined herein have the meanings set forth in the Commitment Letter to which this Exhibit C is attached and in Exhibits A and B thereto.
1. The Borrower and the Guarantors shall have executed and delivered the Facilities Documentation they are party to (provided that the Target and its subsidiaries, to the extent required to become Guarantors, shall only be required to execute and deliver such Facilities Documentation after the effectiveness of, but substantially concurrently with, the Acquisition) on terms consistent with the Commitment Letter and the Term Sheet and the Administrative Agent shall have received the following (collectively, the Closing Deliverables):
a. | customary borrowing notices (which shall not include any requirements to make any certifications as to no default or event of default and, other than with respect to representations and warranties described in paragraph 6 below, no bring downs of representations and warranties), closing certificates, corporate and organizational documents, good standing certificates, customary evidence of authorization and good standing certificates in the jurisdiction of organization (if applicable), in each case with respect to the Borrower and each Guarantor and customary legal opinions; and |
b. | a certificate from the chief financial officer of the Borrower, in the form attached as Annex I to this Exhibit C, certifying that the Borrower and its subsidiaries, on a consolidated basis after giving effect to the Transactions and the other transactions contemplated hereby, are solvent. |
2. On the Closing Date, after giving effect to the Transactions or substantially concurrently with the initial funding of the applicable Facilities on the Closing Date, the Refinancing shall have been consummated.
3. The Acquisition shall, substantially concurrently with the initial funding of the Facilities, be consummated pursuant to the Merger Agreement, and no provision thereof shall have been amended or waived, and no consent or request shall have been given under the Merger Agreement, without the prior written consent of the Commitment Parties (not to be unreasonably withheld, conditioned or delayed), in any way that is materially adverse to the Lenders or the Lead Arrangers in their capacities as such (it being understood and agreed that (a) amendments, waivers and other changes to the definition of Material Adverse Effect (as defined in the Merger Agreement as of the date hereof), and consents and requests given or made by you (or your affiliate) pursuant to such definition shall in each case be deemed to be materially adverse to the Lenders and Lead Arrangers, and (b) any modification, amendment or express waiver or consents by you that results in (x) an increase to the Base Merger Consideration (as defined in the Merger Agreement as in effect on the date hereof) shall be deemed to not be materially adverse to the Lenders or Lead Arrangers so long as such increase is funded solely with a public issuance of common equity of the Borrower and (y) a decrease to the Base Merger Consideration shall be deemed to not be materially adverse to the Lenders or the Lead Arrangers so long as such reduction is allocated to reduce the commitments in respect of the Bridge Facility without the prior written consent of the Commitment Parties.
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4. The Commitment Parties shall have received (a)(i) the audited consolidated balance sheets of the Borrower and its subsidiaries as of December 31, 2016 and December 31, 2017 and the related statements of income, stockholders equity and cash flows of the Borrower and its subsidiaries, for each of the two fiscal years ended prior to and including the fiscal year ended December 31, 2017 and (ii) to the extent ended at least 90 days before the Closing Date, the audited consolidated balance sheet of the Borrower and its subsidiaries as of December 31, 2018 and the related statements of income, stockholders equity and cash flows of the Borrower and its subsidiaries for the fiscal year ended December 31, 2018, (b) (i) the audited consolidated balance sheets of DJO Finance, LLC (DJO Finance) and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of operations, comprehensive loss, (deficit) equity and cash flows of DJO Finance and its subsidiaries for each of the two fiscal years ended prior to and including the fiscal year ended December 31, 2017, and, (ii) to the extent ended at least 90 days before the Closing Date, the audited consolidated balance sheet of DJO Finance and its subsidiaries as of December 31, 2018, and the related consolidated statements of operations, comprehensive loss, (deficit) equity and cash flows of DJO Finance and its subsidiaries for the fiscal year ended December 31, 2018, (c) (i) the unaudited consolidated balance sheet of the Borrower and its subsidiaries as of September 30, 2018 and the related statements of income, stockholders equity and cash flows of the Borrower and its subsidiaries for the 9-month period ended September 30, 2018 and (ii) to the extent ended at least 45 days before the Closing Date, the unaudited consolidated balance sheet of the Borrower and its subsidiaries and the related statements of income, stockholders equity and cash flows of the Borrower and its subsidiaries for each fiscal period (other than the fourth fiscal quarter) ended subsequent to December 31, 2018, and (d) (i) the unaudited consolidated balance sheet of DJO Finance and its Subsidiaries as of September 30, 2018 and the related consolidated statements of operations, comprehensive loss, (deficit) equity and cash flows of DJO Finance and its subsidiaries for the 9-month period ended September 30, 2018 and (ii) to the extent ended at least 45 days before the Closing Date, the unaudited consolidated balance sheet of DJO Finance and its subsidiaries and the related consolidated statements of operations, comprehensive loss, (deficit) equity and cash flows of DJO Finance and its subsidiaries for each fiscal period (other than the fourth fiscal quarter) ended subsequent to December 31, 2018 (in the case of clauses (c) and (d), without footnote disclosure); provided that (x) the filing of the required financial statements on form 10-K and/or form 10-Q by the Borrower or the Target will satisfy the foregoing requirements and (y) the Commitment Parties hereby acknowledge receipt of (I) the financial statements referenced in clause (a) for the fiscal years ended December 31, 2016 and December 31, 2017 and (II) the financial statements referenced in clause (b)(i), (c)(i) and (d)(i).
5. The Commitment Parties shall have received a pro forma consolidated balance sheet and related pro forma consolidated statement of income of the Borrower and its subsidiaries as of and for the twelve-month period ending on the last day of the most recently completed four-fiscal quarter period ended at least 45 days prior to the Closing Date (or 90 days in case such four-fiscal quarter period is the end of the Borrowers fiscal year), prepared after giving effect to the Transactions (including the acquisition of the Target) 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 statement of income), which need not be prepared in compliance with Regulation S-X under the Securities Act or include adjustments for purchase accounting.
6. (a) Each of the Merger Agreement Representations shall be true and correct, but only to the extent required by the Limited Conditionality Provision; and (b) each of the Specified Representations shall be true and correct in all material respects (and in all respects if qualified by material adverse effect or other materiality qualifier).
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7. The Administrative Agent and each Lead Arranger shall have received, (x) at least 3 business days prior to the Closing Date, all documentation and other information about the Borrower as shall have been reasonably requested in writing by the Administrative Agent or any Lead Arranger at least 10 business days prior to the Closing Date and required by U.S. regulatory authorities under applicable know your customer and anti-money laundering rules and regulations, including the PATRIOT Act and (y) a beneficial ownership certificate to the extent required under, and in accordance with the requirements of, 31 C.F.R § 1010.230.
8. All fees required to be paid on the Closing Date pursuant to the Fee Letters and reasonable out-of-pocket expenses required to be paid on the Closing Date pursuant to the Commitment Letter, to the extent, in the case of expenses, a reasonably detailed invoice has been delivered to the Borrower at least one business day prior to the Closing Date (except as otherwise reasonably agreed by the Borrower) shall have been paid (or shall be paid from or offset against the proceeds of the initial fundings under the Facilities).
9. Since the date of the Merger Agreement, there shall not have been a Material Adverse Effect. For purposes hereof, Material Adverse Effect shall have the meaning assigned to the term Material Adverse Effect in the Merger Agreement.
10. The Closing Date shall not occur prior to January 31, 2019 (or such earlier date as agreed by the Commitment Parties).
11. The Borrower shall have engaged one or more investment banks reasonably satisfactory to the Commitment Parties to publicly sell or privately place equity securities and debt securities of the Borrower, which may include convertible debt securities, unsecured senior and/or subordinated non-convertible debt securities, convertible preferred stock (including mandatory convertible preferred securities), other equity-linked securities (including tangible equity units or other stock purchase contracts) and/or any combination of one or more of the foregoing (including units representing one or more of the foregoing), that will provide proceeds in an aggregate amount sufficient to replace the commitments with respect to, or to repay the principal and other amounts then outstanding under, the Bridge Facility (it being understood and agreed by the Commitment Parties that the condition in this paragraph 11 has been satisfied as of the date hereof).
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Annex I to Exhibit C
FORM OF SOLVENCY CERTIFICATE
[ ], 20[ ]
This Solvency Certificate is being executed and delivered pursuant to Section [ ] of the [ ] (the Credit Agreement), dated as of [ ], 20[ ], among Colfax Corporation (the Borrower), the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as the administrative agent; the terms defined therein being used herein as therein defined.
I, [ ], the chief financial officer of the Borrower, solely in such capacity and not in an individual capacity, hereby certify that I am the chief financial officer of the Borrower and that I am generally familiar with the businesses and assets of the Borrower and its Subsidiaries (taken as a whole), I have made such other investigations and inquiries as I have deemed appropriate and I am duly authorized to execute this Solvency Certificate on behalf of the Borrower pursuant to the Credit Agreement.
I further certify, solely in my capacity as chief financial officer of the Borrower, and not in my individual capacity, as of the date hereof and after giving effect to the Transactions and the incurrence of the indebtedness and obligations being incurred in connection with the Credit Agreement and the Transactions on the date hereof, that, with respect to the Borrower and its Subsidiaries on a consolidated basis, (a) the sum of the liabilities of the Borrower and its Subsidiaries, taken as a whole, does not exceed the present fair saleable value of the assets of the Borrower and its Subsidiaries, taken as a whole; (b) the capital of the Borrower and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of the Borrower and its Subsidiaries, taken as a whole, contemplated on the date hereof and (c) the Borrower and its Subsidiaries, taken as a whole, do not intend to incur, or believe that they will incur, debts including current obligations beyond their ability to pay such debt as they mature in the ordinary course of business. For the purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).
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IN WITNESS WHEREOF, I have executed this Solvency Certificate on the date first written above.
By: |
| |
Name: | ||
Title: | Chief Financial Officer |
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